Aquestive Therapeutics, Inc.

Good morning and welcome to Equestive Therapeutics third quarter 2023 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. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference call, Bennett Watson of ICR Westwick Investor Relations. You may begin.

Thank you, operator. Good morning and welcome to today's call. On today's call, I am joined by Dan Barber, Chief Executive Officer, and Ernie Toth, Chief Financial Officer, who are going to provide an overview of recent business developments and performance for the third quarter 2023, followed by a Q&A session. During the Q&A session, the team will be joined by Dr. Carl Kraus, Chief Medical Officer, Ken Marshall, Chief Commercial Officer, and Dr. Stephen Wargacki, Senior Vice President, Research and Development. 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 Equestria's website within the Investors section shortly following the conclusion of this call. To remind you, the Equestiv team will be discussing some non-GAAP financial measures this morning as part of its review of third quarter 2023 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 Investors section of Equestiv'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 the risk factors section and in other sections included in the company's annual report on Form 10-K filed with the Securities Exchange Commission on March 31st, 2023, and in our subsequent 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. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as of the date made. Actual results may differ materially from these statements. All forward-looking statements attributable to a 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 will now turn the line over to Dan.

Thank you, Bennett. I am pleased to say that we have been able to accelerate the transformation of Equestiv over the last few months. We achieved important milestones across the clinical, regulatory, and financial parts of the business since our last earnings call. Let me start with our most recent news. We were excited to refinance our debt last week and pleased with how our new lender, a large leading institutional investor, has worked with us to maintain flexibility in our business. The $45 million facility provides for interest-only payments into mid-2026, well past our upcoming important clinical and regulatory milestones. Importantly, this agreement contains no revenue, EBITDA, or cash covenants includes zero warrants and allows us the flexibility to launch or partner both Anifilm and Libervin as we deem appropriate if approved by the FDA. And despite the Fed funds rate having increased by over 120 percent since our last financing in 2019, our interest rate remains fixed and increased by only one percentage point from the prior debt deal. We are truly pleased with this outcome. This brings me to another important financial point. This past quarter marked the second quarter in a row during which our non-GAAP adjusted EBITDA remained positive after removing our adjusted R&D costs. Simply put, if we weren't investing in the clinical development of antifilm epinephrine sublingual film, our business would have a positive non-GAAP-adjusted EBITDA through the first nine months of 2023. This, along with our continued strong revenue guidance, positions us well as we start to focus on 2024. In fact, our revenue guidance for 2023 has increased by over 25% from our original guidance provided earlier in the year. Ernie will talk more about our results in a few minutes. Now let me turn to our pipeline. Investing in the clinical development of Anifilm remains the top priority. We continue to believe Anifilm has the potential to transform the company and believe this transformation could happen in 2024. As we reported in October, we were pleased with the FDA's feedback on the design for our Pivotal Phase III program. We are reaffirming our guidance that we will start the Phase III Pivotal Study this quarter and expect to provide top-line data in the first quarter of 2024. Completing our Phase III Pivotal Study will represent a major clinical milestone for the company. We also continue to believe that patient demand for an oral epinephrine product for the treatment of severe allergic reactions, including anaphylaxis, remained high. Now, with nasal sprays delayed, we believe the benefits of an orally administered epinephrine rescue medication are more apparent than ever. Literature and survey data clearly show that many patients fail to carry their epinephrine rescue medical device. And even when they have it with them, patients fail to use their device. Our survey data suggests that patients often take an oral antihistamine pill, such as Benadryl, before using the rescue medical device. We believe Anafilm, as the only oral rescue product under development for anaphylaxis, has the potential to replace the incorrect use of antihistamines and thereby speed up time to symptom abatement. One thing allergists universally agree on is that early use of epinephrine is critical to treating anaphylaxis. Beyond the potentially significant carry and use benefits of anafilm, the pharmacodynamic clinical data from our recent studies provides the blueprint for a compelling improvement. According to medical experts, during anaphylaxis, the release of histamines causes blood vessels to expand, thereby rapidly dropping in individuals' mean arterial pressure, or MAP. Maintaining MAP supports the necessary pressure for vital organs, such as the brain and heart, to function normally and reduces the risk of anaphylaxis-related outcomes, such as loss of consciousness. In our studies, anafilm has been shown to preserve MAP in contrast to autoinjectors that have not done so. We are excited about the potential implications for patients and our medical team will spend more time talking about this data as we move into 2024. To sum up, we believe the projected timeline to FDA approval and market entry compared to the variety of nasal sprays under development is now much tighter than it was. The potential carry and use benefits remain significant and our mean arterial pressure, or MAP, data continues to be compelling when compared to autoinjectors. Now, turning to Libervin, we continue to progress towards our April 2024 FDA target action date for our NDA for patients between 2 and 5 years old. At this time, there are no open inquiries with the FDA regarding our NDA for this patient group, and we have no reason to believe the FDA won't meet the action date. Market data shows a 31% increase in prescriptions in the two- to five-year-old space during the third quarter 2023 when compared to the third quarter of 2022. Well over 90% of these scripts were for diazepam rectal gel, the only FDA-approved drug for this age group. We continue to believe The need for an oral product in this space is significant and look forward to working with the FDA to bring Libervin to these patients as soon as possible. We must remind you that in addition to the usual approval risks, we cannot guarantee that even with approval, the FDA will allow Libervin access to the U.S. market. We also continue to believe that based on past behaviors, competitors may actively seek to block the use of Libervin despite its potential benefits to this critical patient population. Now let's turn to our epinephrine Prodrug platform. I'm pleased today to talk about advancements in our epinephrine Prodrug platform, which we have branded as Adreniverse. We have completed the initial formulation of a topical product using the Adreniverse platform and plan on testing this formulation in humans in the coming months. Based on preclinical data, we have seen rapid absorption of epinephrine across porcine tissue. As you know, epinephrine is a vasoconstrictor and does not penetrate well through the skin. However, our Adreniverse platform may allow for absorption, thereby creating the potential use of this product for a variety of dermatological conditions. The unmet need and prevalence in some of these conditions is significant. We look forward to sharing our findings as we progress this initiative. Our business development activities remain ongoing. Our liver vent and anti-film discussions continue in regions around the world. We also continue to believe that as we meet our expected clinical and regulatory milestones, we will be able to generate significant funding from business development transactions. Our base business remains strong. We anticipate continued growth and remain focused on expanding our business capabilities in 2024. In summary, the third quarter was yet another crucial quarter for the company. We refinanced our debt. We raised our revenue guidance and narrowed non-gap adjusted EBITDA guidance for 2023. We progressed our anti-film program and continue to plan for a Q4 start to our pivotal study. We progressed our LiberVent two- to five-year-old application and remain on track. We completed our initial topical formulations of our Adreniverse platform, and we continue to see growth in our base business. With that, I will turn the call over to Ernie.