Aquestive Therapeutics, Inc.

Good morning and welcome to the Equestria Therapeutics fourth quarter and full year 2022 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call is being recorded. I would like to turn the call over to your host for today's conference call, Bennett Watson of Westwick Investor Relations. You may begin.

Thank you, Operator. Good morning and welcome to today's call. On today's call, I'm joined by Dan Barber, Chief Executive Officer, and Ernie Toth, Chief Financial Officer, who are going to provide an overview of recent business development and performance for the fourth quarter 2022, followed by a Q&A session. During the Q&A session, the team will be joined by Steve Wargacki, Vice President of R&D, and Ken Marshall, Chief Commercial Officer. As a reminder, the company's remarks today correspond with the earnings release that was issued after market closed yesterday. In addition, a recording of today's call will be made available on Equestive's website within the Investors section shortly following the conclusion of this call. To remind you, the Equestive team will be discussing some non-GAAP financial measures this morning as part of its review of fourth quarter and full year 2022 results. A description of these measures, along with a reconciliation to GAAP, can be found in the earnings release issued yesterday, which is posted on the investor section of Equestria's website. During the call, the company will be making forward-looking statements. We remind you of the company's safe harbor language, as outlined in yesterday's earnings release, as well as the risks and uncertainties affecting the company, as described in yesterday's earnings release and in the risk factors section. and in other sections, including the company's annual report on Form 10-K to be filed with the Securities Exchange Commission later this month, and in our quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. As with any pharmaceutical company with product candidates under development and products being commercialized, there are significant risks and uncertainties with respect to the company's business and the development, regulatory approval, and commercialization of its products and other matters related to operations. The impact of the ongoing COVID-19 pandemic is highly uncertain and cannot be predicted with certainty or clarity. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as the date made. Actual results may differ materially from these statements. All forward-looking statements attributable to Questive or any person acting on its behalf are expressly qualified in their entirety by this cautionary statement and the cautionary statements contained in the earnings release issued yesterday. The company assumes no obligation to update its forward-looking statements after the date of this conference call, whether as a result of new information, future events, or otherwise, except as required under applicable law. With that, I'll now turn the line over to Dan.

Thank you, Bennett. The fourth quarter marked the culmination of a seven-month run of improvements and execution by the management team in 2022. I am incredibly proud of the progress the team made in the fourth quarter, and quite frankly, since the company's leadership transition occurred in May of last year. In the fourth quarter, the Equestiv team advanced its lead pipeline product AQST109 epinephrine sublingual film through a CMC-focused end-of-Phase II meeting with the FDA and a separate clinical and regulatory-focused end-of-Phase II meeting also with the FDA. Moreover, we completed our registration batches on schedule and plan to have the required 12 months of stability before the end of 2023. Our commercial collaborations also continued to perform at a high level. We completed the license of Simpizen to Assertio, surpassed 150 million doses of shipped product to multiple licensees, announced early payments to our debt holders to reduce our debt overhang, and ended the fourth quarter with more cash than we had at the end of any other quarter last year. In 2022, We executed on three significant non-dilutive deals that generated over $25 million in cash, significantly streamlined our business to reduce ongoing costs, reduced our ongoing litigation through successfully winning a motion to dismiss in the Suboxone Antitrust case, and gained a tentative approval for LibriVent Dizepam Buckle Film. We have also held true to our story. As I said to you during the second quarter earnings call in August, sometimes the simplest stories can be the most compelling. In my view, a pharmaceutical company with existing revenue and two acute rescue medications under development that both have strong clinical results to date as well as long patent lives is a simple and compelling story. This remains just as true today as it was last summer. Now, though, it is time to focus on 2023. This is an exciting year for Equestis, and there are several clear milestones that we remain focused on achieving. The first is continuing the rapid progression of AQST 109. We are currently in the clinic and anticipate having additional clinical data in the coming weeks. As we shared in December, this data will help us determine the reference listed products that we will use in our pivotal study. Once we have the results we need, we will send a revised pivotal protocol to the FDA for its comments. Once we have received the agency's comments, we will start our pivotal study. As of today, we continue to guide to a third quarter start to this study with the goal of having a top-line readout before the end of 2023. If achieved, this will keep us on track for a mid-2024 NDA submission through the FDA. You will see us continue to be active in the allergy community in 2023. Last month, we participated in the annual conference for the American Academy of Allergy, Asthma, and Immunology, more commonly known as Quad AI. As previously disclosed, our Scientific Advisory Board members presented four posters. This conference gave us the opportunity to interact not only with our Scientific Advisory Board but also advocacy groups and other allergy thought leaders. We continue to hear the universal message about the significant unmet need for better products for the treatment of anaphylaxis. We also continue to hear that an oral product will likely be well received by the healthcare community and by patients. This year, we will continue to refine and understand the competitive positioning of AQST 109 as the non-injectable product landscape continues to progress. Based on our interactions with the FDA, we continue to believe AQST109's profile has a distinct competitive advantage among non-injectable products under development. The literature is clear. The guideline for acute therapy and management of anaphylaxis states, and I quote, the symptoms of anaphylactic reactions usually begin acutely and may progress very quickly. Thus, symptoms can deteriorate within minutes, end quote. Our well-respected and published scientific advisory board has also made it clear, speed of absorption matters. And just as importantly, the FDA was clear with us, stating, and I quote, similarity to epinephrine PK via autoinjector is preferred, end quote. As you know, Autoinjectors have shown a rapid uptake in plasma concentrations, typically resulting in a median Tmax between 10 and 20 minutes. Based on the data from our two completed pharmacokinetic studies, AQST109's median Tmax of approximately 12 minutes is within this range. We believe that healthcare providers, caregivers, and patients will also view rapid uptake as important. At the same time, we will continue to focus on growing our commercial collaborations and strengthening our balance sheet. Let's start with our commercial collaborations. We now have seven significant out-licensing collaborations that span six continents. Our collaboration with Hypera in South America has resulted in the launch of OnDiff on Densetron Oral Film in Brazil for the treatment of nausea. This launch is on track. and we continue to see strong order growth. Our collaboration with Zambone in Europe has resulted in the approval of Emolif Rilazol Oral Film for the treatment of ALS. Zambone plans on launching Emolif in the coming months, and we look forward to supporting their efforts. And finally, our collaboration with PharmaNovia in Europe remains on track as well, and we look forward to bringing Libervin to patients and healthcare providers in Europe, if approved. We have also carried over our focus on raising non-dilutive capital from 2022 into 2023 and have already generated an additional $20 million in the first quarter of 2023. We recently reached agreement with Indivior on several outstanding matters, including reimbursement of costs due under our license and supply agreement and changes to transfer pricing. This agreement resulted in a one-time cash payment of approximately $11.5 million. Indivior is important to the company, and I am pleased that we have agreed upon several contractual updates that, in my mind, strengthen the relationship between the two organizations. I am also excited to say that we have reached a settlement with Biodelivery Sciences International related to our ongoing patent infringement case regarding Belbuca and BunaVale. Settlement resulted in a one-time cash payment of $8.5 million to Acquested. It is time to move on from this case and continue to resolve our outstanding litigation cases where appropriate. In addition, we are pursuing potential collaborations in Europe and China for the rights to AQST 109, and for Libravent, we are pursuing potential collaborations in multiple markets, including the U.S. While there is no guarantee of success, we will continue to pursue these opportunities. As a final point on this subject, and as I've stated before, we will remain disciplined on the out-licensing process for Libervin, especially as we learn more from the FDA. We believe Libervin remains an important product for those suffering from seizure clusters, and that patients in the epileptic community will be better off with access to the product now rather than waiting until 2027 when orphan drug exclusivity of a competitive product is scheduled to expire. The healthcare providers, advocacy groups, and patients we have interacted with have given us the same feedback. We believe 2023 is another critical year for Libervin. As we've discussed before, we have provided the FDA with additional clinical data and our proposed protocol for a head-to-head study of Libervin against the products currently blocking our access to the U.S. market. The FDA has assured us that, and I quote, the Office of Orphan Products Development and the Review Division are actively working on review of the newly submitted information and the proposed study. Although we cannot commit to a precise date for providing a response, we're making all efforts to respond in a reasonable timeframe, end quote. While all of us are frustrated by the lack of speed of the responses, we will continue to diligently pursue U.S. market access. We have taken several steps to continue the financial turnaround story of the company. In the first quarter of 2023, we expect to reduce our outstanding debt by 18%, and by the end of 2023, we further expect to reduce our overall debt by over 40%. Depending on market conditions, interest rates and terms, we may seek to refinance our debt as the debt level becomes right-sized for our business. Ernie will talk more about the financials in a moment. In conclusion, we carried our momentum from 2022 into 2023 and are off to a fast start. Our total non-dilutive capital raise is now over $45 million since May of last year. This year, you can expect us to focus on rapidly progressing AQST 109 into a pivotal study pursuant to the FDA's parameters, expanding our collaborations and out-licensing arrangements, further strengthening our balance sheet, and continuing to work towards U.S. market access for Liberman. With that, I will turn the line over to Ernie.