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What changed in Aquestive Therapeutics, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Aquestive Therapeutics, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+512 added−483 removedSource: 10-K (2025-03-05) vs 10-K (2024-03-05)

Top changes in Aquestive Therapeutics, Inc.'s 2024 10-K

512 paragraphs added · 483 removed · 326 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

100 edited+77 added−60 removed162 unchanged
Biggest changeOn September 13, 2020, President Trump signed an Executive Order directing HHS to implement a rulemaking plan to test a payment model, pursuant to which Medicare would pay, for certain high-cost prescription drugs and biological products covered by Medicare Part B, no more than the most-favored-nation price (i.e., the lowest price) after adjustments, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organization for Economic Cooperation and Development that has a comparable per-capita gross domestic product.
Biggest changeIn his first term, President Trump enacted Executive Orders directing the Secretary of HHS to eliminate protection under an Anti-Kickback Statute safe harbor for certain retrospective price reductions, ensure that payment by the Medicare program for certain Medicare Part B drugs is not higher than the payment by other comparable countries, allow certain low-income individuals purchase insulin and epinephrine, and implement a rulemaking plan to test a payment model, pursuant to which Medicare would receive most-favored-nation prices ( i.e ., the lowest price) for certain pharmaceutical products.
This orphan drug exclusivity approval prevents a subsequent product seeking FDA approval from being marketed in the United States during the exclusivity period for the same active moiety for the same orphan drug indication except in the case where the drug candidate sponsor is able to demonstrate, and the FDA concludes, that the later drug is “clinically superior” to the approved products ( e.g. , safer, more effective, or providing a 17 major contribution to patient care) within the meaning of FDA regulations and guidance.
This orphan drug exclusivity approval prevents a subsequent product seeking FDA approval from being marketed in the United States during the exclusivity period for the same active moiety for the same orphan drug indication except in the case where the drug candidate sponsor is able to demonstrate, and the FDA concludes, that the later drug is “clinically superior” to the approved products ( e.g. , safer, more effective, or providing a major contribution to patient care) within the meaning of FDA regulations and guidance.
We manufacture licensed products at our facilities and anticipate that our current manufacturing capacity is sufficient for commercial quantities of our licensed products and product candidates currently in development. Our facilities have been inspected by the FDA, TGA, and DEA and are subject to inspection by all applicable health agencies, including ANVISA and EMA.
We manufacture licensed products at our facilities and anticipate that our current manufacturing capacity is sufficient for commercial quantities of our proprietary and licensed products and product candidates currently in development. Our facilities have been inspected by the FDA, TGA, and DEA and are subject to inspection by all applicable health agencies, including ANVISA and EMA.
In addition, Title II of the Federal Drug Quality and Security Act of 2013, known as the DSCSA has imposed new “track and trace” requirements on the distribution of prescription drug products by manufacturers, distributors, and other entities in the drug supply chain. These requirements are being phased in over a ten-year period.
In addition, Title II of the Federal Drug Quality and Security Act of 2013, known as the DSCSA has imposed new “track and 22 trace” requirements on the distribution of prescription drug products by manufacturers, distributors, and other entities in the drug supply chain. These requirements are being phased in over a ten-year period.
Further, most states have enacted laws governing the privacy and security of health information in certain 24 circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states. Compliance with such laws and regulations requires substantial resources.
Further, most states have enacted laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states. Compliance with such laws and regulations requires substantial resources.
The European Medicines Agency, or EMA, implemented the centralized procedure for the approval of human medicines to facilitate marketing authorizations that are valid throughout the EU. This procedure results in a single marketing authorization issued by the European Commission following a favorable opinion by the EMA that is valid across the European Union, as well as Iceland, Liechtenstein and Norway.
The European Medicines Agency, or EMA, implemented the centralized procedure for the approval of human medicines to facilitate marketing authorizations that are valid throughout the EU. This procedure results in a single marketing authorization issued by the European Commission following a favorable opinion by the EMA that is valid across the EU, as well as Iceland, Liechtenstein and Norway.
Epilepsy treatment regimens typically consist of chronic and acute management therapies. Chronic medicines are used on a daily basis to suppress seizure activity. Approximately 1.1 million of those suffering from epilepsy will continue to suffer with breakthrough seizures and may require an acute (rescue) management strategy.
Epilepsy treatment regimens typically consist of chronic and acute management therapies. Chronic medicines are used on a daily basis to suppress seizure activity. Approximately 1.1 million of those suffering from epilepsy will continue to suffer 16 with breakthrough seizures and may require an acute (rescue) management strategy.
Under PDUFA, the FDA has agreed to certain performance goals in the review of NDAs through a two-tiered classification system, Standard Review and Priority Review. Priority Review designation is given to drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists.
Under PDUFA, the FDA has agreed to certain performance goals in the review of NDAs through a two-tiered classification 21 system, Standard Review and Priority Review. Priority Review designation is given to drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists.
Further, we may be subject to contractual damages and reputational harm as result of such non-compliance. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity.
Further, we may be 25 subject to contractual damages and reputational harm as result of such non-compliance. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity.
The companies operating in this market include multinational organizations, established biotechnology companies, single product pharmaceutical and biotechnology companies, specialty pharmaceutical companies, and generic drug companies. Many of the larger, established organizations currently have commercialization capabilities in-house, and may have partnership or license agreements in place with smaller companies for commercialization rights.
The companies operating in this market include multinational organizations, 17 established biotechnology companies, single product pharmaceutical and biotechnology companies, specialty pharmaceutical companies, and generic drug companies. Many of the larger, established organizations currently have commercialization capabilities in-house, and may have partnership or license agreements in place with smaller companies for commercialization rights.
For each state that does not choose to expand its Medicaid program, there may be fewer insured patients overall, which could impact our sales of products for which we receive regulatory approval, business and financial condition.
For each state that does not choose to expand its Medicaid program, 26 there may be fewer insured patients overall, which could impact our sales of products for which we receive regulatory approval, business and financial condition.
This last certification is known as a paragraph IV certification. A notice of the paragraph IV certification must be provided to each owner of the 22 patent that is the subject of the certification and to the holder of the approved NDA to which the ANDA or 505(b)(2) application refers.
This last certification is known as a paragraph IV certification. A notice of the paragraph IV certification must be provided to each owner of the patent that is the subject of the certification and to the holder of the approved NDA to which the ANDA or 505(b)(2) application refers.
Registration with the FDA subjects entities to periodic unannounced inspections by FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs 21 or other applicable laws, such as adverse event recordkeeping and reporting.
Registration with the FDA subjects entities to periodic unannounced inspections by FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs or other applicable laws, such as adverse event recordkeeping and reporting.
Under the Pharmanovia Agreement, Pharmanovia will lead the regulatory and commercialization activities for Libervant in the Territory and we will serve as the exclusive sole manufacturer and supplier of Libervant in the Territory. We received $3.5 million upon agreement execution.
Under the Pharmanovia Agreement, Pharmanovia will lead the regulatory and commercialization activities for Libervant in the Territory and Aquestive will serve as the exclusive sole manufacturer and supplier of Libervant in the Territory. We received $3.5 million upon agreement execution.
These facilities are expected to have a combined capacity to accommodate the production of our proprietary product pipeline candidates and licensed products, without any current need for additional infrastructure. In 2022, we completed work to expand our manufacturing capabilities to include serialization and secondary packaging. This expansion allows us to support our existing and possible future business collaborations more broadly.
These facilities are expected to have a combined capacity to accommodate the production of our proprietary product pipeline candidate and licensed products, without any current need for additional infrastructure. In 2022, we completed work to expand our manufacturing capabilities to include serialization and secondary packaging. This expansion allows us to support our existing and possible future business collaborations more broadly.
If not treated immediately, anaphylaxis can lead to death due to airway restriction or cardiac arrest. Anaphylaxis is a potentially life-threatening systemic allergic reaction, with an estimated incidence of 50 to 112 episodes per 100,000 people per year. An international study found that hospital admissions for anaphylaxis has increased over a 15-year study period.
If not treated immediately, anaphylaxis can lead to death due to airway restriction or cardiac arrest. Anaphylaxis is a potentially life-threatening systemic allergic reaction, with an estimated incidence of 50 to 112 episodes per 100,000 people per year. An international study found that hospital admissions for anaphylaxis have increased over a 15-year study period.
The NDA must include the results of all 20 preclinical, clinical and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls.
The NDA must include the results of all preclinical, clinical and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls.
We expect that the pharmaceutical industry will experience pricing pressures, given the trend toward managed healthcare, the increasing influence of managed care organizations, and additional regulatory and legislative proposals. Our results of operations and business could be adversely affected by current and future third‑party payor policies, as well as healthcare legislative reforms.
We expect that the pharmaceutical industry will continue to experience pricing pressures, given the trend toward managed healthcare, the increasing influence of managed care organizations, and additional regulatory and legislative proposals. Our results of operations and business could be adversely affected by current and future third‑party payor policies, as well as healthcare legislative reforms.
We believe there is a significant market opportunity for a non-injectable, easier to administer product with a fast onset of action. A product with this profile could enable patients to conveniently and rapidly self-administer a reliable and accurate dose of epinephrine during an anaphylactic reaction, which we believe will improve patient compliance.
We believe there is a significant market opportunity for a non-injectable, device-free, easier to administer product with a fast onset of action. A product with this profile could enable patients to conveniently and rapidly self-administer a reliable and accurate dose of epinephrine during an anaphylactic reaction, which we believe will improve patient compliance.
In August 2022, the FDA granted tentative approval for Libervant for the acute treatment of intermittent, stereotypic episodes of frequent seizure activity ( i.e ., seizure clusters, acute repetitive seizures) that are distinct from a patient’s usual seizure pattern in patients with epilepsy 12 years of age and older.
In August 2022, the FDA granted tentative approval for Libervant for the acute treatment of intermittent, stereotypic episodes of frequent seizure activity ( i.e ., seizure clusters, acute repetitive seizures) (or ARS) that are distinct from a patient’s usual seizure pattern in patients with epilepsy 12 years of age and older.
In January 2021, we announced that we granted an exclusive license to MTHA for the commercialization in the United States of Exservan. MTHA is a multinational pharmaceutical company with a focus on patients with ALS. The product was launched by MTHA in June 2021.
In January 2021, we announced that we granted an exclusive license to MTPA for the commercialization in the United States of Exservan. MTPA is a multinational pharmaceutical company with a focus on patients with ALS. The product was launched by MTPA in June 2021.
During the second quarter of 2023, Aquestive received a $0.5 million milestone payment in connection with the first commercial sale in the first country in the licensed territory for Exservan pursuant to the terms of the license agreement with Zambon.
During the second quarter of 2023, Aquestive received a $0.5 million milestone payment in connection with the first commercial sale in the first country in the licensed territory for Emylif pursuant to the terms of the license agreement with Zambon.
Item 1. Business Overview Aquestive is a pharmaceutical company advancing medicines to bring meaningful improvement to patients’ lives through innovative science and delivery technologies. We are developing pharmaceutical products to deliver complex molecules through administrations that are alternatives to invasive and inconvenient standard of care therapies.
Item 1. Business Overview Aquestive is a pharmaceutical company advancing medicines to bring meaningful improvement to patients’ lives through innovative science and delivery technologies. We are developing pharmaceutical products to deliver complex molecules through alternative administrations to invasive and inconvenient standard of care therapies.
As of December 31, 2023, we were in compliance with government and environmental regulations. Available Information We file with or submit to the SEC our annual, quarterly, periodic and current reports, proxy statements and other information meeting the informational requirements of the Exchange Act.
As of December 31, 2024, we were in compliance with government and environmental regulations. 28 Available Information We file with or submit to the SEC our annual, quarterly, periodic and current reports, proxy statements and other information meeting the informational requirements of the Exchange Act.
We developed our 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 our patent portfolio, which currently includes at least 150 issued patents worldwide, of which at least 30 are U.S. patents, and more than 130 pending patent applications worldwide.
We developed our 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 our patent portfolio, which currently includes at least 110 issued patents worldwide, of which at least 28 are U.S. patents, and more than 150 pending patent applications worldwide.
The active programs in our complex molecule pipeline portfolio are: • Anaphylm (epinephrine sublingual film, pronounced “ana-film”) – the first and only non-device based, orally delivered epinephrine product candidate that has shown clinical results comparable to auto-injectors (such as EpiPen® and Auvi-Q®) for the emergency treatment of allergic reactions, including anaphylaxis.
The active programs in our complex molecule pipeline portfolio are: • Anaphylm (epinephrine) Sublingual Film – the first and only non-device based, orally delivered epinephrine product candidate in development that has shown clinical results comparable to auto-injectors (such as EpiPen ® and Auvi-Q ® ) for the emergency treatment of allergic reactions, including anaphylaxis.
The two-part, Phase 3, single-center, open-label, randomized study is designed to compare the PK and pharmacodynamics (PD) of single and repeat doses of Anaphylm versus single and repeat doses of the epinephrine IM injection and epinephrine autoinjectors (EpiPen® and Auvi-Q®) in healthy adult subjects.
The two-part, Phase 3, single-center, open-label, randomized study was designed to compare the PK and PD of single and repeat doses of Anaphylm versus single and repeat doses of the IM injection and epinephrine autoinjectors (EpiPen® and Auvi-Q®) in healthy adult subjects.
In addition, other regulatory action, including, among other things, warning letters, the seizure of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations, civil penalties, and criminal prosecution may be pursued. In addition, any distribution of prescription drug products must comply with the U.S. Prescription Drug Marketing Act, or PDMA, a part of the FDCA.
In addition, other regulatory action, including, among other things, warning letters, the seizure of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations, civil penalties, and criminal prosecution may be pursued. In addition, any distribution of prescription drug products must comply with the PDMA, a part of the FDCA.
Sympazan ® , Zuplenz ® , PharmFilm ® and the Aquestive logo are registered trademarks of Aquestive Therapeutics, Inc. All other registered trademarks referenced herein are the property of their respective owners.
Libervant ® , Sympazan ® , PharmFilm ® and the Aquestive logo are registered trademarks of Aquestive Therapeutics, Inc. All other registered trademarks referenced herein are the property of their respective owners.
Zambon is responsible for the regulatory approval and marketing of Exservan in the countries where Zambon seeks to market the product, and Aquestive is responsible for the development and manufacture of the product.
Zambon is responsible for the regulatory approval and marketing of Emylif in the countries where Zambon seeks to market the product and Aquestive is responsible for the development and manufacture of the product.
One of the most effective benzodiazepines currently available for the treatment of acute seizures is diazepam. Diazepam has historically been marketed as a product administered rectally and more recently, a nasal spray product was introduced to the market. Rectal administration of this drug presents a particular challenge for patients.
One of the most effective benzodiazepines currently available for the treatment of acute seizures is diazepam. Diazepam has historically been marketed as a product administered rectally and more recently, a nasal spray product was introduced to the market for patients ages 6 years and up. Rectal administration of this drug presents a particular challenge for patients.
There are also two other possible routes to authorize medicinal products in several European Union countries, which are available for investigational medicinal products that fall outside the scope of the centralized procedure: the decentralized procedure and the mutual recognition procedure.
There are also two other possible routes to authorize medicinal products in several EU countries, which are available for investigational medicinal products that fall outside the scope of the centralized procedure: the decentralized procedure and the mutual recognition procedure.
The expiration dates for patents covering these products and product candidates, and for pending applications if issued as patents, extend from 2024 to 2041, excluding any patent term adjustment or patent term extension. We note that several of our issued patents are or have been involved in administrative proceedings, such as reexamination and inter partes review at the U.S.
The expiration dates for patents covering PharmFilm products and product candidates, and for pending applications if issued as patents, extend from 2024 to 2044, excluding any patent term adjustment or patent term extension. 19 We note that several of our issued patents are or have been involved in administrative proceedings, such as reexamination and inter partes review at the U.S.
Additionally, discounted pricing or rebates on purchases of pharmaceutical products must be offered under various federal and state healthcare programs, including: the Centers for Medicare & Medicaid Services’ Medicaid Drug Rebate Program, Medicare Part B Program and Medicare Part D Coverage Gap Discount Programs, the U.S.
Additionally, discounted pricing or rebates on purchases of pharmaceutical products must be offered under various federal and state healthcare programs, including: the Centers for Medicare & Medicaid Services’ Medicaid Drug Rebate 27 Program, Medicare Part B Program and Medicare Part D Manufacturer Discount Programs, the U.S.
Under the terms of the license agreement with Zambon, an upfront payment was paid to Aquestive for the development and commercialization rights of Exservan in the EU, and Aquestive will be paid development and sales milestone payments and low double-digit royalties on net sales of the product in the EU, marketed as Emylif by Zambon.
Under the terms of the license agreement with Zambon, an upfront payment was paid to Aquestive for the development and commercialization rights of Emylif in the EU, and Aquestive will be paid development and sales milestone payments and low double-digit royalties on net sales of the product in the EU.
With the cGMP facilities in Indiana, we will continue to explore possible additional manufacturing capabilities in 2023. We will also continue to consider our anticipated facilities and infrastructure needs as our product development grows. We have produced over 1.0 billion doses in the last five years.
With the cGMP facilities in Indiana, we will continue to explore possible additional manufacturing efficiencies in 2025. We will also continue to consider our anticipated facilities and infrastructure needs as our product development grows. We have produced over 1.0 billion doses in the last five years.
The process required by the FDA before a new drug may be marketed in the United States generally involves: • completion of preclinical laboratory and animal testing and formulation studies in compliance with the FDA’s GLP regulations; 19 • submission to the FDA of an IND, application for human clinical testing which must become effective before human clinical trials may begin in the United States; • approval by an independent IRB at each clinical trial site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with current good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA pre-approval inspection of the facility or facilities at which the product is manufactured to assess compliance with the FDA’s current cGMP regulations to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • satisfactory completion of a potential review by an FDA advisory committee, if applicable; and • FDA review and approval of the NDA.
The process required by the FDA before a new drug may be marketed in the United States generally involves: • completion of preclinical laboratory and animal testing and formulation studies in compliance with the FDA’s GLP regulations; • submission to the FDA of an IND, application for human clinical testing which must become effective before human clinical trials may begin in the United States; • approval by an independent IRB at each clinical trial site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with current good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA pre-approval inspection of the facility or facilities at which the product is manufactured to assess compliance with the FDA’s current cGMP regulations to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; 20 • satisfactory completion of a potential review at a public FDA Advisory Committee meeting; which is a meeting of independent outside experts that provide advice and recommendations to the FDA; and • FDA review and approval of the NDA.
PharmFilm, which is similar in thickness and size to a postage stamp, can be administered via buccal, sublingual or lingual oral delivery. 9 We believe the innovative nature of our 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: • faster, or at least equivalent, onset of action; • ease of administration and availability (no device required); • 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 PK, profiles (buccal, sublingual or lingual); and • customizable taste profiles. 10 Our Product Portfolio and Pipeline The following table outlines our proprietary growth drivers and licensed products.
PharmFilm, which is similar in thickness and size to a postage stamp, can be administered via buccal, sublingual or lingual oral delivery. 9 We believe the innovative nature of our 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: • faster, or at least equivalent, onset of action; • ease of administration and availability (no device required); • 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 PK, profiles (buccal, sublingual or lingual); and • customizable taste profiles.
For example, encompassed within our platform technology patents and/or patent applications is specific coverage directed to PharmFilm dosage formulations of CNS molecules such as diazepam. Also encompassed within our platform technology is coverage for our complex molecule program which includes molecules such as epinephrine.
For example, encompassed within our platform technology patents and/or patent applications is specific coverage directed to PharmFilm dosage formulations of CNS molecules such as diazepam. Also encompassed within our platform technology is coverage for our complex molecule program which includes molecules such as epinephrine and technology applicable to our product candidate Anaphylm.
We have developed a proprietary pipeline of complex molecule-based product candidates as alternatives to invasively administered standard of care therapeutics addressing large market opportunities.
Proprietary Growth Drivers Complex Molecule Portfolio We have developed a proprietary pipeline of complex molecule-based product candidates as alternatives to invasively administered standard of care therapeutics addressing large market opportunities.
Epinephrine is the standard of care in the treatment of anaphylaxis and is currently administered via intramuscular injection (IM) including auto-injectors, such as EpiPen and Auvi-Q, which require patients or their caregivers to inject epinephrine into the patient’s thighs during an emergency allergic reaction.
Epinephrine is the standard of care in the treatment of anaphylaxis and is typically administered via intramuscular injection (IM), including manual auto-injectors such as EpiPen and Auvi-Q, which require patients or their caregivers to inject epinephrine into the patient’s thigh during an emergency allergic reaction.
The FDA has concluded that Libervant has met all required quality, safety, and efficacy standards for approval.
The FDA concluded that Libervant had met all required quality, safety, and efficacy standards for approval.
These issued patents and pending patent applications provide both process of making and composition of matter protection for our PharmFilm technology and products and product candidates, including Suboxone and our PharmFilm formulations of tadalafil, diazepam, clobazam, riluzole, and epinephrine. These patents and, if issued as patents, pending patent applications will likely expire between 2024 and 2041.
These issued patents and pending patent applications provide both process of making and composition of matter protection for our PharmFilm technology and products and product candidates, including Suboxone, Libervant and Anaphylm and our PharmFilm formulations of diazepam, clobazam, riluzole and epinephrine. These patents and, if issued as patents, pending patent applications will likely expire between 2024 and 2044.
The patents and pending patent applications, if issued as patents, will likely expire between 2024 and 2041, excluding any patent term adjustment or patent term extension. 18 The PharmFilm technology patents and/or patent applications also generically and specifically protect the technology utilized in the products and product candidates in our CNS programs, our complex molecule programs, as well as our licensee programs.
The patents and pending patent applications, if issued as patents, will likely expire between 2024 and 2044, excluding any patent term adjustment or patent term extension. The PharmFilm technology patents and/or patent applications also generically and specifically protect the technology utilized in the products in our CNS programs, our complex molecule programs, as well as our licensee programs.
In March 2022, we announced the grant of an exclusive license to Haisco for them to develop and commercialize Exservan for the treatment of ALS in China. Haisco is a China-based public pharmaceutical company. Haisco will lead the regulatory and commercialization activities for Exservan in China. Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China.
In March 2022, we announced the grant of an exclusive license to Haisco for Haisco to develop and commercialize Exservan for the treatment of ALS in China. Haisco is a China-based public pharmaceutical company. Haisco lead the regulatory and commercialization activities for Exservan in China. Aquestive was the exclusive sole manufacturer and supplier for Exservan in China.
Ondansetron is available as branded and generic products as intravenous injections, intramuscular injections, orally dissolving tablets, oral solution tablets, and film. We licensed commercial rights for Zuplenz to Hypera in Brazil (which Hypera markets as Ondif). Hypera received approval to market Zuplenz in Brazil from ANVISA on February 21, 2022.
Ondansetron is available as branded and generic products as intravenous injections, intramuscular injections, orally dissolving tablets, oral solution tablets, and film. We licensed commercial rights for this product to Hypera in Brazil (which Hypera markets as Ondif). Hypera received approval to market Ondif in Brazil from ANVISA on February 21, 2022. Aquestive manufactures and supplies Ondif to Hypera.
Additionally, in November 2022, we received a $6.0 million milestone payment upon its receipt of a notice of allowance from the United States Patent and Trademark Office of its patent application 15 U.S. Serial No. 16/561,573, and payment of the related allowance fee.
Additionally, we subsequently received from Assertio a $6.0 million milestone payment upon its receipt of a notice of allowance from the United States Patent and Trademark Office of its patent application U.S. Serial No. 16/561,573, and payment of the related allowance fee.
The pending patent applications filed in 2017 will provide composition of matter and process of making protection for our PharmFilm dosage formulations of diazepam and epinephrine and, if issued as patents, will likely expire by 2041. The projected expiration dates exclude any patent term adjustment or patent term extension.
The pending patent applications will provide composition of matter and process of making protection for our PharmFilm dosage formulations of diazepam and epinephrine and, if issued as patents, will likely expire by 2040 and 2044, respectively. The projected expiration dates exclude any patent term adjustment or patent term extension.
In the years ended December 31, 2023 and 2022, our licensed product portfolio generated $50.6 million and $47.7 million in revenue to Aquestive, respectively. Those products include: • Suboxone ® – a sublingual film formulation of buprenorphine and naloxone, respectively an opioid agonist and antagonist, that is marketed in the United States and internationally for the treatment of opioid dependence.
In the years ended December 31, 2024 and 2023, our licensed product portfolio generated $57,561 and $50,583 in revenue to Aquestive, respectively. Those products include: • Suboxone ® – a sublingual film formulation of buprenorphine and naloxone, respectively an opioid agonist and antagonist, that is marketed in the United States and internationally for the treatment of opioid dependence.
We entered into the Pharmanovia Agreement with Pharmanovia, effective as of September 26, 2022, pursuant to which we granted Pharmanovia an exclusive license to certain of our intellectual property to develop and commercialize Libervant for the treatment of prolonged or acute, convulsive seizures in all ages in certain countries of the Territory during the term of the Pharmanovia Agreement.
In November 2024, the request for FDA withdrawal of the NDA for Zuplenz was completed. • Libervant ® – We entered into the Pharmanovia Agreement with Pharmanovia, effective as of September 26, 2022, pursuant to which we granted Pharmanovia an exclusive license to certain of our intellectual property to develop and commercialize Libervant for the treatment of prolonged or acute, convulsive seizures in all ages in certain countries of the Territory, as defined in the Pharmanovia Agreement, during the term of the Pharmanovia Agreement.
While some proposed measures will require authorization through additional legislation to become effective, Congress has indicated that they will continue to pursue new legislative and/or administrative measures to control drug costs, including price or patient reimbursement constraints, discounts, restrictions on certain access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Congress has further indicated that they will continue to pursue new legislative and/or administrative measures to control drug costs, including price or patient reimbursement constraints, discounts, restrictions on certain access and marketing cost disclosure and transparency measures, and, in some cases, laws designed to encourage importation from other countries and bulk purchasing.
Our platform technology patents and/or patent applications further cover the products Suboxone and Zuplenz, as well as our formulations of the molecules apomorphine and tadalafil, which are part of our licensed programs.
Our platform technology patents and/or patent applications further cover the products Libervant, Suboxone and Ondif, as well as our formulations of the molecules apomorphine, which is part of our licensed programs.
We follow the CDC guidelines and provide testing to and quarantining of colleagues, when necessary. Environmental Safety We have few environmental risks but are committed to be part of the global solution. We run environmentally responsible laboratory waste collection, recycling and disposal programs. We educate and encourage our colleagues to be environmentally responsible.
Environmental Safety We have few environmental risks but are committed to be part of the global solution. We run environmentally responsible laboratory waste collection, recycling and disposal programs. We educate and encourage our colleagues to be environmentally responsible.
Due to an existing FDA regulatory grant of orphan drug market exclusivity for Valtoco®, a diazepam nasal spray product sold by another company for use in patients 12 years of age and older, the FDA has determined that Libervant is not yet eligible for marketing in the United States.
However, due to an existing FDA regulatory grant of orphan drug market exclusivity for a diazepam nasal spray product sold by another 13 company for use in ARS patients 6 years of age and older, the FDA determined that Libervant was not yet eligible for marketing in the United States for this patient population of 12 years of age and older.
Licensed Commercial Products and Product Candidates and Other Products Our portfolio also includes other products and product candidates that we have licensed, or will seek to license, or for which we have licensed our intellectual property for commercialization.
Financial Statements and Supplementary Data, Note 23, Contingencies. Licensed Commercial Products and Product Candidates and Other Products Our portfolio also includes other products and product candidates that we have licensed, or will seek to license, or for which we have licensed our intellectual property for commercialization.
Generic versions of the clobazam tablet and suspension formulation are available to patients, as well. Sympazan was developed as an alternative to these other routes of administration of clobazam.
Clobazam (branded name Onfi) is available in both a tablet and suspension formulation. Generic versions of the clobazam tablet and suspension formulation are available to patients, as well. Sympazan was developed as an alternative to these other routes of administration of clobazam.
Proprietary CNS Product Candidate We believe the application of our proprietary PharmFilm ® technology is particularly valuable and relevant to patients suffering from certain CNS disorders to meet patients’ unmet medical needs and to solve patients’ therapeutic problems. We believe there remains a significant opportunity to develop additional products in the CNS market.
Proprietary CNS Product We believe the application of our proprietary PharmFilm ® technology is particularly valuable and relevant to patients suffering from certain CNS disorders to meet patients’ unmet medical needs and to solve patients’ therapeutic problems.
On October 26, 2022, we entered into a License Agreement with Otter Pharmaceuticals, LLC, a subsidiary of Assertio, a specialty pharmaceutical company offering differentiated products to patients, pursuant to which we granted an exclusive, worldwide license of its intellectual property for Sympazan to Assertio during the term of that agreement for an upfront payment of $9.0 million.
We commercially launched Sympazan in December 2018. On October 26, 2022, we entered into a License Agreement with Otter Pharmaceuticals, LLC, a subsidiary of Assertio Holdings, Inc., pursuant to which we granted an exclusive, worldwide license of its intellectual property for Sympazan to Assertio during the term of that agreement for an upfront payment of $9.0 million.
For a medicinal product to qualify as orphan: (i) it must be intended for the treatment, prevention or diagnosis of a disease that is life-threatening or chronically debilitating; (ii) the prevalence of the condition in the EU must not be more than five in 10,000 or it must be unlikely that marketing of the medicine would generate sufficient returns to justify the investment needed for its development; and (iii) no satisfactory method of diagnosis, prevention or treatment of the condition concerned can be authorized, or, if such a method exists, the medicine must be of significant benefit to those affected by the condition. 25 United States Healthcare Reform Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access.
For a medicinal product to qualify as orphan: (i) it must be intended for the treatment, prevention or diagnosis of a disease that is life-threatening or chronically debilitating; (ii) the prevalence of the condition in the EU must not be more than five in 10,000 or it must be unlikely that marketing of the medicine would generate sufficient returns to justify the investment needed for its development; and (iii) no satisfactory method of diagnosis, prevention or treatment of the condition concerned can be authorized, or, if such a method exists, the medicine must be of significant benefit to those affected by the condition.
We licensed our intellectual property to Cynapsus Therapeutics, Inc., a company that was acquired by Sunovion for the commercialization of KYNMOBI under an Agreement dated April 1, 2016, as amended by the Sunovion License Agreement. KYNMOBI was approved by the FDA on May 21, 2020 and commercially launched by Sunovion in September 2020.
We licensed our intellectual property to Cynapsus Therapeutics, Inc., a company that was acquired by Sunovion for the commercialization of KYNMOBI under the Sunovion License 15 Agreement. KYNMOBI was approved by the FDA on May 21, 2020 and commercially launched by Sunovion in September 2020. On November 3, 2020, we entered into the Monetization Agreement.
Our colleagues are not represented by a labor union. 27 Culture and Colleagues Engagement We believe that our colleagues are an essential element of our strategy and critical to our continued success.
Culture and Colleagues Engagement We believe that our colleagues are an essential element of our strategy and critical to our continued success.
Under the terms of license agreement with Haisco, as amended, Aquestive received a $7.0 million upfront payment in September 2022, and will receive regulatory milestone 14 payments, double-digit royalties on net sales of Exservan in China, and earn manufacturing revenue upon the sale of Exservan in China. • KYNMOBI ® – a sublingual film formulation of apomorphine, which is a dopamine agonist, was developed to treat episodic off-periods in Parkinson’s disease.
Under the terms of the license agreement with Haisco, as amended, Aquestive received a $7.0 million upfront payment in September 2022, and was to receive regulatory milestone payments, double-digit royalties on net sales of Exservan in China, and earn manufacturing revenue upon the sale of Exservan in China.
The Federal False Claims Act prohibits anyone from knowingly presenting, or causing to be presented, for payment to federal programs (including Medicare and Medicaid) claims for items or services, including drugs, that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services.
Some of these state prohibitions apply to the referral of patients for healthcare services reimbursed by any insurer, not just federal healthcare programs such as Medicare and Medicaid. 24 The Federal False Claims Act prohibits anyone from knowingly presenting, or causing to be presented, for payment to federal programs (including Medicare and Medicaid) claims for items or services, including drugs, that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services.
Manufacturing and Product Supply 16 We operate two manufacturing and primary packaging facilities located in Portage, Indiana, where we currently manufacture our licensed products, Suboxone, Exservan, Ondif and Sympazan, on an exclusive basis.
Manufacturing and Product Supply We operate two manufacturing and primary packaging facilities located in Portage, Indiana, where we currently manufacture our licensed products, Suboxone, Emylif, Ondif and Sympazan, and our proprietary product, Libervant for patients between two to five years of age, on an exclusive basis.
Non-Patent Exclusivity In addition to patent exclusivity, the holder of the NDA for the listed drug may be entitled to a period of non-patent related exclusivity, during which the FDA cannot review, or in some cases, approve an ANDA or 505(b)(2) application that relies on the listed drug.
The ANDA or 505(b)(2) application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the branded reference drug has expired as described in further detail below. 23 Non-Patent Exclusivity In addition to patent exclusivity, the holder of the NDA for the listed drug may be entitled to a period of non-patent related exclusivity, during which the FDA cannot review, or in some cases, approve an ANDA or 505(b)(2) application that relies on the listed drug.
The FDA confirmed that the 505(b)(2) approval pathway is acceptable for the development of Anaphylm.
The FDA confirmed that the 505(b)(2) regulatory approval pathway is acceptable for the development of Anaphylm. The FDA granted Fast Track designation of Anaphylm in March 2022.
Human Capital As of December 31, 2023, we employed approximately 135 colleagues. All of our colleagues were employed in the U.S. Of these colleagues, 20 are directly involved in research and development, 92 are involved in manufacturing operations, and 23 are involved in business development and general and administrative activities.
Human Capital As of December 31, 2024, we employed approximately 142 colleagues. All of our colleagues were employed in the U.S. Of these colleagues, 22 are directly involved in research and development, 93 are involved in manufacturing operations, and 27 are involved in business development and general and administrative activities. Our colleagues are not represented by a labor union.
In June 2023, we filed an NDA for Libervant for the acute treatment of intermittent, stereotypic episodes of frequent seizure activity ( i.e. , seizure clusters, acute repetitive seizures) that are distinct from a patient’s usual seizure pattern in patients with epilepsy between two and five years of age.
We have a proprietary commercial product, Libervant® (diazepam) Buccal Film for the acute treatment of intermittent, stereotypic episodes of frequent seizure activity (i.e., seizure clusters, acute repetitive seizures) that are distinct from a patient’s usual seizure pattern in patients with epilepsy between two to five years of age, which was launched in April 2024.
The Federal Food, Drug, and Cosmetic Act, or FDCA and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products.
Regulatory FDA Approval Process In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The FDCA and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products.
We developed our product candidate Libervant as an alternative to the device-dependent rescue therapies currently available to patients with refractory epilepsy. See “Our Product Portfolio and Pipeline” above and “Competition” below in this Item 1. Business of this Form 10-K for additional information concerning the Libervant FDA approval process and market access issues.
We developed our product candidate Libervant as an alternative to the device-dependent rescue therapies currently available to patients with refractory epilepsy and Libervant® is currently available for patients between ages two to five. See “Our Product Portfolio and Pipeline” above and “Competition” below in this Item 1.
Most recently, the Inflation Reduction Act of 2022, or IRA, included a number of significant drug pricing reforms, which include the establishment of a drug price negotiation program within the HHS (beginning in 2026) that requires manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers under Medicare Parts B and D to penalize price increases that outpace inflation (first due in 2023), and a redesign of the Part D benefit, as part of which manufacturers are required to provide discounts on Part D drugs (beginning in 2025). 26 It is difficult at this time to predict whether additional executive or legislative initiatives may be proposed related to drug pricing.
For example, the Inflation Reduction Act of 2022 (“IRA”), signed into law by President Biden, included a number of significant drug pricing reforms, which include the establishment of a drug price negotiation program within the HHS (beginning in 2026) that requires manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers under Medicare Parts B and D to penalize price increases that outpace inflation, and a redesign of the Part D benefit, a part of which requires manufacturers to provide discounts on Part D drugs starting in 2025.
Several of the patents in this intellectual property portfolio are utilized in each of our proprietary pipeline products. We 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.
We 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 APIs and excipients in place.
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, formulations 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.
Proprietary and patent-protected compositions, formulations 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.
We recently received comments from the FDA on the pivotal Phase 3 PK clinical study protocol for Anaphylm we submitted. In its comments, the FDA indicated that our proposed endpoints, sample size, and statistical analysis are reasonable.
In the fourth quarter of 2023, we received comments from the FDA on the protocol for our pivotal clinical study for Anaphylm, which comments indicated that our proposed endpoints, sample size, and statistical analysis for the proposed pivotal clinical study were reasonable and provided clarity on PK sustainability with repeat-dose requirements.
In August 2022, the FDA granted tentative approval for Libervant for the acute treatment of intermittent, 13 stereotypic episodes of frequent seizure activity ( i.e ., seizure clusters, acute repetitive seizures) that are distinct from a patient’s usual seizure pattern in patients with epilepsy 12 years of age and older.
On April 26, 2024, the FDA approved Libervant for U.S. market access for the acute treatment of intermittent, stereotypic episodes of frequent seizure activity ( i.e. , seizure clusters, acute repetitive seizures) (or ARS) that are distinct from a patient’s usual seizure pattern in patients with epilepsy between two to five years of age.
There are multiple epileptic syndromes including LGS, which is a rare, intractable form of epilepsy. 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 (branded name Onfi) is available in both a tablet and suspension formulation.
Business of this Form 10-K for additional information concerning the Libervant FDA approval process and market access issues. There are multiple epileptic syndromes including LGS, which is a rare, intractable form of epilepsy. 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.
The primary objective is to compare the PK of epinephrine following the single administration of Anaphylm to single administration of epinephrine IM injection in healthy adult subjects. The secondary objectives include evaluating PK sustainability following repeat administration and evaluating the safety and tolerability following single and repeat administrations versus epinephrine IM injection and epinephrine autoinjectors.
The results of this study demonstrated that the primary endpoint of epinephrine PK biocomparability of the single administration of Anaphylm to the single administration of Adrenalin (epinephrine IM injection) and epinephrine autoinjectors in healthy adult subjects was met, as well as the secondary endpoints, which included evaluating the PK sustainability of Anaphylm following repeat administration and the safety and tolerability of Anaphylm following single and repeat administrations versus epinephrine IM injection and epinephrine autoinjectors.
As a result of this route of administration, many patients and their caregivers are reluctant to use currently available products; however, Anaphylm would, if approved by the FDA, allow a patient to simply place a dissolvable strip, approximately the size and weight of a postage stamp, under the tongue, providing an appropriate medication where it is needed, when it is needed and in a form preferred by patients.
However, Anaphylm would, if approved by the FDA, allow a patient to simply place a dissolvable strip, approximately the size and weight of a postage stamp, under the tongue, providing an appropriate medication where it is needed and when it is needed. The FDA conditionally accepted the proprietary name Anaphylm™ (pronounced “ana-film”) as the proposed brand name for Anaphylm.
The level of generic competition and the availability of reimbursement from government and other third-party payors will also significantly affect the pricing and competitiveness of our products. On January 10, 2020, a competitor of Aquestive obtained FDA approval of its diazepam nasal spray drug candidate, Valtoco, and was granted orphan-drug-exclusivity for this drug commencing as of January 10, 2020.
Epilepsy On January 10, 2020, a competitor of Aquestive obtained FDA approval of its diazepam nasal spray drug candidate, Valtoco, and was granted orphan-drug-exclusivity for this drug commencing as of January 10, 2020.
Changes that may affect our business include those governing enrollment in federal healthcare programs, reimbursement changes, benefits for patients within a coverage gap in the Medicare Part D prescription drug program, or commonly known as the donut hole in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, rules regarding prescription drug benefits under the health insurance exchanges, changes to the Medicaid Drug Rebate program, expansion of the Public Health Service’s 340B drug pricing discount program, or 340B program, fraud and abuse, and enforcement.
Changes that may affect our business include those governing enrollment in federal healthcare programs, reimbursement changes, benefits for patients who have reached the “catastrophic coverage” out-of-pocket limit under the Medicare Part D prescription drug program, rules regarding prescription drug benefits under the health insurance exchanges, changes to the Medicaid Drug Rebate program, expansion of the Public Health Service’s 340B drug pricing discount program, or 340B program, fraud and abuse, and enforcement.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAmong the provisions of the PPACA of importance to our business, including our ability to commercialize and the prices we may obtain for any of our products and product candidates that are approved for sale, are the following: • an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee does not apply to sales of certain products approved exclusively for orphan indications; • expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; • expansion of manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” or AMP, 42 for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans; • addition of more entity types eligible for participation in the Public Health Service 340B drug pricing program, or the 340B program; • establishment of the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 50% point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; • the BBA, that among other things, increased the manufacturer’s subsidy under this program from 50% to 70% of the negotiated price, beginning in 2019; • a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and • establishment of the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Biggest changeAmong the provisions of the PPACA of importance to our business, including our ability to commercialize and the prices we may obtain for any of our products and product candidates that are approved for sale, are the following: • an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee does not apply to sales of certain products approved exclusively for orphan indications; • expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; • expansion of manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans; • addition of more entity types eligible for participation in the Public Health Service 340B drug pricing program, or the 340B program; • a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and • establishment of the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Some of the expenses we expect to incur going forward include: • conducting clinical trials of our product candidates; • seeking regulatory approval for any of our product candidates that successfully complete clinical development; • maintaining, expanding and protecting our intellectual property portfolio; • acquiring or in-licensing new technologies or development-stage or approved products; • activities related to pre-commercialization of products; • adding clinical, scientific, operational, financial, and management information systems personnel, including personnel to support our product development and to support our operations as a public company; and • experiencing incremental costs due to delays or encountering any issues with any of the above, including, but not limited to, failed or not fully successful trials, complex results, safety issues or other regulatory challenges.
Some of the expenses we expect to incur going forward include: • conducting clinical trials of our product candidates; • seeking regulatory approval for any of our product candidates that successfully complete clinical development; • maintaining, expanding and protecting our intellectual property portfolio; • acquiring or in-licensing new technologies or development-stage or approved products; • activities related to pre-commercialization and commercialization of products; • adding clinical, scientific, operational, financial, and management information systems personnel, including personnel to support our product development and to support our operations as a public company; and • experiencing incremental costs due to delays or encountering any issues with any of the above, including, but not limited to, failed or not fully successful trials, complex results, safety issues or other regulatory challenges.
We have no committed sources of additional capital, and there can be no assurance that such needed capital or debt financing will be available on favorable terms, or at all.
We have no committed sources of additional capital, and there can be no assurance that such needed capital or debt financing will be available or available on favorable terms, or at all.
The commencement and completion of clinical trials for our clinical product candidates may be delayed suspended or terminated as a result of many factors, including: • the FDA disagreeing as to the design, protocol or implementation of our clinical studies; • the delay or refusal of regulators or IRBs, to authorize us to commence a clinical trial at a prospective trial site; • changes in regulatory requirements, policies and guidelines; • delays or failure to reach an agreement on acceptable terms with prospective CROs, and clinical trial sites; 36 • the inability to enroll or delays in enrolling a sufficient number of patients in trials, particularly in orphan indications, to observe statistically significant treatment effects in the trial; • having clinical sites deviate from the trial protocol; • negative or inconclusive results from ongoing preclinical studies or clinical trials, which may require us to conduct additional preclinical studies or clinical trials or to abandon projects that we had expected to be promising; • reports from preclinical testing of other similar therapies that raise safety or efficacy concerns; • regulators or IRBs requiring that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or safety concerns, among others; • lower than anticipated retention rates of patients and volunteers in clinical trials; • our CROs or clinical trial sites failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, deviating from the protocol or dropping out of a trial; • delays in establishing the appropriate dosage levels; and • exceeding budgeted costs due to difficulty in accurately predicting costs associated with clinical trials.
The commencement and completion of clinical trials for our clinical product candidates may be delayed suspended or terminated as a result of many factors, including: • the FDA disagreeing as to the design, protocol or implementation of our clinical studies; • the delay or refusal of regulators or IRBs, to authorize us to commence a clinical trial at a prospective trial site; • changes in regulatory requirements, policies and guidelines; 36 • delays or failure to reach an agreement on acceptable terms with prospective CROs, and clinical trial sites; • the inability to enroll or delays in enrolling a sufficient number of patients in trials, particularly in orphan indications, to observe statistically significant treatment effects in the trial; • having clinical sites deviate from the trial protocol; • negative or inconclusive results from ongoing preclinical studies or clinical trials, which may require us to conduct additional preclinical studies or clinical trials or to abandon projects that we had expected to be promising; • reports from preclinical testing of other similar therapies that raise safety or efficacy concerns; • regulators or IRBs requiring that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or safety concerns, among others; • lower than anticipated retention rates of patients and volunteers in clinical trials; • our CROs or clinical trial sites failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, deviating from the protocol or dropping out of a trial; • delays in establishing the appropriate dosage levels; and • exceeding budgeted costs due to difficulty in accurately predicting costs associated with clinical trials.
Because of our indebtedness: • we may have difficulty satisfying our obligations with respect to our existing indebtedness including the repayment of such indebtedness; • we may have difficulty obtaining financing in the future (and we have substantial restrictions on incurring any additional indebtedness under our current debt instruments) for working capital, capital expenditures, acquisitions or other purposes; • we will need to use a substantial portion of our available cash flow to pay interest and principal on our debt, which will reduce the amount of money available to finance our operations and other business activities; • we may be more vulnerable to general economic downturns and adverse industry conditions; • if cash flow from revenues from licensed product or collaborative arrangements are insufficient to satisfy our obligations with respect to our existing indebtedness, we may be forced to seek to sell assets (subject to obtaining consent under the Indenture) or seek additional capital, which we may not be able to accomplish on favorable terms, if at all; • we could be limited in our flexibility in planning for, or reacting to, changes in our business and in our industry in general; • we could be placed at a competitive disadvantage compared to our competitors that have less debt, less debt restriction or less restrictive debt covenants; • our failure to comply with the financial and other restrictive covenants in our debt instruments which, among other things, limits our ability to incur additional debt and sell or dispose of assets, could result in an event of default that, if not cured or waived, would have a material adverse effect on our business or prospects; and • our tangible and intangible assets, including our intellectual property, are subject to first priority liens and may be used to satisfy our outstanding debt.
Because of our indebtedness: • we may have difficulty satisfying our obligations with respect to our existing indebtedness including the repayment of such indebtedness; • we may have difficulty obtaining financing in the future (and we have substantial restrictions on incurring any additional indebtedness under our current debt instruments) for working capital, capital expenditures, acquisitions or other purposes; • we will need to use a substantial portion of our available cash flow to pay interest and principal on our debt, which will reduce the amount of money available to finance our operations and other business activities; • we may be more vulnerable to general economic downturns and adverse industry conditions; • if cash flow from revenues from licensed product or collaborative arrangements are insufficient to satisfy our obligations with respect to our existing indebtedness, we may be forced to seek to sell assets (subject to obtaining consent under the Indenture) or seek additional capital, which we may not be able to accomplish on favorable terms, if at all; • we could be limited in our flexibility in planning for, or reacting to, changes in our business and in our industry in general; • we could be placed at a competitive disadvantage compared to our competitors that have less debt, less debt restriction or less restrictive debt covenants; • our failure to comply with the financial and other restrictive covenants in our debt instruments which, among other things, limits our ability to incur additional debt and sell or dispose of assets, could result in an event of default that, if not cured or waived, would have a material adverse effect on our business or prospects; and 33 • our tangible and intangible assets, including our intellectual property, are subject to first priority liens and may be used to satisfy our outstanding debt.
The following examples are illustrative: • others may be able to make products that are similar to our products or product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed; • we or any potential future licensors might not have been the first to file patent applications covering certain of our inventions; 59 • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or have exclusively licensed may be held invalid or unenforceable as a result of legal challenges by our competitors; • issued patents that we own or have exclusively licensed may not provide coverage for all aspects of our products or product candidates in all countries; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; and • the patents of others may have an adverse effect on our business.
The following examples are illustrative: • others may be able to make products that are similar to our products or product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed; • we or any potential future licensors might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or have exclusively licensed may be held invalid or unenforceable as a result of legal challenges by our competitors; • issued patents that we own or have exclusively licensed may not provide coverage for all aspects of our products or product candidates in all countries; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; and • the patents of others may have an adverse effect on our business.
We believe that our ability to successfully compete will depend on, among other things: • the efficacy and safety of our products and product candidates; • the time it takes for our product candidates to complete preclinical and clinical development and receive marketing approval; • our ability to maintain a good relationship with regulatory authorities; • our ability to commercialize and market any of our product candidates after receiving regulatory approval; • the price of our products relative to pricing of branded or generic competitors; 39 • whether coverage and adequate levels of reimbursement are available under private and governmental health insurance plans, including Medicare and Medicaid; • our ability to protect intellectual property rights related to our products and product candidates; • our ability to manufacture on a cost-effective basis for our products and product candidates that receive regulatory approval; and • acceptance by physicians and other healthcare providers of any of our products and product candidates that receive regulatory approval.
We believe that our ability to successfully compete will depend on, among other things: • the efficacy and safety of our products and product candidates; • the time it takes for our product candidates to complete preclinical and clinical development and receive marketing approval; • our ability to maintain a good relationship with regulatory authorities; • our ability to commercialize and market any of our product candidates after receiving regulatory approval; • the price of our products relative to pricing of branded or generic competitors; • whether coverage and adequate levels of reimbursement are available under private and governmental health insurance plans, including Medicare and Medicaid; • our ability to protect intellectual property rights related to our products and product candidates; • our ability to manufacture on a cost-effective basis for our products and product candidates that receive regulatory approval; and • acceptance by physicians and other healthcare providers of any of our products and product candidates that receive regulatory approval.
Market acceptance of our products and any product candidate for which we receive approval depends on a number of factors, including: • the timing of market introduction of the product candidate as well as competitive products; • the clinical indications for which the product candidate is approved; • the potential and perceived advantages of such product candidate over alternative treatments; • favorable pricing and the availability of coverage and adequate reimbursement by third-party payors and government authorities; • relative convenience and ease of administration; • any negative publicity related to our or our competitors’ products that include the same active ingredient; • the prevalence and severity of adverse side effects, including limitations or warnings contained in a product’s FDA-approved labeling; and • the effectiveness of sales and marketing efforts.
Market acceptance of our products and any product candidate for which we receive approval depends on a number of factors, including: 37 • the timing of market introduction of the product candidate as well as competitive products; • the clinical indications for which the product candidate is approved; • the potential and perceived advantages of such product candidate over alternative treatments; • favorable pricing and the availability of coverage and adequate reimbursement by third-party payors and government authorities; • relative convenience and ease of administration; • any negative publicity related to our or our competitors’ products that include the same active ingredient; • the prevalence and severity of adverse side effects, including limitations or warnings contained in a product’s FDA-approved labeling; and • the effectiveness of sales and marketing efforts.
The market price for our Common Stock may be influenced by many factors, including: • results of clinical trials of our current and any future product candidates or those of our competitors; • the success or regulatory approval of competitive drugs or therapies; • regulatory or legal developments in the United States and other countries, as to both our products and product candidates and those of our competitors; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to our current and any future product candidates or clinical development programs; • the results of our efforts to discover, develop, acquire or in-license additional product candidates; • actual or anticipated changes in estimates as to financial results, development, clinical trials or regulatory approval timelines or recommendations by securities analysts; • our inability to obtain or delays in obtaining adequate drug supply for any approved drug or inability to do so at acceptable prices; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • significant lawsuits, including patent or stockholder litigation; • variations in our financial results or those of companies that are perceived to be similar to us, or our failure to achieve anticipated financial results or funding; • market conditions in the pharmaceutical and biotechnology sectors; 64 • inflation and rising interest rates; • general economic, industry and market conditions; and • the other factors described in this “Risk Factors” section.
The market price for our Common Stock may be influenced by many factors, including: • results of clinical trials of our current and any future product candidates or those of our competitors; • the success or regulatory approval of competitive drugs or therapies; • regulatory or legal developments in the United States and other countries, as to both our products and product candidates and those of our competitors; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to our current and any future product candidates or clinical development programs; 62 • the results of our efforts to discover, develop, acquire or in-license additional product candidates; • actual or anticipated changes in estimates as to financial results, development, clinical trials or regulatory approval timelines or recommendations by securities analysts; • our inability to obtain or delays in obtaining adequate drug supply for any approved drug or inability to do so at acceptable prices; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • significant lawsuits, including patent or stockholder litigation; • variations in our financial results or those of companies that are perceived to be similar to us, or our failure to achieve anticipated financial results or funding; • market conditions in the pharmaceutical and biotechnology sectors; • inflation and rising interest rates; • general economic, industry and market conditions; and • the other factors described in this “Risk Factors” section.
In addition, regardless of merit or eventual outcome, product liability claims or false marketing claims may result in: • impairment of our business reputation; • withdrawal of clinical study participants; • substantial costs due to litigation; • distraction of management’s attention from our primary business; • substantial monetary awards to patients or other claimants; • the inability to commercialize our licensed products and product candidates; and • decreased demand for our licensed products or product candidates, if approved for commercial sale.
In addition, regardless of merit or eventual outcome, product liability claims or false marketing claims may result in: • impairment of our business reputation; • withdrawal of clinical study participants; 48 • substantial costs due to litigation; • distraction of management’s attention from our primary business; • substantial monetary awards to patients or other claimants; • the inability to commercialize our licensed products and product candidates; and • decreased demand for our licensed products or product candidates, if approved for commercial sale.
Even if we believe any of those claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, and the holders of any such patents may be able to block our ability to commercialize such product or product candidates unless we obtain a license under the applicable patents, or until such patents expire or are finally 56 determined to be invalid or unenforceable.
Even if we believe any of those claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, and the holders of any such patents may be able to block our ability to commercialize such product or product candidates unless we obtain a license under the applicable patents, or until such patents expire or are finally determined to be invalid or unenforceable.
In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement.
In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
The PPACA provides, and recent government cases against pharmaceutical and medical device manufacturers support, the view that federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, may implicate the False Claims Act; • HIPAA created federal criminal statutes that prohibit a person from knowingly and willfully executing a scheme or making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor ( e.g., public or private); • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization on entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers, and their respective business associates who provide services involving the creation, use or disclosure of HIPAA protected health information; • federal transparency laws, including the federal Physician Payments Sunshine Act, which is part of the PPACA, that require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to: (i) payments or other “transfers of value” made to physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives and teaching hospitals; and (ii) ownership and investment 41 interests held by physicians and their immediate family members, with such information being made publicly available through a searchable website; • state and foreign law equivalents of each of the above federal laws; state laws that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures, or pricing information; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or to adopt compliance programs as prescribed by state laws and regulations, or that otherwise restrict payments that may be made to healthcare providers; and state and local laws that require the registration of pharmaceutical sales representatives; and • state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
The PPACA provides, and recent government cases against pharmaceutical and medical device manufacturers support, the view that federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, may implicate the False Claims Act; • HIPAA created federal criminal statutes that prohibit a person from knowingly and willfully executing a scheme or making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor ( e.g., public or private); • HIPAA, as amended by HITECH, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization on entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers, and their respective business associates who provide services involving the creation, use or disclosure of HIPAA protected health information; • federal transparency laws, including the federal Physician Payments Sunshine Act, which is part of the PPACA, that require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to: (i) payments or other “transfers of value” made to physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives and teaching hospitals; and (ii) certain ownership and investment interests held by physicians and their immediate family members, with such information being made publicly available through a searchable website; • state and foreign law equivalents of each of the above federal laws; state laws that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures, or pricing information; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or to adopt compliance programs as prescribed by state laws and regulations, or that otherwise restrict payments that may be made to healthcare providers; and state and local laws that require the registration of pharmaceutical sales representatives; and • state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Consequently, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase substantially and our ability to generate revenue could be delayed significantly. 44 Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work.
Consequently, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase substantially and our ability to generate revenue could be delayed significantly. Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work.
We and our CROs are required to comply with FDA laws and regulations regarding current good clinical practice, or GCP, which are also required by the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities in the form of International Conference on Harmonization, or ICH, guidelines for all of our products in clinical development.
We and our CROs are required to comply with FDA laws and regulations regarding current good clinical practice, or GCP, which are also required by the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities in the form of International Conference on Harmonization, or 43 ICH, guidelines for all of our products in clinical development.
If these facilities and quality systems do not pass a pre-approval plant inspection, FDA approval of our product candidates, or the equivalent approvals in other jurisdictions, will not be granted. 46 Regulatory authorities also may, at any time following approval of a product for sale, inspect our manufacturing facilities or those of our third-party suppliers or contractors.
If these facilities and quality systems do not pass a pre-approval plant inspection, FDA approval of our product candidates, or the equivalent approvals in other jurisdictions, will not be granted. Regulatory authorities also may, at any time following approval of a product for sale, inspect our manufacturing facilities or those of our third-party suppliers or contractors.
These products may compete with our products or product candidates, and our and our licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. In addition, we may decide to abandon national and regional patent applications before grant. The examination of each national or regional patent application is an independent proceeding.
These products may compete with our products or product candidates, and our and our licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 53 In addition, we may decide to abandon national and regional patent applications before grant. The examination of each national or regional patent application is an independent proceeding.
In addition, we are subject to Section 203 of the Delaware General Corporation 61 Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our board of directors.
In addition, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our board of directors.
Even if we obtain approval from the FDA and comparable foreign regulatory authorities for our current and future product candidates, any approval might contain significant limitations related to use restrictions for specified age groups, 35 warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements.
Even if we obtain approval from the FDA and comparable foreign regulatory authorities for our current and future product candidates, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements.
As a result, the coverage determination process is generally a time-consuming and costly process that requires us to provide scientific and clinical support for the use of our products to each payor 40 separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.
As a result, the coverage determination process is generally a time-consuming and costly process that requires us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.
Proceedings to enforce our patent rights in other jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or 54 interpreted narrowly and our patent applications at risk of not issuing as patents, and could provoke third parties to assert claims against us.
Proceedings to enforce our patent rights in other jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing as patents, and could provoke third parties to assert claims against us.
In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in which non-compliance can result in abandonment or lapse of the patents or patent applications, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, 56 in which non-compliance can result in abandonment or lapse of the patents or patent applications, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
Such characteristics could cause us, our IRBs, clinical trial sites, the FDA or other regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay, denial or withdrawal of regulatory approval, which may harm our business, financial condition and prospects significantly.
Such characteristics could cause us, our IRBs, clinical trial sites, the FDA or other regulatory authorities to interrupt, delay or halt clinical trials and could result in a more 50 restrictive label or the delay, denial or withdrawal of regulatory approval, which may harm our business, financial condition and prospects significantly.
The patent applications that we own, or in-license, may fail to result in issued patents with claims that cover the products or product candidates, if approved, in the United States or in foreign countries or territories. If this were to occur, 53 early generic competition could be expected against our products and product candidates, if approved.
The patent applications that we own, or in-license, may fail to result in issued patents with claims that cover the products or product candidates, if approved, in the United States or in foreign countries or territories. If this were to occur, early generic competition could be expected against our products and product candidates, if approved.
Further, as we scale up manufacturing of our product 45 candidates and conduct required stability testing, product, packaging, equipment and process-related issues may require refinement or resolution in order for us to proceed with our planned clinical trials and obtain regulatory approval for commercialization of our product candidates.
Further, as we scale up manufacturing of our product candidates and conduct required stability testing, product, packaging, equipment and process-related issues may require refinement or resolution in order for us to proceed with our planned clinical trials and obtain regulatory approval for commercialization of our product candidates.
We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize one or more of our products or product candidates, which could harm our business significantly.
We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that 57 event, we would be unable to further develop and commercialize one or more of our products or product candidates, which could harm our business significantly.
Our success depends upon attaining significant market acceptance of our licensed products and product candidates, if approved, among patients, physicians, pharmacists and the medical community. It is possible that we may not complete development of our product candidates or obtain regulatory approval for those product candidates.
Our success depends upon attaining significant market acceptance of our licensed products and proprietary products and product candidates, if approved, among patients, physicians, pharmacists and the medical community. It is possible that we may not complete development of our product candidates or obtain regulatory approval for those product candidates.
To date we have been subject to a number of claims of this nature. In defending such lawsuits, whether or not they are with or without merit or are ultimately determined in our favor, we would continue to face costly litigation and diversion of technical and management personnel.
To date we have been subject to a number of claims of this nature. In defending such lawsuits, whether or not they are with or without merit or are ultimately determined in our favor, we would continue to face costly litigation and diversion of 38 technical and management personnel.
Those factors may include the likelihood of approval by the FDA or foreign regulatory authorities, the potential market for the product or product candidate, the costs and complexities of delivering such product or product candidate to patients, competing products, and industry and market conditions generally. Collaborations are complex and time-consuming to negotiate and document.
Those factors may include the likelihood of approval by the FDA or foreign regulatory authorities, the potential market for the product or product candidate, the costs and complexities of delivering such product or 46 product candidate to patients, competing products, and industry and market conditions generally. Collaborations are complex and time-consuming to negotiate and document.
Further, we may seek to expand our insurance coverage for our 49 licensed products and our marketing and commercialization of any future approved product candidates as well as other risks related to our business. Our current product liability insurance coverage may not be sufficient to reimburse us for any expenses or losses we may suffer.
Further, we may seek to expand our insurance coverage for our licensed products and our marketing and commercialization of any future approved product candidates as well as other risks related to our business. Our current product liability insurance coverage may not be sufficient to reimburse us for any expenses or losses we may suffer.
The net losses and accumulated deficits were partially offset by gross margins from sales of 31 commercialized licensed and proprietary products, license fees, milestone and royalty payments from commercial licensees and co-development parties. In November 2020, we began utilizing the ATM facility.
The net losses and accumulated deficits were partially offset by gross margins from sales of commercialized licensed and proprietary products, license fees, milestone and royalty payments from commercial licensees and co-development parties. In November 2020, we began utilizing the ATM facility.
Even if we do complete development and obtain regulatory approval for our product candidates, our product candidates may not gain market acceptance among patients, physicians, nurses, pharmacists, the medical community or 37 third-party payors, which is critical to commercial success.
Even if we do complete development and obtain regulatory approval for our product candidates, our product candidates may not gain market acceptance among patients, physicians, nurses, pharmacists, the medical community or third-party payors, which is critical to commercial success.
Should any of these events occur, they could significantly harm our business, results of operations and prospects. Risks Related to Ownership of Our Common Stock Our quarterly operating results may fluctuate significantly, and these fluctuations could cause our stock price to decline. We expect our operating results to continue to be subject to significant quarterly and annual fluctuations.
Should any of these events occur, they could significantly harm our business, results of operations and prospects. 58 Risks Related to Ownership of Our Common Stock Our quarterly operating results may fluctuate significantly, and these fluctuations could cause our stock price to decline. We expect our operating results to continue to be subject to significant quarterly and annual fluctuations.
In either case, such a license may not be available on commercially reasonable terms or at all. 58 Our success will depend in part on our ability to operate without infringing the intellectual property and proprietary rights of third parties.
In either case, such a license may not be available on commercially reasonable terms or at all. Our success will depend in part on our ability to operate without infringing the intellectual property and proprietary rights of third parties.
If we are unable to obtain regulatory approval, or any approval contains significant limitations, we may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of that product candidate or any other product candidate that we may in-license, develop or acquire in the future.
If we are unable to obtain regulatory approval, or any approval contains significant limitations, we may not be 35 able to obtain sufficient funding or generate sufficient revenue to continue the development of that product candidate or any other product candidate that we may in-license, develop or acquire in the future.
We cannot guarantee that that the safety procedures utilized by third-party manufacturers and suppliers with whom we may contract will comply with the standards prescribed by laws and regulations or 50 will eliminate the risk of accidental contamination or injury from these materials.
We cannot guarantee that the safety procedures utilized by third-party manufacturers and suppliers with whom we may contract will comply with the standards prescribed by laws and regulations or will eliminate the risk of accidental contamination or injury from these materials.
Even if we can generate revenues from our operations in the future, our revenues and operating income is likely to fluctuate significantly from year-to-year or quarter-to-quarter and create volatility in our stock price. Even if we are able to generate future revenues, our results of operations would likely continue to vary significantly from year-to-year and quarter-to-quarter.
Even if we can generate revenues from our operations in the future, our revenues and operating income are likely to fluctuate significantly from year-to-year or quarter-to-quarter and create volatility in our stock price. Even if we are able to generate future revenues, our results of operations would likely continue to vary significantly from year-to-year and quarter-to-quarter.
Because we have limited research and development capabilities, it may be difficult for us to stay abreast of the rapid changes in each technology. If we fail to stay at the forefront of technological change, we may be unable to compete effectively.
Because we have limited research and development capabilities, it may be difficult for us to stay abreast of the rapid changes in 39 each technology. If we fail to stay at the forefront of technological change, we may be unable to compete effectively.
If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our preclinical development activities or clinical trials may be extended, delayed, suspended or terminated and we may not be able to obtain regulatory approval for any of our product candidates; • our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel; • our ability to protect our intellectual property and proprietary technology is uncertain; 29 • we may be subject to damages resulting from claims that we, or our colleagues, have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors; • our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer; • if we issue more shares of our Common Stock to raise capital, our current stockholders will incur substantial dilution; • we may be subject to damages resulting from litigation matters currently pending against Aquestive; • cybersecurity continues to affect businesses and could cause business interruption; • our business and operations may be adversely affected by the COVID-19 pandemic; and • adverse developments affecting the financial services industry which could adversely affect our current and projected business operations and our financial condition and results of operations.
If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our preclinical development activities or clinical trials may be extended, delayed, suspended or terminated and we may not be able to obtain regulatory approval for any of our product candidates; 29 • our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel; • our ability to protect our intellectual property and proprietary technology is uncertain; • we may be subject to damages resulting from claims that we, or our colleagues, have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors; • our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer; • if we issue more shares of our Common Stock to raise capital, our current stockholders will incur substantial dilution; • we may be subject to damages resulting from litigation matters currently pending against Aquestive; • cybersecurity continues to affect businesses and could cause business interruption; and • adverse developments affecting the financial services industry which could adversely affect our current and projected business operations and our financial condition and results of operations.
In such event, we may be unable to further practice our technologies or develop and commercialize any of our product candidates at issue, which could significantly harm our business.
In such event, we may be unable to 55 further practice our technologies or develop and commercialize any of our product candidates at issue, which could significantly harm our business.
To the extent that we raise additional funds through collaborative or licensing arrangements, it may be necessary to relinquish some rights to our intellectual property or grant licenses on terms that are not favorable to us. In addition, payments made by potential collaborators or licensees generally will depend upon our achievement of negotiated development and regulatory milestones.
To the extent that we raise additional funds through collaborative or licensing arrangements, it may be necessary to relinquish some rights to our intellectual property or grant licenses on terms that are not favorable to us. In addition, payments made by potential collaborators or licensees generally will depend upon our achievement of negotiated 31 development, regulatory and sales milestones.
In addition, a designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.
In addition, a designated orphan drug may not receive orphan drug market exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.
In addition, we are eligible to remain a smaller reporting company, for so long as we have a public float (based on our Common Stock equity) of less than $250 million measured as of the last business day of our most recently completed second fiscal quarter or a public float (based on our Common Stock equity) of less than $700 million as of such date and annual revenues of less than $100 million during the most recently completed fiscal year.
We are eligible to remain a smaller reporting company for so long as we have a public float (based on our Common Stock equity) of less than $250 million measured as of the last business day of our most recently completed second fiscal quarter or a public float (based on our Common Stock equity) of less than $700 million as of such date and annual revenues of less than $100 million during the most recently completed fiscal year.
Our level of indebtedness and significant debt service obligations could constrain our ability to invest in our business and make it more difficult for us to fund our operations. We have substantial debt and substantial debt service obligations. At December 31, 2023, we had an aggregate principal amount of $45.0 million of outstanding indebtedness, represented by the 13.5% Notes.
Our level of indebtedness and significant debt service obligations could constrain our ability to invest in our business and make it more difficult for us to fund our operations. We have substantial debt and substantial debt service obligations. At December 31, 2024, we had an aggregate principal amount of $45.0 million of outstanding indebtedness, represented by the 13.5% Notes.
We are dependent upon the commercial success of our licensed products and other licensing activities to generate revenue for the near future.
We are dependent upon the commercial success of our licensed and proprietary products and other licensing activities to generate revenue for the near future.
Moreover, collaborations and sales and marketing 47 arrangements are complex and time consuming to negotiate, document and implement, and they may require substantial resources to maintain.
Moreover, collaborations and sales and marketing arrangements are complex and time consuming to negotiate, document and implement, and they may require substantial resources to maintain.
Our cash requirements for 2024 and beyond include expenses related to continuing development and clinical evaluation of our products, manufacture and supply costs, costs of regulatory filings, patent prosecution expenses and litigation expenses, expenses related to commercialization of our products, as well as costs to comply with the requirements of being a public company operating in a highly regulated industry.
Our cash requirements for 2025 and beyond include expenses related to continuing development and clinical evaluation of our products, manufacture and supply costs, costs of regulatory filings, patent prosecution expenses and litigation expenses, expenses related to commercialization of our products, as well as costs to comply with the requirements of being a public company operating in a highly regulated industry.
We may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates and companion diagnostic. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership.
We may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership.
We may seek to obtain additional capital in the future through the issuance of our Common Stock, through other public or private equity or debt financings, through potential non-dilutive capital raising events that may result from royalty streams that may be realizable from our licensed products or licensed intellectual property, through collaborations or licensing arrangements with other companie s, and through the sale of assets, including product, product candidates, plants or other tangible assets, or by other means, if available.
We may seek to obtain additional capital in the future through the issuance of our Common Stock, through other public or private equity or debt financings, through potential non-dilutive capital raising events that may result from royalty streams that may be realizable from our licensed products or licensed intellectual property, through collaborations or licensing arrangements with other companies, and through the sale of assets, including product, product candidates, plants or other tangible assets, or by other means, if available.
Any business partner or supplier bankruptcy or insolvency, or any breach or default by a business partner or supplier, or the loss of any significant business partner or supplier relationships, could result in material adverse impacts on our current and/or projected business operations and financial condition. 66 Item 1B. Unresolved Staff Comments None.
Any business partner or supplier bankruptcy or insolvency, or any breach or default by a business partner or supplier, or the loss of any significant business partner or supplier relationships, could result in material adverse impacts on our current and/or projected business operations and financial condition. 64 Item 1B. Unresolved Staff Comments None.
We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product; • if our competitors are better able to develop products for the diagnosis and treatment of diseases of the central nervous system and the treatment for anaphylaxis that are safer, more effective, less costly, easier to use or otherwise more attractive than our PharmFilm technology, our business will be adversely impacted; • even if our product candidates are approved for commercial sale, if we are unable to develop a sales and marketing infrastructure, we may not be successful in commercializing our products in the United States; • our ability to commercialize our product candidates will depend in part on the extent to which reimbursement will be available from government and health administration authorities, private health maintenance organizations and health insurers, and other healthcare payors; • any delays or changes to the timing, cost and success of clinical trials for Anaphylm and our other product candidates; • failure to generate sufficient data in our PK and PD comparability submission for FDA approval of Anaphylm; • data in our PK and PD comparability as submitted to the FDA for approval of Libervant two to five years is insufficient: • we have entered into, and may enter into collaborations, licensing arrangements, joint ventures, strategic alliances or partnerships with third-parties that may not result in the development of commercially viable products or the generation of significant future revenues; • we are and will be dependent on third-party CROs to conduct all of our clinical trials.
We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product; • if our competitors are better able to develop products for the diagnosis and treatment of diseases of the central nervous system and the treatment for anaphylaxis that are safer, more effective, less costly, easier to use or otherwise more attractive than our PharmFilm technology, our business will be adversely impacted; • even if our product candidates are approved for commercial sale, if we are unable to develop a sales and marketing infrastructure, we may not be successful in commercializing our products in the United States; • our ability to commercialize our product candidates will depend in part on the extent to which reimbursement will be available from government and health administration authorities, private health maintenance organizations and health insurers, and other healthcare payors; • any delays or changes to the timing, cost and success of clinical trials for Anaphylm and our other product candidates; • failure to generate sufficient data in our PK and PD comparability submission for FDA approval of Anaphylm; • we have entered into, and may enter into collaborations, licensing arrangements, joint ventures, strategic alliances or partnerships with third-parties that may not result in the development of commercially viable products or the generation of significant future revenues; • we are and will be dependent on third-party CROs to conduct all of our clinical trials.
On August 30, 2022, the FDA provided an approvable letter for Libervant that stated that Libervant was not cleared for U.S. market access until the orphan drug market exclusivity for Valtoco, a competing product, ends in January 2027.
On August 30, 2022, the FDA provided an approvable letter for Libervant that stated that Libervant was not cleared for U.S. market access until the orphan drug market exclusivity for Valtoco, a competing nasal spray product, ends in January 2027.
Variations may result from, among other factors: • the timing of FDA or any other regulatory approval, delay in any FDA or other regulatory approvals, or failure to obtain any such FDA or other regulatory approvals; • competitor’s product candidates obtaining FDA or other regulatory approval, which may include orphan drug market exclusivity for seven years in the U.S., before our product has received any such regulatory approval and/or orphan drug exclusivity, or obtaining other FDA marketing exclusivity that blocks U.S. market access for our product candidates; • the timing of process validation for particular product candidates; • the timing of addressing any additional data required to obtain FDA approval of Anaphylm and delays as a result thereof; • changes in the timing of and the amount we spend to research, develop, acquire, license or promote new product candidates; • the timing, amount we spend on, and outcome of our research, development, preclinical studies and clinical trial programs; • serious or unexpected health or safety concerns related to our products or product candidates; • the introduction of new branded and generic products by others that render our product candidates obsolete, subject to greater competition or noncompetitive; • our ability to maintain selling prices and gross margins on our products; • changes in coverage and reimbursement policies of health plans and other health insurers, including changes to Medicare, Medicaid and similar government healthcare programs; • our ability to comply with complex governmental regulations applicable to many aspects of our business; • increases in the cost of raw materials used to manufacture our products and product candidates; • manufacturing and supply interruptions, including product rejections or recalls due to failure to comply with manufacturing specifications or current Good Manufacturing Practices; 32 • timing of revenue recognition related to our collaboration agreements; • our ability and the significant cost to protect our intellectual property and avoid infringing the intellectual property of others and any adverse developments in any related legal proceeding or in other legal proceedings of any nature; and • the outcome and cost of existing or possible future litigation with third parties.
Variations may result from, among other factors: • the timing of FDA or any other regulatory approval, delay in any FDA or other regulatory approvals, or failure to obtain any such FDA or other regulatory approvals; • competitor’s product candidates obtaining FDA or other regulatory approval, which may include orphan drug market exclusivity for seven years in the U.S., before our product has received any such regulatory approval and/ 32 or orphan drug exclusivity, or obtaining other FDA marketing exclusivity that blocks U.S. market access for our product candidates; • the timing of process validation for particular product candidates; • the timing of addressing any additional data required to obtain FDA approval of Anaphylm and delays as a result thereof; • changes in the timing of and the amount we spend to research, develop, acquire, license or promote new product candidates; • the timing, amount we spend on, and outcome of our research, development, preclinical studies and clinical trial programs; • serious or unexpected health or safety concerns related to our products or product candidates; • the introduction of new branded and generic products by others that render our product candidates obsolete, subject to greater competition or noncompetitive; • our ability to maintain selling prices and gross margins on our products; • changes in coverage and reimbursement policies of health plans and other health insurers, including changes to Medicare, Medicaid and similar government healthcare programs; • our ability to comply with complex governmental regulations applicable to many aspects of our business; • increases in the cost of raw materials used to manufacture our products and product candidates; • manufacturing and supply interruptions, including product rejections or recalls due to failure to comply with manufacturing specifications or current Good Manufacturing Practices; • timing of revenue recognition related to our collaboration agreements; • our ability to fund the commercialization of, commence a commercial operation, and actually commercialize our proprietary products and product candidates, if approved by the FDA; • our ability and the significant cost to protect our intellectual property and avoid infringing the intellectual property of others and any adverse developments in any related legal proceeding or in other legal proceedings of any nature; and • the outcome and cost of existing or possible future litigation with third parties.
Further, if any of our products cause serious or unexpected side effects after receiving market approval, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw their approval of the product or impose restrictions on its distribution; • the FDA may require implementation of a Risk Evaluation and Mitigation Strategy, or REMS; • regulatory authorities may require the addition of labeling statements, such as warnings or contraindications; • we may be required to change the way the product is administered or conduct additional clinical studies; 51 • we could be sued and held liable for substantial damages for harm caused to patients; and • our reputation may suffer.
Further, if any of our products cause serious or unexpected side effects after receiving market approval, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw their approval of the product or impose restrictions on its distribution; • the FDA may require implementation of a REMS; • regulatory authorities may require the addition of labeling statements, such as warnings or contraindications; • we may be required to change the way the product is administered or conduct additional clinical studies; • we could be sued and held liable for substantial damages for harm caused to patients; and • our reputation may suffer.
Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.
The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.
Our net loss and other operating results will be affected by numerous factors, including: • whether the FDA requires us to complete additional, unanticipated studies, trials or other activities prior to approving any of our current and future product candidates, which would likely delay any such approval; • our execution of other collaborative, licensing or similar arrangements and the timing of payments we may make or receive under these arrangements; • our limited cash resources and substantial indebtedness; • variations in the level of expenses related to our future development programs; • any product liability or intellectual property infringement lawsuit in which we may become involved; • delays in obtaining, failure to obtain, or adverse developments in obtaining FDA and other regulatory approval of our product candidates; • other regulatory developments affecting any of our other current and future product candidates, or the product candidates of our competitors; and • if any of our current or future product candidates receive regulatory approval, the level of underlying demand for such product candidate and wholesaler buying patterns.
Our net loss and other operating results will be affected by numerous factors, including: • whether the FDA requires us to complete additional, unanticipated studies, trials or other activities prior to approving any of our current and future product candidates, which would likely delay any such approval; • our execution of other collaborative, licensing or similar arrangements and the timing of payments we may make or receive under these arrangements; • our limited cash resources and substantial indebtedness; • variations in the level of expenses related to our future development programs; • any product liability or intellectual property infringement lawsuit in which we may become involved; • delays in obtaining, failure to obtain, or adverse developments in obtaining FDA and other regulatory approval of our product candidates; • other regulatory developments affecting any of our other current and future product candidates, or the product candidates of our competitors; • the costs of pre-commercialization and commercialization of any of our approved products that we market ourselves; and • if any of our current or future product candidates receive regulatory approval, the level of underlying demand for such product candidate and wholesaler buying patterns.
Registration of these shares under the Securities Act have resulted in a substantial amount of these shares becoming freely 65 tradable without restriction under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our Common Stock.
Registration of these shares under the Securities Act has resulted in a substantial amount of these shares becoming freely 63 tradable without restriction under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our Common Stock.
With this limited experience, we may lack the necessary expertise, personnel and resources to successfully commercialize our other product candidates that must first receive regulatory approval, either on our own or together with collaborators.
We have limited commercialization experience and may lack the necessary expertise, personnel and resources to successfully commercialize our other product candidates that must first receive regulatory approval, either on our own or together with collaborators.
If revenues from such key customer were to decline significantly, it would materially adversely affect our business, financial condition and results of operations. Indivior accounted for approximately 80% and 76% of our revenues for 2023 and 2022, respectively, and we believe in the future will continue to account for a substantial part of our revenues.
If revenues from such key customer were to decline significantly, it would materially adversely affect our business, financial condition and results of operations. Indivior accounted for approximately 62% and 80% of our revenues for 2024 and 2023, respectively, and we believe in the future will continue to account for a substantial part of our revenues.
For example, our existing revenue streams are largely dependent on Indivior, which holds the global commercialization rights to our approved product, Suboxone. During the years ended December 31, 2023 and 2022, Indivior represented 80% and 76% of our total revenue, respectively.
For example, our existing revenue streams are largely dependent on Indivior, which holds the global commercialization rights to our approved product, Suboxone. During the years ended December 31, 2024 and 2023, Indivior represented 62% and 80% of our total revenue, respectively.
We may sell additional equity, incur debt or raise funds through licensing arrangements to fund our operations, which may result in dilution to our stockholders, impose restrictions on our business or require us to relinquish proprietary rights. Aquestive has experienced a history of net losses and our accumulated deficits totaled $319.1 million as of December 31, 2023.
We may sell additional equity, incur debt or raise funds through licensing arrangements to fund our operations, which may result in dilution to our stockholders, impose restrictions on our business or require us to relinquish proprietary rights. Aquestive has experienced a history of net losses and our accumulated deficits totaled $363.2 million as of December 31, 2024.
Subsequent legislation, including the BBA, extended the 2% reduction, on average, to 2027, subject to additional Congressional action.
Subsequent legislation, including the BBA, extended the 2% reduction, on average, to 2032, subject to additional Congressional action.
Significant preclinical study or clinical trial delays also could shorten the period during which we have exclusive rights to commercialize a product candidate or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize a product candidate. We have directly marketed just a single product, Sympazan.
Significant preclinical study or clinical trial delays also could shorten the period during which we have exclusive rights to commercialize a product candidate or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize a product candidate.
Our largest stockholder and management own a significant percentage of our stock and may have the ability to effectively influence matters subject to stockholder approval. As of December 31, 2023, our executive officers and directors beneficially owned approximately 9.5% of our outstanding common stock.
Our largest stockholder and management own a significant percentage of our stock and may have the ability to effectively influence matters subject to stockholder approval. As of December 31, 2024, our executive officers and directors beneficially owned approximately 6.6% of our outstanding common stock.
A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it; • federal civil and criminal false claims laws, including, without limitation, the False Claims Act, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other government payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
Under the PPACA a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it and action that may be customary in other industries ma unintentionally violate the Anti-Kickback Statute; • federal civil and criminal false claims laws, including, without limitation, the False Claims Act, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other government payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States. As described in Part II Item 8.
We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.
In addition, Bratton Capital Management L.P. and its affiliates beneficially owned, directly, approximately 14.8% of our outstanding common stock as of December 31, 2023.
In addition, Bratton Capital Management L.P. and its affiliates beneficially owned, directly, approximately 10.8% of our outstanding common stock as of December 31, 2024.
Suboxone, Zuplenz, Sympazan and Exservan have been approved by the FDA, and other product candidates may be approved by the FDA in the future.
Suboxone, Zuplenz, Sympazan, Libervant and Emylif have been approved by the FDA, and other product candidates may be approved by the FDA in the future.
If any such conflicts were to arise with Indivior or any other third party collaborators, one or more of the following events could result, each of which could delay or prevent the development or commercialization of our product or product candidates and harm our business: • reductions in the payment of royalties or other payments we believe are due pursuant to the applicable collaborative arrangement; • actions taken by a third-party collaborator inside or outside our collaboration which could negatively impact our rights or benefits under our collaboration; • unwillingness on the part of a third-party collaborator to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; and • decision by our third-party collaborator to terminate or significantly reduce the relationship. 48 Risks Related to Our Business Operations and Industry We may experience difficulties in managing growth if our business expands to meet future needs, which could disrupt our operations.
If any such conflicts were to arise with Indivior or any other third party collaborators, one or more of the following events could result, each of which could delay or prevent the development or commercialization of our product or product candidates and harm our business: • reductions in the payment of royalties or other payments we believe are due pursuant to the applicable collaborative arrangement; • actions taken by a third-party collaborator inside or outside our collaboration which could negatively impact our rights or benefits under our collaboration; • unwillingness on the part of a third-party collaborator to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; and • decision by our third-party collaborator to terminate or significantly reduce the relationship.
Also, to date, we have only directly marketed one product in the market. If we commercialize and directly market Libervant, if approved for U.S. market access, this could require a significant upfront expense and create a rapid growth in our workforce.
Also, to date, we have only directly marketed two products in the market. If we commercialize and directly market Anaphylm, if approved for U.S. market access, this could require a significant upfront expense and create a rapid growth in our workforce.
Changes in either patent laws or in interpretations of patent laws in the United States and other countries may materially diminish the value of our intellectual property or narrow the scope of our patent protection. 55 We are currently, and in the future will likely continue to be, involved in lawsuits to protect or enforce our patents.
Changes in either patent laws or in interpretations of patent laws in the United States and other countries may materially diminish the value of our intellectual property or narrow the scope of our patent protection. 54 We have in the past and are likely in the future to be, involved in lawsuits to protect or enforce our patents.
Financial Statements and Supplementary Data, Note 22, Contingencies . In an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.
In an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.
If we are unable to effectively coordinate such activities or comply with such laws and regulations, our ability to commercialize our product candidates in the United States and other jurisdictions in which they are or may be available will be materially adversely affected.
If we are unable to effectively coordinate such activities or comply with such laws and regulations, our ability to commercialize our product candidates in the United States and other jurisdictions in which they are or may be available will be materially adversely affected. We also intend to enter into strategic licenses with third parties to commercialize our product candidates.
A failure to obtain this necessary capital when needed could force us to delay, limit, scale back or cease some or all operations. • we have incurred significant operating losses since inception and cannot assure you that we will ever achieve or sustain profitability; • we may fail to obtain regulatory approvals to market our products in the United States or in other countries; • the failure to overcome a present stay on Libervant entering the U.S. market due to a competitor’s orphan drug market exclusivity status; • the development of pharmaceutical products involves a lengthy and expensive process, with an uncertain outcome.
A failure to obtain this necessary capital when needed could force us to delay, limit, scale back or cease some or all operations. • we have incurred significant operating losses since inception and cannot assure you that we will ever achieve or sustain profitability; • we may fail to obtain regulatory approvals to market our products in the United States or in other countries; • Libervant for ARS patients aged between two and five years being blocked from remaining in the U.S. market due to a competitor’s orphan drug market exclusivity status; • the development of pharmaceutical products involves a lengthy and expensive process, with an uncertain outcome.
Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could make it more difficult for a third-party to acquire us, or may increase the cost of acquiring us, even if doing so would benefit our stockholders, or remove our current management.
Any return to stockholders will therefore be limited to the appreciation of their stock. 59 Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could make it more difficult for a third-party to acquire us, or may increase the cost of acquiring us, even if doing so would benefit our stockholders, or remove our current management.
Furthermore, if our suppliers fail to deliver the required commercial quantities of components and active pharmaceutical ingredient on a timely basis and at commercially reasonable prices, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, we would likely be in default in our supply obligations, which could result in the termination of our supply agreements, our incurring potential default damages and our loss of significant revenues.
Furthermore, if our suppliers fail to deliver the required commercial quantities of components and active pharmaceutical ingredient on a timely basis and at commercially reasonable prices, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, we would likely be in default in our supply obligations, which could result in the termination of our supply agreements, our incurring potential default damages and our loss of significant revenues. 44 We rely on third parties to manufacture API for our licensed products and product candidates, and we intend to rely on third parties to manufacture the API for other approved products.
Promotional activities that fail to comply with the FDA’s regulations or guidelines may be subject to warnings from, or enforcement action by, these authorities and may cause the FDA to issue warning letters or untitled letters, bring an enforcement actions, suspend or withdraw an approved product from the market, require a recall or institute fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could materially harm our reputation and our business significantly. 38 We could incur substantial costs and disruption to our business and delays in the launch of our product candidates if our competitors and/or collaborators bring legal actions against us, which could harm our business and operating results.
Promotional activities that fail to comply with the FDA’s regulations or guidelines may be subject to warnings from, or enforcement action by, these authorities and may cause the FDA to issue warning letters or untitled letters, bring an enforcement actions, suspend or withdraw an approved product from the market, require a recall or institute fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could materially harm our reputation and our business significantly.
If we do not obtain market exclusivity for our certain of our products, including orphan drug exclusivity, our business may be harmed . We have sought orphan drug market exclusivity for our drug candidate Libervant and may in the future seek market exclusivity for other product candidates, including orphan drug market exclusivity.
If we do not obtain market exclusivity for certain of our products, including orphan drug exclusivity, our business may be harmed . We have received orphan drug market exclusivity for our drug candidate Libervant for ARS patients aged between two and five years, and may in the future seek market exclusivity for other product candidates, including orphan drug market exclusivity.
Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs with different active moieties can be approved for the same condition or a drug with the same active moiety can be approved for a different indication.
Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs with different active moieties can be approved for the same condition or a drug with the same active moiety can be approved for a different indication as currently permitted pursuant to FDA regulations in the United States.
This focus has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. The Biden administration has begun taking executive actions to address drug pricing and other healthcare policy changes.
This focus has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe IT Officer briefs the Audit Committee on the effectiveness of Aquestive's cybersecurity program quarterly with a more in depth review done annually. In addition, cybersecurity risks are also reviewed as part of our overall Enterprise Risk Management program. We have not encountered any cybersecurity threats or incidents that have had a material impact on our business.
Biggest changeThe IT Officer briefs the Audit Committee on the effectiveness of Aquestive's cybersecurity program quarterly with a more in depth review done annually. The potential impact of risks from cybersecurity threats on the Company are assessed on an ongoing basis, and how such risks could materially affect the Company’s business strategy, operational results, and financial condition are regularly evaluated.
Item 1C. Cybersecurity Risk Management and Strategy Aquestive’s cybersecurity program is built on three key pillars: Governance, Process, Compliance and Audit.
Item 1C. Cybersecurity Risk Management and Strategy Aquestive’s cybersecurity program is built on four key pillars: Governance, Process, Compliance and Audit.
While we face risks from cybersecurity threats that could have a material adverse effect on our business, financial condition, and results of operations, Aquestive’s cybersecurity program is built upon a set of policies, procedures, and standards supported by training and awareness.
While we face risks from cybersecurity threats that could have a material adverse effect on our business, financial condition, and results of operations, Aquestive’s cybersecurity program is built upon a set of policies, procedures, and standards supported by training and awareness. In addition, cybersecurity risks are also reviewed as part of our overall Enterprise Risk Management program.
The Senior Vice President of Information Technology (“IT Officer”), along with the broader Information Technology function, is responsible for assessing and managing Aquestive’s cybersecurity risk and informing senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents. Governance Role of Management/Board The IT Officer reports to the Chief Executive Officer and leads our cybersecurity program.
Governance Role of Management/Board The Senior Vice President of Information Technology (the “IT Officer”), along with the broader Information Technology function, is responsible for assessing and managing Aquestive’s cybersecurity risk and informing senior management and the Audit Committee of the Board regarding cybersecurity risks and the prevention, detection, mitigation, and remediation of cybersecurity incidents.
The cybersecurity program is executed with the MSSP which provides active threat monitoring, risk assessment and incident response capabilities to timely assess and address any material cyber risk that could impact our business operations.
The cybersecurity program is executed with the MSSP, which provides active threat monitoring, risk assessment and incident response capabilities to timely assess and address any material cyber risk that could impact our business operations. On occasion, we engage other external experts, including cybersecurity assessors, consultants, and auditors to evaluate cybersecurity measures and risk management processes, including those applicable to Aquestive.
Our IT Officer has over ten years of experience in information security strategy and the management of cybersecurity risk. The internal Aquestive IT team has over fifteen years of technical experience, program management and architecture experience in managing cyber risk and information security. In addition, the Audit Committee of the Board oversees Aquestive’s cybersecurity risk exposures.
The internal Aquestive IT team has over fifteen years of technical experience, program management and architecture experience in managing cyber risk and information security. The Audit Committee of the Board provides strategic oversight of Aquestive’s cybersecurity matters, including risks associated with cybersecurity threats.
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We depend on and engage various third parties, including suppliers, vendors, and service providers, to operate. We rely on the expertise of our risk management, legal, information technology, and compliance personnel, as well as our MSSP, when identifying and overseeing risks from cybersecurity threats associated with our use of such entities.
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The IT Officer reports to the Chief Executive Officer and leads our cybersecurity program. Our IT Officer has been responsible for this function at Aquestive for 10 years and has over eleven years of experience in information security strategy and the management of cybersecurity risk.
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During the reporting period, we have not identified any risks from cybersecurity threats or incidents, including as a result of previous cybersecurity incidents, that we believe have materially impacted, or are reasonably likely to materially affect, the Company, including our business strategy, operational results, and financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs amended, this lease has a term that extends our lease through August 2026 and contains a renewal option that could extend the lease through August 2029. We do not own any real property. Item 3. Legal Proceedings For more information on Legal Proceedings, see Part II Item 8. Financial Statements and Supplementary Data, Note 22, Contingencies . Item 4.
Biggest changeAs amended, this lease has a term that extends our lease through August 2026 and contains a renewal option that could extend the lease through August 2029. We do not own any real property.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePrior to that date there was no public market for our Common Stock. 67 Holders of Record As of March 1, 2023, we had approximately 87 holders of record of our Common Stock. Certain shares are held in “street” name and, accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.
Biggest changeHolders of Record As of March 3, 2025, we had approximately 84 holders of record of our Common Stock. Certain shares are held in “street” name and, accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.
Recent Sale of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. Reserved 68
Recent Sale of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. Reserved 66
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common stock began trading on the NASDAQ Global Select Market on July 24, 2018 and now trades on the NASDAQ Global Market under the symbol “AQST”.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common stock began trading on the Nasdaq Global Select Market on July 24, 2018 and now trades on the Nasdaq Global Market under the symbol “AQST”. Prior to that date there was no public market for our Common Stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe tables below provide a breakdown of the major costs included in total Research and development expenses and project costs by type of expense for each of the main clinical development projects in which we are engaged for each period presented: Year Ended December 31, Change (In thousands) 2023 2022 $ % Clinical Trials $ 3,597 $ 3,521 $ 76 2 % Development and Manufacturing 664 2,831 (2,167) (77 %) Product Research Expenses 678 1,354 (676) (50 %) Total Project Costs 4,939 7,706 (2,767) (36 %) Preclinical 659 1,045 (386) (37 %) R&D personnel costs 5,775 6,268 (493) (8 %) Consulting and Outside Services 323 595 (272) (46 %) Share Based Compensation 456 672 (216) (32 %) Depreciation/Amortization 91 173 (82) (47 %) All Other R&D 861 1,022 (161) (16 %) Total $ 13,104 $ 17,481 $ (4,377) (25 %) Year Ended December 31, 2023 2022 2023 2022 2023 2022 2023 2022 Total % inc / dec Anaphylm % inc / dec AQST-108 % inc / dec Libervant % inc / dec Clinical Trials $ 3,597 $ 3,521 2 % $ 4,687 $ 3,494 34 % $ — $ — — % $ (1,090) $ 27 N/M Development and Manufacturing 664 2,831 (77 %) 676 2,466 (73 %) — 65 N/M (12) 300 N/M Product Research Expenses 678 1,354 (50 %) 463 921 (50 %) — 211 N/M 215 222 (3 %) Total Project Costs $ 4,939 $ 7,706 (36 %) $ 5,826 $ 6,881 (15 %) $ — $ 276 N/M $ (887) $ 549 N/M Research and development expenses are largely driven by the timing of clinical trials as well as other product development activities associated with Aquestive's pipeline.
Biggest changeThe tables below provide a breakdown of the major costs included in total Research and development expenses and project costs by type of expense for each of the main clinical development projects in which we are engaged for each period presented: Year Ended December 31, Change (In thousands) 2024 2023 $ % Clinical Trials $ 8,837 $ 3,597 $ 5,240 146 % Development and Manufacturing 303 664 (361) (54 %) Product Research Expenses 1,119 678 441 65 % Total Project Costs 10,259 4,939 5,320 108 % Preclinical 987 659 328 50 % R&D personnel costs 6,509 5,775 734 13 % Consulting and Outside Services 331 323 8 2 % Share Based Compensation 1,215 456 759 166 % Depreciation/Amortization 70 91 (21) (23 %) All Other R&D 909 861 48 6 % Total $ 20,280 $ 13,104 $ 7,176 55 % Year Ended December 31, 2024 2023 2024 2023 2024 2023 2024 2023 Total % inc / dec Anaphylm % inc / dec AQST-108 % inc / dec Libervant % inc / dec Clinical Trials $ 8,837 $ 3,597 146% $ 8,231 $ 4,687 76% $ 588 $ — N/M $ 18 $ (1,090) N/M Development and Manufacturing 303 664 (54%) 310 676 (54%) 10 — N/M (17) (12) 42% Product Research Expenses 1,119 678 65% 930 463 101% 188 — N/M 1 215 N/M Total Project Costs $ 10,259 $ 4,939 108% $ 9,471 $ 5,826 63% $ 786 $ — N/M $ 2 $ (887) N/M Total project expenses for Anaphylm increased 63%, or $3,645, for the year ended December 31, 2024 compared to the same period in 2023.
The note holders are also entitled to a tiered royalty between 1.0% to 2.0% of annual worldwide net sales of Libervant (diazepam) Buccal Film until the earlier of (1) the first sale of Anaphylm and (2) eight years from the first sale of Libervant.
The note holders are also entitled to a tiered royalty between 1.0% to 2.0% of annual worldwide net sales of Libervant (diazepam) Buccal Film until the earlier of (1) the first sale of Anaphylm and (2) eight years from the first sale of Libervant.
We may hire or engage additional skilled colleagues or third parties to perform these activities, conduct clinical trials and ultimately seek regulatory approvals for any product candidate that successfully completes those clinical trials. Selling, General and Administrative Expenses Selling, General and Administrative expenses consist primarily of salaries, benefits, share-based compensation, other related costs for executive, finance, and operational personnel.
We may hire or engage additional skilled colleagues or third parties to perform these activities, conduct clinical trials and ultimately seek regulatory approvals for any product candidate that successfully completes those clinical trials. 68 Selling, General and Administrative Expenses Selling, General and Administrative expenses consist primarily of salaries, benefits, share-based compensation, other related costs for executive, finance, and operational personnel.
The excess of future estimated royalty payments of $56,926 over the $13,856 of allocated fair value is recognized as a discount related to the Royalty Right Agreements and is amortized over the life of the Royalty Rights Agreements. Such amortization is reflected as interest expense related to royalty obligations in the Consolidated Statements of Operations and Comprehensive Loss.
The excess of future estimated royalty payments of $56,926 over the $13,856 of allocated fair value is recognized as a discount related to the Royalty Right Agreements and is amortized over the life of the Royalty Rights Agreements. Such amortization is reflected as interest expense related to royalty obligations in the Statements of Operations and Comprehensive Loss.
Critical Accounting Policies and Use of Estimates We have based our Management’s Discussion and Analysis of our financial condition and results of operations on our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles, or GAAP, in the U.S.
Critical Accounting Policies and Use of Estimates We have based our Management’s Discussion and Analysis of our financial condition and results of operations on our Financial Statements, which have been prepared in accordance with generally accepted accounting principles, or GAAP, in the U.S.
The preparation of the Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements as well as the revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments.
The preparation of the Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements as well as the revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments.
If the customer is able to benefit from the license without provision of any other performance obligations by Aquestive and the license is thereby viewed as a distinct or functional license, Aquestive then determines whether the customer has acquired a right to use the license or a right to access the license.
If the customer is able to benefit from the license without provision of any other performance obligations by Aquestive and the license is 76 thereby viewed as a distinct or functional license, Aquestive then determines whether the customer has acquired a right to use the license or a right to access the license.
Revenue Recognition Proprietary product sales, net - this net revenue is recognized when product is shipped and title passes to the customer, typically at time of delivery. At the time of sale, estimates for various revenue allowances are recorded based on historical trends and judgmental estimates .
Revenue Recognition Proprietary product revenue, net - this net revenue is recognized when product is shipped and title passes to the customer, typically at time of delivery. At the time of sale, estimates for various revenue allowances are recorded based on historical trends and judgmental estimates .
We expect our research and development expenses to continue to be significant over the next several years as we continue to develop existing product candidates such as Anaphylm, AQST-108 and others, and we identify and develop or 70 acquire additional product candidates and technologies.
We expect our research and development expenses to continue to be significant over the next several years as we continue to develop existing product candidates such as Anaphylm, AQST-108 and others, and as we identify and develop or acquire additional product candidates and technologies.
For the year ended December 31, 2023, we recognized a loss on extinguishment of debt of $1,382 for prepayment penalties resulting from 12.5% Notes principal payments made in the first quarter of 2023 and fees related to the repayment of the 12.5% Notes in the fourth quarter of 2023. There was no loss on extinguishment of debt in 2022.
For the year ended December 31, 2023, we recognized a loss on extinguishment of debt of $1,382 for prepayment penalties resulting from 12.5% Notes principal payments made in the first quarter of 2023 and fees related to the repayment of the 12.5% Notes in the fourth quarter of 2023. There was no loss on extinguishment of debt in 2024.
Similarly determined estimates are recorded relating to wholesaler service fees, co-pay support redemptions, Medicare, Medicaid and other rebates, and these estimates are reflected as a component of accrued liabilities. Once all related variable considerations are resolved and uncertainties as to collectable amounts are eliminated, estimates are adjusted to actual allowance amounts.
Similarly determined estimates are recorded relating to wholesaler service fees, co-pay support redemptions, and other rebates, and these estimates are reflected as a component of accrued liabilities. Once all related variable considerations are resolved and uncertainties as to collectable amounts are eliminated, estimates are adjusted to actual allowance amounts.
If such growth should occur for higher volume product opportunities such as Suboxone and Ondansetron, we would incur increased costs associated with hiring additional personnel to support the increased manufacturing and supply costs arising from higher manufactured volumes from proprietary and licensed products.
If such growth should occur for higher volume product opportunities such as Suboxone and Ondif, we would incur increased costs associated with hiring additional personnel to support the increased manufacturing and supply costs arising from higher manufactured volumes from proprietary and licensed products.
In exchange for the sale of these rights, we received an upfront payment from Marathon of $40,000 and an additional payment of $10,000 through the achievement of the first milestone. We have received an aggregate amount of $50,000 through December 31, 2023 under the Monetization Agreement.
In exchange for the sale of these rights, we received an upfront payment from Marathon of $40,000 and an additional payment of $10,000 through the achievement of the first milestone. We have received an aggregate amount of $50,000 through December 31, 2024 under the Monetization Agreement.
During the second quarter of 2020, under the Sunovion License Agreement, we recognized $8,000 of royalty revenue and corresponding royalty receivable, related to the $1,000 annual minimum guaranteed royalty that is due in each of the next eight years.
During the second quarter of 2020, under the Sunovion License Agreement, we recognized $8,000 of royalty revenue and corresponding royalty receivable, related to the $1,000 annual minimum guaranteed royalty that is due in each of the subsequent eight years.
In connection with this supplemental indenture, we entered into a Consent Fee Letter with the holders of the 12.5% Notes, pursuant to which we agreed to pay the holders of the 12.5% Notes an additional cash payment of $2,700 in the aggregate, payable in four quarterly payments beginning May 15, 2022. These payments were made by December 31, 2023.
In connection with the indenture, we entered into a Consent Fee Letter with the holders of the 12.5% Notes, 72 pursuant to which we agreed to pay the holders of the 12.5% Notes an additional cash payment of $2,700 in the aggregate, payable in four quarterly payments beginning May 15, 2022. These payments were made by December 31, 2023.
Financial Statements and Supplementary Data, Note 3, Summary of Significant Accounting Policies in the accompanying Notes to our Consolidated Financial Statements for a discussion of recent accounting pronouncements. 79 Item 7A. Quantitative and Qualitative Disclosures about Market Risk Item 7A is not applicable to us as a smaller reporting company and has been omitted. Item 8.
Financial Statements and Supplementary Data, Note 3, Summary of Significant Accounting Policies in the accompanying Notes to our Financial Statements for a discussion of recent accounting pronouncements. 77 Item 7A. Quantitative and Qualitative Disclosures about Market Risk Item 7A is not applicable to us as a smaller reporting company and has been omitted. Item 8.
Interest on the 13.5% Notes accrues at a rate of 13.5% per annum and is payable quarterly in arrears on March 30, June 30, September 30 and December 30 of each year (each, a “Payment Date”) commencing on December 30, 2023.
Interest on the 13.5% Notes accrues at a rate of 13.5% per annum and is payable quarterly in arrears on March 30, June 30, September 30 and December 30 of each year commencing on December 30, 2023.
Results of Operations Comparison of Years Ended December 31, 2023 and 2022 The following discussion of our results of operations explains the material drivers of these results of operations. Revenues The following table sets forth our revenue data for the periods indicated.
Results of Operations Comparison of Years Ended December 31, 2024 and 2023 The following discussion of our results of operations explains the material drivers of these results of operations. Revenues The following table sets forth our revenue data for the periods indicated.
The redemption of 12.5% Notes and the issuance of 13.5% Notes are discussed in Note 14, Long-Term Debt , to our consolidated financial statements. In addition, see Liquidity and Capital Resources below for further detail on our 12.5% Notes and 13.5% Notes.
The redemption of 12.5% Notes and the issuance of 13.5% Notes are discussed in Note 15, Long-Term Debt , to our financial statements. In addition, see Liquidity and Capital Resources below for further detail on our 12.5% Notes and 13.5% Notes.
A portion of the net proceeds from the Offering were used to redeem all of the outstanding 12.5% Notes and to pay expenses relating to the Offering, with the balance of the proceeds to be used for general corporate purposes.
A portion of the net proceeds from that Offering was used to redeem all of the remaining outstanding 12.5% Notes and to pay expenses relating to that Offering, with the balance of the proceeds to be used for general corporate purposes.
Co-development and research fees increased 8% or $109 for the year ended December 31, 2023 compared to the same period in 2022. The increase was driven by the timing of the achievement of research and development performance obligations which are expected to fluctuate from one reporting period to the next.
Co-development and research fees increased 37% or $523 for the year ended December 31, 2024 compared to the same period in 2023. The increase was driven by the timing of the achievement of research and development performance obligations which are expected to fluctuate from one reporting period to the next.
Amortization of debt is reflected as interest expense related to the sale of future revenue in the Consolidated Statements of Operations and Comprehensive Loss. For further discussion of the sale of the future revenue, see Note 16, Sale of Future Revenue . Recent Accounting Pronouncements Refer to Part II Item 8.
Amortization of debt is reflected as interest expense related to the sale of future revenue in the Statements of Operations and Comprehensive Loss. For further discussion of the sale of the future revenue, see Part II Item 8. Financial Statements and Supplementary Data, Note 17, Sale of Future Revenue . Recent Accounting Pronouncements Refer to Part II Item 8.
We expect to continue to manage business costs to appropriately reflect the anticipated general decline in Suboxone revenue, and other external resources or factors affecting our business including, if available, future equity financing, other future access to the capital markets or other potential available sources of liquidity, as well as the uncertainties associated with the coronavirus pandemic.
We expect to continue to manage business costs to appropriately reflect the anticipated general decline in Suboxone revenue, and other external resources or factors affecting our business including, if available, future equity financing, other future access to the capital markets or other potential available sources of liquidity.
With the exception of our license of Exservan, our licensees are responsible for all other aspects of commercialization of these products, and we have no role, either direct or indirect, in our customers’ commercialization activities, including those related to marketing, pricing, sales, payor access and regulatory operations.
In most cases. our licensees are responsible for all other aspects of commercialization of these products, and we have no role, either direct or indirect, in our customers’ commercialization activities, including those related to marketing, pricing, sales, payor access and regulatory operations.
A substantial portion of our current and past revenues has been dependent upon our licensing, manufacturing and sales with one customer, Indivior, which is expected to continue, and it could take significantly longer than planned to achieve anticipated levels of cash flows to help fund our operations and cash needs.
Financial Statements and Supplementary Data, Note 15, Long-Term Debt . A substantial portion of our current and past revenues has been dependent upon our licensing, manufacturing and sales with one customer, Indivior, which is expected to continue, and it could take significantly longer than planned to achieve anticipated levels of cash flows to help fund our operations and cash needs.
We need to raise additional capital to continue to advance its clinical programs. We can provide no assurance that any of these sources of funding, either individually or in combination, will be available on reasonable terms, if at all, or sufficient to fund our business objectives. In addition, we may be required to utilize available financial resources sooner than expected.
We can provide no assurance that any of these sources of funding, either individually or in combination, will be available on reasonable terms, if at all, or sufficient to fund our business objectives. In addition, we may be required to utilize available financial resources sooner than expected.
The excess of future estimated royalty payments of $56,926 over the $13,856 of the allocated fair value is recognized as a discount related to the Royalty Right Agreements and is amortized as interest expense using the effective interest method. The 13.5% Notes are discussed in Note 14, Long-Term Debt , to our consolidated financial statements.
The excess of future estimated royalty payments of $56,926 over the $13,856 of the allocated fair value is recognized as a discount related to the Royalty Right Agreements and is amortized as interest expense using the effective interest method. The 13.5% Notes are discussed in Part II Item 8. Financial Statements and Supplementary Data, Note 15, Long-Term Debt.
Until profitability is achieved, if at all, additional capital and/or other financing or funding will be required, which could be material, to further advance the development and commercialization of Libervant, Anaphylm and AQST-108, if approved by the FDA for U.S. market access, and to meet our other cash requirements, including debt service, specifically our 13.5% Notes.
Until profitability is achieved, if at all, additional capital and/or other financing or funding will be required, which could be material, to further advance the commercialization of Libervant for pediatric patients between two and five years of age and development and commercialization of Anaphylm and AQST-108, if approved by the FDA, and to meet our other cash requirements, including debt service, specifically our 13.5% Notes.
While significant accounting policies are more fully described in Note 3, Summary of Significant Accounting Policies , of the Notes to our Consolidated Financial Statements included in this filing, we believe that the following accounting policies are those that are most critical to the significant judgements and estimates used in the preparation of our Consolidated Financial Statements.
While significant accounting policies are more fully described in Part II Item 8. Financial Statements and Supplementary Data, Note 3, Summary of Significant Accounting Policies , included in this filing, we believe that the following accounting policies are those that are most critical to the significant judgements and estimates used in the preparation of our Financial Statements.
The Securities Purchase Agreements provide for the sale and issuance by us of an aggregate of: (i) 4,850,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to 4,000,000 shares of Common Stock and (iii) Common Stock Warrants to purchase up to 8,850,000 shares of Common Stock.
The Securities Purchase Agreements provided for the sale and issuance by us of an aggregate of: (i) 4,850,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to 4,000,000 shares of Common Stock and (iii) Common Stock Warrants to purchase up to 8,850,000 shares of Common Stock. The pre-funded warrants were fully exercised in 2022.
The Fourth Supplemental Indenture did not change the maturity date of the Notes or the interest payment obligation due under the Notes.
The indenture did not change the maturity date of the 12.5% Notes or the interest payment obligation due under the 12.5% Notes.
This amount is due to the accounting associated with the sale of future revenue related to KYNMOBI royalties sold to Marathon on November 3, 2020 and does not represent or imply a monetary obligation or cash output at any time during the life of the transaction.
These amounts are due to the accounting associated with the sale of future revenue related to KYNMOBI royalties sold to Marathon on November 3, 2020 and do not represent or imply a monetary obligation or cash output at any time during the life of the transaction. These amounts represent amortization of issuance costs.
Funding Requirements Our on-going business, existing cash and equivalents, expense management activities as well as access to the equity capital markets, including through our ATM facility and under the Lincoln Park Purchase Agreement, potentially provide near term funding opportunities for Aquestive, see “Liquidity and Capital Resources”.
Funding Requirements Our on-going business, existing cash and equivalents, expense management activities as well as access to the equity capital markets, including through our ATM facility, and potential asset sales or product outlicensing potentially provide near term funding opportunities for Aquestive, see “Liquidity and Capital Resources”.
Key factors and assumptions inherent in our planned continued operations and anticipated growth include, without limitation, those related to the following: • continued ability of our customers to pay, in a timely manner, for presently contracted and future anticipated orders for our manufactured products, including effects of generics and other competitive pressures as currently envisioned; • continued ability of our customers to pay, in a timely manner, for presently contracted and future anticipated orders for provided co-development and feasibility services, as well as regulatory support services for recently licensed products, such as Exservan; • access to debt or equity markets if, and at the time, needed for any necessary future funding, including our ability to access funding through our ATM facility and under the Lincoln Park Purchase Agreement; 76 • continuing review and appropriate adjustment of our cost structure consistent with our anticipated revenues and funding; • continued growth and market penetration of Sympazan, including anticipated patient and physician acceptance and our licensee’s ability to obtain adequate price and payment support from government agencies and other private medical insurers; • effective commercialization within anticipated cost levels and expected ramp-up timeframes of our product candidate Libervant, if approved for U.S. market access by the FDA; • infrastructure and administrative costs at expected levels to support operations as an FDA and highly regulated public company; • a manageable level of costs for ongoing efforts to protect our intellectual property rights, including litigation costs in connection with seeking to enforce our rights concerning third parties’ "at-risk" launch of generic products, and other litigation matters in which we are involved; • continued compliance with all covenants under our 13.5% Notes, including our ability to comply with our debt service obligations as required thereunder; • absence of significant unforeseen cash requirements; and • the effects of the COVID-19 pandemic on our operations, operations of our key suppliers and third-party clinical and other service providers, our colleagues and contractors and debt equity and other capital markets.
Key factors and assumptions inherent in our planned continued operations and anticipated growth include, without limitation, those related to the following: 74 • continued ability of our customers to pay, in a timely manner, for presently contracted and future anticipated orders for our manufactured products, including effects of generics and other competitive pressures as currently envisioned; • continued ability of our customers to pay, in a timely manner, for presently contracted and future anticipated orders for provided co-development and feasibility services, as well as regulatory support services for recently licensed products; • access to debt or equity markets if, and at the time, needed for any necessary future funding, including our ability to access funding through our ATM facility, should we choose to access this facility; • continuing review and appropriate adjustment of our cost structure consistent with our anticipated revenues and funding; • continued growth and market penetration of Sympazan, including anticipated patient and physician acceptance and our licensee’s ability to obtain adequate reimbursement and payment support from government agencies and other private medical insurers; • effective commercialization within anticipated cost levels and expected ramp-up timeframes of our product Libervant for pediatric patients between two and five years of age; • infrastructure and administrative costs at expected levels to support operations as an FDA and highly regulated public company; • a manageable level of costs for ongoing efforts to protect our intellectual property rights and litigation matters in which we are involved; • continued compliance with all covenants under our 13.5% Notes, including our ability to comply with our debt service obligations as required thereunder; and • absence of significant unforeseen cash requirements.
The New Warrants are exercisable after February 2, 2024, expire on February 2, 2029 and are issuable only for cash, subject to the exception that, if the shares of Common Stock underlying the New Warrants are not registered in accordance with the terms of the Letter Agreement, the New Warrants may also be exercised, in whole or in part, by means of a "cashless exercise".
The New Warrants are exercisable after February 2, 2024, expire on February 2, 2029 and are exercisable only for cash, unless the shares of Common Stock underlying the New Warrants are not registered in accordance with the terms of the Letter Agreement, in which case the New Warrants may also be exercised by means of a "cashless exercise".
Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 decreased by $7,618 compared to the same period in 2022.
Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2024 increased by $79,618 compared to the same period in 2023.
The nature and extent of these performance obligations, broadly referred to as milestones or deliverables, are usually dependent on the scope and structure of the project as contracted, as well as the complexity of the product and the specific regulatory approval path necessary for that product. License and Royalty Revenue We realize revenue from licenses of our intellectual property.
The nature of these performance obligations, broadly referred to as milestones or deliverables, are usually dependent on the scope and structure of the project as contracted, as well as the complexity of the product and the specific regulatory approval path necessary for that product.
We have based our expectation on assumptions that could change or prove to be inaccurate, due to unrelated factors including factors arising in the capital markets, asset monetization markets, regulatory approval process, including the approval of Anaphylm, full approval of Libervant by the FDA for U.S. market access, and regulatory oversight and other factors.
We have based our expectation on assumptions that could change or prove to be inaccurate, due to unrelated factors including factors arising in the capital markets, asset monetization markets, regulatory approval process, and regulatory oversight and other factors.
These activities generate revenues in four primary categories: manufacture and supply revenue, co-development and research fees, license and royalty revenue, and proprietary product sales, net.
Financial Operations Overview Revenues We generate revenues in four primary categories: manufacture and supply revenue, license and royalty revenue, co-development and research fees, and proprietary product revenue, net.
In June 2023, Sunovion announced that it has voluntarily withdrawn KYNMOBI from the U.S. and Canadian markets, therefore, we likely will not receive any of the additional contingent payments under the Monetization agreement.
In June 2023, Sunovion announced that it has voluntarily withdrawn KYNMOBI from the U.S. and Canadian markets, therefore, we likely will not receive any of the additional contingent payments under the Monetization agreement. We discontinued recording interest expense related to the sale of future revenue under the Monetization agreement in the fourth quarter of 2022.
In connection with the Monetization Agreement, we performed an assessment under ASC 860, Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded that the receivable was not transferred. See Note 16, Sale of Future Revenue , to our consolidated financial statements for further detail.
In connection with the Monetization Agreement, we performed an assessment under ASC 860, Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded that the receivable was 69 not transferred. See Part II Item 8. Financial Statements and Supplementary Data, Note 17, Sale of Future Revenue , and Note 13, Other-Non-Current Assets for further detail.
The expected timing of our leases may be different in future years, depending on our decision to extend lease terms and/or enter into leases in preceding years. For more information on our payments related to the 13.5% Notes, see Part II, Item 8. Financial Statements and Supplementary Data, Note 14, Long-Term Debt .
For more information regarding our future lease payments, see Part II, Item 8. Financial Statements and Supplementary Data, Note 11, Right-of-Use Assets and Lease Obligations for our minimum lease payments schedule. The expected timing of our leases may be different in future years, depending on our decision to extend lease terms and/or enter into leases in preceding years.
Liquidity and Capital Resources Sources of Liquidity We had $23,872 in cash and cash equivalents as of December 31, 2023.
Liquidity and Capital Resources Sources of Liquidity We had $71,546 in cash and cash equivalents as of December 31, 2024.
For sales of Sympazan prior to our outlicensing of the product, returns allowances and prompt pay discounts are estimated based on contract terms and historical return rates, if available, and these estimates are recorded as a reduction of receivables.
For sales of Libervant for patients between two to five years of age, returns allowances and prompt pay discounts are estimated based on contract terms and historical return rates, if available, and these estimates are recorded as a reduction of receivables.
We expect future manufacture and supply revenue from licensed products to be based on volume demand for existing licensed products, and for manufacturing and supply rights under license and supply agreements for existing or new agreements for successful product development collaborations. Co-development and Research Fees We work with our licensees to co-develop pharmaceutical products.
We expect future manufacture and supply revenue from licensed products to be based on volume demand for existing licensed products, and for manufacturing and supply rights under license and supply agreements for existing or new agreements for successful product development collaborations. License and Royalty Revenue We realize revenue from licenses of our intellectual property.
While our ability to execute our business objectives and achieve profitability over the longer term cannot be assured, Aquestive's on-going business, existing cash and equivalents, expense management activities, including, but not limited to the ceasing of R&D activities, as well as access to the equity capital markets, including through its ATM facility and under the Lincoln Park Purchase Agreement, provide near term liquidity for us to fund our operating needs for at least the next twelve months as it continues to execute its business strategy.
While our ability to execute our business objectives and achieve profitability over the longer term cannot be assured, our on-going business, existing cash and cash equivalents, expense management activities, potential asset sales or product outlicensing as well as access to the equity capital markets, including through our ATM facility, provide near term liquidity for us to fund our operating needs for at least the next twelve months as we continue to execute our business strategy.
We expect to incur significant operating losses and negative operating cash flows for the foreseeable future, and we have a significant level of debt on which we have substantial ongoing interest payments have principal repayments related to our 13.5% Notes starting in June 2026 through the debt maturity date, which is further discussed in Note 14, Long-Term Debt to our Consolidated Financial Statements.
We expect to incur significant operating losses and negative operating cash flows for the foreseeable future, and we have a significant level of debt on which we have substantial ongoing interest payments have principal repayments related to our 13.5% Notes starting in June 2026 through the debt maturity date and royalty obligation payments projected to be made from the fourth quarter of 2024 to 2034, which are further discussed in Part II Item 8.
Pursuant to the Letter Agreement, in consideration of the Exercising Holder exercising 5,000,000 of the Existing Warrants, Aquestive issued New Warrants to the Exercising Holder to purchase up to an aggregate of 2,750,000 shares of Common Stock.
We also issued to the Exercising Holder New Warrants to purchase up to an aggregate of 2,750,000 shares of Common Stock.
Interest expense related to the sale of future revenue was $220 for the year ended December 31, 2023.
The year ended December 31, 2024 reflects 12 months of activity while the year ended December 31, 2023 reflects 2 months of activity. Interest expense related to the sale of future revenue was $236 and $220 for the years ended December 31, 2024 and 2023.
In June 2023, Sunovion announced that it has voluntarily withdrawn KYNMOBI from the U.S. and Canadian markets, therefore, we likely will not receive any of the additional contingent payments under the Monetization agreement.
In June 2023, Sunovion announced that it has voluntarily withdrawn KYNMOBI from the U.S. and Canadian markets, therefore, we likely will not receive any of the additional contingent payments under the Monetization agreement. As a result, we discontinued recording interest expense related to the sale of future revenue in the fourth quarter of 2022. See Part II Item 8.
In 2019, we established the ATM facility and currently have a prospectus supplement registering the offer and sale of up to $35,000 of shares of Common Stock pursuant to the ATM facility. For the year ended December 31, 2023, we sold 74 4,958,341 shares which provided net proceeds of approximately $8,962 after deducting commissions and other transaction costs of $502.
For the year ended December 31, 2023, we sold 4,958,341 shares under the ATM facility which provided net proceeds of approximately $8,962 after deducting commissions and other transaction costs of $502.
Interest expense related to amortization of the discount on the royalty obligations was $905 for the year ended December 31, 2023. This amount is due to the accounting associated with the royalty obligations as part of the 13.5% Notes issuance. There were no expenses related to the royalty obligations in the same period in 2022.
Interest expense related to amortization of the discount on the royalty obligations was $5,459 and $905 for the years ended December 31, 2024 and 2023, respectively. These amounts are due to the accounting associated with the royalty obligations as part of the 13.5% Notes issuance in November 2023.
Net Cash Used for Investing Activities Net cash used for investing activities for the year ended December 31, 2023 decreased by $1,529 compared to the same period in 2022. The decrease was due to the absence of investments in intangible assets in 2023.
Net Cash Used for Investing Activities Net cash used for investing activities for the year ended December 31, 2024 decreased by $836 compared to the same period in 2023. The use of cash was related to capital expenditures.
On June 14, 2023, warrants to purchase 3,689,452 shares of Common Stock issued pursuant to the Securities Purchase Agreements were exercised with proceeds paid to Aquestive thereon of approximately $3,542.
In June 2023, 3,689,452 Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised with proceeds of approximately $3,542. On August 2023, we entered into the Letter Agreement with the Exercising Holder of 5,000,000 of the remaining Common Stock Warrants.
The increase in manufacture and supply costs was due to higher costs related to raw materials, production and changes in product mix. Research and development expenses decreased 25% or $4,377 for the year ended December 31, 2023 compared to the same period in 2022.
The decrease in manufacture and supply costs was due to lower volume of strips sold, changes in product mix, and lower production costs. Research and development expenses increased 55%, or $7,176, for the year ended December 31, 2024 compared to the same period in 2023.
If adequate funds are not available for our short-term or longer-term liquidity needs and cash requirements as and when needed, we would be required to engage in expense management activities such as reducing staff, delaying, significantly 77 scaling back, or even discontinuing some or all of our current or planned research and development programs and clinical and other product development activities, and otherwise significantly reducing our other spending and adjusting our operating plan, and we would need to seek to take other steps intended to improve our liquidity.
Our ability to secure additional equity financing could be significantly impacted by numerous factors including our operating performance and prospects, positive or negative developments in the regulatory approval process for our product candidates, our existing level of debt which is secured by substantially all of our assets under the Indenture, and general financial market conditions, and there can be no assurance that we will continue to be successful in raising capital or that any such needed financing will be available, available on favorable or acceptable terms, if at all. 75 If adequate funds are not available for our short-term or longer-term liquidity needs and cash requirements as and when needed, we would be required to engage in expense management activities such as reducing staff, delaying, significantly scaling back, or even discontinuing some or all of our current or planned launch activities and research and development programs and clinical and other product development activities, and otherwise significantly reducing our other spending and adjusting our operating plan, and we would need to seek to take other steps intended to improve our liquidity.
The 13.5% Notes are discussed in Note 14, Long-Term Debt , to our consolidated financial statements.
The 13.5% Notes are discussed in Part II Item 8. Financial Statements and Supplementary Data, Note 15, Long-Term Debt.
Manufacture and supply revenue increased 20% or $7,427 for the year ended December 31, 2023 compared to the same period in 2022.
There were no retroactive price adjustments included in Manufacture and supply revenue for the year ended December 31, 2024. License and royalty revenue increased 185% or $9,969 for the year ended December 31, 2024 compared to the same period in 2023.
The 13.5% Notes are interest-only until June 30, 2026, whereupon on such date and each Payment Date thereafter we will also pay an installment of principal of the 13.5% Notes pursuant to a fixed amortization schedule, along with a portion of an Exit Fee determined as of the applicable date of prepayment, payment, acceleration, repurchase or redemption, as the case may be. 75 Cash Flows The following table provides information regarding our cash flows for the years ended December 31, 2023 and 2022 (In thousands) 2023 2022 Net cash used for operating activities $ (6,380) $ (9,819) Net cash used for investing activities (995) (2,524) Net cash provided by financing activities 3,974 11,592 Net decrease in cash and cash equivalents $ (3,401) $ (751) Net Cash Used for Operating Activities Net cash used for operating activities for the year ended December 31, 2023 decreased by $3,439 compared to the same period in 2022.
The 13.5% Notes are interest-only until June 30, 2026, whereupon on such date and each payment date thereafter we will also pay an installment of principal of the 13.5% Notes pursuant to a fixed amortization schedule, along with a portion of an Exit Fee determined as of the applicable date of prepayment, payment, acceleration, repurchase or redemption, as the case may be.
Payments 78 received in excess of amounts ratably or otherwise earned are deferred and recognized over the term of the license or as contingencies or other performance obligations are met. Revenue recognition arising from milestone payments is dependent upon the facts and circumstances surrounding the milestone payments.
Payments received in excess of amounts ratably or otherwise earned are deferred and recognized over the term of the license or as contingencies or other performance obligations are met. Royalty revenue is estimated and recognized when sales under supply agreements with commercial licensees are recorded, absent any contractual constraints or collectability uncertainties.
We plan to conservatively manage our pre-launch spending as to both timing and level relating to Libervant in light of the tentative approval of Libervant by the FDA. In this regard and in light of our out-license of Sympazan, we have significantly reduced our cost on commercialization in 2023 compared to 2022.
We plan to conservatively manage our launch spending as to both timing and level relating to Libervant in light of the approval of Libervant by the FDA for patients between two and five years of age.
Change 2023 2022 $ % (In thousands, except %) Manufacture and supply revenue $ 43,805 $ 36,378 $ 7,427 20 % License and royalty revenue 5,376 2,351 3,025 129 % Co-development and research fees 1,402 1,293 109 8 % Proprietary product sales, net — 7,658 (7,658) N/M Revenues $ 50,583 $ 47,680 $ 2,903 6 % Revenues increased 6% or $2,903 in 2023 compared to the same period in 2022.
Year Ended December 31, Change 2024 2023 $ % (In thousands, except %) Manufacture and supply revenue $ 39,976 $ 43,805 $ (3,829) (9 %) License and royalty revenue 15,345 5,376 9,969 185 % Co-development and research fees 1,925 1,402 523 37 % Proprietary product revenue, net 315 — 315 N/M Total revenues $ 57,561 $ 50,583 $ 6,978 14 % Revenues increased 14% or $6,978 in 2024 compared to the same period in 2023.
We began recognizing Sympazan sales in manufacture and supply revenue and license and royalty revenue in the fourth quarter of 2022. 72 Expenses: The following table sets forth our expense data for the periods indicated: Change 2023 2022 $ % (In thousands, except %) Manufacture and supply $ 20,831 $ 19,386 $ 1,445 7 % Research and development 13,104 17,481 (4,377) (25 %) Selling, general and administrative 31,750 52,879 (21,129) (40 %) Interest expense 6,337 6,552 (215) (3 %) Interest expense related to royalty obligations 905 — 905 N/M Interest expense related to the sale of future revenue 220 5,891 (5,671) (96 %) Interest income and other income, net (16,321) (99) (16,222) N/M Loss on extinguishment of debt 1,382 — 1,382 N/M Manufacture and supply costs and expenses increased 7% or $1,445 for the year ended December 31, 2023 compared to the same period in 2022.
This increase was partially offset by an additional accrual for returns allowances related to the period prior to the outlicensing to Assertio of our proprietary product, Sympazan, which is recorded as an addition to accrued distribution expenses and sales return provision. 70 Expenses, Interest Income and Other Income: The following table sets forth our expense data for the periods indicated: Year Ended December 31, Change 2024 2023 $ % (In thousands, except %) Manufacture and supply $ 17,872 $ 20,831 $ (2,959) (14 %) Research and development 20,280 13,104 7,176 55 % Selling, general and administrative 50,180 31,750 18,430 58 % Interest expense 11,122 6,337 4,785 76 % Interest expense related to royalty obligations 5,459 905 4,554 N/M Interest expense related to the sale of future revenue 236 220 16 7 % Interest income and other income, net (3,437) (16,321) 12,884 (79) % Loss on extinguishment of debt — 1,382 (1,382) N/M Manufacture and supply costs and expenses decreased 14%, or $2,959, for the year ended December 31, 2024 compared to the same period in 2023.
Interest income and other income, net increased $16,222 for the year ended December 31, 2023 compared to the same period in 2022. The increase primarily reflects other income of $6,000 related to the Amendment 11 to the Indivior Commercial Exploitation Agreement, $8,500 patent litigation settlement with BDSI and the receipt of $1,250 ERTC refund recognized in 2023.
The decrease by $12,884 is due to other income of $6,000 related to the Amendment 11 to the Indivior Commercial Exploitation Agreement, $8,500 related to the patent litigation settlement with BioDelivery Sciences International, Inc. and the receipt of the ERTC, which were recognized in the year ended December 31, 2023 and did not recur in 2024.
In this regard, we earn fees through performance of specific tasks, activities, or completion of stages of development defined within a contractual arrangement with the relevant licensee.
Co-development and Research Fees Co-development and research fees are earned through performance of specific tasks, activities or completion of stages of development defined within a contractual development or feasibility study agreement with a customer.
We have five licensed commercialized products which are marketed by our licensees in the U.S. and around the world. We are the exclusive manufacturer of these licensed products. Aquestive also collaborates with pharmaceutical companies to bring new molecules to market using proprietary, best-in-class technologies, like PharmFilm, and has proven drug development and commercialization capabilities.
Aquestive also collaborates with pharmaceutical companies to bring new molecules to market using proprietary, best-in-class technologies, like PharmFilm, and has proven drug development and commercialization capabilities. Our production facilities are located in Portage, Indiana, and our corporate headquarters and primary research laboratory facilities are based in Warren, New Jersey.
We also may be required to evaluate additional licensing and monetization opportunities, if any become available, of our proprietary product candidate programs that we currently plan to self-commercialize or explore other potential liquidity opportunities or other alternatives or options or strategic alternatives, such asset sales, although we cannot assure that any of these actions would be available or available on reasonable terms.
Such strategic opportunities could include asset sales, outlicensing or other monetization opportunities of our proprietary products and product candidates, including Libervant and Anaphylm, although we cannot assure that any of these actions or opportunities would be available or available on acceptable terms.
Interest Income and other income (expense), net Interest income and other income (expense), net consists of earnings derived from an interest-bearing account and other miscellaneous income and expense items. The interest-bearing account has no minimum amount to be maintained in the account nor any fixed length of period for which interest is earned.
The interest-bearing account and money market Treasury mutual funds have no minimum amounts to be maintained in the accounts nor any fixed length of period for which interest and dividends are earned.
All Other R&D expenses which include rent, utilities, maintenance and other expenses and fees decreased by 16% or $161 for the year ended December 31, 2023 compared to the same period in 2022. Selling, general and administrative expenses decreased 40% or $21,129 for the year ended December 31, 2023 as compared to the same period in 2022.
Selling, general and administrative expenses increased 58%, or $18,430, for the year ended December 31, 2024 as compared to the same period in 2023.
Pursuant to the Letter Agreement, the Exercising Holder and Aquestive agreed that the Exercising Holder would exercise all of its Common Stock Warrants for shares of Common Stock underlying the Common Stock Warrants at $0.96 per share of Common Stock, the exercise price of the Common Stock Warrants under the Securities Purchase Agreements.
Pursuant to the Letter Agreement, the Exercising Holder and Aquestive agreed that the Exercising Holder would exercise all of its Existing Warrants at the then current exercise price of the Existing Warrants. The Exercising Holder subsequently exercised the Existing Warrants, with Aquestive receiving gross proceeds of $4,800.
We will continue to manage business costs to prepare for a potential future decline in Suboxone revenue and other external factors affecting our business, as we continue to focus on our core business: • Continuing the development of Anaphylm and AQST-108 along the 505(b)(2) pathway; and • Seeking to obtain the approval and subsequent launch of Libervant, subject to approval by the FDA for U.S. market access, which cannot be assured.
We will continue to manage business costs to prepare for a potential future decline in Suboxone revenue and other external factors affecting our business, as we continue to focus on our core business: • Continuing the development of Anaphylm and AQST-108; and • Commercializing Libervant for after approval from the FDA on April 26, 2024 for the acute treatment of intermittent, stereotypic episodes of frequent seizure activity that are distinct from a patient’s usual seizure pattern in pediatric patients with epilepsy between two to five years of age.
For the year ended December 31, 2022, we sold 1,600,000 shares in addition to issuing 236,491 commitment shares, which provided proceeds of approximately $1,987 in connection with the Lincoln Park Purchase Agreement. On June 6, 2022, we entered into the Securities Purchase Agreements with certain purchasers.
For the years ended December 31, 2024 and 2023, we did not sell shares in connection with the Lincoln Park Purchase Agreement. We have no current intent to use the Lincoln Park facility and the Lincoln Park Purchase agreement will expire on April 12, 2025. On June 6, 2022, we entered into the Securities Purchase Agreements with certain purchasers.
For Libervant, expenses were a credit of $1,090 and $12 in clinical trials and development and manufacturing, respectively, from third party contractors upon the post completion audit of the studies and a decrease in product research by 3% or $7 due to the completion of modeling work.
Total project expenses for AQST-108 increased $786 for the year ended December 31, 2024 compared to the same period in 2023 and were related to feasibility work for AQST-108. In 2023, Clinical trial expenses for Libervant of $1,090 were a credit from third party contractors upon the post completion audit of a study.
For more information regarding our commitments, see Part II, Item 8. Financial Statements and Supplementary Data, Note 22, Contingencies. For more information regarding our future lease payments, see Part II, Item 8. Financial Statements and Supplementary Data, Note 10, Right-of-Use Assets and Lease Obligations for our minimum lease payments schedule.
For more information on our payments related to the 13.5% Notes, see Part II, Item 8. Financial Statements and Supplementary Data, Note 15, Long-Term Debt .
Preclinical expense decreased by 37% or $386 for the year ended December 31, 2023 compared to the same period in 2022 related to activities in evaluating product candidates. R&D personnel costs decreased by 8% or $493 for the year ended December 31, 2023 compared to the same period in 2022 due to ongoing expense management.
In 2023, product research expenses for Libervant of $215 were primarily due to data integration and modeling work. R&D personnel costs increased by 13%, or $734, for the year ended December 31, 2024 compared to the same period in 2023, due to additional headcount.
License and royalty revenue increased 129% or $3,025 for the year ended December 31, 2023 compared to the same period in 2022. This increase was primarily due to $1,500 in milestone licensing revenues for Azstarys from Zevra, increased licensing revenue of $576 and royalty revenues of $680 for Sympazan and increased royalty revenue of $253 for Azstarys.
The increase was primarily due to certain one-time increases in license and royalty revenue and increases in co-development and research fees, partially offset by decreases in manufacture and supply revenue. Manufacture and supply revenue decreased 9% or $3,829 for the year ended December 31, 2024 compared to the same period in 2023.
Proprietary product sales, net which only includes sales of Sympazan decreased $7,658 for the year ended December 31, 2023 compared to the same period in 2022. The decrease was due to the outlicensing agreement with Assertio in October 2022.
Proprietary product revenue, net increased by $315 for the year ended December 31, 2024 compared to the same period in 2023 due to the launch of Libervant for patients between two to five years of age.
This ATM facility has approximately $23,952 available at December 31, 2023. For the year ended December 31, 2022, we sold 2,860,538 shares under the ATM facility which provided net proceeds of approximately $3,907 after deducting commissions and other transaction costs of $289.
Included as part of the 2024 Registration Statement was a $100,000 ATM facility pursuant to the Amended Equity Distribution Agreement with Piper Sandler & Co. For the year ended December 31, 2024, we sold 4,557,220 shares which provided net proceeds of approximately $11,821 after deducting commissions and other transaction costs of $564.
On November 1, 2023, we issued (the “Offering”) $45,000 aggregate principal amount of its 13.5% Notes due November 1, 2028. A portion of the net proceeds from the Offering was used to redeem all of the outstanding 12.5% Notes and to pay expenses relating to the Offering, with the balance of the proceeds to be used for general corporate purposes.
The New Warrants have an exercise price of $2.60 per share. On November 1, 2023, we issued $45,000 aggregate principal amount of its 13.5% Notes due November 1, 2028.
Removed
We are advancing a product pipeline for the treatment of severe allergic reactions, including anaphylaxis. We have also developed a product pipeline focused on treating diseases of the central nervous system, or CNS. For a summary of our products and product candidates, please refer to Item I. Business of this Form 10-K.

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