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Presentation

Operator: Good morning, and welcome to the Aquestive Therapeutics Fourth Quarter and Full Year 2022 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. Instructions will be given at that time. As a reminder, this call is being recorded. I would now like to turn the call over to your host for today’s conference call, Bennett Watson of Westwicke, Investor Relations. You may begin.

Bennett Watson: 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 fourth quarter 2022, followed by a Q&A session. During the Q&A session, the team will be joined by Steve Wargacki, Vice President of R&D; and Ken Marshall, Chief Commercial Officer. As a reminder, the company’s remarks today correspond with the earnings release that was issued after market close 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 its review of fourth quarter and full year 2022 results. A description of these measures, along with a reconciliation to GAAP, can be found in the earnings release issued yesterday, which is posted on the 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 yesterday’s earnings release and in the Risk Factors section and in other sections included in the company’s annual report on Form 10-K to be filed with the Securities and Exchange Commission later this month and in our quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC.

As with any pharmaceutical company with product candidates under development and products being commercialized. There are significant risks and uncertainties with respect to the company’s business and the development, regulatory approval and commercialization of its products and other matters related to operations. The impact of the ongoing COVID-19 pandemic is highly uncertain and cannot be predicted with certainty or clarity. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as the date they 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.

Dan Barber: Thank you, Bennett. The fourth quarter marked the culmination of a seven month run of improvements and execution by the Management team in 2022. I am incredibly proud of the progress the team made in the fourth quarter and quite frankly since the company’s leadership transition occurred in May of last year. In the fourth quarter, the Aquestive team advanced its lead pipeline product, AQST-109, Epinephrine Sublingual Film through a CMC focused end of Phase 2 meeting with the FDA and a separate clinical and regulatory focused end of Phase 2 meeting also with the FDA. Moreover, we completed our registration batches on schedule and plan to have the required 12 months of stability, before the end of 2023. Our commercial collaborations also continued to perform at a high level.

We completed the license of Sympazan to Assertio surpassed 150 million doses of shipped product to multiple licensees, announced early payments to our debt holders to reduce our debt overhang, and ended the fourth quarter with more cash than we had at the end of any other quarter last year. In 2022, we executed on three significant non-dilutive deals that generated over $25 million in cash, significantly streamlined our business to reduce ongoing costs, reduced our ongoing litigation through successfully winning a motion to dismiss in the Sympazan trust case and gained a tentative approval for LIBERVANT, diazepam buccal film. We have also held true to our story. As I said to you during the second quarter earnings call in August, sometimes the simplest stories can be the most compelling.

In my view, a pharmaceutical company with existing revenue and two acute rescue medications under development that both have strong clinical results to-date as well as long patent lives is a simple and compelling story. This remains just as true today, as it was last summer. Now though, it is time to focus on 2023. This is an exciting year for Aquestive and there are several clear milestones that we remain focused on achieving. The first is continuing the rapid progression of AQST-109. We are currently in the clinic and anticipate having additional clinical data in the coming weeks. As we shared in December, this data will help us to determine the reference list of products that we will use in our pivotal study. Once we have the results we need, we will send a revised pivotal protocol to the FDA for its comments.

Once we have received the agency’s comments, we will start our pivotal study. As of today, we continue to guide to a third quarter start to this study with the goal of having a top line readout before the end of 2023. If achieved, this will keep us on track for a mid-2024 NDA submission through the FDA. You will see us continue to be active in the allergy community in 2023. Last month, we participated in the annual conference for the American Academy of Allergy, Asthma and Immunology, more commonly known as AAAAI. As previously disclosed, our Scientific Advisory Board members presented four posters. This conference gave us the opportunity to interact not only with our Scientific Advisory Board, but also advocacy groups and other allergy thought leaders.

We continue to hear the universal message about the significant unmet need for better products for the treatment of anaphylaxis. We also continue to hear that an oral product will likely be well received by the healthcare community and by patients. This year, we will continue to refine and understand the competitive positioning of AQST-109, as the non-injectable product landscape continues to progress. Based on our interactions with the FDA, we continue to believe AQST-109 profile as a distinct competitive advantage among non-injectable products under development. The literature is clear. The guideline for acute therapy and management of anaphylaxis states, and €œthe symptoms of anaphylactic reactions usually begin acutely and may progress very quickly.

Thus, symptoms can deteriorate within minutes€. Our well-respected and published scientific advisor board has also made it clear, speed of absorption matters. And just as importantly, the FDA was clear with us stating, and €œsimilarity to epinephrine PK via autoinjector is preferred€. As you know, autoinjectors have shown a rapid uptake in plasma concentrations, typically resulting in a median Tmax between 10 and 20 minutes. Based on the data from our two completed pharmacokinetic studies, AQST-109 median Tmax of approximately 12 minutes is within this range. We believe that healthcare providers, caregivers, and patients will also view rapid uptake as important. At the same time, we will continue to focus on growing our commercial collaborations and strengthening our balance sheet.

Let’s start with our commercial collaborations. We now have seven significant out licensing collaborations that span six continents. Our collaboration with Hypera in South America has resulted in the launch of Ondif, ondansetron oral film in Brazil for the treatment of nausea. This launch is on track and we continue to see strong order growth. Our collaboration with Zambon in Europe has resulted in the approval of ROF Riluzole Oral film for the treatment of ALS. Zambon plans on launching ROF in the coming months, and we look forward to supporting their efforts. And finally, our collaboration with Pharmanovia in Europe remains on track as well, and we look forward to bringing Libervant to patients and healthcare providers in Europe, if approved.

We have also carried over our focus on raising non-dilutive capital from 2022 into 2023 and have already generated an additional $20 million in the first quarter of 2023. We’ve recently reached agreement with Indivior on several outstanding matters, including reimbursement of costs due under our license and supply agreement and changes to transfer pricing. This agreement resulted in a one-time cash payment of approximately $11.5 million. Indivior is important to the company and I am pleased that we have agreed upon several contractual updates that in my mind, strengthen the relationship between the two organizations. I’m also excited to say that we have reached a settlement with BioDelivery Sciences International related to our ongoing patent infringement case regarding Belbuca and Bunavail.

A settlement resulted in a one-time cash payment of $8.5 million to Aquestive. It is tied up to move on from this case and continue to resolve our outstanding litigation cases where appropriate. In addition, we are pursuing potential collaborations in Europe and China for the rights to AQST-109, and for Libervant, we are pursuing potential collaborations in multiple markets, including the U.S. While there’s no guarantee of success, we will continue to pursue these opportunities. As a final point on this subject, and as I’ve stated before, we will remain disciplined on the out-licensing process for Libervant, especially as we learn more from the FDA. We believe Libervant remains an important product for those suffering from seizure clusters, and that patients and the epileptic community will be better off with access to the product now rather than waiting until 2027 when orphan drug exclusivity of a competitive product is scheduled to expire.

The healthcare providers, advocacy groups and patients we have interacted with have given us the same feedback. We believe 2023 is another critical year for Libervant. As we’ve discussed before, we have provided the FDA with additional clinical data and our proposed protocol for a head-to-head study of Libervant against the products currently blocking our access to the U.S. market. The FDA has assured us that, €œthe Office of Orphan Products Development and the Review Division are actively working on review of the newly submitted information and the proposed study. Although, we cannot commit to a precise date for providing a response, we’re making all efforts to respond in a reasonable timeframe€. While all of us are frustrated by the lack of speed of the responses, we will continue to diligently pursue U.S. market access.

We have taken several steps to continue the financial turnaround story of the company. In the first quarter of 2023, we expect to reduce our outstanding debt by 18% and by the end of 2023 we further expect to reduce our overall debt by over 40%. Depending on market conditions, interest rates, and terms, we may seek to refinance our debt as the debt level becomes right sized for our business. Ernie will talk more about the financials in a moment. In conclusion, we carry our momentum from 2022 into 2023 and are off to a fast start. Our total non-dilutive capital raise is now over $45 million since May of last year. This year, you can expect us to focus on rapidly progressing AQST-109 into a pivotal study pursuant to the FDA’s parameters, expanding our collaborations and out licensing arrangements further strengthening our balance sheet and continuing to work towards U.S. market access for Libervant.

With that, I will turn the line over to Ernie.

Ernie Toth: Thank you, Dan, and good morning, everyone. By now, you have seen our financial results and our earnings release that was issued last evening. As we typically do, we will address most of the discussion related to the fourth quarter and full year 2022 results in the Q&A. During the fourth quarter of 2022 and continuing into 2023 we continue to manage the company for success as we received additional non-dilutive capital and reduced expenses going forward to extend our cash runway to support the continued development of our lead product, AQST-109, the first orally administered epinephrine product. During the fourth quarter, we entered into a license agreement with Otter Pharmaceuticals, a subsidiary of Assertio Holdings to license Sympazan.

Under the terms of the license agreement, we granted an exclusive worldwide license of our intellectual property for Sympazan to Assertio for an upfront payment of $9 million and a $6 million milestone payment subsequent to the notice received from the U.S. Patent and Trademark Office of allowance of an additional patent application for Sympazan. In addition, we also entered into a long-term supply agreement with Assertio for Sympazan and will receive royalty payments from Assertio on Sympazan sales during the term of the license agreement. The $15 million received from the Assertio transaction along with previously announced transactions with Haisco and Pharmanovia generated over $25 million of non-dilutive financing in 2022. These transactions, along with prudent expense management contributed to our year end cash balance of $27.3 million.

The recently announced amendment to the Indivior license and supply agreement as well as the legal settlement agreement with BDSI generated $20 million of non-dilutive capital that was received in March, 2023. As we have previously stated, we will always pursue non-dilutive sources of capital first to extend our cash runway. As Dan mentioned, we expect to reduce our overall debt by approximately 18% by the end of the first quarter 2023 and by 40% by the end of 2023 through a combination of principal prepayment and scheduled principal payments. As previously announced, we prepaid approximately $6 million of principal to date during the first quarter of 2023. We would expect to refinance our remaining debt balance depending on market conditions.

Total revenues were $10.7 million in the fourth quarter of 2022 compared to $11.1 million in the fourth quarter of 2021, a decrease of 4%. For the fourth quarter of 2022 compared to the prior year period, we saw 141% increase in license and royalty revenue due to an increase in our licensee sales of products, a 17% increase in co-development and research fees revenue and a 16% increase in manufacturing and supply revenue due to increased manufacturing volume of Ondif for Hypera in Brazil offset by 79% decrease in proprietary sales net revenue due to the licensing of Sympazan to Assertio in October 2022. Total revenues were $47.7 million for the full year 2022 compared to $50.8 million for the full year 2021, a decrease of 6%. Excluding non-recurring revenue of $4.1 million that was recognized in 2021, total revenue increased by 2%.

Comparing the year ended 2022, to the prior period, we saw a 3% increase in manufacture and supply revenue and a 10% decrease in proprietary sales due to the out licensing of Sympazan. Our net loss for the fourth quarter of 2022 was $12.4 million or $0.23 loss per share. Our net loss for the fourth quarter of 2021 was $28.9 million or $0.72 loss per share. The change in net loss was primarily driven by a one-time loss on extinguishment of debt of $13.8 million in 2021, lower non-cash interest expense related to the KYNMOBI monetization transaction of $1.8 million and a decrease in total operational cost and expenses of $1.4 million, primarily due to a reduction in our sales force, subsequent to the out licensing of Sympazan during the fourth quarter of 2022 and lower share-based compensation expense offset by higher raw material and production cost.

Our net loss for the full year 2022 was $54.4 million or $1.12 loss per share. The net loss for the full year 2021 was $70.5 million or $1.85 loss per share. The change in net loss was primarily driven by a one-time loss on the extinguishment of debt of $13.8 million in 2021, lower non-cash interest expense related to the KYNMOBI monetization transaction of $6.5 million, and lower interest expense of $3.5 million offset by higher costs and expenses of $4.2 million including one-time severance expenses. Non-GAAP adjusted EBITDA loss was $9.6 million in the fourth quarter of 2022, compared to a $9.2 million loss in the fourth quarter 2021. Non-GAAP adjusted EBITDA loss was $35.3 million in the full year 2022, compared to $24.9 million in the full year 2021.

The year-over-year change in non GAAP adjusted EBITDA loss was primarily driven by the items described above. As of December 31, 2022, cash and cash equivalents were $27.3 million. Under the At-the-Market or ATM facility, we accessed $860,000 of new proceeds during the fourth quarter of 2022 and $3.9 million during the year ended December 31, 2022. The ATM facility has approximately $33.4 million available at December 31, 2022. We are focused in 2023 on the continued development of our Epinephrine program and commencing our pivotal PK program later in the year. The Buccal Film continues to retain a strong presence in both the U.S. commercial and CMS markets and continues to provide an opportunity outside the U.S. While as the Buccal Film is a legacy product for us, it remains a significant part of our near-term revenue outlook.

This product continued to perform well in 2022 with Indivior retaining a U.S. market share of approximately 34%. Our revenue guidance for 2023 considers a modest level of market share erosion. Moreover, in 2023, we will continue to focus on capital conservation so that our cash runway is extended as far as possible. As outlined in the press release issued last night after market closed, we provided our full year 2023 financial guidance as follows. Total revenues of approximately $37 million to $41 million, and non-GAAP adjusted EBITDA loss of approximately $31 million to $36 million. Please note our revenue guidance for 2023 no longer includes proprietary net sales for Sympazan due to the license agreement with Assertio, but does include manufacturing and supply revenue and royalty fees.

In addition, our guidance for 2023 includes focused R&D investments related to the continued development of AQST-109. Again, the first orally administered epinephrine product. With that, I will now turn the line back to the operator to open the line for questions.

Operator: Our first question comes from Gary Nachman with BMO. Your line is open.

Unidentified Analyst : Good morning. This is Dennis on for Gary. Thank you for taking our questions. Regarding 109, can you just talk a little bit more about the March FDA interaction? What information did they provide? Was this proactive on their part? Did they provide any specific suggestions as to what would and would not be a good comparative product? And did they provide any new additional colors to what they would be important to show in the pivotal trial? I’ve got one follow up after.

Dan Barber : Sure. Good morning, Dennis. Thanks for the question on 109. I’m going to pass that over to our SVP of R&D Steve Wargacki to give you an answer.

Steve Wargacki : Thanks Dan. And thank you, Dennis. The interaction that we had in March was initiated by us and it was designed to gain clarity. A lot of topics were covered at the end of Phase 2 meeting and we saw to gain clarity in exactly what would be required to get the proper feedback on our pivotal protocol and we got that clarification from them. The RLD selection is that our choice, but as Dan mentioned in his comments, will be informed by the study we have currently ongoing.

Ken Truitt : And Dennis, in terms of the selection of the reference listed products, that is completely up to us as the sponsor to choose the FDA’s given us clear guidance, but it is our choice.

Unidentified Analyst : Okay, perfect. And then regarding the recent presentation of the allergy, asthma and immunology meeting last month, could you just maybe talk about the receptivity the posters got and overall, KOL physician feedback? Thank you so much.

Dan Barber: Sure. I’m going to pass that over to our Chief Commercial Officer, Ken Marshall.

Ken Marshall : Hi, Dan. Can you guys hear me okay?

Dan Barber: You’re great, Ken.

Ken Marshall : Yes, it was a good meeting for Aquestive. We had four posters. We had KOLs presenting on our behalf at each one of those, along with Aquestive of support and showed a range of data. I talked about our rapid Tmax. I think that was one of the highlights and one of the most impressive pieces of data to the audience. We’ve consistently produced a 12 minute Tmax, and that’s unlike any other medicine, especially in oral medicine. And that was the other takeaway, how frustrated the medical community is and the patient community that was in attendance with needle devices. They certainly are looking for a better solution and extremely impressed with our ability to put epinephrine on a strip and deliver it orally.

Ken Truitt : Dennis, just to add out Ken’s comments, gives us really excited about AQST-109. It continues to get as excited is we’re the only oral product in development. We know there’s a variety of nasal sprays that are coming through, but we’re not aware of any significant other oral product that is in development at this time. So we think that’s a really important and unique position for our product.

Unidentified Analyst : Great. Thanks so much, guys.

Operator: Our next question comes from Jason Butler with JMP Securities. Your line is open.

Unidentified Analyst : Hey, it’s Roy on for Jason. Thanks for taking our questions. I had a couple follow ups on 109 and then one for Ernie. So, I guess on 109, again, on the protocol, I know you’re going to submit to the agency and you’re pending this reference product data. But just any details you can give us about the proposed final design at this time? And then, Dan, you made a comment about, better characterizing the market in 2023 as it evolves. Just any details you can give us on the efforts that you’re going to make and the key questions you’re looking to answer? Thanks.

Dan Barber: Sure, good morning, Rogy. I’ll take the market evolution question. Let me do that first and then I’ll hand it over to Steve to talk about the protocol design. I think you’ve heard Ken talk before about our — what we’ve noticed in the seizure cluster market, which has alternate products have come into the market, the market expands considerably. In that case, I think it is just about doubled. So in our view, has alternate non-injection products come into the treatment of allergic severe allergic reaction space, we believe the market will expand and we want to make sure we keep an eye on how those dynamics unfold as other products come through the system. But again, as we look at how patients think about treating anaphylaxis, we continue to believe that oral is generally a preferred method and we look forward to having that offering on the market. With that, I’ll turn the second question you had on the protocol design over to Steve.

Steve Wargacki: Thank you. Yes. So the pivotal protocol design remains consistent with what we’ve previously guided. We anticipate this being an 80 to a 100 healthy volunteer subject study looking at the pharmacokinetics and pharmacodynamics of our product against two or more reference products. And that’ll allow us to demonstrate how we perform relative to the products that are available in the market.

Unidentified Analyst: Okay, great. That’s helpful. And then that one for Ernie, that just any details on the expense trajectory for 2023 that seems like we should expect SG&A maybe to continue down this quarter. Just anything you can give us there. Thanks.

Dan Barber: Well, as I said in my script, we continue to manage, our expenses closely to help with our cash runway. Certainly, the reduction as I announced in my script about the, a reduction in expenses last year related to the license of Sympazan to Assertio will carry forward into 2023 and is embedded in our projection. I think the important thing about our expenses for 2023 is the continued focus on the advancement of our 109 project.

Unidentified Analyst: Okay, great. Thanks. Let me throw in one more on 109, just on the European and Chinese partnership discussions are, you can never predict when those are going to happen, but are you kind of waiting for the data or is it possible to finalize one of those before you get the pivotal data? Thanks.

Ken Truitt : Well, I think as you know, business development in any company is a constant part of the business. So, at this time, we will continue to look at the potential opportunities that are there. I think as we go of course and more data is available on 109, those opportunities will evolve. But I think you’ll see us continue to look for the right partnerships, to make sure that we can broadly distribute 109, not just in Europe and China, but quite frankly all over the globe. So that’s one of the themes of our company as we go through 2023, is making sure our products are available in a variety of markets. And 109 is of course one of those products that will be focused on, on making sure we place correctly.

Unidentified Analyst: Great. Thank you for taking the questions.

Operator: Thank you. Our next question comes from Francois Brisebois with Oppenheimer, your line is open.

Francois Brisebois: Hi, thanks for taking the questions. Just a couple here. I was just wondering if you can maybe compare and contrast this bracketed kind of, method of showing your PK data to the FDA with reference products. And, you seem to say the reference products that you end up using are your choice. Can you just maybe compare and contrast what the process has been for the nasal spray that I think we’re, you know, we’re expecting a to do for mid-year here, so just the bracket approach. Did they have to use two or more or the similar products? Did they have a choice on what products to use? I’m just trying to figure out if there’s been, if the FDA’s been consistent with both companies here.

Dan Barber: Yes. Good morning, Frank. Thanks for the question. So obviously we don’t know exactly what the FDA is saying to the other applicants. So, we have the same public information that you have. But our view from looking at the public statements of the nasal sprays that are in development is, and also our experience with the FDA in other drug development places, is that they are being consistent with the various products. So, my opinion would be that is something that all products that are seeking this indication will have to achieve. I think the real question for the FDA will be on the speed side. How fast do you have to be in order to be relevant for this particular indication?

Francois Brisebois: Understood. And the meaning that you got it to the FDA in the second half of ’23 for the administration part of the label. So is there a chance, I guess, that means that, you could start the pivotal in the third quarter, and then potentially have this meeting about administration in the fourth quarter. It wouldn’t be barrier to maybe starting or else with the starting the pivotal?

Dan Barber: No, That’s a great question. Just to clarify, as we outlined in December, we had a very productive end of Phase 2 meeting that Steven and his team led and we have learned, or we feel we have learned a clear set of things that the FDA wants to see in our filing. Obviously, one is the pivotal study. But the other is related to administration as we outlined. And so, Steve and the team have very smartly in my view worked with the FDA to clarify that we can separate those two things into two different activities with the FDA that then come together at the filing. So, I think that was a smart development move and it allows us to, or pivotal while also having that meeting on the administration items with the FDA.

Francois Brisebois: Understood. Thank you and congrats on the progress.

Operator: Thank you. Our next question comes from Thomas Flaten with Lake Street. Your line is open.

Thomas Flaten: Thanks. Just to follow-up on the last question, Dan. So, there is no risk that there would be a learning or a finding from the administration characterization that would in any way impact FDA’s thinking around the pivotal, right? I just want to confirm that.

Dan Barber: Yes. I think the way to think about it is we — look, we have been around for — I don’t know the better part of 20 years as a company and our technology has always been oral thin film. So, when we get questions around the administration elements of our technology, we have a big body of data that we can work from, and a deep understanding. So, I think we understand completely at least based on what the comments have been from the FDA so far what they are looking for. And we are prepared to provide those that information. So right now, we don’t see a reason to have: One, make it a linear process, we think, answering the administration pieces in one segment, while pivotal is going on is just fine.

Thomas Flaten: And recognizing that a lot of the market characterization work is upcoming in the current year. I was curious if there is any obvious areas, where an oral film would not be the preferable route of administration that you’ve been able to identify or feedback you have gotten from KOLs or patient groups?

Dan Barber: Sure. So, Thomas, that’s a tough question to ask a CEO in the earnings call, right? I’m obviously very biased towards our technology. I think our technology works broadly in the patient population and that’s why we are pursuing this product. We think that, the fact that a majority of patients don’t have any product at all with them during an allergic reaction, speaks volumes to the need for something that’s easier to carry and simple to use. And we think we fit both of those criteria. So, look, are there instances where other technologies might be preferred short, but we are very focused on where our technology benefits patients and we think in this area, we have a really strong and compelling value proposition to the patient

Thomas Flaten: Okay. And then just a final one for Ernie, the drop in gross margin or non-GAAP gross margin, in particular, Ernie from third quarter to fourth quarter was pretty strong. Anything you could share with us with respect to that in going into 2023?

Ernie Toth: Well, Thomas, I think, there’s a number of things that play there. It’s a change in product mix. Certainly, removing high margin products such as Sympazan that we’re selling is important. When you compare year-over-year the fact that, again, because the gross margin is on total revenue, the fact that there was incremental, non-recurring revenue last year of $4 million impacts the margin. And then when we factor in, again, related to Sympazan, the manufacturing revenue, which is at a different margin basis than manufacturing the product, and then taking into account the new product launches for Hypera Brazil, that’s at a different margin. So, you — it’s really a change in product mix along with just some incremental higher expenses related to materials and production.

Thomas Flaten: Got it, appreciate. Thanks for taking my question.

Operator: Our next question comes from Ram Selvaraju with HC Wainwright. Your line is open.

Ram Selvaraju: Thanks, very much for taking my question. Just a few here. Dan, I was wondering if you could provide us with a little bit more color on the relationship within Indivior as it currently stands, and what additional advances or progress you expect over the course of 2023, and how you expect that to specifically positively impact Aquestive’s business. Secondly, thought that you could perhaps offer us some additional detail on your updated thinking regarding AQST-108, and then lastly, with respect to Libervant was wondering if you could give us a sense of how you are thinking about the best possible path forward commercially for the drug in the United States, and how that’s being colored by the specific timing with which the product may receive market authorization. Thank you.

Dan Barber: Sure. Thanks, Ram, and good morning. First, to start with your first question on our relationship with Indivior. I don’t think there’s any other way to characterize our relationship with Indivior other than it’s a very important one. We value the relationship with them and we’re — we continue to work with them to make sure that we are always providing high quality product to their patients. And I think they appreciate that. In terms of the amendment and agreement we just announced, I think that was a really positive step forward for our company. One, it showed the continued view on both sides that the relationship is important, because one of the things that was extended is the term of the contract, which we were very happy to see.

And two, I think there’s a recognition that what we do for Indivior is important. And so, in terms of making sure that the components of value that we received from Indivior are in line with where they should be. I think we found a partner who — or a relationship that is looking to work with us. So very excited about where that relationship is. In terms of where it progresses from here. Look, there is generic competition of Suboxone. We recognize that. we know that over time the volumes or the market share in the U.S. will slowly decline as outlined buying Indivior and will continue to look to see how the overall volume offsets versus the market decline. While we don’t control that, I think that’s something we continue to watch carefully. In terms of 108, as I always say, when we’re asked on the AQST-108, we love this product.

We think this is a great opportunity to develop yet another product out of the Epinephrine Prodrug platform. The reality right now is we’re very focused on making sure in this macro environment that is very tough. Then we have a reasonable balance sheet. So, the reality for us right now is Ernie laid out, is that we will have — I think the right word is discipline on how we spend our money. And so, one oh eight’s going to have to wait. It’s going to wait until 109 is farther along. And until we have our balance sheet in a place where we feel very, very positive about our ability to do more pipeline programs. And then on Libervant, look, I think that the thing that sometimes it’s easy to forget on Libervant is that there are patients who will benefit from this product and they’re waiting for the product.

So, putting even the desires of the company to get the product into the market aside, we believe patients deserve this product. So, we’re going to continue to advocate, push, create data, make sure we are front and center with the FDA, make sure they understand the choice that they’re making and blocking our product right now based on the needs of patients in the marketplace. So, we’re in no way are we going to step back from bringing that product to the market. When does it ultimately come to the market? We’ll see, right? But in the meantime, we’re very excited to be able to continue to expand our relationships and partnerships outside of the US. And we believe it will be in the hands of patients in Europe and other markets well before 2027.

Ram Selvaraju: Okay. And just one more question for Ernie. I was just wondering if you could clarify whether the financial guidance you’ve given for 2023 includes the impact of additional litigation settlements or not?

Dan Barber : Hi Rob. And no, it does not take into account any impact for additional litigation settlements at this point.

Ram Selvaraju: Thank you.

Operator: Our next question comes from James Malloy with Alliance Global Partners. Your line is open.

James Malloy: Hi, guys. Thanks for taking my question. A remarkable job on the non-dilutive cash in the early part of the year here. Just a quick follow-up on the additional settlements actually, what — is there anything in 2023 or 2023 we should be potentially anticipating look for and then follow-up on that on the Libervant question, how would you characterize any potential partnership discussions? Is it really — there really a path forward on a partnership in advance of claim and the FDA or is it always going to wait on that? Thank you for taking the questions.

Dan Barber : Good morning, James. Vent to your voice. Could you repeat the first question? There was a ding that occurred right in the middle of you speaking. We didn’t quite catch that first question.

James Malloy: Just a follow-up on the prior question on any additional settlements, is there anything that we should potentially anticipate over 2023, even if it’s not in the guidance?

Dan Barber : Sure. So, look on the legal side. On the litigation side, I’m very pleased with how our company and our general counsel in particular has worked to reduce our legal spend over the last several months. First, we were able to have a motion to dismiss granted in the Suboxone antitrust case. Now we have successfully reached a settlement with BDSI on a long, outstanding litigation case that was costing us money. So, both of those items are positive news for us and reduce our legal spend going forward. Will there be other settlements this year? Look, we don’t have much left in terms of litigation inside of this company, so I don’t know if I see big things on the horizon for that area, but I suppose you never know. In terms of Libervant potential partnerships, yes, we do believe that there are potential partnerships to be had with Libervant, both outside the US and in the US.

I think that the critical thing for Ernie, myself and the team is the discipline around what is the right partnership. And what does the value look like? What does the pathway look like and how do we make sure that patients are maximized in that partnership? So that’s where I think you’ll see us just be really thoughtful. But yes, if all we wanted to do was find a partner, I don’t think that’s the difficult part. It’s finding the right one that’s the difficult part.

James Malloy: Hey, would you be able to characterize sort of how many of the right partners have come in and you’re still trying, you trying to judge it between them? Or is it really, again, lot’s going to depend on if you can actually get approved by the FDA. Certainly, big issue for it.

Dan Barber: Sure. I think the right way to characterize it is, we have a lot of active discussions. So, whether those are the right partners or there’s more right partners to come, I think is kind of an amorphous thing for us to know. But I think we have a reasonable set of potential collaborations that could occur.

James Malloy: Excellent. Thank you for taking the questions.

Dan Barber: Thanks James.

Operator: Thank you. Our next question comes from Andreas Argyrides with Wedbush. Your line is open.

Unidentified Analyst: Good morning. This is Caroline on for Andreas. Thanks for taking our questions. So, I just have one question on 109. In the press release it was mentioned that you continue to characterize the administration of 109 under potential conditions of allergic reactions. Just wondering if you can elaborate on the conditions you are evaluating 109 under and if this was requested specifically by the FDA during the end of phase two meeting or in their March correspondence. And then what else might the FDA want to see besides the altered dosing conditions evaluated in part three of the EPIPHAST study?

Dan Barber: Sure. Thanks Caroline. I’ll pass that over to Steve.

Steve Wargacki: Yeah. And so, at the phase two meeting, we discussed with the agency a variety of topics. Some of them were in ensuring the ability to administer and deliver our product under the conditions of a severe allergic reaction, which is expected. And, certainly a conversation we look forward to. And we do continue to evaluate all of those conditions, right? And that ultimately is, all tied to your risk benefit in your NDA. And that’s part of the, that meeting that we talked about having later in the year with the agency is to present all of our work on it line that we’ve characterized everything in the right way and ensure that we have a robust filing in the future. That is the intention.

Unidentified Analyst: Okay. Great, thanks. And then I just have one follow-up, if I may. So, with the PDUFA for ARS Pharmaceuticals, nephrine coming up in mid-2023, if approved, do you think it is possible that FDA would eventually want to see 109 PK compared to nephrine?

Ken Truitt : I don’t think that’s the — I’m just thinking through the patent, looking at Steve. I don’t think that’s the way the pathway works. So, this is not an orphan drug block, where suddenly there would be a need for some comparison or we don’t see why that would occur. But we think our pharmacokinetic curve is very compelling and we will continue to compare it to the existing already approved products. And we think that will be sufficient for the FDA.

Unidentified Analyst: Okay, great. Thank you so much.

Operator: Thank you. This concludes our question-and-answer session. I’d like to turn the call back over to Dan for closing remarks.

Dan Barber: Thank you and thank you to all of you for joining us today. As I stated earlier in the call, we are going to remain very disciplined this year on ensuring we deliver on things we have laid out and that will continue to be rapidly progressing AQST-109 towards our pivotal site. We will continue to focus on expanding our collaborations, which will allow us to further strengthen our balance sheet. And of course, we do remain serious about finding the pathway for Libervant both here and abroad, to get it in the hands of patients. With that, we appreciate your joining us today and we will talk to you soon.

Operator: Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone, have a great day.