Aquestive Therapeutics (NASDAQ:AQST) Q2 2026 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter Aquestive Therapeutics Earnings 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. And to ask a question during the session, you would need to press 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Faith Pomeroy Ward, Investor Relations. Please go ahead. Thank you, operator. Good morning and welcome to today's call.

0:46 On today's call, I'm joined by Dan Barber, President and Chief Executive Officer and Ernie Toth, Chief Financial Officer, who are going to provide an overview of the company's reported financial results for the second quarter ended 06/30/2026, and a progress update on the company's key 2026 objectives, followed by a Q and A session. During the Q and A session, the team will be joined by Doctor. Matt Greenhot, Chief Medical Officer, Molina Chaffee, Senior Vice President, Regulatory Affairs, Sherry Korchinski, Chief Commercial Officer, and Doctor. Matthew Davis, Chief Development Officer. As a reminder, the company's remarks today correspond with the earnings release that was issued after market closed yesterday.

1:33 In addition, a recording of today's call and related supplemental materials 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 second quarter twenty twenty six results. A description of these measures, along with a reconciliation to GAAP, can be found in the earnings release issued yesterday, which is posted on the Investors section of Aquestive's website. During the call, the company will be making forward looking statements. We remind you of the company's Safe Harbor language as outlined in yesterday's earnings release, as well as the risks and uncertainties affecting the company as described in the Risk Factors section and in other sections included in the company's annual report on Form 10 ks filed with the U. S. Securities and Exchange Commission on 03/04/2026.

2:35 As with any pharmaceutical company with product candidates under development and products being commercialized, there are significant risks and uncertainties with respect to the company's business and the development, regulatory approval and commercialization of its products and other matters related to operations. Given these uncertainties, you should not place undue reliance on these forward looking statements, which speak only as of the date made. Actual results may differ materially from these statements. All forward looking statements attributable to Aquestive or any person acting on its behalf are expressly qualified in their entirety by this cautionary statement and the cautionary statements contained in the earnings release issued yesterday.

3:22 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. Now I would like to turn the call over to Dan. Thanks, Faith, and good morning, everyone. I am excited to share today that not only have we completed the necessary studies for antifilm resubmission, but that we remain on track to resubmit before the end of this quarter. This is less than eight months from when we received a complete response letter from the FDA. Our resubmission will include the results from our most recent human factors validation study.

4:09 As a reminder, this study provides information on how participants interacted with our improved packaging and instructions for use. In the complete response letter received earlier this year, the FDA indicated participants experienced difficulty opening our pouch and incorrectly administered the film too many times. I am pleased to say that after updating our packaging labeling and instructions for use, our most recent human factors validation study showed statistically speaking a major reduction in both categories. Under the previous packaging, we had 26 individuals indicate difficulty opening our packaging and we had six individuals tear the film.

4:58 This time, we had only one participant show difficulty and no one tore the film. In the previous study, 20 participants placed the film incorrectly on top of their tongue or on the roof of their mouth. This time we had only two participants misplace the dose during administration. This data is further supported by our latest pharmacokinetic or PK study. In this study, we saw no statistical difference between clinician administered and self administered drug product. Keep in mind, subjects who self administered were given a revised packaging and instructions for use and had no coaching by clinical staff during the administration.

5:44 We also had an encouraging result when the film was purposely misplaced by clinicians on top of a subject's tongue. This data was requested by the FDA to further understand what might happen if the film is misadministered. We saw rapid and meaningful changes in blood pressure and heart rate. The changes from baseline were higher than manual I'm during the critical first fifteen minutes and in line with what we have seen from EpiPen in our other studies. This means that in the evaluated misadministration scenario, pharmacodynamic responses compared favorably to manual I'm administration. Even on PK, while we saw lower levels as expected compared to unlabeled sublingual administration, we still reached meaningful Cmax levels.

6:39 This is a very encouraging outcome for the program. As we approach our planned resubmission for Anafil, it is a good time to review the compelling opportunity that exists for antifilm here in The US. While the epinephrine rescue market is largely generic, the need for improved clinical and carrying offerings in this category is significant. And we believe these needs could support conversion to a branded product over time if approved. As a large PBM publicly wrote earlier in the year about ANNAFILM, this advancement stands out because emergency treatment is a category where ease of use and readiness really matter.

7:26 That need starts with patients, caregivers, and healthcare providers. Our interactions with the allergy community indicate there is a widespread desire among patients and caregivers for an epinephrine that is oral, works quickly, is easy to use, easy to carry, and durable. Many years of research and data tell us patients still do not carry or use their epinephrine. The data also shows that medical devices such as auto injectors are often not where you need it, when you need it, when anaphylaxis occurs. We believe the conversion from auto injectors starts with the allergists and we can accomplish this efficiently.

8:15 Our focus at launch will be on the allergy community, which will allow us to keep our cash burn down as we prepare for a potential launch, if approved. We believe if allergists convert their prescriptions to the first and only non invasive orally delivered epinephrine product for the treatment of type one allergic reactions including anaphylaxis, if approved by the FDA, the rest of the market could follow over time. Clearly, the desire for better products in this space is strong among patients, caregivers, and healthcare providers. This brings us to payer coverage. The first point I want to be clear on today is that we believe clinical differentiation matters to payers.

9:06 Let me repeat that. Clinical differentiation matters. This goes beyond just offering a no needle solution. In our case, the benefits from an oral medication are significant. Not only do we believe we are easier to carry than auto injectors, our product has shown in our studies meaningful clinical differentiation from the auto injector on time to maximum concentration or t max and on change from baseline blood pressure following administration. Our data demonstrates this and we believe payers may find this meaningful. This along with the ease of carry and use aspects of antifilm are important. We have a great clinical story to share and we have already heard from multiple counterparts at various payer groups about the difficulties their individual family members face with auto injectors.

10:06 Payer coverage is also a function of product pricing. This is the single most important decision any brand will make at launch. We are actively building our pricing strategy and for now we'll keep this confidential. What I will say is that based on the ongoing volume in this market, we continue to believe the market opportunity for epinephrine branded products exceeds $1,000,000,000 a year and could potentially reach 2,000,000,000 a year over time. This is driven not just by payer dynamics, but also by prescription volumes. The epinephrine rescue market has been growing for years even without significant promotional activities.

10:53 Over the last few years, the market has grown annually by around 6% and this holds true for 2026 year to date. Given the large gap between prescriptions and prevalence, the continued expansion of allergy diagnoses and new product offerings, we believe this growth rate could continue for the foreseeable future. So from my perspective, the compelling opportunity in this category remains intact. We have an expanding and growing market dominated by outdated technology. We believe our product provides meaningful clinical differentiation that could support payer adoption, all while being efficient in our allergist focused launch strategy if approved.

11:43 Now let's talk about medical affairs and our commercial launch preparations. Our Chief Medical Officer, Doctor. Matt Greenhot, and his team continue to interact with allergists on a daily basis and continue to attend all key allergy conferences. In fact, I believe awareness of antifilm within the allergy community is now quite high. Matt recently told me that during a major allergy conference, it was difficult to find physicians who were unfamiliar with antifilm. That is a testament to the team's consistent engagement with allergists over the last several years. Interaction after interaction, the team continues to share the excitement for antifilm to be potentially approved.

12:33 Our commercial team has launch preparations fully underway. As previously shared, the team has made excellent progress preparing for launch. Sales leadership has put plans in motion to bring on our regional sales directors and training. Marketing is driving all promotional materials and programs to be launch ready in a manner consistent with applicable pre approval requirements And we are building out our commercial analytics capabilities. Simply put, we have the right experienced leadership in place and remain on track to hit the ground running as soon as possible if approved by the FDA. Now let's turn to AQST-one 108. I must admit, I was surprised after our May earnings call by how much interest we received in our atopic dermatitis program.

13:26 One of the most common reactions was I've never thought about epinephrine for atopic dermatitis, along with questions on how we believe the science works. We have included extra slides in our supplemental materials to further elucidate the science. Simply put, a localized topical epinephrine application may have the potential to provide a meaningful treatment approach in atopic dermatitis and could potentially support a dosing profile that does not require DALY administration. This could allow us to position AQST-one hundred eight between low cost, less effective generics, and significantly higher priced biologics. We will have more to say on this program after we have completed the resubmission of Anafilm.

14:15 Now let's turn to our partnering and base business activities. We continue to engage in active partnering processes for Libervant in The U. S. And Anafilm outside of The U. S. And we expect to have more to say as those processes progress. Our base business as well remains cash flowing on a consistent basis. After interacting with Indivior, we also believe that there is no near term impact to our base business based on the proposed IndiviorSupernus merger. We continue to manage our cash carefully. As a reminder, we continue to expect $75,000,000 in launch funds from RTW following FDA approval, as well as $20,000,000 from Oaktree.

15:04 This along with the potential cash that could be generated from our out licensing activities is completed on acceptable terms means we believe we are positioned to support an effective launch of ANNAFELM assuming FDA approval, satisfaction of applicable funding conditions and execution of our planned commercial strategy. In conclusion, the epinephrine market remains a healthy and growing market that is well positioned for potential conversion from auto injectors. We are on track to resubmit our NDA in Q3. Our cash position is expected to support a potential launch and we will have more to say on AQST-one hundred eight later in the year. With that, I will turn the call over to Ernie.

15:52 Thank you, Dan, and good morning, everyone. By now, you will have seen our second quarter twenty twenty six financial results in the earnings release issued last evening and detailed in our Form 10 Q filing. As we typically do, we will address most of the detailed discussion regarding the quarter during Q and A, and I will focus my remarks on the financial performance, operating spend and liquidity. During the second quarter, our primary financial focus remains supporting the ANIFILM resubmission process while maintaining a strong balance sheet and financial flexibility. During the quarter, we also completed our refinancing with Oaktree, establishing a new $150,000,000 debt facility that lowers our cost of capital, extends our interest only period and enhances our financial flexibility as we prepare for a potential antifilm launch if approved by the FDA.

16:58 As Dan discussed, we successfully completed the human factors validation study and PK study for ANNAFILM and results support resubmission of the NDA in the third quarter of twenty twenty six. We are also continuing to manage the business with a disciplined approach to capital allocation. Our commercial team is advancing launch preparations in a manner consistent with applicable pre approval requirements, while our medical affairs team continues to engage with the allergy community. At the same time, we remain focused on carefully managing cash as we move towards resubmission and prepare for a potential launch if approved.

17:47 Now let me walk through the second quarter results. Total revenues increased to $13,800,000 in the second quarter twenty twenty six from $10,000,000 in the second quarter twenty twenty five. The 38% increase was primarily driven by increases in manufacturer and supply revenue and increases in license and royalty revenue. Manufacturer and supply revenue increased to $11,900,000 in the second quarter twenty twenty six from $9,600,000 in the second quarter twenty twenty five, primarily due to increases in Suboxone revenues, partially offset by lower ONDIF revenues.

18:36 License and royalty revenue increased to 1,300,000 in the second quarter twenty twenty six from $800,000 in the second quarter twenty twenty five, primarily due to royalty revenue from Zebra. Total revenues increased to $28,300,000 for the six months ended 06/30/2026, from $18,700,000 for the six months ended 06/30/2025. The 51% increase was primarily driven by increases in license and royalty revenues and increases in manufacturer and supply revenue. Manufacturer and supply revenue increased to $20,700,000 for the six months ended 06/30/2026, from $16,800,000 for the six months ended 06/30/2025, primarily due to increases in Suboxone revenues, partially offset by lower ONDIF revenues.

19:38 License and royalty revenue increased to $6,700,000 for the six months ended 06/30/2026, from $1,600,000 for the six months ended 06/30/2025, primarily due to royalty revenue from Zebra. Research and development expenses decreased to $4,000,000 in the second quarter of twenty twenty six from $4,100,000 in the second quarter of twenty twenty five. The decrease in research and development expenses was primarily due to lower development and manufacturing costs associated with the ANIFILM program, partially offset by increases in preclinical costs. Research and development expenses decreased to $8,200,000 for the six months ended 06/30/2026, from $9,500,000 for the six months ended 06/30/2025.

20:38 The decrease in research and development expenses was primarily due to a decrease in the clinical trial costs and product research expenses associated with the antifilm program and decreases in share based compensation, partially offset by increase in personnel costs. Selling, general and administrative expenses increased to $14,100,000 in the second quarter twenty twenty six from $12,700,000 in the second quarter of twenty twenty five. The increase primarily represents higher legal fees of approximately $2,100,000 higher severance costs of approximately $1,400,000 which includes acceleration of share based compensation, higher personnel costs of approximately $900,000 and higher share based compensation expenses of approximately $300,000 as well as other expenses, partially offset by lower commercial spending of approximately $2,600,000 and lower regulatory and licensing fees of approximately $1,200,000 Selling, general and administrative expenses decreased to $25,000,000 for the six months ended 06/30/2026 from $31,800,000 for the six months ended 06/30/2025.

22:10 The decrease primarily represents lower commercial spending of approximately $4,500,000 the onetime antifilm PDUFA fee of $4,300,000 in the prior year period, lower legal fees of approximately $1,300,000 lower regulatory and licensing fees of approximately $1,900,000 partially offset by higher severance costs of approximately $2,000,000 which includes acceleration of share based compensation, higher personnel costs of approximately $1,400,000 and higher share based compensation expenses of approximately $1,800,000 as well as other expenses.

22:59 In the second quarter of twenty twenty six, the company recognized a one time loss on extinguishment of debt of $11,700,000 which represents the difference between the carrying value of the 13.5% notes as of 05/12/2026, and the total payoff amount of the 13.5% notes. Aquestive's net loss for the second quarter twenty twenty six was $22,900,000 or zero one eight dollars for both basic and diluted loss per share compared to the net loss in the second quarter of twenty twenty five of $13,500,000 or $0.14 for both basic and diluted loss per share.

23:47 Excluding the impact of the onetime recognition of the loss and extinguishment on the company's 13.5% notes, the net loss in the second quarter of twenty twenty six was $11,200,000 Aquestive's net loss for the six months ended 06/30/2026 was $30,900,000 or $0.25 for both basic and diluted loss per share compared to the net loss for the six months ended 06/30/2025, of $36,500,000 or $0.37 for both basic and diluted loss per share. Excluding the impact of the onetime recognition of a loss on extinguishment on the company's 13.5% notes, the net loss for the six months ended 06/30/2026, was $19,200,000 Non GAAP adjusted EBITDA loss was $5,200,000 in the second quarter twenty twenty six compared to a non GAAP adjusted EBITDA loss of $9,300,000 in the second quarter of twenty twenty five.

25:01 Non GAAP adjusted EBITDA loss was $7,000,000 for the six months ended 06/30/2026 compared to a non GAAP adjusted EBITDA loss of $27,000,000 for the six months ended 06/30/2025. Turning to the balance sheet. We ended the second quarter of twenty twenty six with $98,500,000 in cash and cash equivalents. Combined with the flexibility provided by our Oaktree facility and the expected availability of $75,000,000 in launch funding from RTW and $20,000,000 from Oaktree following FDA approval of ANNOFILM, we believe we are well positioned to support our planned commercial strategy and launch preparation.

25:52 As Dan noted, we also continue to engage in active partnering processes for Libervant in The U. S. And ANNAFILM outside of The U. S, and we expect to have more to say as those processes progress. Our base business also remains cash flowing on a consistent basis. We are maintaining our full year 2026 financial guidance. For 2026, the company expects to have total revenue of $46,000,000 to $50,000,000 and non GAAP adjusted EBITDA loss of $35,000,000 to $30,000,000 In summary, the second quarter reflects continued financial discipline and execution across the business.

26:40 We delivered year over year revenue growth, improved non GAAP adjusted EBITDA performance, ended the quarter with a strong cash position and remain focused on funding the key priorities that Dan outlined today. Those priorities including completing the antifilm resubmission in Q3, preparing for a potential launch if approved by the FDA, advancing AQST-one hundred eight, and continuing to evaluate partnering opportunities. With that, I will now turn the line back to the operator to open the line for questions. The first question will come from Roanna Ruiz with Leerink Partners. Your line is open.

27:39 Hi, morning everyone. So a couple of questions from me. One, could you help frame how the recent PK and human factor study data potentially increases your conviction in the resubmission, being very comprehensive? And can you give us updated thoughts on whether you think the FDA may use a shorter or accelerated timeframe to review the resubmission? Sure. Good morning, Roana. So I'll give you my thought on the PK human factors overview, and then I will ask Matt to give a little bit more color. We know from the original review that the FDA's clinical team was bought into and signed off on the approval of our product.

28:32 So we know from a clinical perspective that there's conviction on the FDA side from at least the interactions we've had in the back and forth and what we've seen documentation. So we know that the CRL was limited to the things that not only we shared with you, but also to that idea that the packaging was difficult to open and our instructions weren't clear for administration. So when we look at the data that we just generated, we believe we have very convincingly and thoroughly answered the open questions the FDA put out. As you heard in the prepared remarks, on the human factor side we think the results are very clean, and on the PK side, when self administered, we saw no difference from clinician administered.

29:24 And even when we look at this off label arm that the FDA asked us to produce, we see some really interesting pharmacodynamic data. And before I answer the timeframe question you had, I'll just ask Matt to give his thoughts on the pharmacodynamic data. Good morning. In looking at the results, the one theme that I keep coming back to is just how reassuring it was to look up the results that we got. Think, as Dan said, when you look at the repeat of the health administration and the healthcare provider, got exactly what we were expecting and it didn't range with what we've seen before, so it's nice to see the reinforcement replication of that data.

30:13 And then you look at the off target, the top of tongue, and those were really, really great data to see that there is with that sort of in a way that we don't intend the product to be used that you're still getting a very clinically meaningful increase in your heart rate and blood pressure. I think, in my opinion as a clinician, when I'm prescribing a drug to a family, to a parent, they reassurance that this is going to work. And I think we're able to look at these data in a way that we see a response, which in a way that you wouldn't want the drug to be taken, you're still going to get a response. I think that's among the more reassuring things that you can counsel a family when they're making a decision on what product they would prefer to be prescribed.

31:06 Very, very pleased with the results. And going to your second question on the timeframe, our guidance to everyone remains the same. If the classification system at the FDA would tend to say this is a six month review, so our guidance is this will be a six month review. However, comma, we are already engaged with the FDA on the fact that our application is coming their way. We do think this is a very thin package compared to the ten month review they've already done and the conclusions that they've reached, and we will be pressing them in a supportive way, not in an aggressive way, that this is an opportunity to move faster. So whether they take that opportunity or not is up to them, and the standard time would be success.

31:57 Yep, that's helpful. And a quick follow-up. Thinking ahead, how would physicians typically interpret the HF and PK data on top of the existing data you've already produced, and how are you thinking about leveraging this information with the field force, detailing docs, things like that, assuming anofilm is eventually approved? Yeah, well, I'll give it to Matt in a second again to give you his thoughts on how a physician might think about this data, but let me be clear with the data that we've generated. We have a great clinical story, and you heard me say that in the prepared comments. So not only in the payer world where we think there's an ability to position the product in an important way from a clinical perspective, but also with Matt's team, the MSLs, and of course with Sherry and all of her efforts and her marketing team and sales team, we will absolutely be showing all of the great data we have, including the data we just generated. But I'll let Matt give you his thoughts. I think Dan said it well.

33:04 On the medical affairs side, we're very excited to get out to the next conference to be able to start sharing these details with the allergy community and in our visits to physician offices. How we would look at these data, this is just building more of rounding out the story of an already sort of very, very nice tale. We've got great data. We have a product that in our studies shows a very strong magnitude of effect and that magnitude of effect occurs very early within a couple of minutes. You know, comparatively in our studies we've consistently seen that the magnitude of that effect exceeds that we're comparing it to. You know, you sort of synthesize what we just released, you know, we were able to show that even with the top of tongue, again, we really would prefer you not take it this way, but if you do, even the setting of low resulting PK, the resulting PD is overlapping with the same magnitude of change that we saw when we used EpiPen in our pivotal study.

34:11 That to me just sort of at this point is icing on the cake, but it's a really, really nice feature to be able to have to counsel your patients. If you're looking at the totality of our data, have a consistent picture of rapid onset of the drug reaching high levels, and these are very clinically meaningful levels. So, you know, combine this now with human factors data that shows that clearly we've improved on, you know, sort of previous performance, Yeah, reassurance, that's the one word, and it's nice to have these data to see it over and over again in a number of different studies with the PKPD data, consistency, it's just very, it's a nice thing to have to be able to counsel your patients.

35:05 Sounds good. Thanks. Thank you. And the next question is going to come from Kristen Kluska with Cantor. Your line is open. Hi, good morning everybody and congrats on these data you announced earlier in the week. A few questions from me. The first one, we've often talked about the product profile differences that will be important for payer discussions. But in your prepared remarks, you mentioned some of the clinical differentiation factors. Curious if there are certain endpoints over others that you think are going to carry the most weight and how that portrays with the data that you've seen from ANNAFILM so far? And then I wanted to ask for the Cmax data for the top of the tongue, the inaccurate usage, whether the FDA in advance of this had set a bar for what they were looking for? And I know in literature they talk about this one hundred picograms per milliliter being important, but is there a timeframe associated with when they'd want to see that? Thank you.

36:12 Sure. Good morning, Kristen. So, let me go in reverse order on the Cmax question. As we all know, the FDA is reticent to ever give you bright lines of what you need or don't need. But we know from our correspondents over several years that there's two threshold marks that they have pointed to both in written communication with us and in meetings. And the first one is this idea of getting over 50 picograms per milliliter, which we clearly do, and the second, on the top of the tongue, and the second is that idea of clearing 100 picograms per milliliter, which we also do. So we think from a PK perspective, if you, and I'll hand it over to Matt in a second, and obviously as a practicing physician I think you'll hear him say PK is not really where practicing physicians focus, but from an FDA perspective where PK can be more important, I think we have, at least from the bars they have talked about in the past, we have what we need from, again, an off label or off use I should say, because the label is obviously in progress, an off use administration.

37:37 Will, Matt, I think this is your lucky day, it's coming back your way. I will let Matt talk about the clinical differentiation he sees, but I think it's worth pointing out again, I think one of the learnings we have in watching this market develop is positioning a product as simply no needle is not the path to success. The path to success is highlighting the important clinical differentiation that you have, and then of course all of the important features like use and carry come along with that. But I'll let Matt talk about the specific clinical differentiation items he thinks are meaningful. Thanks, Dan. Good morning. I think differentiation is doing work, and if you look at our data, and I'll highlight going back to our unpublished pivotal trial, the three zero one study, differentiation is very evident when you look at the magnitude of effect that our drug reaches versus what the comparative drugs reach in that study.

38:41 The magnitude of change is, I mean, can see it very clearly, it is greater. But more importantly, it's happening faster, much faster. And that makes a huge difference. In my clinical experience, and I'll disclose, I'm also a patient, I have a venom allergy, I get stung, hopefully I try not to get stung, but I get stung, I don't want something that's going to take a long time to kick in, I want that effect very rapidly and I want a maximal effect. I don't sort of want a gradual increase in sort of marginal peaks of how much my blood pressure and heart rate are going to respond. And that's what we see with our data, a rapid response in high levels.

39:26 And when you're giving epinephrine to a patient, you've a very small window in which you're watching to see is this going to work, what do I have to do next? It's sometimes five to ten minutes. So you look at where the time to these onset hits is within that window and we feel not only the change clinically meaningful, but it's happening in a timeframe that fits when we have to make a decision. Are we going to say that the patient's going to be okay in that when we're watching them or are we going to have to escalate care? So to us, we believe that our properties are absolutely differentiating in that respect. And again, my career given alpha doses of epinephrine, time is precious, and you really don't want to mess around with that.

40:22 Thank you. And the next question is going to come from David Amsellem with Piper Sandler. Your line is open. Hi, this is on for David. Thank you for taking our question. First, regarding one hundred eight, any learnings from the recently completed study in androgenic alopecia that gives you confidence that the effects of one hundred eight are relevant to atopic derm and a broader slate of dermatological conditions? That's number one. Number two, also on 108, can you speak to the rationale behind pursuing atopic derm first and how this decision plays into your broader strategy with respect to the Adreuniverse platform? Thank you. Sure. Good morning. And thank you for giving a little bit of airtime to one hundred eight. Obviously we're incredibly excited about antifilm and where we are and what we're doing, but we do believe adrenoverse has broader use, and one hundred and eight is the first place we're putting that to work. Starting with the rationale on atopic derm, that's pretty straightforward.

41:24 It's a well worn path in the dermatology space that atopic derm is a good entry point, good first initial indication for expanding into broader indications. So while we think alopecia areata is still an important indication and one that's out there for us, we want to get that first proof point through the gates. Now, we've obviously been a little hampered by just the ability to focus on 108 while also bringing antifilm forward, and clearly our resources are focused on antifilm, but to the extent that we've been able to move 108 forward, and we plan on doing that as we go forward, we do think that the science is there in a compelling way. I'll turn it over to Matthew Davis to just give you his thoughts quickly and remind everyone why we feel good from a scientific perspective.

42:22 We're incredibly excited. So in our human trials of 900 we saw TSLP suppression, We saw CCL3 and CCL4 suppression. So when you think of atopic derm, the number one symptom that you want to alleviate is itch. And itch is not just a histaminic mast cell phenomenon. When it comes to atopic derm, it's actually an IL-thirty one phenomenon, TSLP phenomenon, and mast cell. When we looked at our preclinical program, we saw an NF kappa B modulation, and that's a direct correlation with IL-thirty one. So if you throw together the three main causes of itch for atopic dermatitis, we believe that topical one hundred eight is going to hit those areas that cause itch, and we believe that it can have a meaningful benefit. So I'm very excited.

43:17 So more to come as time goes on, but appreciate the questions on 900. Alright, thank you. Thank you. And the next question will come from Mazi Ali Mohamed with Oppenheimer. Your line is open. Thanks everyone, thanks for taking our questions. Just really two for us. So one, kind of going back to the human factor study. So maybe on the root cause of the failure. So it seems like there was one opening failure and two misplacements. So maybe any color you can add what the root cause analysis concluded for each and what residual risk justification goes into the submission? And then a second one kind of following up on 108.

44:04 So, that was also an asset that this actually seemed to be quite an opportunity in atopic derm. One of the things that we were thinking through, though, was maybe more about dosing and long term use. And maybe any color you could add about rebound erythema or cachyphylaxis with chronic dosing with epinephrine products in this disease? Sure, yeah. And thank you for two really insightful questions. First, I appreciate the opportunity to clarify on the human factors data. So I want to be really clear, everyone opened the pouch in our human factors study. We had no failures to open the pouch. The one difficulty that we had still successfully opened the pouch.

44:53 So the way the human factor studies work, without diving in too deep, is a ranking of identified risks. So one is you opened it easily, one is you didn't open it, or another is you had some difficulty but opened it. So the one who opened it with some difficulty still opened the pouch. In terms of the misplacements, the two misplacements weren't necessarily on top of the tongue or roof of the mouth, they just weren't completely in the sublingual cavity. So if you pair that with the PK data in the conversation that we had with Matt earlier, you would expect if there had been PK around those individuals, and I'm completely giving an opinion, we don't have that data, you would expect they would be somewhere between the self admin data that is under the tongue and the data that was worst case scenario generated by clinicians as the FDA requested. So I think we're in a really good place on that data, and I don't think there's any additional justification necessary for those two things.

46:04 On 900, dosing over time, and I will pass it back to Matthew, I'll just highlight and remind you that this is a local delivery system that we're talking about, not a suspect, but I hopefully didn't steal all Matthew's thunder, I'm sure he can say it way better than I could. This is an incredible opportunity. So what we found, our preclinical team has done amazing, amazing work. So when you topically apply one hundred eight, the tip of epinephrine has a super pharmacologic concentration on the skin. The carboxyesterase in your interstitial fluid slowly will break back down to epinephrine. So your question about tachyphylaxis is a great one and a vital one.

46:51 Because we appear to have this TPO like effect, we do believe that this is foreshadowing that maybe we can dose this product not even once a day. So more to come on that, but we believe, first of all, you talk about immunology, with cellular based immunology, PK does not always correlate to PD. We are going to study the effect, the steeple effect, and we believe that we can have an extended release dosing of this product. More to come. Well, thank you both very much for the added color. Thank you. And the next question will come from Francois Brisebois with LifeSci.

47:38 Your line is now open. Good morning. Thank you for our questions. This is AQST on for Frank this morning. Congratulations on the progress. Two questions from us. So just one clarification, as you are on track for Q3 resubmission, can you comment is this going to be a Class I or Class II resubmission? And how does this affect the planned launch timeline, if at all? And secondly, want to ask about something that your competitor ARS has flagged previously that epinephrine patients tend to refill rather than return to the prescriber. So, this issue, how do you think about realistically the switchable pool by year one, say, and what's the mechanism that gets the patient to switch from existing auto injector script? Thank you.

48:37 Sure. Two good questions. The first, we did talk a little bit about the timing for the filing, but I will ask Molina to talk a little bit more about the classifications and what that means. Certainly. So there are two classifications that the agency will use to categorize an NDA resubmission. It's a very dated system from about thirty years ago, and there's really just those two classifications, one being a class one two month review, the second one being that of a six month review, And there's a very limited scope in terms of what would qualify for a two month review, and it's not really well defined.

49:28 Certainly it would be at the discretion of the agency as to whether or not they categorize this class one or class two, but as Dan had indicated, we certainly will be offering a very succinct package with a very focused scope on the CRL items, and so I do think that, at least from my regulatory experience, given the data that we will be providing, it really should be a very streamlined review for the agency. Again, it's certainly at their discretion, but I do think that they should be able to review what we consider to be a very succinct package quite quickly if they choose. And I appreciate the commercial question, because Sherri has been sitting here patiently with all the great stuff her team has been doing, so I'll pass it over to her on a few questions. Yeah, thank you so much for the question. As you know, this market continues to be so big, and it continues to grow. I mean, year over year we're seeing 6% or so growth, and even more encouraging is the allergist market continues to grow. So when we think about how efficient our launch will be with it being allergist focused, we have been very focused, if you will, on understanding that process.

50:49 And so the one thing that's really important foundationally is a patient does need to see their allergist every year to get a prescription. And so I can't really comment on the competitor as to what or why they said that, but look, we will have a very balanced and integrated approach across multiple channels to drive those conversations with the patient and their allergist. We've got a really compelling switch story, as you've heard all morning long, and my team is preparing to drive that messaging and that clinical differentiation that we believe is absolutely the icing on the cake.

51:36 Thank you for the color. Thank you. And the next question will come from Raghuram Silvaraju with H. C. Wainwright. Your line is open. Thanks for taking our questions and thank you all and congrats also on the progress. Wanted to ask, first of all, about your ex U. S. Plans for ANNAFILM. If you could maybe give us a sense of how you're prioritizing the different territories and where you think from a regulatory standpoint this product candidate might be most favorably received and what the underlying market dynamics are that would inform your prioritization of those territories, that would be very helpful.

52:24 I also wanted to ask about on a different front, how you are thinking about the potential long term impact to Aquestive of the recent Cosette Pharmaceuticals transaction and perhaps more importantly, the recently announced merger combination between Supernus and Indivior, given your long standing historical relationship with Indivior, what you see as potential opportunities going forward in the context of those two developments? Thank you. Sure. Thanks Ram. So I'll go in reverse order on this one as well and hit the long term impact question, and then give you some thoughts on the ex US market. I will also ask Molina to weigh in again on the regulatory piece.

53:11 So first, probably most importantly on the long term impact, with the IndiviorSupernus merger, we of course have been in contact with Indivior, with our, I don't know, I guess it's a twenty year relationship now, and not only do we know that Suboxone sublingual film continues to have strong usage, as you've seen from their results, but also that it's an important part of the story and will continue to be an important part of the story. So while that is a legacy part of our business, it does bring in it is a profitable part of our business, and we expect that to continue as is. In terms of cassette, they clearly are doing a good job with SYMPAZIM. They're actually local to us here, we know the team there, we think they're a good home for SYMPAZEN, we look forward to seeing what they do with the product.

54:07 In terms of ex US, I'll start with how we prioritize or where the opportunity is in the markets. Quite frankly, just like here in The US, epinephrine is a mature market from an understanding standpoint. So we know the opportunity in Europe is mathematically larger than the opportunity in Canada, which is larger than the opportunity in The UK. So in terms of markets, that would be the order of importance. But in terms of how we file, I'll let Melina tell you what we're thinking. Thank you, Dan. So we are targeting Canada, Europe, and The U. K. We will be beginning that process this year in the fourth quarter.

55:03 There was a question in terms of how the regulators view the product. I will just remind folks that we did have the opportunity to engage with all three regional health authorities, and not only were they confirmatory that the existing data package would suffice for filing, but I will just say that they also expressed interest, and I think that there is this concept of an unmet need that at least from a regulator perspective the groups understand. Thank you. The next question comes from Thomas Flaten with Lake Street. Your line is now open.

55:55 Hey, good morning guys. Appreciate taking the question. I guess to bring Sherry back on the phone, with respect to launch readiness and the potential for an expedited review, how are you thinking through, I guess, being ready for either scenario? And then, I guess, with a focus on managing contingency offers for sales reps with maybe a bit of a variable timeline around review time and potential approval. Well, before Sherri gives you her thoughts, I do want to give her a lot of credit. It's never easy to have a moving target, so I have definitely asked her to be ready for three or four different dates, which she has done a great job at, but I'll let her give you the thoughts. Yeah, thanks so much for the question. Well, for lack of a better phrase, the beauty of having the CRL is that it has provided us time. I was very fortunate to be able to keep the majority of my team on board. And so we have taken, as I've shared before, we've taken these months to really, really hone in and refine our plan from agencies and vendors we're using, and then also, Dan says there's a few scenario plans. I will tell you we've got quite a few scenario plans.

57:10 And so it will be a great problem to have if we get the two month approval. So we'll be ready for it. Will it impact hiring? Sure. I mean, we're not going to carry salespeople for months on end, as we stated. Once we have the package filed, we should have fairly shortly thereafter further understanding of timing, as Melina has shared with us, and then that will allow us to determine when we are able to make those contingency offers for salespeople. Do just want to to remind everyone that our base case, and Thomas, we're excited too, so I appreciate the question, but our base case is a six month review.

58:07 Got it. And then more broadly, strategically with respect to the ADRENAVERSE platform, Dan, are you thinking about that as a kind of a rich internal development pipeline, or do you view it more as an opportunity for partnerable assets that you can farm out? And I guess more specifically with respect to 900, assuming success in AD, is this something we could see you build a commercial presence in the derm space, or would you ultimately look to partner that out? Yeah, I think the great thing about this moment for Aquestive is we have the ability to grow in several different places, with Matt Greenhaught and his experience and background and sharing depth in the allergy space as well.

58:53 As we launch antifilm and find our ground in our market share, we will absolutely be active in that space and want to be a leader in that space. With the technology we have that believes nicely into dermatology, which is right next to allergy. In fact, there's a variety of practices that we know in this country that are both allergy and dermatology. One side is allergy, one side is dermatology. So with Matthew Davis and some of the development experience we have, we do think we can play in that dermatology world as well. So if I answer your question more from a what would I like to see the company do over the next coming years, I would like to see us play in both areas and become a much larger company with multiple products.

59:44 Appreciate that. Thank you. Thank you. I show no further questions at this time. I will now turn the call back over to Dan for closing remarks. Thank you, Michelle. As you heard today from our prepared remarks and the Q and A, this is a really exciting time for Aquestive. We do feel as though, and the expression goes, that we're hitting on all cylinders. We are on track to file antifilm in the coming weeks, the epinephrine market, as Sherry said, remains healthy and growing, and we've positioned the company to launch antifilm quickly if approved by the FDA. So with that, thank you for joining us, and have a great day. This concludes today's conference call. Thank you for participating, and you may now disconnect.