Aquestive Therapeutics, Inc.

Good morning and welcome to the Questive Therapeutic second quarter 2024 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 automatic message advising your hand is raised. 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 West 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 second quarter 2024, followed by a Q&A session. During the Q&A session, the team will be joined by Dr. Carl Cross, Chief Medical Officer, Dr. Stephen Wargacki, Chief Science Officer, and Sherry Corgenti, Senior Vice President of Sales and Marketing. As a reminder, the company's remarks today correspond with the earnings release that was issued after market close 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 second quarter 2024 results. The description of these measures, along with the 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 quarterly report on Form 10-Q filed with the Securities Exchange Commission on August 6, 2024. 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 Equestria 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 assumed 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. On the heels of our successful equity raise in the first quarter, we had a very eventful second quarter. We progressed our antifilm epinephrine sublingual film program gained FDA approval of LibriVent Dizepam Buccal Film for the two to five-year-old age group, streamlined our base business to focus on growth, and continued to expand our LibriVent launch efforts for epilepsy patients aged between two and five years. As usual with Equestiv, this was an action-packed 90 days. Starting with Anafilm, our momentum continues to build When I look at the competitive landscape for anafilm, I remain more optimistic than ever. With the potential to be the first and only oral epinephrine product for the treatment of severe allergic reactions, including anaphylaxis, we believe anafilm easily fits within the patient's daily life due to its highly differentiated product attributes. On past earnings calls, I have focused on some of these important attributes, such as ease of carrying and ease of use. Today, let me expand on an additional area of differentiation. Let's talk about the durability of rescue products in the real world. You see, approved epinephrine medical devices, such as auto-injectors, come in liquid form and are largely made up of water. Products composed largely of water are subject to degradation in real-world conditions like high temperatures. That is one of the main reasons that EpiPens have such strict storage instructions, as they may no longer be effective if they are left on a soccer field in summer heat for an extended period of time. We estimate that 98% of the EpiPen formulation is water. Now think about anafilm. Only 2% of the anafilm product is composed of water. As we have seen with our other products over the last two decades, oral films are different. Anafilm's low water content means it has the potential to remain stable even after long durations of heat exposure. It means anafilm has the potential still work in freezing temperatures. It means antifoam has the potential to work in a broad spectrum of real-world conditions, which we do not believe can be matched by any other existing or pipeline product in this category. Now, turning to our development progress, we have successfully completed two of the three supportive studies necessary for engaging the FDA in a pre-NDA meeting. These are our temperature pH study and self-administration study. In both cases, as we have already shared publicly, the top-line data was positive. The third study, our oral allergen challenge study, is currently in the clinic. We are advancing our enrollment of the patients needed for the study and expect completion of the study late in the third quarter or early in the fourth quarter of this year. We continue to anticipate holding a pre-NDA meeting in the fourth quarter and starting our pediatric study immediately afterwards. Once the pediatric study has completed, we will file our NDA. At this time, we expect to begin our NDA submission in December and complete the submission in the first quarter of 2025. Based on FDA approval, our timing for a full launch at the end of 2025 or in the first quarter of 2026 remains unchanged. Our commercial launch activities remain on track. We now have in place very experienced leadership over both our commercial and medical affairs efforts for NFL. The team is focused on increasing awareness among physicians, payers, and the advocacy community. Across this entire stakeholder universe, we are hearing that Anafilm is the answer to address the significant unmet needs of healthcare providers, patients, and their caregivers. Even though other alternative medical devices may be on the horizon, there is nothing like Anafilm. No needle, no device, oral administration, Anafilm is easy to carry and keep everywhere you go, whether you are headed to the beach or the soccer field. There's no need for a carrying case. Anafilm fits on the back of your phone or easily in a wallet and is durable enough to withstand the real-life activities of patients, all while potentially improving the carry rate for patients. Our data suggests Anafilm is not impacted by comorbid allergic diseases such as congestion, atopic dermatitis, and asthma. Antifilm remains highly differentiated and poised to positively disrupt rescue treatment for severe allergic reactions, including anaphylaxis. As we get closer to filing and launch, we have had multiple inbound inquiries from companies interested in helping us distribute antifilm. Our goal is to maximize the distribution of antifoam to all patients immediately if approved by the FDA. Over the next year, we will continue to examine if our commercial efforts can be augmented by utilizing the sales and distribution platforms of other companies. Speaking of commercialization, let's turn to LibraVent. We are now focused on expanding our LibraVent launch in the two to five-year-old age group. Over the last few months, we have received significant feedback on the value and benefits LibraVent offers to patients and their caregivers. This feedback includes outreach from major children's institutions across the country who are proactively seeking information on LibraVent. We expect to have national retail distribution capabilities in place by October 1st while continuously improving our commercial and Medicaid coverage through the fourth quarter. We will expand to a national sales team of 10 representatives in late Q3. We believe expanding our sales team for Lieberman for the two to five-year-old age group will result in minimal single-digit millions in cash burn in 2025 and will generate top-line revenue in 2025 to be somewhere in the neighborhood of $5 million. While that may seem modest in the short term, there is significant benefit to the company as we prepare for an anafilm launch in 2026, if approved, and a full LibriVent launch in 2027 on the expiration of a competitor's orphan drug exclusivity. We continue to see the long-term potential for LibraVent as a brand with over 100 million in peak annual net sales. And we look forward to our sales expansion for the two- to five-year-old age group in the weeks to come. Now let's turn to our Adreniverse epinephrine prodrug platform. As promised, we are preparing to share more with the investor community on the future pipeline potential of Adreniverse. As you may recall, Anafilm was born out of our Adreniverse platform technology. We believe there are additional major products that will come from this platform. In the next few months, we will hold an investor day to outline how Anafilm has helped propel our scientific thinking, the science behind our Adreniverse platform, our unique intellectual property position, and the potential products that could arise from the work we have done. This is an exciting part of our business. Finally, on our base business, we have completed our strategic review of our existing collaborations and eliminated our unprofitable relationships. This includes no longer focusing on China, as well as terminating our U.S.-based partnership with the distribution of Exervin Rilazol Oral Film. In 2023, Equestria's revenue from Exurban was negligible. Ernie will provide more details on revenue in a moment. Eliminating these distractions will allow the executives responsible for our base business to focus on products such as Suboxone with Indivior, Amylif with Zambone, Symphazin with Assyrdio, and Ondif with Hypera, while also preparing for higher volumes of LibraVent and the launch of Anafilm, if approved. In conclusion, we continue to be a company with incredible growth potential. Our lead pipeline program, Anafilm, for severe allergic reactions, including anaphylaxis, is nearing the end of its development cycle and we believe is only months away from filing. Our commercial product, LibraVent, affords us the opportunity begin commercialization in a low-risk, low-cost environment while still retaining significant long-term potential. Our Adreniverse platform gives us a unique intellectual property position that can generate meaningful programs for years to come, and our base business continues to be a meaningful part of our story. With that, I will turn the call over to Ernie.

Thank you, Dan, and good morning, everyone. By now, you have seen our financial results in our earnings release that was issued last evening. As we typically do, we will address most of the discussion related to the second quarter 2024 results in the Q&A. During the second quarter, we continue to execute on our financial strategy to strengthen our financial position to support the continued development of Anifilm. Our lead product candidate that has no needle, is not a device, is orally administered, and is easy to carry. On April 26th, we received approval for LibriVent for ages between two and five. Second quarter revenue for LibriVent was minimal due to limited launch activities but we expect to expand our launch for this pediatric age group during the remainder of the year with broadening national retail distribution and expanded insurance coverage. We continued our pre-commercial launch activities for Anafilm to increase awareness among physicians, payers, and the advocacy community. In addition, during the quarter we conducted a strategic review of our existing collaborations with a prioritization of our focus on promising products from a long-term profitability perspective. We terminated our U.S. and China-based collaborations for ExtraVant, allowing us to focus on the continued development of antifilm, our pipeline, and commercialization of LibraVant for patients aged between two and five. Let's turn to the second quarter results. Total revenues increased from $13.2 million in the second quarter 2023 to $20.1 million in the second quarter 2024. This 52% increase in revenue was primarily driven by increases in license and royalty revenue due to the recognition of deferred revenues from the termination of licensing and supply agreements partially offset by decreases in manufacturer and supply revenue. Excluding this one-time recognition of deferred revenue, total revenues decreased by $3.4 million, or 26% year-over-year. Manufacturer and supply revenue decreased from $11.6 million in the second quarter 2023 to $8.1 million in the second quarter 2024 primarily due to timing of Suboxone and UNDIF orders. Co-development and research fees increased by $0.6 million for the second quarter 2024 versus the prior year period. Total revenues increased from $24.4 million for the six months ended June 30th, 2023 to $32.2 million for the six months ended June 30th, 2024. This 32% increase in revenue was primarily driven by the increases in license and royalty revenue due to the recognition of deferred revenues from the termination of licensing and supply agreements, partially offset by decreases in manufacture and supply revenue. Excluding this one-time recognition of deferred revenue, total revenues decreased by $2.5 million, or 10.3% year-over-year. Excluding the one-time retroactive 2022 price increase of $1.7 million recognized in the six months ended June 30, 2023, manufacturer and supply revenue decreased by 5%, primarily due to lower ONDIF revenue, which was attributable to a decrease in volume due to timing of orders, partially offset by an increase in Suboxone manufacturing revenues. Research and development expenses increased from $3.5 million in the second quarter of 2023 to $4.2 million in the second quarter of 2024. The increase in research and development expenses was primarily due to clinical trial costs associated with the continued advancement of our anti-film program, an increase in personnel costs, and an increase in share-based compensation. As a reminder, The first three quarters of 2024 will contain expenses for multiple clinical studies being conducted to advance the anti-film program. Research and development expenses increased from $7 million for the six months ended June 30, 2023 to $10.1 million for the six months ended June 30, 2024. The increase in research and development expenses was primarily due to the clinical trial costs associated with the continued advancement of the NFL program, an increase in personnel costs, and the increase in share-based compensation. Selling, general, and administrative expenses increased from $7.4 million in the second quarter of 2023 to $11.4 million in the second quarter of 2024. The increase of $4 million, or 54%, primarily represents higher personnel costs of approximately $0.5 million, share-based compensation expense of $0.6 million, regulatory and licensing fees of $0.4 million related to the regulatory fee for Lieberman, consulting costs of $0.7 million, higher expenses of $1.5 million due to a change in the allocation of manufacturing supply costs compared to the prior period and other expenses, partially offset by decreases in other general and administrative costs, including insurance expense. Selling general and administrative expenses increased from $14.8 million for the six months ended June 30, 2023, to $22 million for the six months ended June 30, 2024. Of the increase of 49% or $17.2 million for the six months ended June 30, 2024, as compared to the same period in the prior year, more than half of this increase was driven by severance costs of $1.1 million incurred in the first three months of this year and $2.5 million due to a year-over-year change in the allocation of manufacturer and supply costs. The remainder of the increase is largely driven by higher commercial and regulatory costs related to LibraVant and Anafilm, partially offset by lower legal fees and decreases in other general and administrative costs, including insurance. Equestria's net loss for the second quarter of 2024 was $2.7 million, or three cents for both basic and diluted loss per share, compared to the net loss for the second quarter of 2023 of $5.8 million, were $0.10 for both basic and diluted loss per share. The decrease in net loss was driven by increases in revenue and decreases in manufacturing supply expenses offset by increases in selling general and administrative expenses, research and development expenses, and non-cash interest expense related to the amortization of the debt and royalty obligation discounts. Equestria's net loss for the six months ended June 30th, 2024 was $15.6 million or 19 cents for both basic and diluted loss per share compared to the net income for the six months ended June 30th, 2023 of $2.3 million or 4 cents for both basic and diluted earnings per share. The increase in net loss was primarily driven by a decrease in net other income increases in selling general and administrative expenses, research and development expenses, and non-cash interest expense related to the amortization of the debt and royalty obligation discounts, partially offset by increases in revenues and decreases in manufacture and supply expenses. Non-GAAP adjusted EBITDA income was $1.8 million in the second quarter of 2024, compared to non-GAAP-adjusted EBITDA loss of $3.3 million in the second quarter of 2023. Non-GAAP-adjusted EBITDA income excluding adjusted R&D expenses was $5.6 million in the second quarter of 2024 compared to a non-GAAP-adjusted EBITDA income excluding adjusted R&D expenses of $.1 million in the second quarter of 2023. Non-GAAP-adjusted EBITDA loss was $5.4 million for the six months ended June 30, 2024, compared to non-GAAP-adjusted EBITDA loss of $7.2 million for the six months ended June 30, 2023. Non-GAAP-adjusted EBITDA income excluding adjusted R&D expenses was $4.2 million for the six months ended June 30th, 2024, compared to a non-GAAP adjusted EBITDA loss excluding adjusted R&D expenses of $.4 million for the six months ended June 30th, 2023. Cash and cash equivalents were approximately $90 million as of June 30th, 2024. During the second quarter, we did not sell any shares under our ATM facility. We continue to be focused in 2024 on the advancement of our antifilm epinephrine program and continued commercialization of LibriVent for patients ages between 2 and 5 years old. As outlined in the press release issued last night after market closed, we are revising our outlook for 2024 as follows. total revenues of approximately $57 million to $60 million from prior revenue guidance of $48 million to $51 million, and non-GAAP adjusted EBITDA loss of approximately $20 million to $23 million from prior guidance of $22 million to $26 million. Our guidance for 2024 includes conclusion of the supportive studies engaging the FDA in a pre-NDA meeting, commencing a pediatric study, following the NDA, and pre-commercial activities for anafilm, in addition to expanding the commercial launch of LibraVant for patients ages between 2 and 5. With that, I will now turn the line back to the operator to open the line for questions.

Thank you. Ladies and gentlemen, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, simply press star one one again. Please stand by while we compile the Q&A roster. And our first question coming from the line of Raina Ruiz with Lyric Partners. Your line is open.

Great. Good morning, everyone. So two questions for me. First one, I was curious about the upcoming launch preparations for Anafilm. Could you talk a bit about your overall plan to target key physicians and hospital accounts, and how might you pursue possibly unbranded marketing and engaging with advocacy groups alongside that?

Good morning, Ruana. Nice to hear your voice.

I am very fortunate today on this call that as we've invested in our company, I have a phenomenal leader of commercial with me named Sherry Korzynski, who actually has a deep background in the epinephrine space. So I'm going to hand it over to Sherry to walk you through the awareness activity we're doing right now and some of her thoughts on our NFL launch.

Good morning, everybody. Super excited to be here, and I cannot be more thrilled at the opportunities we have with meeting significant unmet need in the severe allergy market. As we think about what we're doing today to prepare for our launch in late 25, early 26, we really focused on implementing a three-pronged strategy that targets high autoinjective prescribers. And this encompasses, first, obviously awareness of the data and the functional benefits of anafilm. Secondly, believability in anafilm, that it works at least as well as the EpiPen based on the data we have. And third, we want to ensure there's confidence to prescribe anafilm when approved. So to achieve this and to answer your question a little bit more detailed, You know, we've put significant effort into three key areas, as you would expect at this time in preparation for launch. The first is around medical education and KOL interaction. So we're out at the allergy conferences. We are consistently meeting with the top four advocacy groups. We have engaged to start CME and non-CME programs, leveraged through channels as doctors access for information. Secondly, we're doing all of our block and tackling marketing activities to prepare Anna Film for launch day. This is market research with the high prescribers, our brand building work, such as positioning, advertising concepts, key messaging, and perhaps most importantly, we're having conversations have started with key payer decision makers so that at or shortly after PDUFA, we ensure that patients have affordable access to MSL.

Got it. Super helpful. And then second one from me, could you remind us from the recent temperature and pH and self-administration studies, how the PD data tracked with the PK data and when you looked at the data in these studies and do you plan to disclose the exact specifics coming up in the fall?

Sure. So, Rowana, I'm going to hand it over to Dr. Krause in a second here, just a technical note, I'll call it. In our supplementary materials online, we actually did include the PD data for our temperature pH study, but I'll let Dr. Krause give you his view on the results.

Yeah, I'd be happy to, and thanks for the question. The pharmacodynamic data, as we've seen in the past, does reflect the pharmacokinetic data in our data set. historically, and we see the same kind of tracking both in the temperature pH study as well as in the self-administration study. So, I think overall there's consistency across our data set.

Got it. Thanks for clarifying.

Thank you. And our next question coming from the line of David Amthelen with Piper Sandler and Yolanda Salfin.

Hey, thanks. Just a couple for me. So, first, Can you talk more specifically about the design of the pediatric study? And I believe, so that's something you're going to be discussing with the FDA in your pre-NDA meeting, if I'm not mistaken. So can you elaborate on the discussion points and what, if anything, needs to be, I guess, ironed out with the agency as it relates to the pediatrics? So that's number one. Number two, on LiberVant, can you talk more about your long-term strategy for the asset? Is the idea here to ultimately out-license it, or are you contemplating keeping it? I just want to get your latest and greatest on how you're thinking about the role of that asset in the business. Thanks.

Sure. Good morning, David. So on the pediatric study, I know Dr. Krause and his team have spent a lot of time on this, so I'll let you give his view on your question.

Yeah, thanks for the question. On the pediatric study, fortunately, the trial design is relatively straightforward. The intention of the study would be to determine whether the pharmacokinetic profile is able to mirror what we're seeing in adults. So I don't expect that to be a complicated design and one which we, of course, will need to secure alignment with the agency.

And David, just to add to Dr. Krause's view, just two reminders. One, again, in our supplementary materials, we have the design for people to see. And two, we have shared that with the FDA professionals. that Carl and his team are having. On your second question on LiberVent, I'm really glad you asked that question because with all of the focus we have on anafilm both in our company and outside of our company, sometimes LiberVent gets overshadowed. But LiberVent is, in my view, a fantastic product. patient group is, in my mind, truly disruptive in that space. And we think as we get to 2027 and are able to launch across all the age groups, that that will continue to unfold. So our mandate as a company is to make sure, one, patients have the product, and two, that we maximize our upside and our position in the product. As of today, that means we are putting together and launching a small, or excuse me, expanding a small sales team. Like any of our products, over time, it could remain with us for 10 years, or it could end up being distributed by another company in the years to come. I think that remains to be seen.

Okay, that's helpful. If I may just sneak in a follow-up question on LiberVent. So as you get to 27 and with the ODE situation, in the rearview mirror. I guess the question is, if you were to keep it, what kind of commercial infrastructure would you put behind it more broadly than what you're doing now? How many reps, et cetera, et cetera?

Yeah, yeah. Well, and Libervin is a much narrower call point compared to Anifilm, right? So you're talking about epileptologists who are by far the majority prescribers in that space. And our plans that we originally had when we thought we were launching Lieberman years ago remain evergreen. So the rep size would be limited, and we do not see that as a major lift as we get to 2027. I'm just looking at Sherry. Sherry, is there anything you would want to add to that?

Well, this is really exciting, as Dan mentioned. I mean, this is a game changer for patients and caregivers. We are really excited. As we have been over the last couple of months, the outreach directly to us has been significant from patients, children's hospitals, various institutions with a strong desire to have LibraVant in their armamentarium, if you will. So we are, as Dan mentioned, expanding our launch to have, in a very targeted way, as we continue to ensure that the patients ages two to five have access to liver bands.

Okay. Helpful. Thank you.

Thank you. And our next question, coming from the lineup, Francois from Oppenheimer. Your line is open.

All right, thanks for taking the questions. Congrats on the progress here. I was just wondering, in terms of the oral allergy test and that data coming out, you talked about completion, but is completion, is that a guidance on timing of the data? And just on that, can you remind us kind of the design of that trial and what to be expected?

Yeah, I'll let Dr. Krause walk you through that. Yeah, no, thanks for the question. The design of the study is meant to characterize whether or not changes in the physiology of the oral cavity have an influence on the pharmacokinetics of anafilm. So the way that the study is designed is we take individuals who have a history of oral allergy syndrome. We challenge them to make sure that they actually have those kinds of symptoms and signs that they historically state that they have. Once confirmed, then they will be challenged with the fruit that causes the symptoms. They will be provided and dosed with anafilm. The pharmacokinetics will be evaluated, and that will be compared to the same situation, but without the challenge, as well as with the intramuscular administration of adrenaline.

And on timing, Frank, yes, our guidance on timing is that we expect top-line data from that study either at the end of this quarter or early in Q4.

Okay, great. And then maybe on Anifilm, we talked about Libervant and the Salesforce, and you talked about a lot of pre-commercial efforts on Anifilm, but can you help us segment? Maybe you talked about the higher prescribers, but is this kind of a KOL mindset where it's very concentrated, or is this really... really a broad population, you know, like what percentage is the high prescribers? And I'm just trying to get a feel for how doable this is for a company your size and, you know, what goes into the discussion or strategy of looking to a bigger partner and just check in the desktop a little bit these prescribers and what kind of sales force they would require. Thank you.

Sure, I'll let Sherry take that.

Thanks for the question. I greatly appreciate it. Based on the significant experience I have in this market, this is a well-worn path, right? We know how many reps it would take to reach those high desktop prescribers. And we'll start our HCP targeting and rate sizing Salesforce work in early 2025. I think that when you think about this market, it is an It is spread over multiple specialties. However, the high prescribers are concentrated in allergists and pediatricians. And so we feel very good about the opportunity we have to really penetrate those high prescribing allergists and pediatricians, and that will be our key focus upon launch.

Thank you.

Thank you. Our next question, coming from the line-up, back from Tel Aviv, from H.C. Renright. Ilan, it's open.

Hi, thanks very much for taking my questions. Firstly, with respect to Anafilm, I was wondering if you could provide us with some more detail on what you plan to discuss at the upcoming showcase event, and in particular, if you're going to discuss ways in which you're going to differentiate anafilm from nefi assuming those products are both on the market simultaneously particularly with respect to the overall marketing message that you expect to utilize and also if you could comment at all you know assuming you're comfortable doing so to what extent do you believe you might be able to utilize a more efficient you know smaller commercial footprint to support the commercialization of anafilm versus what conceivably would be necessary for NEFI. Thanks.

Thanks, Ram.

So I will, we as a team here, we'll try to make sure we address all of your, all parts of your question, but if I miss one, please let me know. First, on our upcoming Investor Day, as and this may be underappreciated based on how much we've talked about it, but when we talk about our Adreniverse epinephrine prodrug platform, Anifilm actually came out of that work, right? So we will discuss Anifilm at the investor event, but I'm going to pass it over to Dr. Wargacki for a second here, and he can tell you a little bit more about what we're really excited to talk about at that investor event outside of Anisome.

Thanks, Dan. Yeah, so with the Adrenaverse platform, we learned a lot of stuff in the genesis of Anisome. And what we've done is we've progressed that through now to expand that technology. And we're really excited to come talk to everybody here shortly. about the progression we've done on the non-clinical front and securing our intellectual property as we prepare for our interaction with the agency at the end of the year.

Yeah, so the plug I'll put in is make sure you attend. We think it'll be worth everyone's time. In terms of the differentiation of Anifilm versus NAPI, I'm going to pass it over to Sherry in a second here, but on that in particular, just at a macro level, we think, we believe we are very differentiated Nessie. So we don't see ourselves in any way as being a product that will have an issue separating ourselves. And I'll let Sherry walk you through some of the highlights from her perspective.

Again, thank you for that question. We've spent a great deal of time conducting market research to understand what our key competitive advantages are in the minds of physicians and patients. And as I mentioned earlier, the unmet needs in this market are well known, well articulated. Anafilm offers such a unique competitive advantage in terms of addressing those needs. The beauty of Anafilm is the simplicity of Anafilm. We know that based on our data, it works as quickly and as safely as the gold standard EpiPen. Next, you don't have a needle and there is no device. Third, it's orally delivered. That is unmatched. And it has been a desire for at least the last two decades, based on my experience, is that to have an orally delivered product is a game changer in treating the patient with severe allergies and anaphylaxis. We know from our research, and Dan had mentioned earlier in his comments about our ability to better withstand heat, withstand excursions, excuse me, cold heat, washing machines, et cetera. But perhaps most importantly, and if you take nothing else away from this, it is the one and only epinephrine product that can fit into any lifestyle. And it doesn't require an active carry decision. So it fits and can always be kept in a wallet, a small change purse. in the credit card holder that you put on the back of your phone. So I believe, based on my experiences in this therapeutic area, we will have the best form of epinephrine upon approval by FDA for patients and caregivers alike.

Thanks, Sherry. And Ron, I think the last part of your question was really around sales coverage and distribution, right? How are we thinking about that? And I think you mentioned a more efficient, smaller footprint. As I put in my prepared comments, I think you hit the nail on the head, so to speak. When I look at where we are right now with $90 million in the bank as of June 30th and the progression of our programs versus where we were two years ago, I am ecstatic with what we have done. Now the task is making sure that we are able to bring the product to all patients and that we are able to do that efficiently. We clearly, at this time, don't plan on being a PCP call point-based sales force. So the efforts that we are focused on, as Sherry walked you through, are very targeted and they're very specific to the high prescribers. As I mentioned in my prepared comments, we do have some inbound interest that we're walking through. And as we get closer to our launch, we will look at how do we cover the entire market to make sure we maximize patients' ability to get the product. Great. And then just two very quick additional ones. I was wondering if Ernie could comment on the components driving the updates to 2024 top-line guidance, and in particular, wanted clarity on two aspects of this. One is the extent to which the revenue reported in the second quarter was effectively non-cash impacting because of what you disclosed in the press release were effectively agreement terminations and recognition of deferred revenue. And also, when we looked at the updated guidance number, how much of that is being driven by improved expectations for organic growth of underlying revenue streams, like, for example, the royalties that you expect to receive from partners on partnered products.

Hi, Ram. Thank you. Good to talk to you. So, the guidance for 2024, the revenue is increased because of the deferred revenue recognition due to the terminations of the two agreements. As we mentioned back in May, we went through a strategic review to focus on, so we were able to focus our time not only on profitable products, but also from a long-term perspective, but also from a time allocation resources of being able to focus both on antifilm and on the expanded launch now of Lieberman. So the revenue guidance for the year does include those terminations. As you mentioned, they are non-cash items. We actually received that cash back in the 21-22 timeframe, so that's cash that we had, and now it's just a non-cash recognition of that When we look at our, again, the guidance for the year, we've taken those into account. When we look at our demand for suboxone for the remainder of the year, we see that increasing from the levels that we've seen in the first half of the year. And then from an EBITDA perspective, we have built in now, which was not in our prior guidance, was the Lieberman launch cost. that we had and some additional spending, the timing of spending on the pre-commercial spend for anafilm. So all total, the revised guidance includes the recognition of deferred revenue, timing of suboxone for the remainder of the year on an EBITDA basis, timing of the LibraBand launch cost, and also some commercial spend, pre-commercial spend for anafilm.

So, Ron, the only thing I'd add to what Ernie said is if you back away from the ins and outs that Ernie walked you through, we're right where we wanted to be, right? The investment dollars we have are going to commercial and to the NFL development, and we are on track with all of the expectations that we have set over the last two quarters.

Great. Thank you very much.

Thank you. Now, next question coming from Delana. Thomas Lan with Lake Street Security, Celina Selfman.

Great, thanks for taking the questions. Dan, in the press release, you mentioned that you'll be submitting for the 6- to 12-year-old age bracket for LiberVant. What data do you have or do you need to get to enable that submission to go into FDA?

Yeah, we did that work years ago, as Thomas, you probably know. So that is strictly a paper exercise at this point.

Okay, got it. And then for the investor day coming up and maybe some of the unveiling around the Adreniverse opportunity, I'm trying to interpret the press release. Can I read into that that you'll be unveiling additional products beyond AQST 108, or is it more of a 108-focused presentation?

Yes. Our plan is to, we know we have continued to talk about Adreniverse and 108 without giving a lot of detail to you, and we appreciate everyone's patience. As Steve mentioned before, intellectual property, being in position is very important before you have those days. So one of the things we'll do, as Steve mentioned, is walk you through the science, because I don't think we've given you a fair view on why we're so excited about it. We will walk through the specific indication for 108, which we haven't given you yet. But in that discussion, we believe you will walk away seeing that while we're announcing 108 in an indication, there are multiple programs that could come after 108.

Great. And then just one question, just to follow up on something you said, Dan, in response to another question, that you had some inbound interest in Anafilm. Is that from a commercial partnering perspective or maybe something broader like an acquisition of the entire product?

Yeah, it's been across the board. So as we get closer and other companies in our space have more of an eye towards where we are and what's happening, we've had inquiries that have spanned the spectrum.

Got it. Appreciate you taking the question. Thank you. Thanks, Thomas.

Thank you. And our next question coming from the lineup, Jason Butler with Citizens JMP. Hi.

Thanks for taking the question. I just wanted to come back to the anafilm pediatric study. Given that you've already had dialogue with FDA about the design of the study, what's the gating factor to starting the study? And I guess that's a different way. What is it that you need to get from the pre-NDA meeting before you start that study?

I'll let Carl take that one. Thanks for the question. Really, it's making sure that we have alignment with the agency that the adult data set meets muster, and we agree on using those data to act as a toll gate for starting a pediatric program. So that's really one of the critical questions we're going to secure out of the pre-NDA meeting.

Okay, thank you.

Thank you. And our next question, coming from the line-off, Gary Knutman with Raymond James, ULANA Selfin.

Hey, good morning, guys. So I know you still have to meet with FDA on anafilm in the fourth quarter, but are you anticipating an adcom for anafilm like NEFI had, or do you think with all your conversations with FDA and supportive studies, that wouldn't be necessary? And since NEFI could get approved on October 2nd, you know, just what do you think the read-through is there for you guys from a regulatory standpoint?

Yeah, I'll take your second question first, and then I'll hand it over to Carl to talk about his views on the adcom. It's always tricky to look at someone else's application and have a read-through to your program, right? So our engagement with the FDA has been very open, transparent from our perspective, consistent, and supportive of what we are looking to accomplish. I haven't been in the discussions that our competitor has had. So I think we're all looking to see on October 2nd how their product fares and whether, if they don't get approval, whether that's related to something that is specific to their product or something that is in the way they've interacted with the FDA. We just don't have any insight into that. In terms of the adcom, I'll let Carl give his thoughts.

Yeah, no, thanks, Dan. Look, we believe that the program continues down a path of declining risk, and whether or not the division wants to secure counsel from the advisory committee, that is a decision that they have to make. I can't try and get inside the FDA's head, but I do believe that no matter what, we can of decreasing risk for an outcome as well. But of course, I can't speak for the FDA.

Okay. And then just, you know, with LiberBand, as you're building out that infrastructure a little bit, just talk about how you'll be able to leverage that effort potentially for Anafilm, where there's going to be some overlap. And with respect to the inbound interest on Anafilm, you know, I would imagine that it more likely to be for a primary care, someone who has a primary care capability, but maybe you could just elaborate on that a little bit, Dan.

Yeah. For whatever reason, Gary, I'll start with your second question again here. So, of course, primary care would be an interesting addition to our capabilities for Annafilm. It's early days in terms of any discussions that we're having, so my view would be, it will be orders of time before we have a view on what we will or won't do with someone else on NFLM. In terms of Lieberman, of course, Lieberman, excuse me, there are some really nice infrastructure pieces that do tie to NFLM. I'll let Sherry give you her thoughts on some of those infrastructure overlaps.

Yes, obviously it important. It'll start to lay a foundation for all of our commercial activities between Salesforce, marketing. We'll give us synergies in commercial operations. So we feel strongly that this is a really nice start for us as we prepare for the launch of Anafilm as well.

Okay, great. Thank you very much.

Thank you. And our next question, coming from the line of James Malloy with Alliance Global Partners. Yolanda Sullivan.

Hey, guys. Thank you very much for taking my questions. Just a quick question for Ernie just to clarify as well. So the updated guidance top line does include the $10 million one-timer. So excluding that for top line, should we just stay with the prior guidance on both those items as a more sort of cash? driven EBITDA and top line?

Hi, Jim. So again, the amount of the deferred revenue that was recognized was non-cash. We got that cash two years ago. So that is included in the revised guidance for 2024. That does contribute to EBITDA But if your question is about annualizing our results, or I don't know if that's exactly what you're asking, there will be some increased expenses as we get into the second half of the year around the Lieberman launch activities, some increased pre-commercial spend for anafilm, in addition to some other timing issues around revenue and expenses. So I think backing out the one-time revenue that is included in both revenue and contributes to EBITDA, you could get to another number. That's not something we give.

Thank you. That actually ties in with the next question, too. the R&D and G&A in the current quarter. Is that the number we should expect going forward, or we just paid any material changes up or down on those?

Well, again, some of these expenses we would expect to increase a little bit in the second part of the year, R&D, and annualizing it. Remember that we do have some of these studies that are coming to a conclusion in the next second part of the year. In addition, there is, you know, some of the selling expenses that is included in SG&A, you know, around the Lieberman expanded launch and the pre-commercial spend for anafil would be embedded in those numbers. And all that is included in my guidance for the year, our guidance for the year.

All right, thank you. And maybe a question for Dan. Thank you, Ernie. The topical show, could you walk through the phase two trial design? And one of the things you guys talk about, the Adrenaverse, the billion-dollar opportunity, could you walk through what sort of the big pillars of that billion-dollar opportunity could be?

Jim, I want to make sure you attend our investor day. So I'm going to give you the teaser that that is exactly some of the things you'll hear at our investor day in the coming months. So we look forward to walking through 108, the indication that we're seeing, and some of our thoughts on what the Phase 2A will look like.

I'll be there with bells on.

Could you walk through the 108 topical gel Phase 2 trial design, please?

That's, Jim, and maybe I wasn't clear, so my apologies. We're not providing that ahead of the investor day. That is one of the things we want to share with everyone in the context of our science, our program, and where we're going. And walking through that today would be ahead of all the things we need to share with you.

Honestly, my apologies for missing that answer. And then we'll also, on the R&D day, we talk about the number of reps for the Anafilm self-launch, if it should indeed self-launch. And could you walk through, again, maybe this will be in there on day as well, the go-no-go on a partner versus self-launch?

Yeah, yeah. Yeah, we will, of course.

Look, Anafilm is the center theme of our company at this time, right? So we, of course, in the Investor Day, we'll start with any updates we have on Anafilm anything that we think is meaningful to share and how it ties to our Adreniverse technology. In terms of the sales force, I think Sherry gave you her thoughts before and her timing on how we go from where we are today to a very specific plan. Just one of the things I think is important that Sherry said is that this is a well-worn path. She's done it before. She understands it. So I don't think there'll be any surprises there. In terms of any distribution agreements or alignment with other companies, just to make sure I've clarified that, where we are today is we've had inbound inquiries. We are just beginning to think about what type of arrangement we may or may not want to have. I would say it is not imminent, nor do we want it to be imminent that something like that develop as will Sherry's plan, and then we'll know exactly as a company where we want to place our bets, so to speak.

Thank you. I'm showing up for the questions at this time. I will now turn the call back over to Dan Barber for any closing remarks.

Thank you, Olivia. Well, of course, as always, we appreciate your time this morning. As you heard, we are truly excited about the progress the company has made over the last year. We're confident in our anafilm development program. We're ready to expand our sales efforts for Lieberwind in the two- to five-year-old space. And we have meaningful in-house technology to refill our pipeline. This is a great place to be. We hope you have a great rest of your day, and we look forward to our future interactions.

Ladies and gentlemen, that's our conference for today. Thank you for your participation. You may now disconnect. you Music you Thank you.

Bye.

Good morning and welcome to the Questive Therapeutic second quarter 2024 conference call. At this time, all participants are on 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 automatic message advising your hand is raised. 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 West 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 second quarter 2024, followed by a Q&A session. During the Q&A session, the team will be joined by Dr. Carl Cross, Chief Medical Officer, Dr. Stephen Wargacki, Chief Science Officer, and Sherry Corgenti, Senior Vice President of Sales and Marketing. As a reminder, the company's remarks today correspond with the earnings release that was issued after market close 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 second quarter 2024 results. The description of these measures, along with the reconciliation to GAAP, can be found in the earnings release issued yesterday, which is posted on the investor 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 quarterly report on Form 10-Q filed with the Securities Exchange Commission on August 6, 2024. 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 Equestria 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. On the heels of our successful equity raise in the first quarter, we had a very eventful second quarter. We progressed our antifilm epinephrine sublingual film program gained FDA approval of LibriVent, diazepam buccal film, for the two- to five-year-old age group, streamlined our base business to focus on growth, and continued to expand our LibriVent launch efforts for epilepsy patients aged between two and five years. As usual with Equestiv, this was an action-packed 90 days. Starting with anafilm, our momentum continues to build When I look at the competitive landscape for anafilm, I remain more optimistic than ever. With the potential to be the first and only oral epinephrine product for the treatment of severe allergic reactions, including anaphylaxis, we believe anafilm easily fits within the patient's daily life due to its highly differentiated product attributes. On past earnings calls, I have focused on some of these important attributes, such as ease of carrying and ease of use. Today, let me expand on an additional area of differentiation. Let's talk about the durability of rescue products in the real world. You see, approved epinephrine medical devices, such as auto-injectors, come in liquid form and are largely made up of water. Products composed largely of water are subject to degradation in real-world conditions like high temperatures. That is one of the main reasons that EpiPens have such strict storage instructions, as they may no longer be effective if they are left on a soccer field in summer heat for an extended period of time. We estimate that 98% of the EpiPen formulation is water. Now think about anafilm. Only 2% of the anafilm product is composed of water. As we have seen with our other products over the last two decades, oral films are different. Anafilm's low water content means it has the potential to remain stable even after long durations of heat exposure. It means anafilm has the potential still work in freezing temperatures. It means antifoam has the potential to work in a broad spectrum of real-world conditions, which we do not believe can be matched by any other existing or pipeline product in this category. Now, turning to our development progress, we have successfully completed two of the three supportive studies necessary for engaging the FDA in a pre-NDA meeting. These are our temperature pH study and self-administration study. In both cases, as we have already shared publicly, the top-line data was positive. The third study, our oral allergen challenge study, is currently in the clinic. We are advancing our enrollment of the patients needed for the study and expect completion of the study late in the third quarter or early in the fourth quarter of this year. We continue to anticipate holding a pre-NDA meeting in the fourth quarter and starting our pediatric study immediately afterwards. Once the pediatric study has completed, we will file our NDA. At this time, we expect to begin our NDA submission in December and complete the submission in the first quarter of 2025. Based on FDA approval, our timing for a full launch at the end of 2025 or in the first quarter of 2026 remains unchanged. Our commercial launch activities remain on track. We now have in place very experienced leadership over both our commercial and medical affairs efforts for NFL. The team is focused on increasing awareness among physicians, payers, and the advocacy community. Across this entire stakeholder universe, we are hearing that Anafilm is the answer to address the significant unmet needs of healthcare providers, patients, and their caregivers. Even though other alternative medical devices may be on the horizon, there is nothing like Anafilm. No needle, no device, oral administration, Anafilm is easy to carry and keep everywhere you go, whether you are headed to the beach or the soccer field. There's no need for a carrying case. Anafilm fits on the back of your phone or easily in a wallet and is durable enough to withstand the real-life activities of patients, all while potentially improving the carry rate for patients. Our data suggests Anafilm is not impacted by comorbid allergic diseases such as congestion, atopic dermatitis, and asthma. Antifilm remains highly differentiated and poised to positively disrupt rescue treatment for severe allergic reactions, including anaphylaxis. As we get closer to filing and launch, we have had multiple inbound inquiries from companies interested in helping us distribute antifilm. Our goal is to maximize the distribution of anafilm to all patients immediately if approved by the FDA. Over the next year, we will continue to examine if our commercial efforts can be augmented by utilizing the sales and distribution platforms of other companies. Speaking of commercialization, let's turn to LibraVent. We are now focused on expanding our LibraVent launch in the two- to five-year-old age group. Over the last few months, we have received significant feedback on the value and benefits LibraVent offers to patients and their caregivers. This feedback includes outreach from major children's institutions across the country who are proactively seeking information on LibraVent. We expect to have national retail distribution capabilities in place by October 1st while continuously improving our commercial and Medicaid coverage through the fourth quarter. We will expand to a national sales team of 10 representatives in late Q3. We believe expanding our sales team for Lieberman for the two to five year old age group will result in minimal single digit millions in cash burn in 2025 and will generate top line revenue in 2025 to be somewhere in the neighborhood of $5 million. While that may seem modest in the short term, there is significant benefit to the company as we prepare for an anafilm launch in 2026, if approved, and a full LibraVent launch in 2027 on the expiration of a competitor's orphan drug exclusivity. We continue to see the long-term potential for LibraVent as a brand with over 100 million in peak annual net sales. And we look forward to our sales expansion for the two to five-year-old age group in the weeks to come. Now let's turn to our Adreniverse epinephrine prodrug platform. As promised, we are preparing to share more with the investor community on the future pipeline potential of Adreniverse. As you may recall, Anafilm was born out of our Adreniverse platform technology. We believe there are additional major products that will come from this platform. In the next few months, we will hold an investor day to outline how Anafilm has helped propel our scientific thinking, the science behind our Adreniverse platform, our unique intellectual property position, and the potential products that could arise from the work we have done. This is an exciting part of our business. Finally, on our base business, we have completed our strategic review of our existing collaborations and eliminated our unprofitable relationships. This includes no longer focusing on China, as well as terminating our U.S.-based partnership for the distribution of Exervin Rilazol Oral Film. In 2023, Equestria's revenue from Exurban was negligible. Ernie will provide more details on revenue in a moment. Eliminating these distractions will allow the executives responsible for our base business to focus on products such as Suboxone with Indivior, Amylif with Zambone, Vimpazin with Assertio, and OnDeath with Hypera, while also preparing for higher volumes of LibraVent and the launch of Anafilm, if approved. In conclusion, we continue to be a company with incredible growth potential. Our lead pipeline program, Anafilm, for severe allergic reactions, including anaphylaxis, is nearing the end of its development cycle and we believe is only months away from filing. Our commercial product, LibraVent, affords us the opportunity begin commercialization in a low-risk, low-cost environment while still retaining significant long-term potential. Our Adreniverse platform gives us a unique intellectual property position that can generate meaningful programs for years to come, and our base business continues to be a meaningful part of our story. With that, I will turn the call over to Ernie.

Thank you, Dan, and good morning, everyone. By now, you have seen our financial results in our earnings release that was issued last evening. As we typically do, we will address most of the discussion related to the second quarter 2024 results in the Q&A. During the second quarter, we continue to execute on our financial strategy to strengthen our financial position to support the continued development of Anifilm. Our lead product candidate that has no needle, is not a device, is orally administered, and is easy to carry. On April 26th, we received approval for LibriVent for ages between two and five. Second quarter revenue for LibriVent was minimal due to limited launch activities but we expect to expand our launch for this pediatric age group during the remainder of the year with broadening national retail distribution and expanded insurance coverage. We continued our pre-commercial launch activities for Anafilm to increase awareness among physicians, payers, and the advocacy community. In addition, during the quarter, we conducted a strategic review of our existing collaborations with a prioritization of our focus on promising products from a long-term profitability perspective. We terminated our U.S. and China-based collaborations for ExtraVant, allowing us to focus on the continued development of antifilm, our pipeline, and commercialization of LibraVant for patients aged between 2 and 5. Let's turn to the second quarter results. Total revenues increased from $13.2 million in the second quarter 2023 to $20.1 million in the second quarter 2024. This 52% increase in revenue was primarily driven by increases in license and royalty revenue due to the recognition of deferred revenues from the termination of licensing and supply agreements partially offset by decreases in manufacturer and supply revenue. Excluding this one-time recognition of deferred revenue, total revenues decreased by $3.4 million or 26% year-over-year. Manufacturer and supply revenue decreased from $11.6 million in the second quarter 2023 to $8.1 million in the second quarter 2024 primarily due to timing of Suboxone and UNDIF orders. Co-development and research fees increased by $0.6 million for the second quarter 2024 versus the prior year period. Total revenues increased from $24.4 million for the six months ended June 30th, 2023 to $32.2 million for the six months ended June 30th, 2024. This 32% increase in revenue was primarily driven by the increases in license and royalty revenue due to the recognition of deferred revenues from the termination of licensing and supply agreements, partially offset by decreases in manufacture and supply revenue. Excluding this one-time recognition of deferred revenue, total revenues decreased by $2.5 million, or 10.3% year-over-year. Excluding the one-time retroactive 2022 price increase of $1.7 million recognized in the six months ended June 30, 2023, manufacturer and supply revenue decreased by 5%, primarily due to lower ONDIF revenue, which was attributable to a decrease in volume due to timing of orders, partially offset by an increase in Suboxone manufacturing revenues. Research and development expenses increased from $3.5 million in the second quarter of 2023 to $4.2 million in the second quarter of 2024. The increase in research and development expenses was primarily due to clinical trial costs associated with the continued advancement of our anti-film program, an increase in personnel costs, and an increase in share-based compensation. As a reminder, The first three quarters of 2024 will contain expenses for multiple clinical studies being conducted to advance the anti-film program. Research and development expenses increased from $7 million for the six months ended June 30, 2023 to $10.1 million for the six months ended June 30, 2024. The increase in research and development expenses was primarily due to the clinical trial costs associated with the continued advancement of the NFL program, an increase in personnel costs, and the increase in share-based compensation. Selling, general, and administrative expenses increased from $7.4 million in the second quarter of 2023 to $11.4 million in the second quarter of 2024. The increase of $4 million, or 54%, primarily represents higher personnel costs of approximately $0.5 million, share-based compensation expense of $0.6 million, regulatory and licensing fees of $0.4 million related to the regulatory fee for Lieberman, consulting costs of $0.7 million, higher expenses of $1.5 million due to a change in the allocation of manufacturing supply costs compared to the prior period and other expenses, partially offset by decreases in other general and administrative costs, including insurance expense. Selling general and administrative expenses increased from $14.8 million for the six months ended June 30, 2023, to $22 million for the six months ended June 30, 2024. Of the increase of 49%, or $17.2 million for the six months ended June 30, 2024, as compared to the same period in the prior year, more than half of this increase was driven by severance costs of $1.1 million incurred in the first three months of this year and $2.5 million due to a year-over-year change in the allocation of manufacturer and supply costs. The remainder of the increase is largely driven by higher commercial and regulatory costs related to LibraVant and Anafilm, partially offset by lower legal fees and decreases in other general and administrative costs, including insurance. Equestria's net loss for the second quarter of 2024 was $2.7 million, or three cents for both basic and diluted loss per share, compared to the net loss for the second quarter of 2023 of $5.8 million, were $0.10 for both basic and diluted loss per share. The decrease in net loss was driven by increases in revenue and decreases in manufacturing supply expenses offset by increases in selling general and administrative expenses, research and development expenses, and non-cash interest expense related to the amortization of the debt and royalty obligation discounts. Equestria's net loss for the six months ended June 30th, 2024 was $15.6 million or 19 cents for both basic and diluted loss per share compared to the net income for the six months ended June 30th, 2023 of $2.3 million or 4 cents for both basic and diluted earnings per share. The increase in net loss was primarily driven by a decrease in net other income increases in selling general and administrative expenses, research and development expenses, and non-cash interest expense related to the amortization of the debt and royalty obligation discounts, partially offset by increases in revenues and decreases in manufacture and supply expenses. Non-GAAP adjusted EBITDA income was $1.8 million in the second quarter of 2024, compared to non-GAAP-adjusted EBITDA loss of $3.3 million in the second quarter of 2023. Non-GAAP-adjusted EBITDA income excluding adjusted R&D expenses was $5.6 million in the second quarter of 2024 compared to a non-GAAP-adjusted EBITDA income excluding adjusted R&D expenses of $.1 million in the second quarter of 2023. Non-GAAP-adjusted EBITDA loss was $5.4 million for the six months ended June 30, 2024, compared to non-GAAP-adjusted EBITDA loss of $7.2 million for the six months ended June 30, 2023. Non-GAAP-adjusted EBITDA income excluding adjusted R&D expenses was $4.2 million for the six months ended June 30th, 2024, compared to a non-GAAP adjusted EBITDA loss excluding adjusted R&D expenses of $.4 million for the six months ended June 30th, 2023. Cash and cash equivalents were approximately $90 million as of June 30th, 2024. During the second quarter, we did not sell any shares under our ATM facility. We continue to be focused in 2024 on the advancement of our antifilm epinephrine program and continued commercialization of LibraVent for patients ages between 2 and 5 years old. As outlined in the press release issued last night after market closed, we are revising our outlook for 2024 as follows. total revenues of approximately $57 million to $60 million from prior revenue guidance of $48 million to $51 million, and non-GAAP adjusted EBITDA loss of approximately $20 million to $23 million from prior guidance of $22 million to $26 million. Our guidance for 2024 includes conclusion of the supportive studies engaging the FDA in a pre-NDA meeting, commencing a pediatric study, following the NDA, and pre-commercial activities for anafilm, in addition to expanding the commercial launch of LibraVant for patients ages between 2 and 5. With that, I will now turn the line back to the operator to open the line for questions.

Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1-1 again. Please stand by while we compile the Q&A roster. And our first question coming from the line of Raina Ruiz with Lyric Partners. Your line is open.

Great. Good morning, everyone. So two questions for me. First one, I was curious about the upcoming launch preparations for Anafilm. Could you talk a bit about your overall plan to target key physicians and hospital accounts, and how might you pursue possibly unbranded marketing and engaging with advocacy groups alongside that?

Good morning, Ruana. Nice to hear your voice.

I am very fortunate today on this call that as we've invested in our company, I have a phenomenal leader of commercial with me named Sherry Korsinsky, who actually has a deep background in the epinephrine space. So I'm going to hand it over to Sherry to walk you through the awareness activity we're doing right now and some of her thoughts on our NFL launch.

Good morning, everybody. Super excited to be here, and I cannot be more thrilled at the opportunities we have with meeting significant unmet need in the severe allergy market. As we think about what we're doing today to prepare for our launch in late 25, early 26, we really focused on implementing a three-pronged strategy that targets high autoinjective prescribers. And this encompasses, first, obviously awareness of the data and the functional benefits of anafilm. Secondly, believability in anafilm, that it works at least as well as the EpiPen based on the data we have. And third, we want to ensure there's confidence to prescribe anafilm when approved. So to achieve this and to answer your question a little bit more detailed, You know, we've put significant effort into three key areas, as you would expect at this time in preparation for launch. The first is around medical education and KOL interaction. So we're out at the allergy conferences. We are consistently meeting with the top four advocacy groups. We have engaged to start CME and non-CME programs, leveraged through channels as doctors access for information. Secondly, we're doing all of our block and tackling marketing activities to prepare Anna Film for launch day. This is market research with the high prescribers, our brand building work, such as positioning, advertising concepts, key messaging, and perhaps most importantly, we're having conversations have started with key payer decision makers so that at or shortly after PDUFA, we ensure that patients have affordable access to MSL.

Got it. Super helpful. And then second one from me, could you remind us from the recent temperature and pH and self-administration studies, how the PD data tracked with the PK data and when you looked at the data in these studies and do you plan to disclose the exact specifics coming up in the fall?

Sure. So, Rowana, I'm going to hand it over to Dr. Krause in a second here, just a technical note, I'll call it. In our supplementary materials online, we actually did include the PD data for our temperature pH study, but I'll let Dr. Krause give you his view on the results.

Yeah, happy to, and thanks for the question. The pharmacodynamic data, as we've seen in the past, does reflect the pharmacokinetic data, and our data has had and we see the same kind of tracking both in the temperature pH study as well as in the self-administration study. So I think overall there's consistency across our data set.

Got it. Thanks for clarifying.

Thank you. And our next question coming from the line of David Amthelen with Piper Sandler and Yolanda Salfin.

Hey, thanks. Just a couple for me. So first, can you talk more specifically about the design of the pediatric study? And I believe, so that's something you're going to be discussing with the FDA in your pre-NDA meeting, if I'm not mistaken. So can you elaborate on the discussion points and what, if anything, needs to be I guess, ironed out with the agency as it relates to the pediatric studies. So that's number one. Number two, on Libervant, can you talk more about your long-term strategy for the asset? Is the idea here to ultimately out-license it, or are you contemplating keeping it? I just want to get your latest and greatest on how you're thinking about the role of that asset in the business. Thanks.

Sure. Good morning, David. So on the pediatric study, I know Dr. Krause and his team have spent a lot of time on this, so I'll let you give his view on your question.

Yeah, thanks for the question. On the pediatric study, fortunately, the trial design is relatively straightforward. The intention of the study would be to determine whether the pharmacokinetic profile is able to mirror what we're seeing in adults. So I don't expect that to be a complicated design and one which we, of course, will need to secure alignment with the agency.

And, David, just to add to Dr. Krause's view, just two reminders. One, again, in our supplementary materials, we have the design for people to see. And two, we have shared that with the FDA. that Carl and his team are having. On your second question on LiberVent, I'm really glad you asked that question because with all of the focus we have on anafilm both in our company and outside of our company, sometimes LiberVent gets overshadowed. But LiberVent is, in my view, a fantastic product. five-year-old patient group is, in my mind, truly disruptive in that space. And we think as we get to 2027 and are able to launch across all the age groups, that that will continue to unfold. So our mandate as a company is to make sure, one, patients have the product, and two, that we maximize our upside and our position in the product. As of today, that means we are putting together and launching a small, or excuse me, expanding a small sales team. Like any of our products, over time, it could remain with us for 10 years, or it could end up being distributed by another company in the years to come. I think that remains to be seen.

Okay, that's helpful. If I may just sneak in a follow-up question on LiberVent. So as you get to 27 and with the ODE situation, in the rearview mirror. I guess the question is, if you were to keep it, what kind of commercial infrastructure would you put behind it more broadly than what you're doing now? How many reps, et cetera, et cetera?

Yeah, yeah. Well, and Libervin is a much narrower call point compared to Anifilm, right? So you're talking about epileptologists who are by far the majority prescribers in that space. And our plans that we originally had when we thought we were launching Lieberman years ago remain evergreen. So the rep size would be limited, and we do not see that as a major lift as we get to 2027. I'm just looking at Sherry. Sherry, is there anything you would want to add to that?

Well, this is really exciting, as Dan mentioned. I mean, this is a game changer for patients and caregivers. We are really excited. As we have been over the last couple of months, the outreach directly to us has been significant from patients, children's hospitals, various institutions with a strong desire to have LibraVant in their armamentarium, if you will. So we are, as Dan mentioned, expanding our launch to have, in a very targeted way, as we continue to ensure that the patients ages two to five have access to LibroVans.

Okay. Helpful. Thank you.

Thank you. And our next question coming from the line of Francois from Oppenheimer. Your line is open.

All right, thanks for taking the questions. Congrats on the progress here. I was just wondering, in terms of the oral allergy test and that data coming out, you talked about completion, but is completion, is that a guidance on timing of the data? And just on that, can you remind us kind of the design of that trial and what to be expected?

Yeah, I'll let Dr. Krause walk you through that. Yeah, no, thanks for the question. The design of the study is meant to characterize whether or not changes in the physiology of the oral cavity have an influence on the pharmacokinetics of anaphylm. So the way that the study is designed is we take individuals who have a history of oral allergy syndrome. We challenge them to make sure that they actually have those kinds of symptoms and signs that they historically state that they have. Once confirmed, then they will be challenged with the fruit that causes the symptoms. They will be provided and dosed with anafilm. The pharmacokinetics will be evaluated, and that will be compared to the same situation but without the challenge as well as with the intramuscular administration of adrenaline.

And on timing, Frank, yes, our guidance on timing is that we expect top-line data from that study. either at the end of this quarter or early in Q4.

Okay, great. And then maybe on Anifilm, we talked about Libervant and the Salesforce, and you talked about a lot of pre-commercial efforts on Anifilm, but can you help us segment? Maybe you talked about the higher prescribers, but is this kind of a KOL mindset where it's very concentrated, or is this really... really a broad population, you know, like what percentage is the high prescribers? And I'm just trying to get a feel for how doable this is for a company your size and, you know, what goes into the discussion or strategy of looking to a bigger partner and just turn the desk a little bit, these prescribers, and what kind of sales force they would require. Thank you.

Sure, I'll let Sherry take that.

Thanks for the question. I greatly appreciate it. Based on the significant experience I have in this market, this is a well-worn path, right? We know how many reps it would take to reach those high desktop prescribers. And we'll start our HCP targeting and rate sizing Salesforce work in early 2025. I think that when you think about this market, it is an It is spread over multiple specialties. However, the high prescribers are concentrated in allergists and pediatricians. And so we feel very good about the opportunity we have to really penetrate those high prescribing allergists and pediatricians, and that will be our key focus upon launch. Thank you.

Thank you.

Our next question, coming from the line-up, back from Tel Aviv, from H.C. Renright. Ilan, it's open.

Hi, thanks very much for taking my questions.

Firstly, with respect to Anafilm, I was wondering if you could provide us with some more detail on what you plan to discuss at the upcoming showcase event, and in particular, if you're going to discuss ways in which you're going to differentiate anafilm from nefi assuming those products are both on the market simultaneously particularly with respect to the overall marketing message that you expect to utilize and also if you could comment at all you know assuming you're comfortable doing so to what extent do you believe you might be able to utilize a more efficient you know smaller commercial footprint to support the commercialization of anafilm versus what conceivably would be necessary for NEFI. Thanks.

Thanks, Ram.

So I will, we as a team here, we'll try to make sure we address all of your, all parts of your question, but if I miss one, please let me know. First, on our upcoming Investor Day, as and this may be underappreciated based on how much we've talked about it, but when we talk about our Adreniverse epinephrine prodrug platform, Anifilm actually came out of that work, right? So we will discuss Anifilm at the investor event, but I'm going to pass it over to Dr. Wargacki for a second here, and he can tell you a little bit more about what we're really excited to talk about at that investor event outside of Anisome. Thanks, Dan.

Yeah, so with the Adrenaverse platform, we learned a lot of stuff in the genesis of Anisome. And what we've done is we've progressed that through now to expand that technology. And we're really excited to come talk to everybody here shortly. about the progression we've done on the non-clinical front and securing our intellectual property as we prepare for our interaction with the agency at the end of the year.

Yeah, so the plug I'll put in is make sure you attend. We think it'll be worth everyone's time. In terms of the differentiation of Anifilm versus NAPI, I'm going to pass it over to Sherry in a second here, but on that in particular, just at a macro level, we think, we believe we are very differentiated Nessie. So we don't see ourselves in any way as being a product that will have an issue separating ourselves. And I'll let Sherry walk you through some of the highlights from her perspective.

Again, thank you for that question. We've spent a great deal of time conducting market research to understand what our key competitive advantages are in the minds of physicians and patients. And as I mentioned earlier, the unmet needs in this market are well known, well articulated. Anafilm offers such a unique competitive advantage in terms of addressing those needs. The beauty of Anafilm is the simplicity of Anafilm. We know that based on our data, it works as quickly and as safely as the gold standard EpiPen. Next, you don't have a needle and there is no device. Third, it's orally delivered. That is unmatched. And it has been a desire for at least the last two decades, based on my experience, is that to have an orally delivered product is a game changer in treating the patient with severe allergies and anaphylaxis. We know from our research, and Dan had mentioned earlier in his comments about our ability to better withstand heat, withstand excursions, excuse me, cold heat, washing machines, et cetera. But perhaps most importantly, and if you take nothing else away from this, it is the one and only epinephrine product that can fit into any lifestyle. And it doesn't require an active carry decision. So it fits and can always be kept in a wallet, a small change purse. in the credit card holder that you put on the back of your phone. So I believe, based on my experiences in this therapeutic area, we will have the best form of epinephrine upon approval by FDA for patients and caregivers alike.

Thanks, Sherry. And Ron, I think the last part of your question was really around sales coverage and distribution, right? How are we thinking about that? And I think you mentioned a more efficient, smaller footprint. As I put in my prepared comments, I think you hit the nail on the head, so to speak. When I look at where we are right now with $90 million in the bank as of June 30th and the progression of our programs versus where we were two years ago, I am ecstatic with what we have done. Now the task is making sure that we are able to bring the product to all patients and that we are able to do that efficiently. We clearly, at this time, don't plan on being a PCP call point-based sales force. So the efforts that we are focused on, as Sherry walked you through, are very targeted and they're very specific to the high prescribers. As I mentioned in my prepared comments, we do have some inbound interest that we're walking through. And as we get closer to our launch, we will look at how do we cover the entire market to make sure we maximize patients' ability to get the product.

Great.

And then just two very quick additional ones. I was wondering if Ernie could comment on the components driving the updates to 2024 top-line guidance, and in particular, wanted clarity on two aspects of this. One is the extent to which the revenue reported in the second quarter uh was effectively you know non-cash impacting because of what you disclosed in the press release were uh effectively agreement terminations and uh recognition of deferred revenue and also when we looked at the updated guidance number how much of that is being driven by uh improved expectations for organic organic growth of underlying revenue streams, like, for example, the royalties that you expect to receive from partners on partnered products?

Hi, Ram. Thank you. Good to talk to you. So, the guidance for 2024, the revenue is increased because of the deferred revenue recognition. due to the terminations of the two agreements. As we mentioned back in May, we went through a strategic review to focus on, so we were able to focus our time not only on profitable products, but also from a long-term perspective, but also from a time allocation resources of being able to focus both on Antifilm and on the expanded launch now of Lieberman. So the revenue guidance for the year does include those terminations. They, as you mentioned, they are non-cash items. We actually received that cash back in the 21-22 timeframe. So that's cash that we had. And now it's just a non-cash recognition of that When we look at our, again, the guidance for the year, we've taken those into account. When we look at our demand for Suboxone for the remainder of the year, we see that increasing from the levels that we've seen in the first half of the year. And then from an EBITDA perspective, we have built in now, which was not in our prior guidance, was the Lieberman launch cost. that we had and some additional spending, the timing of spending on the pre-commercial spend for anafilm. So all total, the revised guidance includes the recognition of deferred revenue, timing of suboxone for the remainder of the year on an EBITDA basis, timing of the LibraBand launch cost, and also some commercial spend, pre-commercial spend for anafilm.

So, Ron, the only thing I'd add to what Ernie said is if you back away from the ins and outs that Ernie walked you through, we're right where we wanted to be, right? The investment dollars we have are going to commercial and to the NFL development, and we are on track with all of the expectations that we have set over the last two quarters.

Great. Thank you very much.

Thank you. Now, next question coming from Delana. Thomas Lan with Lake Street Securities. Your line is open.

Great. Thanks for taking the questions. Dan, in the press release, you mentioned that you'll be submitting for the 6- to 12-year-old age bracket for LiberVant. What data do you have or do you need to get to enable that submission to go into FDA?

Yeah, we did that work years ago, as Thomas, you probably know. So that is strictly a paper exercise at this point.

Okay, got it. And then for the investor day coming up and maybe some of the unveiling around the Adreniverse opportunity, I'm trying to interpret the press release. Can I read into that that you'll be unveiling additional products beyond AQST 108, or is it more of a 108-focused presentation?

Yes. Our plan is to, we know we have continued to talk about Adreniverse and 108 without giving a lot of detail to you, and we appreciate everyone's patience. As Steve mentioned before, intellectual property, being in position is very important before you have those days. So one of the things we'll do, as Steve mentioned, is walk you through the science, because I don't think we've given you a fair view on why we're so excited about it. We will walk through the specific indication for 108, which we haven't given you yet. But in that discussion, we believe you will walk away seeing that while we're announcing 108 in an indication, there are multiple programs that could come after 108.

Great, and then just one question, just to follow up on something you said, Dan, in response to another question, that you had some inbound interest in Anafilm. Is that from a commercial partnering perspective or maybe something broader like an acquisition of the entire product?

Yeah, it's been across the board. So as we get closer and other companies in our space have more of an eye towards where we are and what's happening, we've had inquiries that have spanned the spectrum.

Got it. Appreciate you taking the question. Thank you. Thanks, Thomas.

Thank you. And our next question coming from the lineup, Jason Butler with Citizens JMP. Hi.

Thanks for taking the question. I just wanted to come back to the anafilm pediatric study. Given that you've already had dialogue with FDA about the design of the study, what's the gating factor to starting the study? And I guess that's a different way. What is it that you need to get from the pre-NDA meeting before you start that study?

I'll let Carl take that one. Thanks for the question. Really, it's making sure that we have alignment with the agency that the adult data set meets muster, and we agree on using those data to act as a toll gate for starting a pediatric program. So that's really one of the critical questions we're going to secure out of the pre-NDA meeting.

Okay, thank you.

Thank you. And our next question, coming from the line-off, Gary Neckman with Raymond James,

Hey, good morning, guys. So I know you still have to meet with FDA on anafilm in the fourth quarter, but are you anticipating an adcom for anafilm like NEFI had, or do you think with all your conversations with FDA and supportive studies, that wouldn't be necessary? And since NEFI could get approved on October 2nd, you know, just what do you think the read-through is there for you guys from a regulatory standpoint?

Yeah, I'll take your second question first, and then I'll hand it over to Carl to talk about his views on the adcom. It's always tricky to look at someone else's application and have a read-through to your program, right? So our engagement with the FDA has been very open, transparent from our perspective, consistent, and supportive of what we are looking to accomplish. I haven't been in the discussions that our competitor has had. So I think we're all looking to see on October 2nd how their product fares and whether, if they don't get approval, whether that's related to something that is specific to their product or something that is in the way they've interacted with the FDA. We just don't have any insight into that. In terms of the adcom, I'll let Carl give you his thoughts.

Yeah, no, thanks, Dan. Look, we believe that the program continues down a path of declining risk, and whether or not the division wants to secure counsel from the advisory committee, that is a decision that they have to make. I can't try and get inside the FDA's head, but I do believe that no matter what, we continue to go down this path of declining risk, and that's hopefully in a position of decreasing risk for an outcome as well. But of course, I can't speak for the FDA.

Okay. And then just, you know, with LiberBand, as you're building out that infrastructure a little bit, just talk about how you'll be able to leverage that effort potentially for anafilm, where there's going to be some overlap. And with respect to the inbound interest on anafilm, you know, I would imagine that it more likely to be for a primary care, someone who has a primary care capability, but maybe you could just elaborate on that a little bit, Dan.

Yeah. For whatever reason, Gary, I'll start with your second question again here. So, of course, primary care would be an interesting addition to our capabilities for Annafilm. It's early days in terms of any discussions that we're having, so my view would be, it will be orders of time before we have a view on what we will or won't do with someone else on the NFL. In terms of Liberman, of course, there are some really nice infrastructure pieces that do tie to NFL. I'll let Sherry give you her thoughts on some of those infrastructure overlaps.

Yes, obviously, it It's important. It'll start to lay a foundation for all of our commercial activities between Salesforce, marketing. We'll give us synergies in commercial operations. So we feel strongly that this is a really nice start for us as we prepare for the launch of Anafilm as well.

Okay, great. Thank you very much.

Thank you. And our next question, coming from the lineup, James Malloy with Alliance Global Partners. Yolanda Sullivan.

Hey, guys. Thank you very much for taking my questions. Just a quick question for Ernie just to clarify as well. So the updated guidance top line does include the $10 million one-timer. So excluding that for top line, should we just stay with the prior guidance on both those items as a more sort of cash? driven EBITDA and top line?

Hi, Jim. So again, the amount of the deferred revenue that was recognized was non-cash. We got that cash two years ago. So that is included in the revised guidance for 2024. That does contribute to EBITDA But if your question is about annualizing our results, or I don't know if that's exactly what you're asking, there will be some increased expenses as we get into the second half of the year around the Lieberman launch activities, some increased pre-commercial spend for anafilm, in addition to some other timing issues around revenue and expenses. So I think backing out the one-time revenue that is included in both revenue and contributes to EBITDA, you could get to another number. That's not something we give.

Thank you. That actually ties in with the next question, too. the R&D and G&A in the current quarter. Is that the number we should expect going forward, or we just paid any material changes up or down on those?

Well, again, some of these expenses we would expect to increase a little bit in the second part of the year, R&D and annualizing it. Remember that we do have some of these studies that are coming to a conclusion in the next the second part of the year. In addition, there is some of the selling expenses that is included in SG&A around the Lieberman expanded launch and the pre-commercial spend for anafilm would be embedded in those numbers. And all of that is included in our guidance for the year.

All right, thank you. I have a question for Dan. Thank you, Ernie. The topical show, could you walk through the Phase 2 trial design? And one of the things you guys talk about is the Adrenaverse, the billion-dollar opportunity. Could you walk through what sort of the big pillars of that billion-dollar opportunity could be?

Jim, I want to make sure you attend our investor day.

So I'm going to give you the teaser that that is exactly some of the things you'll hear at our investor day in the coming months. So we look forward to walking through 108, the indication that we're seeing, and some of our thoughts on what the Phase 2A will look like.

I'll be there with bells on.

Could you walk through the 108 topical gel Phase 2 trial design, please?

That's, Jim, and maybe I wasn't clear, so my apologies.

We're not providing that ahead of the investor day. That is one of the things we want to share with everyone in the context of our science, our program, and where we're going. And walking through that today would be ahead of all the things we need to share with you.

Honestly, my apologies for missing that answer. And then we'll also, on the R&D day, we talked about the number of reps. for the Anafilm self-launch, if it should indeed self-launch. And could you walk through, again, maybe this will be an R&D day as well, the go-no-go on a partner versus self-launch?

Yeah, yeah.

Yeah, we will, of course.

Look, Anafilm is the center theme of our company at this time, right? So we, of course, in the Investor Day, we'll start with any updates we have on Anafilm anything that we think is meaningful to share and how it ties to our Adreniverse technology. In terms of the sales force, I think Sherry gave you her thoughts before and her timing on how we go from where we are today to a very specific plan. Just one of the things I think is important that Sherry said is that this is a well-worn path. She's done it before. She understands it. So I don't think there'll be any surprises there. In terms of any distribution agreements or alignment with other companies, just to make sure I've clarified that, where we are today is we've had inbound inquiries. We are just beginning to think about what type of arrangement we may or may not want to have. I would say it is not imminent, nor do we want it to be imminent, that something like develop as will Sherry's plan, and then we'll know exactly as a company where we want to place our bets, so to speak.

Thank you. I'm showing up for the questions at this time. I will now turn the call back over to Dan Barber for any closing remarks.

Thank you, Olivia. Well, of course, as always, we appreciate your time this morning. As you heard, we are truly excited about the progress the company has made over the last year of We're confident in our anafilm development program. We're ready to expand our sales efforts for Lieberwind in the two- to five-year-old space. And we have meaningful in-house technology to refill our pipeline. This is a great place to be. We hope you have a great rest of your day, and we look forward to our future interactions.

Ladies and gentlemen, that's our conference for today. Thank you for your participation. You may now disconnect.