Aquestive
Therapeutics, Inc. AQST $14.00-$16.00 4.0 million
shares Underwriters: BMO, RBC Co-Managers: JMP Securities, Wedbush Proposed trade date of 7/25.
They are a specialty pharmaceutical company focused
on identifying, developing and commercializing differentiated products to
address unmet medical needs.
Aquestive Therapeutics, Inc. AQST
- 4,000,000
shares to be offered between $14.00 and $16.00 per share
- Underwriters:
BMO, RBC Co-Managers: JMP Securities, Wedbush
- Proposed
trade date of 7/25
- Rating
= 3
Click here
to view the prospectus.
https://www.sec.gov/Archives/edgar/data/1398733/000114036118032464/s002128x7_s1a.htm
Company
Overview
They are a specialty pharmaceutical company focused
on identifying, developing and commercializing differentiated products to
address unmet medical needs. They have
a late-stage proprietary product pipeline focused on the treatment of diseases
of the Central Nervous System, or CNS. They believe that the
characteristics of these patient populations and shortcomings of available
treatment options create opportunities for the development and
commercialization of meaningfully differentiated medicines. Their most
advanced proprietary product candidates, which they intend to commercialize
themselves, include (i) Libervant (the preliminary brand name for
AQST-203), a buccally, or inside of the cheek, administered soluble film
formulation of diazepam for the treatment of recurrent epileptic seizures, for
which they expect to submit a New Drug Application, or NDA, in 2018; (ii) Sympazan
(the preliminary brand name for AQST-120), an oral soluble film formulation
of clobazam for the treatment of seizures associated with a rare, intractable
form of epilepsy known as Lennox-Gastaut Syndrome, or LGS, for which they
submitted an NDA in October 2017 and have been assigned an August 31, 2018
Prescription Drug User Fee Act, or PDUFA, date, which is the date the U.S. Food
and Drug Administration, or FDA, expects to complete its review of their NDA,
and (iii) AQST-117, an oral soluble film formulation of riluzole for the
treatment of Amyotrophic Lateral Sclerosis, or ALS, for which they expect to
submit an NDA in the first half of 2019. They have also developed a
proprietary pipeline of complex molecule products addressing large market
opportunities beyond CNS indications, which include (i) AQST-108, a sublingual
film formulation of epinephrine for the treatment of anaphylaxis, for which
they expect to begin additional Phase 1 trials in 2018 and (ii) AQST-305, a
buccal film formulation of octreotide for the treatment of acromegaly and
neuroendocrine tumors, for which they expect to begin human proof of concept
trials in 2018.
In
addition to these product candidates, they have a portfolio of commercialized
and development-stage partnered products. These products include Suboxone, a
sublingual film formulation of buprenorphine and naloxone, which is the market
leader for the treatment of opioid dependence. They manufacture all of their partnered and
proprietary products at their FDA and Drug Enforcement Administration, or DEA,
inspected facilities and anticipate that their current manufacturing capacity
is sufficient for commercial quantities of their products and product
candidates currently in development. They have produced over 1.1 billion doses
of Suboxone in the last four years. Their products are developed using their
proprietary PharmFilm technology and know-how. Their patent portfolio currently
comprises at least 200 issued patents worldwide, of which at least 40 are U.S.
patents, and more than 75 pending patent applications worldwide.
Their Product
Portfolio and Pipeline
Proprietary CNS
Product Portfolio
They have initially focused their proprietary
product pipeline on certain difficult to treat CNS diseases. Their PharmFilm
technology allows them to develop medicines that offer non-invasive delivery,
customized suitability for patients with dysphagia, or trouble swallowing, can
be administered without water and ensure consistent therapeutic dosing. They
believe that these characteristics will allow them to achieve the desired
patient outcomes, while potentially reducing the total cost of patient care.
The most advanced assets within their proprietary
CNS portfolio are as follows:
·
Libervant – a buccally, or inside of the cheek, administered
soluble film formulation of diazepam, a benzodiazepine used as a rescue therapy
for breakthrough epileptic seizures and an adjunctive therapy for use in
recurrent convulsive seizures. They are developing Libervant as an alternative
to Diastat (diazepam rectal gel), the current standard of care rescue therapy
for patients with epilepsy, which as a rectal gel, is invasive, inconvenient,
and difficult to administer. Libervant is currently completing its final
clinical trials. They expect to submit an NDA for Libervant in 2018.
·
Sympazan – an oral soluble film formulation of
clobazam, a benzodiazepine used as an adjunctive therapy for seizures
associated with LGS. They are developing Sympazan as an alternative to Onfi
(clobazam), currently available in either tablet form or liquid suspension. LGS
patients often have difficulty swallowing pills and large volume suspensions
leading to uncertain and inconsistent dosing and increasing the burden of care,
particularly for patients that may be combative or resistant to treatment. In
clinical trials, Sympazan has demonstrated bioequivalence to Onfi. They
submitted an NDA for Sympazan in October 2017 and were given a PDUFA date of
August 31, 2018. If approved by the FDA, they anticipate launching Sympazan by
the end of 2018.
·
AQST-117 – an oral soluble film formulation of
riluzole, a small molecule glutamate antagonist used as an adjunctive therapy
in the treatment of ALS, which has been shown to slow disease progression,
increase lifespan and improve quality of life. However, because ALS patients
typically have difficulty swallowing, tablet administration is challenging. They
are developing AQST-117 as an alternative to Rilutek (riluzole), which is
currently available only in tablet form in order to achieve an easier, more
reliable and accurate dosing. This may allow patients to continue therapy even
after their ability to swallow has become compromised. AQST-117 addresses these
treatment obstacles because it is mucoadhesive and dissolves easily on the
tongue without the need for water and without a substantial increase in
salivary flow. In clinical trials, AQST-117 has demonstrated bioequivalence
to Rilutek. They expect to submit an NDA for AQST-117 during the first half of
2019.
Proprietary
Complex Molecule Portfolio
They
are utilizing their technology and know-how to target large market
opportunities by developing orally-administered complex molecule therapies as
alternatives to invasively-administered standard of care injectable therapeutics. They currently have two active complex molecule
programs in clinical development, which are:
·
AQST-108 – a sublingual soluble film formulation of
epinephrine for the treatment of anaphylaxis, a severe and potentially
life-threatening allergic reaction. Epinephrine is the standard of care in the
treatment of anaphylaxis and is currently administered via intramuscular
injection. The current market leader is EpiPen, a single-dose, pre-filled
epinephrine automatic injection device. As a result of its administration
via intra-muscular injection, many patients and their caregivers are reluctant
to use currently available products, resulting in increased hospital visits and
overall cost of care to treat anaphylactic events. They are designing AQST-108
to be the first non-injectable form of epinephrine used to treat anaphylaxis.
·
AQST-305 – a sublingual film formulation of octreotide,
a small peptide that has a similar pharmacological profile to natural
somatostatin, for the treatment of acromegaly, as well as severe diarrhea and
flushing associated with carcinoid syndrome. Acromegaly is a hormone disorder
that results from the overproduction of growth hormone in middle-aged adults.
Octreotide is the standard of care for the treatment of acromegaly. The current
market leader, Sandostatin (octreotide injectable suspension), is administered
via deep subcutaneous or intramuscular injections once a month. This monthly
treatment regimen can result in loss of efficacy towards the end of the monthly
treatment cycle. They are developing AQST-305 as a non-invasive, pain-free
alternative to Sandostatin to reduce treatment burden, healthcare costs and the
potential loss of efficacy over the treatment cycle.
Partnered
Products
Their portfolio also includes products and product
candidates that they have partnered, or will seek to partner, for commercialization.
In the year ended December 31, 2017, their partnered product portfolio
generated over $1 billion in revenue for their partners, resulting in $66.9
million in revenue to them. Their key partnered products include:
·
Suboxone – a sublingual film formulation of
buprenorphine and naloxone that is marketed in the United States and
internationally for the treatment of opioid dependence. Suboxone was launched
in 2010 in partnership with Reckitt Benckiser Pharmaceuticals, Inc., who was
later succeeded in interest by Indivior, Inc. Suboxone is the most prescribed
branded product in its category with approximately 60% market share
|
·
|
PharmFilm
– Their Oral Film Technology
They are the
worldwide leader in oral film drug delivery and manufacturing. They supply more
than 95% of the world’s oral films for prescription pharmaceutical use, and
they have the capability to produce more than one billion commercial doses a
year. They developed their PharmFilm
technology to provide meaningful clinical and therapeutic advantages over other
existing dosage forms and, in turn, to improve the lives of patients and
caregivers. PharmFilm is protected by their patent portfolio, which currently
comprises at least 200 issued patents worldwide, of which at least 40 are U.S.
patents, and more than 75 pending patent applications worldwide. Several of the
patents in this intellectual property portfolio are utilized in each of their
proprietary pipeline products. They are continuing to develop additional
intellectual property and know-how related to the applications and engineering
of PharmFilm alone or in combination with other technologies to create product
capabilities that have compelling value propositions.
PharmFilm is
comprised of proprietary polymer compositions that serve as film formers to
hold active pharmaceutical ingredients, or APIs, and excipients in place.
Proprietary and patent-protected compositions, formulation and manufacturing
techniques and technology are employed to ensure that the API is distributed
uniformly throughout the film and that target absorption levels are achieved. Their
proprietary technology and manufacturing process ensures that PharmFilm can be
engineered to fit a variety of target product profiles in order to best address
the unmet patient need present within specific disease states. PharmFilm,
which is similar in thickness and size to a postage stamp, can be administered
via buccal, sublingual or lingual oral delivery.
IPO
Detail
This is the initial public offering of Aquestive
Therapeutics, Inc. and no public market currently exists for its common stock. Aquestive
Therapeutics, Inc. is offering 4,000,000 shares of common stock as described in
the prospectus. The company expects the initial public offering price of its
common stock to be between $14.00 and $16.00 per share. The company has applied
to list its common stock on the NASDAQ Global Market under the symbol “AQST.”
|
Common stock
offered by the company |
4,000,000
shares |
|
Common stock to
be outstanding immediately after this offering |
24,000,000
shares |
Certain existing investors have indicated an interest in
purchasing an aggregate of up to $20.0 million of shares of their common stock
in this offering at the initial public offering price. However, because
indications of interest are not binding agreements or commitments to purchase,
the underwriters may determine to sell more, less or no shares in this offering
to any of these stockholders, and any of these stockholders may determine to
purchase more, less or no shares in this offering. The underwriters will
receive the same underwriting discount on any shares purchased by these
stockholders as they will on any other shares sold to the public in this
offering.
Use of
Proceeds
They estimate that the net proceeds from
this offering will be $51.6 million. The principal purposes of this offering
are to obtain additional capital to support their operations, to create a
public market for their common stock and to facilitate their future access to
the public equity markets. They intend to use the net proceeds of this
offering, together with their existing cash and cash equivalents and cash
generated from existing partnerships, as follows:
|
• |
approximately $28.0 million to fund commercialization
investments for their late-stage epilepsy products, Libervant and Sympazan,
as well as their ALS product candidate, AQST-117; |
|
• |
approximately $13.0 million to fund the commencement of their
clinical trials for their complex molecules AQST-108 and AQST-305; |
|
• |
approximately $2.0 million to identify their new pipeline
candidates in CNS diseases and other therapeutic categories and indications;
and |
|
• |
the remainder for general corporate purposes, including working
capital and capital expenditures. |
They believe that the net proceeds from this offering,
combined with the revenue from partnered product activities and their existing
cash and cash equivalents, will be sufficient to fund their operations at least
through the next 24 months, including the investments identified above
Competition
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Company |
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Stock Symbol |
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Exchange. |
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Mylan
NV |
|
MYL |
|
NASDAQ |
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Novartis
AG |
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|
NVS |
|
|
NYSE |
|
. Pfizer Inc. |
|
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PFE |
|
|
NYSE |
|
Valeant
Pharmaceuticals Intl. |
|
|
VRXN |
|
|
BMV |
|
H.
Lundbeck A/S |
|
|
LUN |
|
|
CPH |
|
Eisai
Co. Ltd. |
|
|
4523 |
|
|
TYO |
|
Mitsubishi
Tanabe Pharma Corp. |
|
|
4508 |
|
|
TYO |
|
Xeris
Pharmaceuticals, Inc. |
|
|
XERS |
|
|
NASDAQ |
|
Proximagen
Group Ltd. |
|
|
Private |
|
|
|
|
Engage
Therapeutics, Inc. |
|
|
Private |
|
|
|
|
GW
Pharmaceuticals plc |
|
|
GWPH |
|
|
NASDAQ |
|
Zogenix
Inc. |
|
|
ZGNX |
|
|
NASDAQ |
|
Ovid
Therapeutics Inc. |
|
|
OVID |
|
|
NASDAQ |
|
Insys
Therapeutics, Inc. |
|
|
INSYS |
|
|
NASDAQ |
Market
Opportunity
CNS
Market
CNS diseases
affect the brain or spinal cord, and cause neurological and psychiatric
disorders. Driven by an increase in mental health awareness and an aging
population, the global market for therapeutics indicated for CNS disorders was
estimated by EvaluatePharma to be $80 billion in 2017, with anticipated growth
to $96 billion by 2022.
Epilepsy
Epilepsy is a
chronic CNS disorder characterized by recurrent seizure activity. There are
approximately 3.4 million people in the United States suffering from epilepsy.
According to IQVIA, antiepileptic medications generated sales of $4.4 billion
in the United States in 2017. The direct (medical) and indirect (lost wages and
productivity) annual costs associated with epileptic patients in the United
States are estimated to be approximately $15.5 billion.
Epilepsy
treatment regimens typically consist of chronic and acute management therapies.
Chronic medicines are used on a daily basis to suppress seizure activity.
Approximately 1.2 million of those 3.4 million people suffering from epilepsy
will continue to suffer with breakthrough seizures and require an acute
(rescue) management strategy. Patients are routinely prescribed antiepileptic
drugs, or AEDs, as “maintenance” therapy to control chronic seizure activity. Most
AEDs specifically target neuronal excitation or neuronal inhibitory pathways.
There are currently more than 20 AEDs approved for use in the United States,
and therapeutic choice depends on the epileptic syndrome being considered.
Patients are routinely prescribed benzodiazepines as “rescue” therapy for the
management of acute seizure emergencies.
Rescue
therapies are administered as needed in the event of an acute seizure to
rapidly terminate seizure activity. One of the most effective benzodiazepines
currently available for the treatment of acute seizures is diazepam. Diazepam
is currently marketed as Diastat, a product administered rectally. Although
Diastat is the preferred drug prescribed by physicians, due to its rectal
administration, Diastat presents a particular challenge for patients. As a
result, only approximately 100,000 patients out of 1.2 million sufferers
currently use this therapy. The remaining sufferers either pursue less
effective treatments or forego treatment altogether.
There are
multiple epileptic syndromes including LGS, which is a rare, intractable form
of epilepsy and affects approximately 55,000 patients in the United States.
Patients with LGS are often drug resistant, predisposing them to recurrent
seizures, and are typically prescribed a combination of antiepileptic
medications, which often includes clobazam. Clobazam is currently marketed
under the brand name Onfi and is available in both a tablet and suspension
formulation. Onfi generated combined sales revenue of $753 million with more
than 475,000 prescriptions filled in 2017, and is expected to lose patent
protection in October 2018.
They are
developing their lead product candidates, Libervant and Sympazan, to reduce the
burden associated with administering both chronic and rescue therapies, thereby
improving patient compliance and lowering the overall cost to the healthcare
system for epileptic patients.
Amyotrophic
Lateral Sclerosis
ALS is a
progressive neurodegenerative disease affecting nerve cells responsible for
controlling voluntary muscle movement. Patients suffering from ALS have
progressive degeneration of motor neurons, which ultimately leads to death,
primarily due to respiratory failure. Diagnosis of ALS typically occurs between
the ages of 40 and 60, with more than 13,000 patients diagnosed in the U.S.
each year, which corresponds to a prevalence of four cases per 100,000 people.
According to IQVIA, ALS medications generated sales of $62 million in the U.S.
in 2017.
There are
currently no treatments available that reverse the damage caused by ALS.
However, there are two treatment molecules that have been shown to slow
disease progression, riluzole marketed as Rilutek and edaravone marketed as
Radicava. According to IQVIA, the combined market for riluzole generated over
62,000 prescriptions and sales of $7 million in 2017.
In addition
to therapeutics aimed at slowing disease progression, patients are often
prescribed multiple medications and receive additional therapies, including
breathing care, physical therapy, occupational therapy, speech therapy,
nutritional support, and psychological and social support, to ease the burden
of the disease.
As a result of the
degenerative muscle function associated with ALS, patients eventually lose the
ability to swallow. Because
riluzole may slow disease progression and delay the need for a tracheotomy,
dysphagia represents a barrier to treatment for many of these patients. They
are developing AQST-117 to allow patients to remain on riluzole therapy for
extended periods of time, delaying the need for procedures like tracheotomies,
prolonging the quality of life for those patients and lowering the overall cost
of treatment.
Other
Therapeutic Areas
In addition
to products to treat CNS conditions, they are developing a number of product
candidates in other therapeutic areas, such as anaphylaxis and acromegaly to
create differentiated medicines to address unmet needs.
Anaphylaxis
Anaphylaxis is a
systemic allergic reaction caused by a wide range of allergen exposure,
estimated to affect one in 50 people in the United States. Anaphylaxis
typically occurs quickly once allergen exposure has occurred, and if untreated,
can lead to death via airway restriction. According to IQVIA, anaphylaxis
treatments generated sales of $1.7 billion in the U.S. in 2017.
Treatment of
anaphylaxis typically consists of an intramuscular injection of epinephrine
administered at the earliest opportunity, followed by additional intramuscular
or intravenous injections as needed. While generic versions of epinephrine are
currently available, they are provided as a vial of medication administered via
syringes. Due to the inconvenience of this dosing mechanism, a branded form of
epinephrine known as the EpiPen, which utilizes a proprietary auto-injector
device administered through a deep intramuscular injection, dominates the
market. In addition, recent manufacturing issues that resulted in injector
malfunctions have led to significant patient concern regarding the reliability
of auto-injectors. According to IQVIA, branded and generic versions of
epinephrine auto-injectors generated over 3.8 million prescriptions and
combined gross sales of $1.5 billion in 2017. EpiPen, which is marketed by
Mylan, represents over 74% of the current market on a prescription volume basis.
Proper dosing
and the ability to effectively administer epinephrine in a timely, reliable
manner is critical for patients experiencing anaphylaxis. However, the
inability to administer complex molecules via oral administration has limited
the development of treatments that have the potential to provide significant
patient benefit. They designed AQST-108 to offer a more convenient and cost
effective oral form of epinephrine as an alternative to the current standard of
care.
Acromegaly
Acromegaly is a
hormone disorder that results from the overproduction of growth hormone in
middle-aged adults. The
condition is typically caused by a benign tumor present in the pituitary gland
that excretes excessive amounts of growth hormone and leads to exaggerated bone
growth over time. Due to the gradual progression of the disorder, patients
are often not diagnosed for years. The prevalence of acromegaly is estimated to
be 78 cases per million people, indicating approximately 25,000 diagnosed
patients within the United States. According to IQVIA, acromegaly treatments
generated sales of $1.2 billion in the United States in 2017.
Depending on
the placement and size of the tumor, patients may be eligible for endoscopic
transnasal transsphenoidal surgery, a procedure in which pituitary tumors are
removed through the nose and sphenoid sinus. However, surgeons may be unable to
completely remove the tumor, leading to persistently elevated growth hormone
levels post-surgery. The standard of care for post-surgery patients includes the
use of somatostatin analogues to lower production or block the action of growth
hormones. The somatostatin analogues currently available, octreotide and
lanreotide, are administered by deep subcutaneous or intramuscular injections
once a month, or subcutaneous injections three times daily.
The market leading
product for acromegaly is octreotide, which is marketed as Sandostatin LAR by
Novartis, and is administered monthly via depot injections. According to IQVIA,
Sandostatin generated over 49,000 prescriptions and sales of $843 million in
2017.
Ease of
administration has been identified as an unmet patient need within this market,
with at least one other company pursing an oral formulation of octreotide. Their
PharmFilm formulation has the potential to reduce treatment burden and
healthcare costs for patients, and improve clinical differentiation.
|
||||||||||||
|
|
Three
Months Ended |
|
||||||||||
|
|
2017 |
2016 |
2018 |
2017 |
||||||||
|
(In thousands, except per membership interest and per share
data) |
|
|
|
|
||||||||
|
Consolidated
Statements of Operations and Comprehensive Income (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
66,918 |
|
$ |
51,785 |
|
$ |
23,411 |
|
$ |
16,436 |
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacture and supply |
|
19,820 |
|
|
16,378 |
|
|
5,636 |
|
|
4,184 |
|
|
Research and development |
|
22,133 |
|
|
15,450 |
|
|
4,901 |
|
|
5,343 |
|
|
Selling, general and administrative |
|
25,078 |
|
|
20,804 |
|
|
7,569 |
|
|
6,128 |
|
|
Total costs and expenses |
|
67,031 |
|
|
52,632 |
|
|
18,106 |
|
|
15,655 |
|
|
Operating (loss) income |
|
(113 |
) |
|
(847 |
) |
|
5,305 |
|
|
781 |
|
|
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(7,707 |
) |
|
(6,143 |
) |
|
(1,927 |
) |
|
(1,818 |
) |
|
Loss on extinguishment of debt |
|
— |
|
|
(757 |
) |
|
— |
|
|
— |
|
|
Loss on impairment of investment |
|
— |
|
|
(1,006 |
) |
|
— |
|
|
— |
|
|
Change in fair value of warrant |
|
(1,123 |
) |
|
(750 |
) |
|
697 |
|
|
(420 |
) |
|
Other (expense) income |
|
— |
|
|
(99 |
) |
|
24 |
|
|
— |
|
|
Net (loss) income before income taxes |
|
(8,943 |
) |
|
(9,602 |
) |
|
4,099 |
|
|
(1,457 |
) |
|
Income taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Net income (loss) |
|
(8,943 |
) |
|
(9,602 |
) |
|
4,099 |
|
|
(1,457 |
) |
|
Dividends on redeemable preferred interests |
|
(2,480 |
) |
|
(2,342 |
) |
|
— |
|
|
(613 |
) |
|
Net income
(loss) attributable to shares of common stock / members’ interests |
|
(11,423 |
) |
|
(11,944 |
) |
|
4,099 |
|
|
(2,070 |
) |
|
Comprehensive (loss) income |
$ |
(11,423 |
) |
$ |
(11,944 |
) |
$ |
4,099 |
|
$ |
(2,070 |
) |
|
Net income / Net (loss) per membership / shareholder interest |
$ |
(0.09 |
) |
$ |
(0.10 |
) |
$ |
0.27 |
|
|
|
|
|
Weighted-average
number of shares of common stock / membership interests outstanding — basic
and diluted |
|
121,228,353 |
|
|
118,785,104 |
|
|
15,077,647 |
|
|
|
|
|
Unaudited pro forma net loss |
|
|
|
|
|
|
$ |
(23,201 |
) |
|
|
|
|
Unaudited pro forma net loss per share of common stock |
|
|
|
|
|
|
$ |
(1.16 |
) |
|
|
|
|
Unaudited
pro forma weighted-average number of shares of common stock outstanding used
to compute net loss per share of common stock |
|
|
|
|
|
|
|
20,000,000 |
|
|
|
|
|
|
As of
March 31, |
|
|||||||||||||
|
|
2017 |
2016 |
Actual |
Pro Forma |
Pro Forma
As |
||||||||||
|
(In thousands) |
|
|
|
(unaudited) |
|
||||||||||
|
Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
17,379 |
|
$ |
9,209 |
|
$ |
16,488 |
|
$ |
16,488 |
|
$ |
68,088 |
|
|
Working capital |
|
12,813 |
|
|
12,526 |
|
|
14,349 |
|
|
6,949 |
|
|
58,549 |
|
|
Total assets |
|
43,116 |
|
|
39,389 |
|
|
46,082 |
|
|
46,082 |
|
|
97,682 |
|
|
Total debt |
|
45,507 |
|
|
38,650 |
|
|
45,965 |
|
|
45,965 |
|
|
45,965 |
|
|
Accumulated deficit |
|
(120,093 |
) |
|
(108,670 |
) |
|
(115,994 |
) |
|
(143,294 |
) |
|
(143,294 |
) |
|
Total members’ / stockholders’ (deficit)/equity |
|
(68,596 |
) |
|
(57,197 |
) |
|
(22,396 |
) |
|
(22,820 |
) |
|
28,780 |
|
Target
Markets
Advance
their late stage proprietary portfolio of CNS product candidates to solve
critical healthcare problems and make a meaningful improvement in the
lives of patients and caregivers. They have three proprietary CNS product candidates for which
they have completed or are approaching NDA submission. These product
candidates address treatment challenges associated with epilepsy and ALS.
They have submitted an NDA to the FDA and were given a PDUFA date of August 31,
2018 for Sympazan. They expect to submit NDAs for Libervant in 2018 and
AQST-117 during the first half of 2019.
Scale their
commercial platform to maximize the value of their proprietary
product candidates. In
order to maximize the value of their proprietary product candidates, they plan
to self-commercialize their late stage CNS and other proprietary product
candidates through a dedicated and focused commercial organization. They
have built expertise in marketing, sales, payor and market access management
and medical affairs in anticipation of multiple product launches starting in
2018. Based on overlapping prescriber call points for their initial CNS product
candidates, they believe an efficient and dedicated sales force can effectively
cover the vast majority of targeted prescribers.
Exploit
their technology and know-how to develop oral versions of more
complex injectable drugs to address unmet patient needs. Based on promising preclinical and early
clinical results, they intend to continue to develop oral transmucosal
versions of epinephrine and octreotide, products that are currently available
only in injectable form. They believe the success of these efforts may lead to
additional high value opportunities in developing oral transmucosal versions of
some proteins, peptides and other complex molecule drugs, which have
historically been administered by means other than oral intake, such as
injection or infusion.
Continue to
identify product opportunities within CNS and other markets to expand
their proprietary product pipeline. They intend to identify additional product candidates that
provide clinical differentiation and solve unmet needs. In the CNS space, they
will leverage their relationships with key stakeholders including patients,
caregivers, key opinion leaders and patient advocacy groups to identify new
product opportunities. Additionally, they will continue to evaluate other
therapeutic areas, indications and products where their expertise and know-how
can create differentiation and value.
Acquire
products or establish partnerships to develop and market products utilizing
new chemical entities. They
intend to continue to strategically expand their product portfolio by developing
products that incorporate new chemical entities to treat disorders with high
unmet need. For example, in August 2017, they entered into a partnership with
Mitsubishi Tanabe relating to edaravone, a treatment for ALS currently marketed
only in injectable form.
Continue to
expand and solidify their intellectual property portfolio for their
products, product candidates and manufacturing processes. Their robust global intellectual property
portfolio is a significant source of competitive advantage, the strength of
which has been demonstrated through multiple successful patent defenses. They
have built a two-tier patent estate consisting of composition-of-matter and
method of manufacture patents and patent applications. They intend to expand
their intellectually property estate as they advance their PharmFilm and other
technologies and as they develop new and existing product candidates.
Company's
Unique Strengths
They believe the
innovative nature of their PharmFilm drug delivery platform has the potential
to offer a number of meaningful advantages to patients, caregivers and
physicians compared to current standard of care therapies, including:
·
preferred alternative to
more invasive drugs such as injection;
·
faster onset of action;
·
direct absorption into the
bloodstream reducing or avoiding “first pass” effects in the liver;
·
reduced gastrointestinal, or
GI, side effects;
·
positive dosing outcomes,
especially for patients with physical (e.g.,
dysphagia) or psychological barriers to other methods of drug administration;
·
stable, durable, portable
and quick-dissolving (with or without water);
·
customizable delivery routes
for tailored pharmacokinetic, or PK, profiles (buccal, sublingual or lingual);
and
·
customizable taste profiles.
Company's
Unique Risks
They have
incurred significant losses since their inception and anticipate that they will
continue to incur significant losses for the foreseeable future and may
never achieve or maintain profitability. They have a limited operating history. To date, they have focused
primarily on developing a broad product portfolio and have obtained regulatory
approval for two of their products: Suboxone, the first sublingual film product
for the treatment of opioid dependence, and Zuplenz, the first approved
prescription oral soluble film for the prevention of chemotherapy-induced,
radiotherapy-induced, and postoperative nausea and vomiting. Some of their
product candidates will require substantial additional development time and
resources before they would be able to receive regulatory approvals, implement
commercialization strategies and begin generating revenue from product sales.
Even if
this offering is successful, they will need substantial additional
capital to fund their operations, which may not be available on acceptable
terms, if at all. If they are
unable to raise capital when needed, they may need to significantly delay,
scale back or discontinue the development or commercialization of one or
more of their product candidates.
They are
dependent upon the commercial success of Suboxone and other licensing
activities to generate revenue for the near future. Although they are in the process of testing and
developing proprietary product candidates and may seek to acquire rights in
other approved drugs, they anticipate that their ability to generate revenue
and to become profitable in the near future will depend upon the continued
commercial success of their only approved partnered products, Zuplenz and
Suboxone, as well as their other licensing and partnered development activities
Their
commercial success depends upon attaining significant market acceptance of
their products and product candidates, if approved, among patients,
physicians, pharmacists and the medical community.
If they are
unable to achieve and maintain coverage and adequate reimbursement for
their products or product candidates, if approved, their commercial
success may be severely hindered.
They rely
on third parties to conduct their preclinical studies and clinical trials. If these third parties do not successfully
carry out their contractual duties or meet expected deadlines, they
may not be able to obtain regulatory approval for or commercialize their
product candidates and their business could be substantially harmed.
They rely
on limited sources of supply for their thin film foil, and any disruption in
the chain of supply may impact production and sales and cause delay in
developing and commercializing their Proprietary PharmFilm Technology
product candidates. They
currently have relationships with only one third party for the manufacture of their
thin film foil. Because of the unique equipment and process for
manufacturing their thin film foil, transferring manufacturing activities for
their foil to an alternate supplier would be a time-consuming and costly
endeavor, and there are only a limited number of manufacturers that they
believe are capable of performing this function for them.
They rely
on third parties to manufacture active pharmaceutical ingredients, or API, for
their product candidates, and they intend to rely on third parties to
manufacture the API for any other approved products. The commercialization of any of their products could
be stopped, delayed or made less profitable if those third parties fail to
provide them with sufficient quantities of API or fail to do so at
acceptable quality levels or prices or fail to maintain or achieve satisfactory
regulatory compliance.
They may
enjoy only limited geographical protection with respect to certain patents and
they may not be able to protect their intellectual property rights
throughout the world.
The patents
and patent applications that they have covering their products and
product candidates are limited to specific formulations and
manufacturing processes, and their market opportunity for their products
and product candidates may be limited by the lack of patent protection for
the active ingredients and by competition from other formulations
and manufacturing processes, as well as administration methods that may be
developed by competitors.
Their
principal stockholders and management own a significant percentage of their
stock and will be able to exert significant control over matters subject
to stockholder approval. As of July
16, 2018, their executive officers, directors, 5% or greater stockholders and
their affiliates beneficially owned approximately 79.5% of their voting stock. Upon
the closing of this offering, that same group will beneficially own
approximately 64.6% of their outstanding voting stock. Bratton Capital
Management L.P., which controls certain of their major stockholders, has
beneficial ownership of approximately 56.7% of their common stock as of July
16, 2018. Therefore, even after this offering these stockholders will have the
ability to influence them through this ownership position. These stockholders
may be able to determine all matters requiring stockholder approval.
Bottom Line
They had
revenues of $51.8 million and $66.9 million and net loss of $9.6 million and
$8.9 million in 2016 and 2017, respectively. In the first quarter of 2018,
their revenues increased 42.4% to $24.4 million, and their net improved from a
$1.5 million loss to a $4.1 million profit.
They have a
late-stage proprietary product pipeline focused on the treatment of diseases of
the Central Nervous System, or CNS. Their most advanced proprietary product
candidates, which they intend to commercialize themselves, include (i)
Libervant, a buccally, or inside of the cheek, administered soluble film formulation
of diazepam for the treatment of recurrent epileptic seizures, for which they
expect to submit a New Drug Application, or NDA, in 2018; Sympazan, an oral
soluble film formulation of clobazam for the treatment of seizures associated
with a rare, intractable form of epilepsy known as Lennox-Gastaut Syndrome, or
LGS, for which they submitted an NDA in October 2017 and have been assigned an
August 31, 2018 Prescription Drug User Fee Act, or PDUFA, date, which is the
date the U.S. Food and Drug Administration, or FDA, expects to complete its
review of their NDA; (iii) AQST-117, an oral soluble film formulation of
riluzole for the treatment of Amyotrophic Lateral Sclerosis, or ALS, for which
they expect to submit an NDA in the first half of 2019. They have also
developed a proprietary pipeline of complex molecule products addressing large
market opportunities beyond CNS indications, which include (i) AQST-108, a
sublingual film formulation of epinephrine for the treatment of anaphylaxis,
for which they expect to begin additional Phase 1 trials in 2018 and (ii)
AQST-305, a buccal film formulation of octreotide for the treatment of
acromegaly and neuroendocrine tumors, for which they expect to begin human
proof of concept trials in 2018. In addition to these product candidates, they
have a portfolio of commercialized and development-stage partnered products.
These products include Suboxone, a sublingual film formulation of buprenorphine
and naloxone, which is the market leader for the treatment of opioid dependence.
They are the worldwide leader in oral film drug delivery and manufacturing.
They supply more than 95% of the world’s oral films for prescription
pharmaceutical use, and they have the capability to produce more than one
billion commercial doses a year. They are continuing to develop additional
intellectual property and know-how related to the applications and engineering
of PharmFilm alone or in combination with other technologies to create product
capabilities that have compelling value propositions. Their proprietary
technology and manufacturing process ensures that PharmFilm can be engineered
to fit a variety of target product profiles in order to best address the unmet
patient need present within specific disease states.
Driven by an
increase in mental health awareness and an aging population, the global market
for therapeutics indicated for CNS disorders was estimated by EvaluatePharma to
be $80 billion in 2017, with anticipated growth to $96 billion by 2022.
Epilepsy is a chronic CNS disorder characterized by recurrent seizure activity.
There are approximately 3.4 million people in the United States suffering from
epilepsy. According to IQVIA, antiepileptic medications generated sales of $4.4
billion in the United States in 2017. The direct (medical) and indirect (lost
wages and productivity) annual costs associated with epileptic patients in the
United States are estimated to be approximately $15.5 billion. They are
developing their lead product candidates, Libervant and Sympazan, to reduce the
burden associated with administering both chronic and rescue therapies, thereby
improving patient compliance and lowering the overall cost to the healthcare
system for epileptic patients. Patients suffering from ALS have progressive
degeneration of motor neurons, which ultimately leads to death, primarily due
to respiratory failure. Diagnosis of ALS typically occurs between the ages of
40 and 60, with more than 13,000 patients diagnosed in the U.S. each year,
which corresponds to a prevalence of four cases per 100,000 people. According
to IQVIA, ALS medications generated sales of $62 million in the U.S. in 2017.
There are two treatment molecules that have been shown to slow disease
progression, riluzole marketed as Rilutek and edaravone marketed as Radicava.
According to IQVIA, the combined market for riluzole generated over 62,000
prescriptions and sales of $7 million in 2017. As a result of the degenerative
muscle function associated with ALS, patients eventually lose the ability to
swallow. They are developing AQST-117 to allow patients to remain on riluzole
therapy for extended periods of time, delaying the need for procedures like
tracheotomies, prolonging the quality of life for those patients and lowering
the overall cost of treatment. Anaphylaxis is a systemic allergic reaction
caused by a wide range of allergen exposure, estimated to affect one in 50
people in the United States. Anaphylaxis typically occurs quickly once allergen
exposure has occurred, and if untreated, can lead to death via airway
restriction. According to IQVIA, anaphylaxis treatments generated sales of $1.7
billion in the U.S. in 2017. Branded and generic versions of epinephrine
auto-injectors generated over 3.8 million prescriptions and combined gross
sales of $1.5 billion in 2017. EpiPen, which is marketed by Mylan, represents
over 74% of the current market on a prescription volume basis. They designed
AQST-108 to offer a more convenient and cost effective oral form of epinephrine
as an alternative to the current standard of care. Acromegaly is a hormone
disorder that results from the overproduction of growth hormone in middle-aged
adults. . Due to the gradual progression of the disorder, patients are often
not diagnosed for years. The prevalence of acromegaly is estimated to be 78
cases per million people, indicating approximately 25,000 diagnosed patients
within the United States. According to IQVIA, acromegaly treatments generated
sales of $1.2 billion in the United States in 2017. The market leading product
for acromegaly is octreotide, which is marketed as Sandostatin LAR by Novartis,
and is administered monthly via depot injections. According to IQVIA,
Sandostatin generated over 49,000 prescriptions and sales of $843 million in
2017. Their PharmFilm formulation has the potential to reduce treatment burden
and healthcare costs for patients, and improve clinical differentiation.
They have
three proprietary CNS product candidates for which they have completed or are
approaching NDA submission. . They have submitted an NDA to the FDA and were given
a PDUFA date of August 31, 2018 for Sympazan. They expect to submit NDAs for
Libervant in 2018 and AQST-117 during the first half of 2019. In order to
maximize the value of their proprietary product candidates, they plan to
self-commercialize their late stage CNS and other proprietary product
candidates through a dedicated and focused commercial organization. They intend
to continue to develop oral transmucosal versions of epinephrine and
octreotide, products that are currently available only in injectable form. They
believe the success of these efforts may lead to additional high value
opportunities in developing oral transmucosal versions of some proteins,
peptides and other complex molecule drugs, which have historically been
administered by means other than oral intake, such as injection or infusion.
They intend to identify additional product candidates that provide clinical
differentiation and solve unmet needs. Additionally, they will continue to
evaluate other therapeutic areas, indications and products where their
expertise and know-how can create differentiation and value. They intend to
continue to strategically expand their product portfolio by developing products
that incorporate new chemical entities to treat disorders with high unmet need.
For example, in August 2017, they entered into a partnership with Mitsubishi
Tanabe relating to edaravone, a treatment for ALS currently marketed only in
injectable form. They intend to expand their intellectually property estate as
they advance their PharmFilm and other technologies and as they develop new and
existing product candidates.
They believe
the innovative nature of their PharmFilm drug delivery platform has the
potential to offer a number of meaningful advantages to patients, caregivers
and physicians compared to current standard of care therapies, including
preferred alternative to more invasive drugs such as injection; faster onset of
action; direct absorption into the bloodstream reducing or avoiding “first
pass” effects in the liver; reduced gastrointestinal, or GI, side effects;
positive dosing outcomes, especially for patients with physical (e.g.,
dysphagia) or psychological barriers to other methods of drug administration;
stable, durable, portable and quick-dissolving (with or without water);
customizable delivery routes for tailored pharmacokinetic, or PK, profiles
(buccal, sublingual or lingual); and customizable taste profiles.
They have incurred significant losses since their inception and anticipate that they will continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability. Some of their product candidates will require substantial additional development time and resources before they would be able to receive regulatory approvals, implement commercialization strategies and begin generating revenue from product sales. Even if this offering is successful, they will need substantial additional capital to fund their operations, which may not be available on acceptable terms, if at all. Although they are in the process of testing and developing proprietary product candidates and may seek to acquire rights in other approved drugs, they anticipate that their ability to generate revenue and to become profitable in the near future will depend upon the continued commercial success of their only approved partnered products, Zuplenz and Suboxone, as well as their other licensing and partnered development activities. Their commercial success depends upon attaining significant market acceptance of their products and product candidates, if approved, among patients, physicians, pharmacists and the medical community. If they are unable to achieve and maintain coverage and adequate reimbursement for their products or product candidates, if approved, their commercial success may be severely hindered. They rely on third parties to conduct their preclinical studies and clinical trials. They rely on limited sources of supply for their thin film foil, and any disruption in the chain of supply may impact production and sales and cause delay in developing and commercializing their Proprietary PharmFilm Technology product candidates. They rely on third parties to manufacture active pharmaceutical ingredients, or API, for their product candidates, and they intend to rely on third parties to manufacture the API for any other approved products. They may enjoy only limited geographical protection with respect to certain patents and they may not be able to protect their intellectual property rights throughout the world. The patents and patent applications that they have covering their products and product candidates are limited to specific formulations and manufacturing processes, and their market opportunity for their products and product candidates may be limited by the lack of patent protection for the active ingredients and by competition from other formulations and manufacturing processes, as well as administration methods that may be developed by competitors. Upon the closing of this offering, their executive officers, directors, 5% or greater stockholders and their affiliates will beneficially own approximately 64.6% of their outstanding voting stock. Bratton Capital Management L.P., which controls certain of their major stockholders, has beneficial ownership of approximately 56.7% of their common stock as of July 16, 2018. Therefore, even after this offering these stockholders will have the ability to influence them through this ownership position. These stockholders may be able to determine all matters requiring stockholder approval. Rating = 3