Aquestive Therapeutics, Inc. (AQST) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for your standing by, and welcome to Aquestive Therapeutics conference call. [Operator Instructions] I would now like to turn the conference over to your first presenter, Ms. Stephanie Carrington, Westwicke Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good evening and welcome to today's conference call. On today's call, I am joined by Keith Kendall, Chief Executive Officer; Dan Barber, Chief Operating Officer; and John Maxwell, Chief Financial Officer, who are going to provide an overview of the recent business development. In addition, additional members of the Aquestive team will be available for Q&A. In total, we expect today's call to last approximately 60 minutes. As a reminder, the company's remarks today correspond with the press release that we issued after market close today in a Form 8-K that was filed with the Securities and Exchange Commission, containing prepared responses to anticipated questions during this call and relevant charts to the business developments we will be discussing tonight. In addition, a recording of today's call will be made available on Aquestive Therapeutics' website within the Investor Relations section shortly following the conclusion of this call. Before we begin, let me remind you that today's call will include forward-looking statements based on the company's current expectations. Such statements represent our 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. We undertake no obligation to revise or update these forward-looking statements in light of new information or future events, except as required by law. For information concerning risk factors that could affect the company, please refer to the Risk Factors section in the company's annual report on Form 10-K filed with the SEC on March 11, 2020, and in its quarterly reports on Form 10-Q. With that, I'll now turn the line over to Ken -- line to Keith.

Thank you, Stephanie, and thank you, everyone, for reacting quickly and your flexibility in joining us this evening. Disappointingly, today, we received a complete response letter from the FDA on our new drug application for our product candidate, Libervant or diazepam buccal film, for the management of seizure clusters. As we outlined in our press release, the FDA issues a CRL to indicate that the review cycle for an application is complete, but the application cannot be approved in its current form. In the CRL, the FDA limited its comments to only 1 of the 9 studies performed by Aquestive and included in our Libervant NDA. Importantly, other than procedural observations concerning a small number of blood draws, the FDA did not identify deficiencies on any other issues beyond their comments on this one particular study. The study commented on by the FDA was Study 180323, which was a crossover study comparing the pharmacokinetic or PK profiles of Libervant and Diastat, the referenced listed drug to Libervant, in subjects diagnosed with epilepsy and actively taking antiepileptic drugs or AEDs. As far as we are aware, this is the first pharmacokinetic study ever performed using Diastat in subjects with epilepsy. Study 180323 contained 28 subjects and, from Aquestive's perspective, had solid results. As many of you know, PK studies generally focus on 3 measures: total exposure, referred to as area under the curve or AUC; the highest concentration of a drug at a known time point or Cmax; and the time to reach the highest concentration of drug or Tmax. In Study 180323, 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 Study 180323, there were 2 weight groups where the Cmax ratio comparing Libervant to Diastat were not as close to comparability as the FDA would like to see. In addition, the FDA noted that there were 5 subjects out of 28 who, when grouped together, had a Cmax ratio closer to 50% of Diastat. Importantly, 4 of these 5 individuals were within the same weight groups I mentioned before. The FDA had no further comments on the study or in any of the other weight groups. We had extensive and collaborative discussions with the agency about this question right up until and through Monday of this week. From Aquestive's standpoint, this CRL is heartbreaking. We have put a robust package together that thoroughly characterizes Libervant as well as Diastat. We have over 1,300 dosings in our safety study with promising results. This is an important product for patients, and we're very disappointed that our application was not approved for immediate distribution. In the short term, we believe this is a detriment to the epilepsy community, especially patients and caregivers. However, in our discussions with the FDA to date, we believe there is a logical path forward that will not require additional clinical studies. Using the robustness of the data from our 9 studies, we believe we can utilize modeling to adjust the dosing regimen for the weight groups noted in the FDA CRL. In all of our studies, Libervant has proven to have excellent linearity, which is a basis for predictability when modeling dose and exposure levels. Over the coming weeks, we will update our dosing model and request a Type A meeting with the FDA. The Type A meeting is a meeting that occurs typically within 30 days to discuss the development program to proceed to a path for approval. At this meeting, we intend to share the results of our modeling as well as our new dosing regimen 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 a resubmission of this kind is typically 6 months. However, given the narrowness of the resubmission, we will request a shorter review cycle, as is our right. This decision will be completely at the discretion of the FDA. In summary, while we did receive a CRL from the FDA for our Libervant application, today is an important step forward for Aquestive and the patients who will benefit from having access to Libervant. The FDA's comments are limited to one study. The comments on the study are limited to 2 weight groups. We can use our modeling to update the dosing regimen for these 2 weight groups, and we believe that this solution presents a promising path forward to approval. And we're hopeful the FDA will agree in the soon-to-be-scheduled Type A meeting. This concludes my prepared remarks, and I'll now open the line for questions.

[Operator Instructions] Your first question comes from the line of Randall Stanicky from RBC.

Randall, are you there?

Yes. Sorry, this is Dan Busby on for Randall. So first question, I know that you've talked about the linear relationship in weight-based dosing before. So just to be clear, do you intend to change the way you model that relationship itself? And would that have an impact on any of the other 8 studies?

Thanks, Dan. This is Dan Barber. Good to hear your voice. So from a -- if you think about the modeling we use, the linearity is driven by all of those 8 studies. So it's actually the other way around. The studies created the linearity, which is what we can use to adjust our dosing regimen. So to make it a practical example, in one of our weight groups, we are using 12.5 milligrams against the Diastat level of 15 milligrams. We will up our 12.5 milligrams to 15 milligrams, and we will then put that in the model to recast what those dosing regimen at that level would produce. So the robustness of the model we have is actually what will benefit us now, rather than it being something that goes backwards and creates a problem for us in our past studies.

Okay. Got it. That's helpful. And then I mean, if it sounds -- if FDA's concerns could be addressed with what sounds like a fairly straightforward adjustment, does it surprise you that FDA didn't simply ask for that information during the review, even if it meant potentially extending the PDUFA date by a few months?

The -- as I said, we've been working with the FDA intensively for the last couple of weeks. The question came up very late, and we addressed it with them. We've actually had 2 meetings with them in the last 2.5 weeks to talk through it. And I just don't think based on when the question came up and the work that had to be done with the model that there was time left.

Got it. Understood. Just one more question for me. It sounds like your base case assumption is a 6-month review. But can you talk about the factors that FDA might consider when deciding whether to grant a 2-month versus 6-month review?

Well, as you, I'm sure, know, a 6-month review -- a 2-month review is usually for minor adjustments, right? If you had an excipient that you were switching out the vendor, that would be a 2-month review. When you get into clinical changes, that is typically the 6-month review cycle. What we will argue in this case, though, is because we are using modeling and we are submitting no new clinical data, and our modeling changes and our dosing regimen are isolated to 2 weight groups, that the review cycle can be supported in a faster time. But as Keith said, that is completely at the discretion of the FDA.

And your next question comes from the line of Jason Butler from JMP Securities.

I just wanted to clarify. Did you, in the discussions with FDA over the last couple of weeks, propose the modeling solution? And did they give you any feedback into that potential route to a solution?

Jason, nice to hear for your voice. This is Dan. Yes, we did talk to the FDA about modeling as a solution. We found their comments to be helpful. The FDA, of course, would never say on any program for any reason it absolutes. But we do -- from our discussions, we do feel it's an appropriate and reasonable path forward that we'll have a very robust and positive conversation with the FDA.

Okay. And then I guess I'm looking at Slide 4 here, where you're showing the PK levels. And it looks like your PK profile is more consistent across the different weight groups versus Diastat, which has a higher Cmax in lighter patients, the lower Cmax in heavier patients. Do you get -- have you had feedback from FDA that acknowledges that the PK profile may be more predictive and the product appears more consistent across a range of weight groups?

Yes. And thank you, Jason, that's a very good observation. We have -- the FDA has acknowledged to us that at the study level, in particular, we have results that are within comparability and that our variability is better when compared to Diastat. You're absolutely also right that when you look at the weight bins, across those weight bins on Slide 4, you can see the tightness of our error bars and the tightness of our range when compared to Diastat, where at the low level, patients are getting a very high level, an unnecessarily high level, in some cases. And at the high weight group, they're getting a very low level and a level that perhaps is problematic for them. So one of the things we did struggle with the FDA is what level exactly are they looking for across all weight groups. And that's why on this slide, we included the overall Diastat Cmax level of 211. We do think that when we update our dosing regimen, we will be well within the range the FDA is looking for. And one helpful way we have approached that in understanding that is there is public information out there on other programs. Obviously, we can't compare ourselves to other programs such as diazepam nasal spray. There's a product called VALTOCO. But we have noted that in their public information, their patient data has a Cmax level in patients with epilepsy of 145 nanograms per milliliter. So for us, we get a lot of confidence when we see the VALTOCO level at 145, the Diastat level at 211, and we know we're already at the 211 and when we put our new dosing regimen, and we'll be well above that. So I know that was long-winded, Jason. But hopefully, that helped with your question.

That's really helpful, Dan. And then just one more question, Keith, and I get that you're going to have a limited amount you can say here. But can you just comment as to in terms of the KYNMOBI, the apomorphine royalty monetization, whether anything has changed in your plans or your broad time lines in securing that transaction?

Jason, you know how much I hate disappointing all of you. We're not going to make any comments about that. We'll provide an update on that in our earnings call in November.

[Operator Instructions] Our next question comes from the line of Liana Moussatos from Wedbush.

This is Shveta for Liana. Keith, can you remind us of the different weight groups in the Libervant study? And then on the call, you mentioned 4 of the 5 patients were in the same group. Can you talk about which group they belong to?

Sure. I'll let Dan walk you through that.