Aquestive Therapeutics - Earnings Call - Q3 2020

Transcript

Speaker 0

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 twenty twenty Aquestive Therapeutics, Inc. Earnings Conference Call. At this time, all participant lines are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Stephanie Carrington, Westwick Investor Relations. Thank you. Please go ahead, ma'am.

Speaker 1

Thank you, operator. Good morning and welcome to today's call. I am joined by Keith Kendall, President and Chief Executive Officer and John Maxwell, Chief Financial Officer, who will be providing an overview of recent business developments and performance of the company in the third quarter. We expect today's call to last approximately sixty minutes. 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 Aquesta's website within the Investors section shortly following the conclusion of this call. This call will also include a discussion of certain non GAAP financial measures. A reconciliation to corresponding GAAP measures can be found in yesterday's earnings release. Before we begin, let me remind you that today's call will include forward looking statements based on the company's current expectations. These statements reflect the company's judgment as of today only and are subject to risks and uncertainties that could cause actual results to differ materially from those described in these statements.

The company undertakes no obligation to revise or update these forward looking statements in light of new information or future events, except as required by law. These risks and uncertainties are discussed in greater detail in the company's quarterly report on Form 10 Q filed today in greater detail under the caption Risk Factors. With that, I will now turn the line over to Keith.

Speaker 2

Thank you, Stephanie, and thank you to everyone on the call for joining us this morning. In our remarks, John and I will provide an update on our business for the third quarter. And as always, we'll be joined by additional members of the Aquestive leadership team during the Q and A session afterward. During the third quarter, Aquestive continued to make progress as it relates to the key drivers of value for the company. First, SYMPAZAN continues to perform against all important metrics despite the ongoing COVID nineteen related restrictions on face to face interactions with health care providers.

We're continuing to market SYMPAZAN to the same prescriber base that our potential prescribers of our product candidate, Libervant. SYMPAZAN retail shipment volume grew 18% third quarter over second quarter. Next, as previously announced, the company is taking steps to address the issues raised in the FDA's complete response letter that we received in September regarding our new drug application for Libervant. After submitting the meeting package to the FDA in October, we received confirmation that the FDA agreed to have a type a meeting with us set for 11/12/2020. A type a meeting, as you know, is granted for candidate drugs on hold to discuss impending issues and a path forward for approval.

We look forward to meeting with the FDA to discuss the information we submitted and to seek feedback on the resubmission of our NDA for Libervant. We believe that we've provided a strong set of facts supporting our NDA. We will update the market once minutes of the meeting are finalized regarding the FDA's comments, our plans for resubmitting our NDA and the potential range of PDUFA dates for Libervant. Additionally, in the quarter, we commenced the Phase I pharmacokinetic trial for AQUESTIV-one hundred eight in August and completed trial enrollment in October. This therapeutic candidate is a first of its kind oral sublingual film formulation delivering systemic epinephrine.

Once we receive and analyze all of the data from this trial, we'll provide further guidance on the next stages of development as appropriate for this product. We believe Aquestive one zero eight, if approved, will be the first orally administered epinephrine based rescue medication for this patient population. Finally, the Aquestive team entered into a monetization agreement with Marathon Asset Management, a leading global investment firm, for up to $125,000,000 for the anticipated royalties associated with Sunovion's Kinmobi sublingual apomorphine product that received FDA approval in May 2020. This transaction, along with our continued expense and capital management activities, will provide a capital runway for the company through the 2021 and potentially beyond. Now let's discuss in more detail each of these key areas of focus for the company.

First, we remain focused on building our CNS franchise. We're advancing the commercialization of SYMPAZAN, whose prescribers substantially overlap with potential prescribers of Libervant. Our aim is to raise the profile of our PharmFilm technology as a commercial precursor and complementary product in support of opportunity. SYMPAZAN continues to prove the build out of our capabilities and processes in preparation for the commercial launch of Libervant if approved by the FDA for U. S.

Market access. The acceptance of SYMPAZAN is an important building block, providing a meaningful value proposition for caregivers of patients suffering from Lennox Gastaut syndrome, as well as positioning Libervant for a stronger launch. Despite the limitations created by the continuing COVID-nineteen crisis that restrict our sales team to mostly virtual interactions with health care providers, SYMPAZAN continues to see market penetration and prescription growth. Shipment volume sequentially quarter over quarter has grown 18% and by 130% over the same period last year. During that same period, we also continued to grow our prescriber base, which now approaches 700 health care providers, representing over 30% penetration into our focus group of prescribers, with over 77% of those prescribers writing multiple scripts.

Those health care providers are critical to the continued success of SYMPAZAN and will be critical to the success of Libervant once launched upon FDA approval for U. S. Market access. SYMPAZAN revenue grew with 102% increase in net revenue for the three month period ended Q3 twenty twenty versus Q3 twenty nineteen and an 86 increase in net revenue for the nine month period ending q three twenty twenty versus 2019. We continue to ramp up payer acceptance and currently have over 72% of commercialized covered and 82% coverage of state Medicaid regions.

The actual third quarter claims paid rate for commercial patients was 85%, and for Medicaid, 88%. We believe our position with the payers also will help us with the potential launch of Libervant. During the pandemic, we have, to the best of our ability, ensured that our sales team is safe and compliant with local regulations, but have also worked hard to maintain the sales team's connections with the prescriber and patient community that needs SYMPAZAN. We believe that our continued growth in prescriptions and net revenue demonstrate that we've been able to continue to connect with the prescribers even virtually and grow this product through extraordinary times. Next, as we previously communicated, we received a complete response letter from the FDA for Libervant in late September.

As we outlined during the previous conference call on this topic in September, we were very disappointed that our NDA was not approved and are taking immediate action to address the agency's concerns. As you may recall, the FDA limited its comments to one out of the nine studies that Aquestive included in our NDA submission for this product. The study in question under the CRL was the single dose crossover PK study in 28 patients that we refer to as study 180,323. In the study, Libervant exceeded the AUC measure when compared to Diastat, was within normal comparability ranges for Cmax, and had a Tmax within the published Diastat label. We were quite pleased with these results.

However, the FDA noted in its CRL that in the study there were two weight groups where the Cmax ratio comparing Libervant to Diastat were not as close to comparability as the FDA would like to see. The FDA had no further comments on the study or in any of the other weight groups. No other safety, clinical, pharmacological, biopharmaceuticals, CMC, or other nonclinical issues were identified in the CRL. As we indicated on our September 25 conference call, we intended to submit data and information to the agency quickly to attempt to resolve their questions. After submitting a meeting package to the FDA in October, we received confirmation that the FDA scheduled a Type A meeting with us set for 11/12/2020.

Again, a Type A meeting is granted for candidate drugs on hold to discuss impeding issues and a path forward for approval. We included in our October submission additional data and analysis to demonstrate that we have sufficient information to update our label with an adjusted dosing regimen. We look forward to meeting with the FDA where we will discuss the information we presented to the agency in October, attempt to confirm the pathway for approval, and propose the immediate resubmission of our NDA. If the FDA agrees with our proposal, then we plan on resubmitting the NDA before the end of the year. The review cycle for resubmission of this type is typically six months.

However, given the narrowness of the resubmission, we will request an expedited review cycle of two months as is our right. This decision will be completely at the discretion of the FDA. Under a six month review cycle, our targeted PDUFA action date would occur in the 2021. If the FDA agree does with our proposal, then we will seek to understand the best path forward for resubmission and approval. We will update the market regarding the FDA's comments, our plans for resubmitting our NDA, and the potential range of PDUFA dates for Libervant once meeting minutes are finalized.

To date, there have been no indications in our discussions with the agency relating to market access for Libervant, and we do not expect any indication until product approvability is decided. Regarding FDA approval of US market access, we believe that we have provided a strong set of facts supporting a decision by the FDA of clinical superiority to prior approved drugs for this indication based upon a finding that Libervant represents a major contribution to patient care. We will augment and update that information to the agency prior to any new PDUFA date for Libervant. Subject to FDA approval, we are committed to quickly launching Libervant and have the foundational commercial capabilities to do that. Next, let's turn to AQUESTIV one hundred eight.

As previously reported, the FDA granted Fast Track designation for AQUESTIV one zero eight in August 2020. Fast Track is an FDA process designed to facilitate the development and expedite the review of therapies to treat serious conditions and fulfill unmet medical needs. In doing so, the agency acknowledged that Aquestive one zero eight satisfies an unmet need in the patient population relating to those patients resisting taking intramuscular or subcutaneous injections. In August, we also initiated the phase one pharmacokinetic trial for this exciting product. The trial featured a four treatment crossover design comparing the pharmacokinetics and pharmacodynamics of AQUESTIV-one hundred eight to two different doses of subcutaneous injection and one of intramuscular injection.

The study included secondary endpoints for changes in blood pressure and heart rate. We have completed the enrollment of this study with 28 healthy volunteers dosed as of October and are on track to QC that data in the coming weeks. Once our review is completed, we will update everyone as appropriate regarding the results of the study and on our clinical and regulatory path forward. If approved by the agency, AQUESTIV one zero eight will be the first orally administered epinephrine based rescue medication for this patient population. Finally, as I mentioned a few moments ago, we've signed an agreement as expected with respect to the monetization of the royalties and other amounts due to company under our license agreement with Sunovion Pharmaceuticals for Kinvobi, an apomorphine therapy using our PharmFilm technology for the treatment of OFF episodes in Parkinson's disease patients.

Kinnovi received approval from the FDA on 05/21/2020. The company entered a royalty monetization agreement with Marathon Asset Management that will result in proceeds to the company of up to $125,000,000 upon meeting certain milestones. We believe the valuation of the royalties of Kinmobi seen in this transaction reflect the strong value PharmFilm can bring to CNS and other disease conditions like epilepsy. Net proceeds of the transaction will fund the company's ongoing development and commercialization of its proprietary product pipeline candidates as well as the repayment of certain senior notes and working capital for the company. We expect that this transaction will close and fund later this month.

As John will explain in more detail, we also were able to extend our senior credit facility reopeners to the 2021, giving us a longer opportunity to obtain a potential additional $30,000,000 of capital linked to the PDUFA date and approval of Libervant. This financing, along with the potential access to the reopeners, provides Aquestive with immediate and substantial capital to reduce debt, support key initiatives of the company, including supporting the FDA approval of Libervant and the ongoing clinical development of Aquestive one hundred eight. We are delighted to have partnered with Marathon Asset Management and our senior credit facility lenders for this important milestone for Aquestive. Once closed, the monetization transaction will provide a capital runway for the company through the 2021 and potentially beyond. The $30,000,000 of senior note reopeners, assuming Libervant approval and market access, which cannot be guaranteed, provide additional capital options to fund the launch of Libervant after approval.

With that, I would like to turn the floor over to John, who will provide specifics of our financial performance and outlook. John?

Speaker 3

Thank you, Keith. Good morning. We filed our 10 Q and issued our earnings release yesterday afternoon. As we typically do, we will tackle most of the discussion related to the 2020 results in the Q and A. And in my comments, I will highlight a few points from our results that are important in order understand our updated full year 2020 financial guidance and our progress towards it.

As we previously reported, we signed a monetization agreement for the royalty rights associated with Kenobi, providing potential $125,000,000 of capital over time, including $40,000,000 later this month. Under the terms of the monetization agreement, we are entitled to receive the additional up to $85,000,000 of future non dilutive capital at various points beginning as early as the fourth quarter, 25,000,000 of which could be received between now and mid-twenty twenty two, assuming we can achieve the commercial targets associated with the monetization transaction. Shortly after funding of the monetization transaction, we will reduce our debt from $70,000,000 down to $51,500,000 This reduction is due to repaying of $22,500,000 of our senior notes and issuing $4,000,000 of new senior notes in lieu of paying a prepayment premium on the early repayment of the senior notes, bringing our net senior debt outstanding down and reducing our principal and interest obligations under the facility substantially in the future. The remaining net proceeds will be used for operations. Upon closing of the Kenobi monetization and the related reduction in principal and interest obligations, we will have capital visibility through 2021 and potentially beyond.

We believe this time horizon will give us the runway we need to get past the anticipated PDUFA date for Libervant in the 2021. In addition, the terms of our debt agreement were modified to extend the availability of $30,000,000 of reopeners option to 12/31/2021, including $10,000,000 of funds committed by our current lenders upon the FDA's product approval of Libervant, even if there is a delay in the market access decision. The second $20,000,000 of reopener, again at the company's option, can be marketed to current or other lenders upon FDA approval of Libervant for U. S. Market access.

We have agreed to issue warrants to purchase up to 857,000 shares of common stock in connection with the consummation of the indenture modifications and our potential exercise of the reopener, 143,000 of which will be issued upon closing of the indenture modifications. Moving on to our operating results and our financial guidance for the rest of 2020. Our third quarter twenty twenty revenue of $8,300,000 includes $1,700,000 of SYMPAZAN revenue, which is up over 100 year over year and reflects stronger prescription momentum in Q3 as compared to Q2 at the height COVID-nineteen pandemic restrictions. We are pleased with the performance of SYMPAZAN, especially as a market precursor to Libervant, noting that we exited Q3 at an annual revenue run rate of 7,000,000 to $8,000,000 which represents a 62% increase from the start of the year despite the impact of the pandemic. We continue to drive towards SYMPAZAN profitability in 2021.

While Suboxone remains the largest portion of our total revenue in the third quarter, we do expect that The U. S. Component of this revenue will continue continue to erode, while the non U. S. Component starting with the EU, we expect will continue to grow.

We believe that ultimately our proprietary revenue base will surpass these levels in future years after the launch of Libervant if approved by the FDA for U. S. Market market access. We have raised and tightened our range of our previously provided revenue guidance for 2020 to be in the range of 42,000,000 to $46,000,000 This guidance factors in continued erosion of Suboxone, Suboxone, additional growth in SYMPAZAN despite COVID-nineteen limitations, KINMOBI revenues recognized in the second quarter and co development fees and modest license fees and royalties. Our non GAAP adjusted gross margin in the 2020 was 72%, in line with our guidance.

Before considering the KINMOBI revenues recognized in the second quarter and as our revenue base shifts towards our proprietary products, starting with SYMPAZAN and away from SUBOXONE, we expect our adjusted gross margin will exceed 70% for the full year as we have previously guided. As outlined in the earnings release issued yesterday, our third quarter twenty twenty non GAAP adjusted EBITDA loss was $11,600,000 in line with our expectations. We continue to tightly manage our expenses with overall expenses down sequentially before factoring in higher R and D driven by project timing. And we are down year over year as well. We will continue to tightly manage our cost base as we move forward while focusing our investments on getting Libervant into the market and continuing the development of AQST-one 108.

Before considering the impact of Kenobi monetization in the fourth quarter, tightening our guidance with respect to our anticipated EBITDA loss to be in the range of 38,000,000 to $42,000,000 This guidance reflects continued performance on the revenue line and continued tight management of our cost base. Cash used for operations in the third quarter was approximately $8,000,000 down from $10,000,000 in the second quarter and down from the prior year third quarter of nearly $15,000,000 This improved cash flow reflected the capital preservation steps we have taken while still making investments in our most critical priorities as well as the collection of the 4,000,000 Kenobi milestone in this quarter. Our $17,000,000 cash position at quarter end combined with the impact of the Kenobi monetization once closed as anticipated to occur in November is expected to provide the capital necessary to advance the company through the 2021 and potentially beyond. We are reconfirming our full year cash burn guidance of 45,000,000 to $50,000,000 before considering any additional contingent monetization payments that may be received in the fourth quarter. In summary, our improved guidance for 2020 reflects continued cash flow from our licensee and proprietary products revenue base, careful focus of our investments into the most value driven aspects of our future Libervant and AQST-one 108, continued focus on capital conservation so that cash is extended as far as possible, along with the impact of the Kenobi monetization anticipated to close in November.

Operator, we will now open the line for questions.

Speaker 0

Thank you. Our first question comes from the line of Gary Nachman from BMO Capital Markets. Your line is now open.

Speaker 4

Hi guys. Good morning. First on Libervant, describe the reanalysis you did and the data you submitted to FDA that you'll review at the Type A meeting and why you're confident you won't need additional clinical studies there? And then when will you get the minutes from the FDA, Keith or Dan? Is it thirty days later just so we should have the right expectation on when we'll get an update on next steps?

Speaker 5

Sure, Gary. Thanks for joining us this morning, and thanks for your questions. I'll turn it over to Dan and let him walk you through the answer to both of those, okay?

Speaker 6

Good morning, Gary. So we've done exactly what we said we would do back in September. We have updated our dosing regimen based on the FDA's CRL. We have supported that update in the dosing regimen based on the nine studies that we have completed and the linearity that we find in those nine studies. And we've provided a robust package utilizing population PK modeling to support why the existing studies are sufficient based on the totality of the data we've created to date.

In terms of the minutes, the typical turnaround time for the FDA is thirty days, but we'll see how that's completely in their hands, and we'll see how long they take.

Speaker 4

Okay. And probably sticking with you, Dan, the Phase one PK trial for 108, how many different doses did you look at for 108? And what what are you looking for when you analyze the data to help determine next steps? And could you potentially go straight to a Phase three on this one?

Speaker 6

Yes. I don't see in my I don't see the need for a Phase III, a true Phase III for this program. We think PK is absolutely the pathway, and we have a broad depth of PK data across healthy volunteers' patients in a variety of conditions. So I don't see that as a probable outcome. The dosing regimen update we have done in the two weight categories, just to frame everyone, as Gary said, the study in question is Study 180,323.

And in that study, there are two weight groups that the comparison to Diastat in only those two weight groups was not where the FDA wanted it to be. And in both of those weight groups, we have updated our dosing table by two point five milligrams. And in doing that, because of the linearity of our product, we believe we will cure the deficiency noted by the FDA. So that we think we have a very strong position. We're excited for the meeting next week, and we'll advise out of that meeting what the conversation with the FDA what the content of the meeting with the FDA looks like.

Speaker 4

Okay. Did you but on one hundred eight specifically, the different doses that you're looking at there versus the I'm in the subcu?

Speaker 6

I'm sorry, are you talking about

Speaker 5

He's talking about epinephrine. Asking what the doses are compared to epinephrine.

Speaker 6

Okay. Yes. No, my apologies, Gary. I thought you were still on Libervant. I apparently didn't have enough coffee this morning.

Yes, on AQST-one hundred eight, we're really excited to see the data that comes through in the study that we are we're just about to complete. Could we go directly into a Phase III? It is possible. I think we want to understand what the data looks like, understand what the next steps would be in terms of the possibilities of this program. I think the exciting thing in this space is that we have a lot of different pathways to potential different indications, which allows for a very broad platform, almost program initiative for us.

So we'll see where the results take us. We'll also seek the FDA's feedback, and we'll keep you updated as we know more.

Speaker 4

Okay. And then just last one for Keith. If SYMPAZAN is starting to accelerate, which it sounds like, it begs the question if you should put some more resources behind it maybe before you have the Libervant approval, especially now that you'll have additional funds from Kinmobi. So just what are your thoughts on building out your commercial infrastructure before Libervant? Thanks.

Speaker 5

That's a great question, Gary. And I think that, that's a very insightful question, right? We're we believe at the current course and speed, we're on track for SYMPAZANT to be profitable next year as a stand alone product. Obviously, as the penetration in that focused prescriber base continues to grow, the justification for additional resources is a lot easier to make as is whether they be sales or medical affairs type of people. And obviously, you all know that we believe that SYMPAZAN is a very important precursor to Libervant.

So I think you will see some increase in those resources based on its success and growth and based on our ability while we're trying to resolve visibility on the risk around Libervant, you'll see us judiciously adding resources to help support that product and continue for it to grow.

Speaker 4

Okay, great. Thanks.

Speaker 0

Thank you. Our next question comes from the line of Randall Stanicky from RBC Capital Markets. Your line is now open.

Speaker 7

Hey, guys. It's Edwin on for Randall. Thanks for taking my questions. Just a couple from us. The first on Libervant.

I know you're going to request a two month review. Can you just talk about what needs to happen for this to be a two month versus a traditional six month review? Thanks

Speaker 5

for joining, Edwin. I'm going to let Dan field that question for you.

Speaker 6

Yes. That's a really my response is really basic on that one. The FDA has to agree. So the nature of their of the questions they had in the CRL are clinical. And our update is a clinical update because of the dosing regimen, which ties to a six month review.

So as we said before and as Keith framed in his comments, we will request a two month review because we believe, especially if the FDA, is supportive of the dosing regimen we submitted to them, we believe the changes are narrowed to the NDA that was previously submitted. So we will request a two month review, but that is completely at the discretion of the FDA.

Speaker 7

Great. And then my next one, second one on Libervant, just one more. Obviously, it's going to depend on tepid meeting, but how are you guys thinking about the different ways this could play out and how this would impact the filing timing? Yes.

Speaker 6

So we the package we submitted and our approach to curing the deficiency in the CRL is built on the conversations we were having in September. So the exciting thing for us next week is this will be a continuation in our view of where we left off prior to the CRL. So we think we have a very good case before us. I don't want to overly speculate about the possibilities of any feedback we may get from the FDA because we simply don't have it yet. But we're excited for the meeting.

We think we have a very good case, and we're looking forward to the conversation.

Speaker 7

And then my last one is just on the guidance raising the revenue. It implies a range of 3,000,000 to $7,000,000 in 4Q. Just wanted to ask about a little bit of details on some of the factors that drove that change and how we should be thinking about that versus where implied 4Q is with respect to consensus? That's all from us. Sure,

Speaker 3

Edwin. So as you know, we don't guide on the pieces components of the revenue nor do we not guide on the quarter.

Speaker 8

But as you look at

Speaker 3

the pieces of revenue, what you should see is that SYMPAZAN will continue to be strong and grow. Certainly, on the prescriber and the penetration front, we expect that. And then the revenue, we would expect to follow. We'll continue to see the SUBOXONE product will erode over time, and we will see a little bit of that erosion possibly because of just timing of manufacturing activity in the fourth quarter. And then the rest of it, the smaller pieces of revenue there around license and royalty and co development are going to be relatively small in the quarter.

Speaker 7

Thanks. Appreciate it. Sure.

Speaker 0

Thank you. Our next question comes from the line of Andres Argyros from Wedbush. Your line is now open.

Speaker 9

Good morning.

Speaker 5

Guys. Good

Speaker 9

Thanks for taking my question. Congrats on the quarter. I guess I'm going to follow on some questions already asked and answered. But as far as Libervant is concerned, how has the process with the FDA impacted the pediatric or the timing of the pediatric studies? Are we going to get any top line data or any data anytime soon?

Speaker 5

Go ahead, Dan.

Speaker 6

Thank you for the question. So we have the pediatric data now, and we're able to submit that when we feel it's appropriate. In our minds, the right time to do that is once we have adjudicated the current submission that we have. So we will resubmit with the NDA that we have. And when we have approval on that NDA, we will follow on with the pediatric portion of the NDA.

Speaker 9

Okay. And in regards to let's look at the other pipeline assets there. The opportunity for exservin in ALS, how are are you guys actively looking for a U. S. Partner?

Speaker 5

Yes. We continue to have conversations with potential U. S. Partners. We do believe that product will get partnered in The U.

S. And we'll continue to work until we get to that point.

Speaker 9

What would a potential partnership look like, if you can provide any color on that?

Speaker 8

Go ahead, Dan.

Speaker 6

Well, there are several parties in The U. S. That we think would be good fits for Exerven. We're in discussions fairly advanced discussions in a couple of cases. And what it would look like would be fairly typical.

It would be that we would expect an upfront, and we would expect a transfer price and royalties for access and supply of the product.

Speaker 9

Okay. That's it for me guys. I appreciate you taking the question. Congrats again.

Speaker 0

Thank you. Our next question comes from the line of Thomas Flaten from Lake Street Capital. Your line is now open.

Speaker 8

Good morning. Thanks for taking the questions. Just a kind of a strange question. You made reference to the 108 data and the need to assess the validity and quality of that data. Can you I've not heard that term of phrase with respect to clinical data before, but what is it about the validity and quality that's up for question?

Or is that just the way you decided to phrase it?

Speaker 6

Thomas, I think you're going back to the moment where I was I thought Gary was talking about Study 01/14787 rather than AQST-one 108. So on AQST-one hundred eight, which is epinephrine, we are excited to see the data that comes out of our pilot study. We will analyze it. So there's nothing we know of right now that would question the validity or quality of the data coming out of our epinephrine study. We're excited to see it.

Once we've had a chance to analyze it and absorb it, we will, of course, come back to all of you and talk about it at the right level of detail.

Speaker 8

Got it. And then on SYMPAZAN, the number of physicians who are writing multiple scripts, how has that trended over time? If you can just remind us what that looks like? I'm trying to get at how entrenched the product is becoming within the larger component of your prescriber base.

Speaker 5

I'm sorry, Thomas. Can you repeat the question? I'm not sure I followed it.

Speaker 8

Sure. So you made mention of I think it was seventy seven percent of your prescribers who have written multiple prescriptions. The question is how has that trended over time? And is that within the quarter? Or is that just over since launch?

I'm trying to understand how entrenched the product is becoming within that prescriber base, how many of them are repeat prescribers versus prescribers?

Speaker 5

Sure. Ken, are you on the phone?

Speaker 10

Yes, Keith, I am.

Speaker 5

Do you want to respond to that question?

Speaker 10

Yes, absolutely. Thanks for the question, Thomas. This is Ken Marshall. It's been relatively stable over time. We've been adding anywhere from seven to 10 physicians on a weekly basis.

And so those are the ones that have written once and you have to kind of set them aside. If you look at the bulk of the physicians, it's now well over 700. Keith quoted a number, that's a couple of weeks old. If you look at our data through the sixteenth of this month, it's now, well over 700. And as Keith stated, I think you said 77% physicians have written more than one, and that's been a fairly consistent number as our base of prescribers have expanded.

Speaker 8

Got it. That's helpful. And then just one for John. John, there was a pretty steep drop off in the SG and A spending for the third quarter. Does that reflect kind of a new baseline?

Or was there something specific that happened in the third quarter within SG and A?

Speaker 3

We look, Thomas, as you know, we continue to really carefully manage our spending as part of our overall capital preservation strategy to extend our runway. And we'll continue to push that down. You will have fluctuations quarter to quarter depending upon activity levels. So I don't think there was anything unusual there other than it may have been. There was nothing unusual in terms of activity.

So it was relatively low baseline. We will

Speaker 8

manage Got it going

Speaker 7

it. Thanks for taking

Speaker 9

the questions guys. Sure.

Speaker 0

Thank you. Our next question comes from the line of Jason Butler from JMP Securities. Your line is now open. Jason Butler, please check your meat plan. Jason Butler from JMP Securities, your line is now open.

Please proceed. Our next question goes to Raghuram Selvaraju from H. C. Wainwright. Your line is now open.

Speaker 11

Good morning. This is Maz on for Raghuram. I was wondering if you're able to provide any precedent from your previous trial experience in general for dose adjustment being a successful strategy, to achieve the drug exposure you're looking for? And could the variable PK profile be explained by body physiology of the weight groups in question?

Speaker 6

Sure, Dan. Sure. So our as you know, we have broad experience in pharmacokinetic studies. I don't have another program I would point to in the correspondence back and forth with the FDA. But I would say that in the PK world, adjusting and coming up with a dosing regimen based on your PK results as well as the linearity or lack of variability in the results you have created is a fairly normal course of business.

Think I would imagine you've seen that as well. In terms of the weight groups and the physiology creating differences in results, I would say that, that would be it would be a little speculative of us to go to that depth. I would say this on the diastat side, in all the weight groups, no matter what dose we gave under what study, we saw high variability. So we do know that the reference product, the RLD, in this case, Diastat, is highly variable. And when you are working with a highly variable drug as your RLD, it can create some difficulties on comparability.

So we think we saw that in 01/8323, and we're excited to have the conversation with the FDA with their adjusted dosing regimen.

Speaker 11

Thank you very much for the clarity.

Speaker 0

Thank you. Our next question comes from the line of Jason Butler from JMP Securities. Your line is now open.

Speaker 7

Hi, it's Roy in for Jason. Can you guys hear me?

Speaker 5

Yes, Roy. Good to talk.

Speaker 7

Sorry about that. Early. So yes, we had a couple of questions on, epinephrine one hundred eight. First question is, do you guys think there's going to be the early adopters? Is it going get used by EMTs, health care providers first, then expand more broadly?

Or do you think it will be a true EpiPen alternative, from the get go? And then what are we going to see from the top line data later this year? Are we going to see Cmax, Tmax, AUC? Are you guys going to give qualitative characterizations?

Speaker 5

Go ahead.

Speaker 6

Yes. So we've provided the I'll start with the study design. We've provided an outline of what the study design looks like. So we, of course, would like the opportunity to see the data and work through it before we know exactly what we'll be providing to you. But our intent would be to provide you with as much clarity as we can on where we are and where we're going and what it means.

In terms of the marketing of the product, we see a variety of ways in which the product can be used. We I would point more to the need in the market than exactly where we'll place the product at this stage in development. If you look at the overall allergy market, there are approximately thirty million Americans who have some level of allergy issues that could lead to anaphylaxis, while the amount who actually carry fraction of that. So we know that there's a big gap between people who are carrying an EpiPen and people who perhaps should be carrying an EpiPen. And we think an oral product could be placed into that particular unmet need in a lot of different ways.

And between Keith, myself and Ken, as time goes on, we will be defining that for all

Speaker 8

of you.

Speaker 5

Yes. As we've committed, once we get the data from this study and we're able to analyze it and plan a path forward and begin to interact with the FDA around it, we planned a full R and D day for discussion of the program. And we'll talk about some of the market characteristics that we see, where we think it can be placed in the market as well as talk about the product, its engineering and the test results at a level of detail that people will be comfortable with.

Speaker 7

Okay, great. And then on SYMPAZAN, you've seen pretty good growth there, good represcribing rates continue. Can you characterize a little bit the feedback you're getting from the field? How does it compare to your expectations? And then what level of in person interactions are you guys having?

And how do you see that going forward if COVID resurges as it seems to be? Thanks.

Speaker 5

Sure. I mean the and I'll turn it over to Ken to give a little

Speaker 2

bit more color than I

Speaker 5

can provide. I think a couple of things. First, obviously, a product like this in the market it's in for the patients that it is targeted for and the caregivers who care for them and prescribe to them, this is very promotion sensitive. So the ability to have face to face interactions with the prescribers is important to us as our growth rates quarter over quarter and year over year have shown. I think we've also demonstrated that even during the worst of the times when there was zero face to face contact at the height of the COVID restrictions, we were still able to grow the product, which speaks to the level of depth and relationship that our sales group has developed with the prescribers.

And we think that's, along with the payer performance up to this point, are very important, not only contributors to the growth of SYMPAZAN, but precursors to the launch and success of Libervant when and if it's approved, right? Ken, maybe you can provide some more color on the feedback you're getting and precisely how sensitive it is to the face to face interactions.

Speaker 10

Okay. Thanks, Keith. Yes, we look at that fairly closely in a lot of detail on a weekly basis. And we see we seem to be flattening out right about now about about sixty forty, 60% live, 40% virtual with caregivers. You're also saying, as Keith Keith mentioned, the success rate in moving prescriptions is increasing because we've become more comfortable in a virtual world and clearly our healthcare practitioners have.

So both sides are really starting to understand how to more effectively communicate in this manner. So we're happy with the way that's moving. If you look at our ability to access their staff, which is key, their NPs and PAs are very important in any transition that's made from a tablet or a crushed tablet protocol or a liquid protocol to our strips. We've got a seventy-thirty ratio there. So about 70% of those discussions happen live versus 30% virtual.

So both are in a good place. It's a good question. It would be a speculative answer on how that might change in a world where you see some level of rebound. Regardless, I think we'll do better, regardless of how people behave if there's a rebound in COVID, we'll do better than we did back in that late Q1, early Q2, timeframe where everybody was trying to figure it out. There's a much clearer path.

And qualitatively, what seems to be driving the uptake in SYMPAZAN is just a very clear patient profile that we're now able to paint for physicians. They use a lot of Clozam. There's a lot of Clozam used. And they look for those patients where we might be a more appropriate delivery platform. And those are turning out to be as you would expect, those that have a little bit of difficulty swallowing, those on G tubes that want to take something orally where they can swallow in the normal course of just swallowing their saliva.

Those on a ketogenic diet, we have virtually zero carbs, which is a very important consideration. There are a lot of carbs in the liquid, SYMPAZAN and actually quite a few carbs in the tablets and the media that you usually end up crushing it in. Examples of very clear patient types that physicians can look for in their practice and use SYMPAZAN.

Speaker 7

Great. Very helpful. Thank you.

Speaker 0

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Keith Kendall for closing remarks.

Speaker 5

Thank you, operator. Thank you, everyone, as always, for your interest in Aquestive and for joining us for the call today. We appreciate your time. We look forward to continuing to move along all of the elements we think drive value for the company and continuing to push those projects and those events forward as we expect and as we commit to all of you in these calls. And we've got some updates that we will make at the appropriate time on Libervant and epinephrine, and we look forward to those as well.

So thank you all for joining, and we look forward to talking to you all soon. Have a great day.

Speaker 0

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.