Hi. Good afternoon, everybody. This is Kristen Kluska at Cantor. Thank you so much for being here at day one of our conference. Very excited to have the Aquestive Therapeutics team on stage with me. We have Dan Barber, the President and CEO, and Dr. Matt Greenhawt, the CMO. Thank you both so much for being here.
Thanks for having us.
Thanks for having us.
Okay, great. So maybe from a high level, do you mind just providing us with an overview of the company, and then we'll jump into some specifics?
Sure. Happy to. Kristen, thank you for having us back. As always, it's great to be here. In the past when we've talked about the company, we've talked about some of the things we've done over the years, but today I'll say we're an emerging commercial pharmaceutical company. Because as you know, I'm sure we'll spend most of our time today on Anaphylm, which is dibutepinephrine sublingual film, which, if approved by the FDA, would be indicated for the treatment of severe allergic reactions, including anaphylaxis. But with that product about to go back to the FDA and hopefully get through the FDA in the next few months, we really see our story as a commercial story.
As you know, the big hook with our product, I know you know I do this all the time, is that it is very portable, goes on the back of the phone, along with all of the clinical benefits that we'll talk about as we go through today.
As usual, you'll be disappointed to know that I don't have my EpiPen on me right now.
Come on, Kristen.
Further emphasizing why we need products like yours. So maybe to kick off our conversation, we can talk about the regulatory landscape, especially since you just had some recent data for us.
Sure.
So can you talk about the core checklist items the FDA wanted you to address after receiving the CRL, and how did the recent data you presented support this?
Sure. So we received a CRL just over eight months ago, and it was an interesting CRL. Never good to get a CRL, but there were some interesting things that we found in that CRL that have now made what we believe our package to be much stronger than it was. But the heart of the CRL was around packaging and Instructions for Use. The FDA said that our packaging was too difficult to open and that our Instructions for Use were not as clear as they needed to be for an emergency situation. However, we also learned in that CRL that the key clinical questions of our product had been answered. So from a clinical perspective, the FDA was supportive of approval.
We also, as we go back to submission right now, know that because the FDA asked us to do an off-label administration, so put the product on top of the tongue instead of under the tongue. We also know that even if you don't put the product in the oral cavity the way you're supposed to, that we get a pharmacodynamic effect that is meaningful. So we're going in with a package that has better packaging, clear Instructions for Use. We know the key clinical questions have been answered, and we know even if you don't administer it correctly, you still get a good pharmacodynamic response.
Okay. Thank you for that. Why does the rapid time to opening the pouch matter so much in the context of an emergency situation, and how do you think Anaphylm compares to other products and—
Well, look, you're supposed to carry an EpiPen. You don't have it with you. But for people who do carry an EpiPen, when you're in a crisis situation, and I'll pass it over to Matt in a second here, every second matters. But when you look at the data, our second human factor study, which is part of the core package that we'll put in, shows that the average person, this is across 100 people, took about 17 seconds to open our product, take it out of the package, and administer it. That's faster than what's in the public domain for the auto-injector and the other medical devices. So we now have the fastest product from a time perspective. But Matt, maybe you could talk about why that's important.
Yeah. The longer an allergic reaction goes on, the more severe it's going to get, so you want to stop this as soon as you can. You have a medicine that is very rapidly active in the body. You can take advantage of that. You can get it out of the package and into your body quickly, and once it's in your body, you see rapid peak onset of very robust effects. So that's sort of an ideal situation. You have to carry it with you, but we've had this talk before.
Yeah. Dr. Greenhawt, in situations of an emergency, though, do you feel that people just prolong it and say, "I'll wait a little bit longer, and I'm only going to absolutely administer the injection if necessary"? Also, is there a fear of other people helping out in these situations?
There's a lot of inertia to inject. I have gotten some very odd calls from one of my fellows saying, "Somebody's in the ER parking lot, and they're asking if they should inject themselves." I'm like, "Just send them in." We see this all the time.
Sure.
People, because of the injection, they think twice about. They're having symptoms. They recognize that they're clearly not doing well. They're sitting in front of the emergency room, but they're not using it. This is a preventable outcome in anaphylaxis. Anytime that there's delay, then that. We spend a lot of time counseling our patients before we send them out about how and when and why it's important to use it, then, nobody does, which is the unfortunate part. Change the form factor, give them something. They will take as much oral antihistamine as they can handle because they want something by mouth. We feel that this is something that potentially is more aligned with preference. You've got epinephrine, it can go in the mouth and work that way.
Now you're sort of aligning things that patients have been telling us subtly for years through their actions and inactions, maybe is a good way to potentially treat this.
Thank you for that. Going back to your recent data set, how's the FDA going to consider, or what have they said about understanding the PK trends relative to the IM administration?
Well, Matt has done a really good job in our organization, and I think in the allergy community in general, pointing out that PK is really just about FDA approval. It is just about bridging, right? The real world is about PD, which I know we will talk quite a bit about. So from an FDA PK perspective, we feel like we have answered the questions that need to be answered. The data that we are putting in now is just confirmatory. It shows once again, for the 12th time, it literally is the 12th PK study that we have run, that our PK can be bridged to the auto-injector and to the manual IM. The PK data that is on top of the tongue, again, we think that is just supportive data.
Okay, thanks. Just to clarify, the top of the tongue is essentially where there would be the least amount of saliva intake, right?
That is correct.
Okay. Thank you for clarifying that. Can you talk about the latest from the perspective of manufacturing readiness for FDA?
We're ready. We are, as you know, our history is in manufacturing. We still to this day manufacture 150 million doses of product for a variety of other companies every year. From a manufacturing perspective, we're very good at it. We have six FDA approvals in the past. We know how to do it, and we're ready to go.
Okay. Love that. If Anaphylm is approved, which financings get triggered, and is this going to be sufficient capital for the early launch requirements?
Yeah. No. We've done a lot of work, and our CFO, Ernie Toth, has really led the way over the last year to make sure we are well-positioned at launch time. We have just under $100 million of capital that we have already signed agreements for, $75 million with RTW, which is a royalty strip, and $20 million with Oaktree, which would be additional, a debt facility that will be available to us upon approval. Along with the cash we have on hand and the potential out-licensing deals that we have for Libervant in the U.S., as well as Anaphylm outside the U.S., we feel that we have a good runway for our launch.
Okay. Just to reiterate timelines for when you're going to submit.
Sure. Well, we've said Q3. It is September 9th, so imminently is probably the right word.
Q3 is still fair.
I wish we could do breaking here at this, but it will be imminently. We will ask for a class one timing, which would be two months for an action date. It's most likely that the FDA will assign a class two, which is six months. But we'll do our best to see if we can get the FDA to move faster, given that this package is a very thin package from a review perspective. It's literally a human factor study and a PK study to review.
Okay. I think when we think about differentiation, it falls into a few different buckets, right? It's going to fall into what the patient is going to prefer, what the physician is comfortable prescribing, and of course, how a payer will look at this, right? Maybe first focusing on the clinical profile differences, what do you think is the most differentiated aspect of Anaphylm?
Yeah. How rapidly and robust this kicks in. You see sort of steep rises already by two minutes, which in our trials is the first measurable. It takes about 90 seconds to inflate a blood pressure cuff, so that is really the first data point that you can capture in a clinical trial. By two minutes, you are already seeing fairly steep rises, which, depending on the study, are already starting to peak between 5- 11 minutes, depending on the parameter. If it is heart rate, systolic or diastolic blood pressure, that is peak. Not sort of hitting a clinically meaningful level. It is hitting that already by two minutes. So fast onset, and then it goes to really very robust levels that support resuscitation. That is the whole point. You do not give somebody epinephrine unless they need it.
You give it to raise their blood pressure, to make sure that their heart keeps beating to circulate the blood around, and epinephrine shuts down pretty much every effect of a mast cell. So if you are seeing it hit all the alpha and beta receptors, which are the sort of the hemodynamic effects, it is also hitting everything in the organs within the lungs or whatnot. It is stopping all the histamine from You have had an allergic reaction, right? Everything that makes you itch, sneeze, wheeze, swell, hopefully not pass out and go into shock, but again, that is why you give this. You want a rapid kick. You do not want this to linger. You do not want this to delay and wait 15 minutes. You look at our clinical guidelines, right? They start to say, if you get a prompt response, you can watch and wait.
But between five and 15 minutes is that window where if you have not seen something, you are giving a second dose. We need to be in that window so that there is no ambiguity that the patient is responding. You prevent the second dose. Now you prevent them from going to the emergency room. You prevent them from riding in an ambulance. You prevent them from being observed in an emergency room. Everything that costs thousands and thousands and thousands to tens of thousands of dollars. All of that can be sort of avoided by a good, swift clinical response, and that is hopefully where we can differentiate ourselves.
What is it about the profile of Anaphylm that allows for this, though? Is it because it is faster for me to open the pouch than read the fine print on the pen, and by the time I take it out? Is it the fact that it is sublingual administration? What is it about the mechanics that makes this a faster onset?
Yeah. We have that nice picture on the but it's a prodrug.
Yeah.
Sublingual epinephrine is not a new idea, but getting it to actually get into the bloodstream without it vasoconstricting and fighting its own mechanism has been the difficulty. The prodrug allows that so that there's no vasoconstriction. It doesn't activate in the mouth. It only activates in the bloodstream, and then it All of it is there. When you inject it or give it by other routes, the first thing it does is constrict its own absorbency into the bloodstream. When it does that, the low effects of the epinephrine activate the beta-2 receptor. The same thing that helps you breathe and other effects. At first, it actually causes your blood vessels to dilate, so you get some runoff. It actually works against your blood pressure and your heart beating fast until the concentration increases.
That's just a quirk that we've been dealing with. I believe that this is a more efficient way to give it, and the prodrug really helps with that. I'm geeking out over it as a clinician and because I'm a lot of fun at parties. But it's a really innovative way to give the drug, and it has some really remarkable clinical properties associated with that. This is great for patients.
Thank you for that.
Remember to carry it with them and take it, but—
Yeah. Well, that's one of the main advantages, right? It's easy to carry.
Well, as we've gone on the journey with this product, this has been a key learning for me.
Yeah.
You and I have talked for several years. When Matt joined us, I would've told you the most important thing you need to know about our product is it's easy to carry.
Yeah.
It's still really important.
Yeah.
But the reality is there is a clinical story here that is important, and that clinical story is, there's no one else in this space who has the clinical story that we have. I think that's compelling.
Yeah, of course. The epinephrine only works if it's next to you and easy to use, and in hindsight, right?
That's right.
So maybe turning gears to thinking about the commercial space a little bit here. Investors, I think, understand the profile of Anaphylm and why it could benefit so many patients, but there's concerns that reimbursement dynamics are strict for newer epinephrine products. What parts of that view do you believe hold true, and which ones might be incorrect?
Sure. Look, my learning in life is whenever you're going to negotiate with someone, you have to sit in their shoes and understand what they're going through. Not that any of us are big fans of the PBM system, but people in a PBM, they have a job to do, and they're faced with rising costs around biologics, around rare disease products. They're being asked to find bigger rebates to give back to their clients. They're trying to keep a net zero cost world. They have a lot of pressures on them. When we come to a space like epinephrine and rescue medication, where auto-injectors have just been running the course for years, and we say we want more money, that's hard for them. You really need to justify that premium that you're going to ask.
I think our learning from watching the other branded products is they didn't really justify the premium. They really focused on, "Well, we're convenient. We don't have a needle, therefore we should be covered." I don't think that was good enough. I think that was really hard for the payers to translate. Our approach is very much on what Matt just walked through, the clinical space. This is a space where when our product is taken, we know our blood pressure change is higher and faster than the auto-injectors and can be best in class. When you think about what that does from the downstream costs, there is no doubt in the literature that the faster you stop an allergic reaction, the better the outcomes.
The better the outcomes for the patient, and the better the outcomes from the reduction in a burden on the healthcare system. I get that every company on the planet comes forward and says, "Well, if you pay for our drug, we're definitely going to save you money on the medical side." But typically, that argument will be, "Well, over two years, we'll save surgeries on whatever." It's very hard to point to. In our case, it's very easy to point to. We're going to stop an emergency room visit, should I use 15 minutes, 10 minutes, 12 minutes?
It's 15 minutes. Yeah.
15?
Yes.
15 minutes after you have your allergic reaction. So it's almost an instantaneous amount of savings for the payer. When you look at the downstream impact, one source I was looking at says there's 1 million visits a year to an emergency room for allergic reactions. Then you go to the number of people who have been admitted. Then you go to the urgent care visits. There's a wide variety of costs that can be impacted if you have a product that not only people carry, but actually stops the allergic reaction faster than the other products out there. From my perspective, that is the pitch to the payer. There's no doubt price is a big part of that.
Yeah.
We're underway with that work right now.
So in a nutshell, the product is very attractive from a patient and physician perspective because of its convenience and easy to use. But maybe from a payer's perspective, the thing to really drill down is this product works fast, and it's going to save you money because of how fast it works.
That's right. You said that way quicker than I did.
Yeah.
Thank you.
It's okay. You have way more data points than I do. So which endpoints do you think are going to make the biggest difference in payer conversations about differentiation? We talk about onset of action, right? But what specifically are those measures, and is it anything beyond just the onset of action that we should be thinking about?
Do you want to go first, or do you want me to take that one?
You sure?
Sure. Yeah. From my perspective, I'll start with the negatives.
Sure.
I think PK, Tmax, Cmax, carry, you're not going to get much of anywhere with that. I think change in blood pressure, change in heart rate, explaining, making sure everyone understands what's going on in the body with an allergic reaction, and how epinephrine is very scientifically known to work. Those data points, if you want to call them endpoints, become very valuable, and then you do have to tie them to the downstream costs. Now, we won't be able to show savings on day one because our product's not yet in the market.
Right.
We do strongly believe that as our product cycles through and is used more and more, we'll be able to show that savings in real time to the payers.
Okay, so if you are commercial, there might be a way to measure if there are these real-world emergency situations.
Absolutely.
Okay, great. When thinking about a commercial landscape, where are you expecting the most utilization? Is this going to come from switch patients, newly diagnosed patients, maybe even patients who are very well aware that they have allergies but don't do the best job carrying around standard of care?
Every syllabus you—
I know the first person we're going to get a script from. We're going to go to someone who doesn't carry their EpiPen, may work at Cantor, and get them to carry our film.
Patient X, right?
Big Patient X. Right, yeah. All kidding aside, I think the first group of people, the easiest to convert, so to speak, are the disenfranchised. The people who have an EpiPen, don't carry it, do carry it but don't like to carry it, have a medical device that is clunky in their minds and want something better. That is absolutely the first group. The second group, I'll say, is more of a broad group. What we find with our product, and you've heard me say this before, we use this phrase at Aquestive of seeing is believing. When we are able to get in front of a doctor or a patient and actually show our product, we win people over all the time. We did a survey, well, we did a survey originally where we called people on the phone.
We described an auto-injector, a nasal spray, and a film, and said, "Which would you like?" I think half the time, they chose the film. We then did a survey where we sent the placebo versions of all three to patients, had them look at them, feel them, touch them, and then said, "Which would you choose?" Out of 54 patients, 52 of them chose the film. One chose our product and another product and said it was a tie, and only one chose another product. So we do believe getting in front of a healthcare provider, showing the product, that's how we can win.
Do you imagine that if I'm a patient and I'm going to my allergist, that they're going to visually have some examples or testers of the products that I can visualize myself?
We will definitely have demos, and we will definitely use our demos broadly and widely.
Okay.
We—
Please go ahead.
We can't let you out of the office without you showing us that you can use the product, whatever it is. We spend a lot of time, that's a documentable endpoint for our reimbursement as clinicians, but it's a socially responsible thing to do, right? If I prescribe you something that you either won't carry, won't use, or can't use, why did I prescribe it to you?
Right.
It's not going to do you any good. Medical legally, I'm covered for the five minutes until you show me that you can't use it, and then the question is why did you choose that product for that patient? That's pretty simple.
Okay. So you've said that awareness with allergists is extremely high now, and I know I'll embarrass you, Dr. Greenhawt, but I saw at ACAAI how many people came up to you firsthand to talk to you about why you joined the company.
They were all so happy I left the field. I'm going into pharma.
No, you were very loved there. So what part of the prescribing equation do these allergists make up, and how will you spread the word beyond allergists for patients that know that they have these allergies and they just get refills from their PCPs or another type of prescriber?
Well, let me give some stats, and then maybe you can talk about the work you and the medical affairs team are up to. So there's around, call it somewhere between 4,000 - 6,000 allergists that are prescribing on a regular basis. Together, they make up about 35% of the market. And with our 75 reps, we will cover that in its entirety. We'll also cover the high prescriber pediatric prescribers. And if we were to increase the size of our sales reps, let's say we doubled it, just for argument's sake.
Sure.
You start to get a very low additional percentage. So instead of 35% of the market, you're now at 40%, 41%, 42%. So we think we've found the right spot in order to be out in the market, cover the allergy space, make sure the word of mouth is there. But even before we get our sales reps in place, the awareness, the work that medical affairs does is really key, which, Matt, is what you guys are up to.
Yeah. I think the experience of seeing new products come to market in this space, the prescriber needs to trust the product. They need to know that if I prescribe this for a patient, it's going to work in the way that I've read about or heard about or believe or have seen or whatnot. So you're sort of engendering that trust, and Karen Rance, my VP of Medical Affairs, who's an allergy nurse practitioner, myself, we're leveraging everything we have in terms of going to our former colleagues and really trying to explain the data. And that's where we want to start, is just sort of building the story through the data. Data are the thing that we all cling to. That's our evidence base.
We can show sort of why we believe that this drug is behaving in a particular way, how this, we think, would help patients or whatnot, and sort of come from the top down, go to the experts, go into the community, to the community allergists. Give them a reason to want to prescribe this, because we can make them confident that this is going to help their patients. When they're confident, then they convince their patients that this is going to help them. Maybe they carry it with them. Hopefully, they take it, if they're carrying it with them. Everybody gets better. We have world peace. It'll be great. All through solving anaphylaxis. But we're the experts as the allergists. This is what we're trained to do. Anybody can prescribe this drug, but we know this inside and out.
We are the ones that make the diagnosis and understand what the indications are, who's at risk. This is what we're trained to do, to counsel, so that's the most logical place. We are 5,000, 6,000 strong, but we're the ones in the community that really represent. You had an allergic reaction, you don't want to go to anybody, but you want to come to us.
Yeah.
We do this better than anybody else, as allergists. So why not start with us? I'd love for the other fields to prescribe it. It'd make my job a lot easier. Start with the allergists and go from there.
I can respect that pricing conversations are confidential at this time.
Sure.
Maybe at a high level, can you tell us some of the work that you're doing with payers that's ultimately going to help influence where you end up pricing Anaphylm?
Yeah. Well, as you know, ahead of approval, there is an allowed regulatory pathway where you can engage with payers. We are in the middle of that pre-approval payer work. Really what that means is we are spending time making sure we are building the relationship. We are spending time telling our clinical story. We are spending time telling how we see the world and what the positioning of our product would be. We also do have the ability, while we are keeping it to ourselves for now—
Yeah.
—we do have the ability to talk about price with payers. We are doing all of that work right now. The awareness piece is also a big piece to make sure that they understand the potential. We will continue that work up until the day we have approval.
Okay. Realistically, how should investors think about the first few quarters of this launch and modeling?
Sure. I will stay away from modeling guidance. I would say there are a few things that people should look for. How do you judge success in an early launch in a world where it takes a while to get payer coverage? The first is, we think our strategy is very cash efficient, I will call it. So watching how we spend money and what we get for that money. What is the market share that comes out of that spend? We think we can be best in class on that compared to the other launches that have happened in this space. Second thing that we think we are well positioned for, the PBM wins. We do want to make sure we continue to, as we get past launch, show you where we are having coverage wins and keep those coming. So, that is hard work. That takes time.
It won't happen overnight, but that's something people should judge us on in 2027. Then the third spot, which perhaps is the intangible, but may even be the most important of all is five, six, seven months after launch, when you talk to HCPs and patients who have used the product, do they like the product? Are they telling their friends about the product? Are they saying, "How could I ever have stuck with this other product when I have this now available to me?" So this product, I think, has a huge capability to have word of mouth, and if you see that start to spread along with a good, efficient spend and good PBM coverage, I think we'll be in great shape.
Okay. There's been a lot of great progress this year. Your recent data was exceptional. We know that this is a huge market. A lot of patients unfortunately suffer from type I allergies. So putting it all together, what do you think is the most misunderstood or undervalued component to Aquestive's valuation, and why should investors look at you now?
Sure. Yeah. No. Look, they're clearly, and I may sound like every CEO on the planet when I say this, but clearly we're undervalued from my perspective. My opinion—
We think so too.
Thank you, Kristen. I think there is investor fear, I will call it, that because of the branded products that have come before, that the generic auto-injector is here to stay and cannot be converted into these better branded products that have come to market. I think that fear is completely unwarranted. I think when you look in other spaces, when patients and healthcare providers are given a product that is meaningfully improved from the existing products before, over time, habits will change, and they will move to that branded new product. I think what you will see as we come out and we hit our marks and we show what we can do, I think you will see that fear start to dissipate.
I do continue to believe, just like all of the survey work for a variety of people has shown, that in three to five years, the majority of this market is going to be in branded products.
Well, thank you so much. We are rooting for you over these next few months. These patients definitely need better options, especially ones that work much faster. So appreciate everything you are doing for this community, and thanks for being here.
Thank you, Kristen.