Aquestive Therapeutics, Inc. Q3 FY2024 Earnings Call

Good morning, and welcome to the Aquestive Therapeutics Third Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. 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 Westwicke Investor Relations. You may begin.

Thank you, operator. Good morning, and welcome to today's call. On today's call, I'm joined by Dan Barber, Chief Executive Officer, and Ernie Toth, Chief Financial Officer. We're going to provide an overview of recent business developments and performance for the third quarter of 2024, followed by a Q&A session. During the Q&A session, the team will be joined by Dr. Carl Kraus, Chief Medical Officer; Dr. Steve Wargacki, Chief Science Officer; and Sherry Korczynski, 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 closed yesterday. In addition, a recording of today's call will be made available on Aquestive's website within the Investors section shortly following the conclusion of this call. To remind you, the Aquestive team will be discussing some non-GAAP financial measures this morning as part of a review of third quarter 2024 results. A description of these measures, along with a reconciliation to GAAP can be found in the earnings release issued yesterday, which is posted on the Investors section of Aquestive'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 and Exchange Commission on November 4, 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 Aquestive 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. Good morning, everyone, and thank you for joining us today. I am pleased to say that we have once again made tremendous progress since our last earnings call in early August. This is truly an exciting time for the Aquestive team. In the last three months, we have announced a major new product candidate from our Adrenaverse pipeline program with AQST-108 for alopecia areata, expanded our Libervant launch in the two to five-year-old space by adding retail distribution and a full sales team, completed what we believe to be our final adult study for our Anaphylm program, and submitted our pre-NDA briefing book to the FDA in anticipation of a fourth quarter pre-NDA meeting. We believe this work has set us up well for continued progress in 2025 and beyond. Now let's focus on Anaphylm. We recently announced the top-line results from our oral allergy syndrome challenge study, which we refer to as our OASIS study. The OASIS study was requested by the FDA to provide clinical data showing that epinephrine plasma concentrations following dosing of Anaphylm are similar with and without the presence of an allergen. As you have seen from our reported results, we have confirmed that the absorption profile of Anaphylm remains the same whether subjects have been exposed to an allergen or not. Importantly, the most meaningful part of this study was our symptom resolution data. During the OASIS study, we tracked the time to symptom resolution without Anaphylm administration and with Anaphylm administration. As a reminder, symptoms included swelling of the lips, tongue, and throat, along with nasal congestion and systemic symptoms, such as GI tract discomfort as well as tingling. When no Anaphylm was administered, the median time to full symptom resolution was 74 minutes. When Anaphylm was administered, this dropped to 12 minutes. In fact, there are three numbers that resonate with me from this study: 2, 5, and 12. The data showed that subjects started seeing symptom resolution two minutes after the administration of Anaphylm. All swelling symptoms were resolved within five minutes, and the median time to full symptom resolution was 12 minutes. These are truly remarkable results that make us wonder if treating at the site of symptoms may bring additional benefit to patients. This is something we hope to understand more as we continue to progress. One of the questions that we have heard from the allergy community is how to correlate this data to anaphylaxis. I have discussed this with our medical experts, and we believe that it is important to note the systemic symptoms from our OASIS study, as well as the fact that up to 10% of OAS reactions progress into more severe allergic reactions with up to 2% resulting in anaphylaxis. This gives us confidence that the OASIS study increases our understanding of how Anaphylm works in the presence of edema. I am also excited to announce today that we received the first part of feedback from our FDA pre-NDA process. We had previously submitted our chemistry, manufacturing, and controls pre-NDA questions to the FDA. We recently received a written response from the FDA on all our questions, and I am pleased to say we found the FDA's responses supportive of filing our application. I am also pleased to confirm that we have submitted our Anaphylm film clinical briefing book to the FDA for review ahead of our pre-NDA meeting. While we are not disclosing the specific date of the meeting, we remain on track to complete this meeting before the end of the year. We plan on sharing our findings from this meeting once we have final FDA meeting minutes, if not sooner. If the FDA is supportive of our plans for submitting our NDA, then we will immediately start our pediatric pharmacokinetic or PK study. This is a single-dose study in children and adolescents between the ages of approximately 7 to 17 years of age. We expect to enroll between 18 and 24 subjects. This will be a multi-site study, and each subject will be administered one dose of Anaphylm. Blood draws will be taken, and then the subject will go home. This is a similar study to the one conducted by the recently approved epinephrine nasal spray. Based on the anticipated positive FDA feedback and the expected pace of enrollment in our pediatric study, we continue to plan for a Q1 2025 filing and a Q1 2026 launch of Anaphylm, if approved by the FDA. Now turning to our commercial capabilities, they continue to grow on a daily basis. Our Libervant launch in the two to five-year-old space has helped us build infrastructure around pharmacovigilance, medical affairs, market access, and sales management. This has been particularly helpful when it comes to market access, as we know that a successful launch must include quick wins with payers. That is why I am pleased to share with you today that we now have Medicaid coverage of Libervant in all 50 states, and we recently completed agreements with two of the top three PBMs and are in negotiations with the third. I am also pleased to share that as of the first week of October, Libervant was available through retail distribution on a national basis, and we have a dozen sales colleagues spending their days educating physicians on the benefits of Libervant for the indicated patient population. This has resulted in a steady increase in prescriptions between September and October, and we are working hard to continue this trend. We will take these learnings and apply them to our Anaphylm commercial launch, if approved by the FDA. We have continued to increase our non-promotional efforts in the anaphylaxis space. These efforts will be an area of increased focus as we move towards submission of our NDA for Anaphylm. Now, let's turn to AQST-108, our epinephrine prodrug topical gel. As you heard during our Investor Day on September 27, we believe that the commercial opportunity for AQST-108 could be equal to or larger than Anaphylm. Our goal for 2025 is to conduct a Phase 2a study that will provide additional clinical data supporting our view on the benefits of AQST-108 for alopecia areata. This week, we submitted our briefing book to the FDA for our pre-IND meeting, and we continue to anticipate concluding this activity before the end of the year. We will then open our IND and begin the Phase 2a study. As a reminder, our initial study will focus on determining if we detect a meaningful change from baseline in the Severity of Alopecia Tool score or SALT score for enrolled subjects. We believe patient unmet needs in alopecia areata remain high, the existing JAK inhibitor treatment products in this space worked systemically and come with a significant black box warning. We anticipate AQST-108 will only be absorbed locally and may provide an opportunity for treatment without the adverse events associated with JAK inhibitors. In conclusion, we continue to focus on growing the company across multiple platforms. This includes continuing to advance Anaphylm towards NDA submission, continuing to grow our Libervant prescriptions in the two to five-year-old space, and continuing to advance our AQST-108 program for the treatment of alopecia areata. This truly remains an exciting time for the company, the patients it serves and seeks to serve, and all our stakeholders. 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 third quarter 2024 results in the Q&A. During the third quarter, we continued to execute on our strategy to support the further development of Anaphylm, our lead product candidate that has no needle, is not a device, is orally administered, and is easy to carry. We continued our pre-commercial launch activities for Anaphylm to increase awareness among physicians, payers, and the advocacy community. On April 26 of this year, we received approval for Libervant for patients ages between two and five years. We have expanded our launch for this pediatric age group with broadening national retail distribution, expanded insurance coverage, and additional commercial infrastructure, including a national sales team of 12 individuals in the third quarter to support the continued growth of this product. Now let's turn to the third quarter results. Total revenues increased to $13.5 million in the third quarter of 2024 from $13 million in the third quarter of 2023. This 4% increase in revenue was primarily driven by an increase in license and royalty revenue due to the recognition of deferred revenue from the termination of a licensing and supply agreement, partially offset by decreases in manufacture and supply revenue. Excluding this one-time recognition of deferred revenue, total revenues decreased by $0.7 million or 5% year-over-year. Manufacture and supply revenue decreased to $10.7 million in the third quarter of 2024 from $11.4 million in the third quarter of 2023, primarily due to the timing of Suboxone and Sympazan revenues, partially offset by an increase in Ondif revenue. Co-development and research fees in the third quarter 2024 remained relatively unchanged compared to the same period in the prior year. Total revenues increased to $45.7 million for the nine months ended September 30, 2024, from $37.4 million for the nine months ended September 30, 2023. This 22% 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 license and supply agreements, increases in co-development and research fees, partially offset by decreases in manufacture and supply revenue. Excluding this one-time recognition of deferred revenue, total revenues decreased by $3.2 million or 9% year-over-year. Research and development expenses increased to $5.3 million in the third quarter 2024 from $3.2 million in the third quarter of 2023. The increase in research and development expenses was primarily due to the clinical trial cost and product research expenses associated with the continued advancement of our Anaphylm development program and an increase in share-based compensation. Research and development expenses increased to $15.4 million for the nine months ended September 30, 2024, from $10.2 million for the nine months ended September 30, 2023. The increase in research and development expenses was primarily due to the clinical trial costs associated with the continued advancement of the Anaphylm and AQST-108 programs as well as an increase in personnel costs and share-based compensation. Selling, general and administrative expenses increased to $12.1 million for the third quarter of 2024 from $7.4 million in the third quarter of 2023. This increase was partially driven by a $1.5 million year-over-year change in the allocation of expenses of manufactured and supply costs. Given this year-over-year change, the company expects to continue to see a positive benefit in gross margin, offset by somewhat higher selling, general and administrative expenses. Excluding this item, increases in SG&A expenses were primarily driven by increased commercial spending and regulatory fees related to the approval of Libervant and the commercial preparations for Anaphylm. Selling, general and administrative expenses increased to $34.2 million for the nine months ended September 30, 2024, from $22.2 million for the nine months ended September 30, 2023. The increase included severance costs of $1.1 million incurred in the first three months of the year, and $4.1 million due to the year-over-year change in the allocation of manufacturer and supply costs. The remainder of the increase is largely driven by higher commercial spending and regulatory fees related to the approval of Libervant, and the commercial preparations for Anaphylm, partially offset by lower legal fees and decreases in other general and administrative costs, including insurance fees. Aquestive's net loss for the third quarter 2024 was $11.5 million or $0.13 for both basic and diluted loss per share compared to the net loss for the third quarter of 2023 of $2 million or $0.03 for both basic and diluted loss per share. The increase in net loss was primarily driven by increases in selling, general and administrative expenses, research and development expenses, noncash interest expenses related to the amortization of the debt and royalty obligation discounts, and decreases in interest income and other income, partially offset by increases in revenues and decreases in manufacturing and supply expenses. Aquestive's net loss for the nine months ended September 30, 2024, was $27.1 million or $0.32 for both basic and diluted loss per share compared to the net income for the nine months ended September 30, 2023, of $0.2 million or $0.00 for both basic and diluted loss per share. The increase in net loss was primarily driven by the items previously mentioned. Non-GAAP adjusted EBITDA loss was $6.6 million in the third quarter of 2024 compared to a non-GAAP adjusted EBITDA loss of $1.3 million in the third quarter of 2023. Non-GAAP adjusted EBITDA loss, excluding adjusted R&D expenses, was $1.6 million in the third quarter 2024 compared to a non-GAAP adjusted EBITDA income, excluding R&D expenses, of $1.7 million in the third quarter of 2023. Non-GAAP adjusted EBITDA loss was $11.9 million for the nine months ended September 30, 2024, compared to a non-GAAP adjusted EBITDA loss of $8.5 million for the nine months ended September 30, 2023. Non-GAAP adjusted EBITDA income, excluding adjusted R&D expenses, was $2.6 million for the nine months ended September 30, 2024, compared to a non-GAAP adjusted EBITDA income, excluding R&D expenses, of $1.3 million for the nine months ended September 30, 2023. Cash and cash equivalents were $77.9 million as of September 30, 2024. During the third quarter, we did not sell any shares under our ATM facility. We continue our focus in 2024 on the advancement of Anaphylm, epinephrine, and AQST-108 programs, and continued commercialization of Libervant for patients ages between two and five years old. As outlined in the press release issued last night after market close, our outlook for 2024 remains unchanged at total revenues of approximately $57 million to $60 million and non-GAAP adjusted EBITDA loss of approximately $20 million to $23 million. Our guidance for 2024 includes, for Anaphylm, conclusion of the supportive studies, engaging the FDA in a pre-NDA meeting this quarter, commencing a pediatric study, and pre-commercial activities for a planned launch in the first quarter of 2026, if approved by the FDA. Our guidance also includes continued expansion of the commercial launch of Libervant for patients ages between two and five and the advancement of our AQST-108, epinephrine topical gel program. With that, I will now turn the line back to the operator to open the line for questions.

Our first question comes from Roanna Ruiz with Leerink Partners. You may proceed.

Hi, good morning, everyone. Two questions from me. First one for Anaphylm and the clinical briefing book. I was curious what topics you seek to highlight most to the FDA? And if you're able to share what were some of your main goals when assembling the data for this briefing book?

Good morning, Roanna, do you have a second question? Or was that...

Second question was on Libervant. So I was also curious how did the initial negotiations go with the first two PBMs? And if you have any color around that?

Sure. Let me address the Anaphylm question first, and then I'll pass it over to Sherry for her insights on the negotiations. I might also share a comment or two myself. Regarding the clinical briefing book for Anaphylm, we are exactly where we aimed to be. Our objective for that meeting is straightforward. We have completed all the requirements set by the FDA to date. We believe that the results we've generated are positive, as we've communicated to the public. We are now waiting for the FDA to provide us with feedback on the completeness of our submission. We feel well prepared, confident that we've put forth our best efforts, and are looking forward to the upcoming meeting. Concerning Libervant and the negotiations, I am also very pleased with the progress that Sherry and her team have made in positioning us effectively. I'll let her explain what she's observing so far.

Thanks, Dan. Hi, Roanna, how are you? I appreciate the question. Our negotiations with our account team have been very positive so far. We're finding that at both the state Medicaid level and with commercial PBMs, as long as the product is prescribed for patients ages two to five, Libervant is being covered for these patients. We're also expanding our reach into downstream payers. This trend is consistent, indicating a significant unmet need in the market. For patients ages two to five, this is viewed by physicians and payers as a breakthrough.

Got it. That's great. And one quick follow-up for Libervant. I noticed you mentioned you have Medicaid coverage now. When should we expect that to start to impact prescribing going forward?

I want to remind everyone to consider the two to five-year-old markets we've discussed previously. From a financial and scale perspective, this will have limited scope and will shape what we can achieve in 2025 for Aquestive. Our focus is on enhancing coverage and encouraging patients to choose our product, which we believe is superior to current options for this age group, ultimately aiming for growth in our prescriptions. I am confident we are on the right path now that our national sales force has been established for about three to four weeks.

Four weeks, yes.

And we're really excited by the feedback we're getting so far. So while it will be financially small until we are able to access the entire market in the years to come, we think the learnings we're getting are the places to focus on as we go forward.

That’s great. Thanks.

Thank you. Our next question comes from David Amsellem with Piper Sandler. You may proceed.

Thanks. So I just have a couple. First, regarding the NDA for Anaphylm, are you going to assume or at least prepare for an Ad Comm, particularly given the experience with neffy, how are you thinking about that or how should we think about that? That's number one. Number two, can you just remind us how you're thinking about the initial sales force for Anaphylm? I'm specifically interested in, how are you thinking about prescriber concentration along EpiPen and what that means in terms of your target audience and initial sales force headcount? And then lastly, Libervant question, which is as you have executed on regarding payers and obviously launching into that two to five segment, is it more likely or just as likely that you're going to continue to keep rights to the product and ultimately, over the long term, launch it in a wider population? In other words, is this asset core to the overall mission of Aquestive? Thank you.

Sure. Good morning, David. I believe I've addressed your three questions. Let me answer them in reverse order for fun. First, I'll respond to your question about Libervant. After that, I'll hand it over to Sherry to discuss the concentration of prescribers for Anaphylm, and Carl can provide his insights on the Ad Comm. Your question about Libervant is important as it relates to our company's objectives. Over the past few years, we've been consistently building a more valuable company. We have three products that we believe hold significant value: Anaphylm, 108, and Libervant, and we will continue to focus on maximizing their value for all stakeholders, including both patients and shareholders. Currently, we feel very well positioned with Libervant. We're able to launch into a specific area, set up all necessary infrastructure, and gather insights for Anaphylm, which benefits us greatly. At this moment, our strategy for Libervant involves focusing on the two to five-year-old market. When the chance arises to expand into the six and up segment, we definitely want to be prepared to launch. Regarding all our products, whether we manage everything in-house or collaborate with other sales forces will depend on what best supports the growth of the company. We will always prioritize what is best for the company and shareholders across all our assets. Now, let me turn it over to Sherry to address the questions about Anaphylm specifically.

Hi, David, thank you for your question. It's an exciting time at Aquestive regarding our commercial readiness. We have plans in place to ensure a successful launch. Specifically for our sales force, we know that allergists are the most productive specialty, prescribing about 200 epinephrine prescriptions annually. Therefore, our sales team's focus will be on those allergists and high decile prescribing primary care physicians, otolaryngologists, nurse practitioners, physician assistants, and pediatricians. With our in-house expertise and a sales force of approximately 100 representatives, we believe we can effectively engage those high-prescribing physicians. Does that answer your question?

Yeah, that's helpful. Thank you.

And Carl, can you give your view on the Ad Comm.

Sure. Happy to. Good morning. So obviously, I can't predict what the FDA will do. I can say that we have risk mitigated this program tremendously. All of our primary and secondary endpoints have been met for all of our studies, whether it's our pivotal or self-administration or temperature/pH and most recently, the Oral Anaphylm Symptom Intervention Study, the OASIS study. We're certainly considering the possibility, and we'll be prepared for this to become an avenue that FDA pursues. But right now, we don't have insight into the FDA's thinking.

Okay. Appreciate all the color. Thanks everyone.

Thank you. Our next question comes from Francois Brisebois with Oppenheimer. You may proceed.

Hey, thanks for the question. So I was just wondering, you touched on the allergen test and the study. And I was just trying to figure out the importance of efficacy here based on this study, just in terms of real-world adoption with doctors. And just maybe a little more if you could push on the potential importance here of treating at the site to see benefit. Is this something that can help in the real world just because like a lot of launches, docs will kind of wait and see sometimes how things work? And I was just wondering if the OAS study is something that should really create some buzz with the medical community? Thank you.

Yeah. Good morning, Frank. And I'll pass it over to Carl in a second to walk through your full question. But I have to tell you, from my perspective, we're incredibly excited to have this data. We think this is a differentiator. As far as we're aware, we're the only ones with data like this, and we absolutely from the recent interactions at several conferences with physicians think they're paying attention. But with that, I'll let Carl answer your specific questions.

Yeah. No, that's a good question. And I can tell you, both anecdotally and meeting with a number of KOLs, there was widespread support that these data do indicate delivery of epinephrine into the oral cavity probably does hold promise when you think about interrupting the anaphylactic cycle or certainly localized reactions in the oral cavity. I hadn't realized this, but many allergists actually use the direct spraying of epinephrine into the back of the oral cavity when these symptoms do arise as a way of trying to get more drug at the site of reaction. Also worth noting that we do have, for the first time, an oral physiologic change model that hadn't been developed before, and those changes did not impact Anaphylm absorption, as Dan said earlier, we certainly shrink time to symptom resolution. All of those in my mind certainly underscore the fact that we now have a potentially predictive model that one could use and think about when it comes to evaluating anaphylaxis. So useful for many different regards.

Thank you. Please continue.

I want to mention that we recently released these results, less than 10 days ago, and we didn't have the chance to hold a conference with this community at that time. We appreciate you bringing this up because it's a significant point for our program. Now, I believe you had another question?

Great. No, I think it makes a lot of sense. I just wanted to clarify something. The percentage you mentioned, I think, was 10% for those who progressed with the allergen test. You also spoke about a percentage in terms of patients who progressed to anaphylaxis in the real world. Could you please repeat that?

Sure. In my prepared remarks, I noted that in oral allergy syndrome, which was the model we used for the study, a certain percentage of patients experiencing an OAS reaction do progress to anaphylaxis. The literature states that about 10%, specifically between 9% and 10%, have a more severe allergic reaction that advances from their initial response, and 2% actually reach anaphylaxis. We are simply emphasizing that OAS exists along the spectrum of anaphylaxis.

Okay. It's 2% of the total? Not 2% of that 10% sort of?

It's 2% of the total. That's correct.

Okay. Perfect. Thank you.

Thank you. Our next question comes from Raghuram Selvaraju with HC Wainwright & Co. You may proceed.

Thanks so much for taking my question and congrats on all the progress. Can you hear me?

We can hear you just fine, Ram.

Okay. Very quickly. With respect to Libervant, I was wondering if you could comment on two things. One is the overall pricing paradigm that currently prevails with respect to VALTOCO and what you believe is likely to be the implication for the future introduction of Libervant into the adult population? Any kind of thoughts there? Any granularity you can provide to us regarding where the pricing levels are? And secondly, you mentioned in the press release that you will be filing for approval of Libervant in that population ahead of the expiration of orphan drug exclusivity on VALTOCO. But I wanted to better understand what that means? How far in advance of the expiration of exclusivity in early 2027 do you expect to file? And what are the likely implications of that with respect to the FDA path forward? Thanks.

Thank you, Ram. I'll begin with the question about the Libervant filing, which is primarily a technical matter. We need to submit our administrative filing six months before the approval date we are requesting. We plan to time this based on when the ODE exclusivity ends. Additionally, we still have to complete the approval process for the 6 to 11 age group since we have been focused on other priorities. Most of this will be handled behind the scenes as it involves technical FDA paperwork. However, we are committed to ensuring that when we are permitted to sell to the six and older population, we will be ready and approved to enter the market. Regarding pricing, we are discovering that this is a rescue product for epilepsy, primarily in pediatrics, and we have not encountered any major pricing or coverage obstacles. Even in cases with prior authorizations during the contracting phase, we have not found those to be problematic. The payer community seems to recognize the necessity of this product and is responding accordingly. We currently have no reason to believe that pricing dynamics will significantly change once we gain access to the entire market.

Okay. That's very helpful. I have a related question regarding Anaphylm. Now that Neffy is available on the market, do you plan to engage in any prescriber outreach or conduct market research to identify the key prescribers or those who frequently prescribe Neffy? I'm curious about those who may not be fully committed to prescribing it. Among those two groups of prescribers, what product features from Anaphylm's profile do you think would be most appealing to them as a precursor to preparing for a full launch of the product?

Sure. In a moment, I will pass it to Sherry to discuss the survey activities we are currently conducting. However, I want to emphasize that one of the benefits of observing a competitor enter this market is the insights we gain. We are closely monitoring the pricing trends, prescriber behaviors and responses, and identifying areas of success and challenges. We firmly believe that this market is not a zero-sum game; the demand for the product is significant. As patients become aware of alternative options, they will seek the best fit for their needs. This directly relates to your question about the characteristics from our survey that we find most promising, which Sherry will elaborate on shortly.

Sure. Hi, Ram, thank you for your questions. It's unusual to launch multiple products that are transformative. However, based on our recent market research, we're finding that physicians are frequently referring to these as game-changers for their patients. This makes sense because this product category addresses a significant unmet need. Anaphylaxis is a condition that can develop quickly and lead to serious consequences. Therefore, it is essential for patients to have an epinephrine product that is easy to use and carry. Our market research indicates that Anaphylm is the most convenient and user-friendly option, with strong efficacy, working swiftly and reliably. In terms of our target patients, we are carefully monitoring the situation, as Dan mentioned. There will always be early adopters among physicians and patients. We expect that those patients with an active prescription for neffy or related devices will be quick to adopt our products. Additionally, we believe that newly diagnosed patients without a prescription will prefer Anaphylm. Lastly, we see potential in the market for patients who have never filled a prescription and currently avoid allergens, as they will also benefit from our product.

Great. Thanks. And very quickly, one last thing with respect to 108. Given the timeline that you've laid out with respect to the IND and initiation of the Phase 2a trial, are we to assume that this effectively falls within the scope of the previous timeline guidance that you provided indicating an expectation that this product could be launched before the end of 2028? Just wanted to make sure that things are still effectively on track relative to what you previously showcased at the Investor Day event?

Yes, Ram. We're very excited and very serious about 108. We've already, as you heard from the comments before in our press release, we've put our briefing book into the FDA. We are ready to file our IND, and we want to get our Phase 2a going. So absolutely on schedule, just like we laid out just a few weeks ago.

Thank you. Our next question comes from Jason Butler with JMP Securities. You may proceed.

Hi, thank you for taking my question. Regarding the meeting with the FDA for Anaphylm, could you share what elements of the product label are still being debated or discussed? What data can you present to the FDA, including the oral allergy challenge study and the pediatric study? Any information that can help differentiate it from neffy would be appreciated. Thank you.

Yeah. Good morning, Jason. I'll hand it over to Carl in a second here. But yes, just in terms of global strategy with a label, like any company in our position, while there will be elements of the label that are just standard, we do believe that we have differentiation in a couple of places, like you mentioned, the OASIS study that could be very interesting. But Carl, I'll let you go a little deeper.

Yeah. No. Jason, thank you for the question. And I completely agree. I think there are elements here that are clearly differentiating. We've created and demonstrated utility with regards to thinking about symptom resolution in a relatively predictive model, right? We're actually introducing allergen into the oral cavity where you typically see allergens introduced in people with food allergies. But with regard to the forthcoming pre-NDA meeting, as Dan said earlier, the overarching intent is to align on the completion of the adult program and march forward with the execution of the pediatric program study. So that is really the intent overall, but we're certainly considering all potential opportunities to include the most recent data as a differentiating element.

Great. And then just a follow-up for Ernie. I understand you're not going to provide guidance for 2025 at this point. But how should we think about the trends for legacy revenues as we exit this year? I'm not considering Libervant or Anaphylm, but rather everything that has driven the other revenue streams up until now. What is the expected duration of those royalty streams or revenue streams? Thanks.

I believe your main question is about Suboxone. As we've mentioned before, it remains a legacy product for us that still generates cash flow and is a significant part of our company. However, we recognize that its future can be uncertain at times due to market competition, and we rely on Indivior for our orders. We anticipate some market dislocation, which will impact us moving forward. Nevertheless, we want to emphasize that it continues to contribute positively to our cash flow. We will factor this into our guidance for 2025.

Okay, great. Thanks for taking the questions.

Thank you. Our next question comes from Thomas Flaten with Lake Street Capital Markets. You may proceed.

Good morning, and thank you for taking the questions. Regarding Ernie, what level of commercial investment is expected for Anaphylm as we look at the cash runway into 2026? Will you have a fully staffed sales force in place by that time, or will the sales force development be more gradual?

What we have previously indicated, Thomas, is that the cash will carry us through 2026. We haven't provided further details on that. However, we can confirm that in 2024 and 2025, this cash will facilitate the expanded launch of Libervant, which will extend into 2025. It also covers all pre-commercial activities for Anaphylm in both years. Additionally, we have stated that we will not be increasing our sales representative force until we receive approval.

Got it. Appreciate that. And is there anything ongoing with respect to trying to overturn the orphan drug exclusivity for Libervant? I know a while back, the major contribution to patient care argument that was trying to be made. Is there anything going on there still?

Yeah, Thomas. We do have, what I guess I would call, back and forth with the FDA. But as you can see from the way we've positioned the company, that is not where we are putting a lot of our energy right now. So our focus is on the next milestone, and next few milestones for Anaphylm. Our focus is on building Libervant 2 to 5, focuses on getting 108 for alopecia areata through the next couple of milestones. And yes, somewhere behind all of that, there is effort with the FDA. But the main place I would focus in terms of that exclusivity is just watching the clock run out.

Good. Appreciate it. Thank you.

Thank you. Our next question comes from Gary Nachman with Raymond James. You may proceed.

Thanks, good morning. So back on Anaphylm, do you still need to get alignment at all specifically on the pediatric study at the FDA meeting or do you feel you have good visibility on the dosing design for that pediatric study that you're going to start soon after the meeting? And then how will you be prepping the NDA while the PED study is ongoing so that you meet the 1Q '25 filing? And in the CMC feedback, anything you still need to do with manufacturing before the filing? Or is that completely buttoned up?

Yeah. Good morning, Gary, I'm glad you brought up the CMC because sometimes from our perspective, because we have such a deep history in CMC, we don't talk about it as much as we should. But that was, in my view, a major win for our organization. And I'll pass it over to Steve who can give you his view on what it means for a major part of the NDA, which, by the way, as you know, I think more than half of CRLs that occur are due to the CMC sections of NDAs.

And thank you, Dan. Gary, yeah, we're really excited about the feedback we got. We were able to align on all of the important features that you just want to present in the best possible way. Having completed all of the work we've needed to do for our filing. But the presentation of that data, the specifications, all of the stability data and things that we're going to use within our NDA and just aligning on exactly how that's presented is a big win to have the cleanest possible filing.

Regarding the preparation of the NDA, it's a significant paperwork task to submit to the FDA. We have now gathered all the necessary information, including CMC data. The work to prepare the NDA is currently underway, and any additional information we collect from this point will be incorporated into the document as we approach filing. As for pediatric alignment, it’s evident from the competitive landscape that pediatric studies are fairly standard across different programs. I'll let Carl share his perspective on this.

Sure. We're looking to have as an adaptive study an interim look at 12 weeks. Presumably, we'll be able to move forward, then we would have a 24-week readout. But if you add that all up, I would obviously think that we're going to be somewhere a little bit north of six months.

Okay, great. Thanks, guys.

Thank you. Our next question comes from James Molloy with Alliance Global Partners. You may proceed.

Hey, guys. Thanks for taking my questions. Just a couple of quick ones. I know that you touched upon whether or not you going to make a decision on partner and a self-launching based on what's best. When do you think you've come to that decision? Is that something that happens post-hopeful approval next year? Or what are the deciding factors for self-launch versus partner? And then on the AQST-108, what is a post-Phase 2a/2b trial timeline look like? I mean, I know that 2028 is the expected launch. Will you walk us through how you get to that, please?

Sure. Good morning, Jim. When it comes to partnerships versus self-launching, I believe it’s important not to view it in a black and white manner. As we build the company and achieve our milestones, we continuously engage with the life sciences community around us. If opportunities arise that can help us grow or reach more patients, we will seize those. If such opportunities are absent, we will proceed on our own. We see this as a spectrum rather than a strict choice between having a partner or self-launching. Our management team excels at maintaining a focus on growth instead of fixating on specific moments related to partnerships versus self-launching. On 108, I think this relates to the question Gary asked earlier. As you will see from the materials, we plan to start Phase 2a in the second quarter of next year. As I mentioned previously, we haven't provided specific guidance on when that might conclude. Carl offered a general timeframe, suggesting it could be around six months. Our plan would typically involve a Phase 2b following that, and then we would proceed to Phase 3. As we advance, we can discuss the transition from Phase 2b to Phase 3 and so on. However, we believe all of this can be completed in a reasonable timeframe for a launch in 2028.

I have a quick follow-up on that. Looking at the timeline you provided from last month, with Phase 2a expected in Q2 '25 and Phase 2b in Q3 '25, it seems to suggest a three-month timeline. Should we anticipate that this might actually take a bit longer, possibly into the fourth quarter?

I would like to highlight, as Carl mentioned during our Investor Day and in our subsequent discussions, that we are considering incorporating adaptive design into our study. This approach would enable us to gather additional insights from a Phase 2b as we progress. I believe there is a slide in our Investor Day presentation that outlines the continuum from Phase 2a to Phase 2b.

Great. Thank you very much for the questions.

Thank you. I would now like to turn the call back over to Dan Barber for any closing remarks.

Thank you, Josh. Well, thank you to everyone for the time this morning. I just want to reiterate the excitement we have about the moment we're in for this company. We believe we have built value across several different areas, and we're focused on continuing to hit our milestones. And as we continue forward, you'll hear us be disciplined about staying focused on those milestones. With that, we appreciate your time, and we will talk to you soon.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.