A Deep Dive Into Aquestive Following The FDA's Approval Of Riluzole

Aquestive Therapeutics Inc AQST made a move this week, gaining about 17% Monday after the FDA approved one of its drugs ahead of a Nov. 30 PDUFA action date.

The thinly traded, micro-cap stock is little changed on a year-to-date basis, although it has traded in the range of $2.95-$8.54.

The company is expected to complete the rolling regulatory submission for another investigational drug before the end of November.

Aquestive is a specialty pharma company that primarily focuses on therapies for central nervous system conditions. Founded in 2004 as Monosol Rx, the company changed its name to Aquestive in late 2017. The company offered its shares to the public in July 2018 through a 4.5-million-share IPO priced at $15 per share.

The company applies its innovative drug delivery technology PharmFilm to deliver medications through film. It also uses its scientific expertise to redesign important medicines.

Source: Aquestive

The company has a proprietary commercial product in Sympazan (clobazam) oral film, which is used to treat Lennox-Gastaut syndrome. The product was made commercially available in December 2018 following FDA approval in the previous month.

The company announced Monday that the FDA approved its Exservan (riluzole) for amyotrophic lateral sclerosis, or ALS, aka Lou Gehrig's disease, which leads to death of neurons that control voluntary muscles.

The company said it is continuing dialogue with potential licensees for the U.S. commercial rights for the drug.

It has licensed the European development and commercialization rights to Zambon S.p.A.

Although Aquestive did not disclose the full financial terms of the licensing agreement with Zambon, it said the agreement provides for low-double digit royalties on net sales in the EU.

Aquestive also markets two licensed products: 

• Suboxone (buprenorphine and naloxone) sublingual film, licensed from Indivior PLC IZQVF and intended to treat opioid dependence.
• Zuplenz (ondansetron) oral stable film, licensed from Midatech Pharma PLC-ADR MTP and meant to treat chemotherapy-induced nausea and vomiting and pregnancy-induced nausea and vomiting.

Aquestive's Pipeline

• Libervant (diazepam) buccal film is being developed for breakthrough seizures and is in Phase 3 development. Following the pre-NDA meeting Aquestive had with the FDA, it conducted a single-dose crossover study versus Libervant's reference-listed drug, Diastat rectal gel.
• AQST-108 (epinephrine) for anaphylaxis and severe allergies: Phase 1 development. 
• AQST-305 (octreotide) for acromegaly/carcinoid syndrome is in pre-clinical development. Acromegaly is a hormonal disorder resulting from excessive growth hormone production by the pituitary gland, which leads to increased bone size, especially in the hands, feet and face. Carcinoid syndrome manifests as signs and symptoms that occur secondary to carcinoid tumors. It is caused by the endogenous secretion of primarily serotonin and kallikrein.

Source: Aquestive

Among licensed programs, regulatory submissions have been made for marketing APL-130277 (apomorphine) for Parkinson's disease and AQST-119 (tadalafil) for erectile dysfunction as well as for benign prostatic hyperplasia, which is non-cancerous enlargement of the prostate gland. The former has been licensed to Sunovion and the latter has been developed under a collaboration agreement with IntelGenx Technologies Corp. IGXT.

In January, Sunovion received a CRL for its NDA for APL-130277. Sunovion received a CRL for its NDA for APL-130277, and the company resubmitted the NDA Nov. 22.

Market Potential

Sympazan oral film shipments from wholesalers to retailers have risen by over 50% since the end of the second quarter, and the prescriber base climbed 56%, Aquestive said in a corporate presentation in November.

The company said the product is on track to generate about $65 million in peak net revenue.

With regard to Libervant, the company is of the view that it has the potential to become the preferred rescue medication by patients and providers who are seeking a clinically differentiated treatment in a preferred dosage form.

Over 1 million patients in the U.S. have uncontrolled epilepsy that requires rescue medication. Less than 10% of these patients are treated successfully with diazepam, the current standard of care.

Aquestive is also positive about its allergy drug AQST-108. About 2% of the U.S. population suffers from anaphylaxis, and it causes 186-225 deaths per year.

Mylan NV MYL's Epipen has drawbacks such as difficulty in administration, inaccurate dosing, painful intramuscular injection and inconvenient portability, according to Aquestive.

Aquestive sees a window of opportunity here: the market for epinephrine is estimated at $1.7 billion, with more than 3.5 million total prescriptions.

Aquestive's Financials

Since its inception, the company has incurred losses and continues to expect losses and negative operating cash flow for the foreseeable future.

Source: 10-K filing

For the recent third quarter, Aquestive reported revenue of $12.4 million compared to $13.3 million one year ago. 

The company blamed the decline on lower license and royalty revenue. Manufacturing and supply revenue related to Suboxone and authorized generic product volume growth increased.

The net loss for the quarter widened from 64 cents per share to 74 cents per share. The larger loss reflected higher investments for the commercialization of Sympazan and the development of Linervant and AQST-108.

Cash and cash equivalents stood at $20.91 million as of Sept. 30,, notably lower than the $60.6-million balance on Dec. 31, 2018.

For the full year 2019, Aquestive has guided to revenue of $45 million to $47 million and a non-GAAP adjusted EBITDA loss of $49 million to $50 million.

These figures represent upward revisions from the guidance issued in early August, which called for revenues of $38 million to $45 million and a non-GAAP adjusted EBITDA loss of $50 million to $52 million.

The company forecast a cash burn rate — including interest, capital spending and working capital — of $60 million to $65 million.

Aquestive expects its cash and cash equivalents; anticipated revenue; financing raised through a July 15 debt offering; and potential future monetization of certain royalty streams or other license rights for apomorphine to be adequate to fund its cash needs for at least 12 months.

Aquestive's Upcoming Catalysts

• Completion of rolling submission for Libervant NDA: before the end of November.
• Presentation at the American Epilepsy Society Annual Meeting: early December.
• Pre-IND meeting for AQST-108: early 2020.
• Libervant approval: end of the third quarter of 2020 (estimated).
• Human proof-of-concept data for AQST-305: 2020

A Take On Aquestive Stock

Aquestive shares, which closed their debut session with a gain of 7%, went on to hit an intraday high of $20.70 in September 2018. Subsequently, the stock fell sharply through the end of the year, with a CRL for tadafil oral film and an adverse patent ruling triggering the stock drops. 

The stock was on a downtrend through most of 2019, although the intensity of the sell-off slowed.

After it bottomed at $2.95 on Sept. 23 of this year, it has attempted a rebound. The area around $6 could now be a key support level. The $3-$3.30 area could also serve as a strong support.

On the upside, the stock is likely to find resistance around the $8 level.

The average analyst rating for the shares is a Buy, and the average price target is $18.33, according to the Yahoo database.