10q10k10q10k.net

What changed in Aquestive Therapeutics, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Aquestive Therapeutics, Inc.'s 2022 and 2023 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 2023 report.

+395 added−407 removedSource: 10-K (2024-03-05) vs 10-K (2023-03-31)

Top changes in Aquestive Therapeutics, Inc.'s 2023 10-K

395 paragraphs added · 407 removed · 309 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

117 edited+32 added−19 removed173 unchanged
Biggest changeHowever, overcoming the orphan drug marketing exclusivity is difficult to establish, with limited precedent, and there can be no assurance that the FDA will agree with our position seeking to overcome such market exclusivity and approve Libervant for U.S. market access earlier than January 2027, the schedule date for expiration of orphan drug market exclusivity, if this effort is not successful.
Biggest changeThere is no assurance that, if the pediatric NDA for Libervant is approved by the FDA, it will overcome the orphan drug exclusivity granted by the FDA for Valtoco and be granted U.S. market access for this patient age group.
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.
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.
In addition, other regulatory action, including, among other things, warning letters, the seizure of products, 15 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 U.S. Prescription Drug Marketing Act, or PDMA, a part of the FDCA.
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. 11 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.
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.
Aquestive has 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.
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.
In addition, Title II of the Federal Drug Quality and Security Act of 2013, known as the Drug Supply Chain Security Act or 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 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 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 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.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. In the European Union, or EU, we may seek marketing authorization under either the centralized authorization procedure or national authorization procedures. 18 Centralized procedure .
If we fail to comply with applicable foreign regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. In the European Union, or EU, we may seek marketing authorization under either the centralized authorization procedure or national authorization procedures. Centralized procedure .
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 10 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. Rectal administration of this drug presents a particular challenge for patients.
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, 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.
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 caregivers to inject epinephrine into their thighs during an emergency allergic reaction.
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.
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.
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.
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.
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.
Our annual, quarterly, periodic and current reports, proxy statements and other public filings are also available free of charge on the EDGAR Database on the SEC's Internet website at www.sec.gov. 21
Our annual, quarterly, periodic and current reports, proxy statements and other public filings are also available free of charge on the EDGAR Database on the SEC’s Internet website at www.sec.gov.
Manufacturing and Product Supply 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 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.
For example, pharmaceutical companies have been found liable under the Federal False Claims Act in 17 connection with their off-label promotion of drugs.
For example, pharmaceutical companies have been found liable under the Federal False Claims Act in connection with their off-label promotion of drugs.
On July 24, 2020, four Executive Orders were signed and enacted directing the Secretary of HHS to: (1) eliminate protection under an Anti-Kickback Statute safe harbor for certain retrospective price reductions provided by drug manufacturers to sponsors of Medicare Part D plans or pharmacy benefit managers that are not applied at the point-of-sale, which may be delayed until 2032 by the recent Consolidated Appropriations Act ; (2) allow the importation of certain drugs from other countries through individual waivers, permit the re-importation of insulin products, and prioritize 19 finalization of FDA’s December 2019 proposed rule to permit the importation of drugs from Canada; (3) ensure that payment by the Medicare program for certain Medicare Part B drugs is not higher than the payment by other comparable countries (depending on whether pharmaceutical manufacturers agree to other measures); and (4) allow certain low-income individuals receiving insulin and epinephrine purchased by a Federally Qualified Health Center, or FQHC, as part of the 340B drug program to purchase those drugs at the discounted price paid by the FQHC.
On July 24, 2020, four Executive Orders were signed and enacted directing the Secretary of HHS to: (1) eliminate protection under an Anti-Kickback Statute safe harbor for certain retrospective price reductions provided by drug manufacturers to sponsors of Medicare Part D plans or pharmacy benefit managers that are not applied at the point-of-sale, which may be delayed until 2032 by the recent Consolidated Appropriations Act ; (2) allow the importation of certain drugs from other countries through individual waivers, permit the re-importation of insulin products, and prioritize finalization of FDA’s December 2019 proposed rule to permit the importation of drugs from Canada; (3) ensure that payment by the Medicare program for certain Medicare Part B drugs is not higher than the payment by other comparable countries (depending on whether pharmaceutical manufacturers agree to other measures); and (4) allow certain low-income individuals receiving insulin and epinephrine purchased by a FQHC, as part of the 340B drug program to purchase those drugs at the discounted price paid by the FQHC.
We licensed our intellectual property to Cynapsus Therapeutics, Inc., a company that was acquired by Sunovion Pharmaceuticals Inc., or Sunovion, for the commercialization of KYNMOBI under an Agreement dated April 1, 2016, as amended (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 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.
With the GMP 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 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.
Our corporate values – safety, compliance, collaboration, integrity and high performance are built on the foundation that the colleagues we hire, the steps we use to engage them and the way we treat one another promote the creativity, innovation and productivity that spurs the Company’s success.
Our corporate values – safety, compliance, collaboration, integrity and high performance are built on the foundation that the colleagues we hire, the steps we use to engage them and the way we treat one another promote the creativity, innovation and productivity that spurs Aquestive's success.
Subject to our achieving regulatory approval of this product candidate, which we cannot assure, we believe AQST-109 has the potential to reduce the treatment burden currently associated with intramuscular injections and may lower costs to the healthcare system associated with anaphylaxis, due to inaccurate or untimely dosing. Epilepsy Epilepsy is a chronic CNS disorder characterized by recurrent seizure activity.
Subject to our achieving regulatory approval of this product candidate, which we cannot assure, we believe Anaphylm has the potential to reduce the treatment burden currently associated with intramuscular injections and may lower costs to the healthcare system associated with anaphylaxis, due to inaccurate or untimely dosing. Epilepsy Epilepsy is a chronic CNS disorder characterized by recurrent seizure activity.
The single dose of EpiPen resulted in a Cmax of 869 pg/mL. Changes in systolic blood pressure and heart rate were similar after a single dose of AQST-109 when compared to a single dose of EpiPen. This data, along with the data from the completed EPIPHAST study, was the basis for our second End-of-Phase 2 (EoP2) meeting with the FDA.
The single dose of EpiPen resulted in a Cmax of 869 pg/mL. Changes in systolic blood pressure and heart rate were similar after a single dose of Anaphylm when compared to a single dose of EpiPen. This data, along with the data from the completed EPIPHAST study, was the basis for our second End-of-Phase 2 (EoP2) meeting with the FDA.
Under the the terms of license agreement with Haisco, as amended, Aquestive received a $7.0 million upfront cash payment, and will 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. • 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 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.
The process required by the FDA before a new drug may be marketed in the United States generally involves: 13 • completion of preclinical laboratory and animal testing and formulation studies in compliance with the FDA’s current good laboratory practice, or GLP, regulations; • submission to the FDA of an Investigational New Drug, or IND, application for human clinical testing which must become effective before human clinical trials may begin in the United States; • approval by an independent institutional review board, or 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 a New Drug Application, or 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 good manufacturing, or 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; 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.
Utilizing a replicate crossover design, Part 2 confirmed in a larger population of 24 healthy subjects the key PK and PD measures observed in Part 1 of the EPIPHAST study and the first-in-human PK study. The median Tmax was observed to be 15 minutes for AQST-109, compared to 50 minutes for the epinephrine IM 0.3mg.
Utilizing a replicate crossover design, Part 2 confirmed in a larger population of 24 healthy subjects the key PK and PD measures observed in Part 1 of the EPIPHAST study and the first-in-human PK study. The median Tmax was observed to be 15 minutes for Anaphylm, compared to 50 minutes for the epinephrine IM 0.3mg.
AQST-109 repeat dosing provided significantly higher drug plasma concentrations, with a Tmax of 8 minutes after administration, and extensive absorption was observed. The mean Cmax of AQST-109 was 465 pg/mL after one dose and 2,958 pg/mL after two doses. In comparison, the epinephrine IM 0.3mg Cmax was 489 pg/mL after one dose and 911 pg/mL after two doses.
Anaphylm repeat dosing provided significantly higher drug plasma concentrations, with a Tmax of 8 minutes after administration, and extensive absorption was observed. The mean Cmax of Anaphylm was 465 pg/mL after one dose and 2,958 pg/mL after two doses. In comparison, the epinephrine IM 0.3mg Cmax was 489 pg/mL after one dose and 911 pg/mL after two doses.
The final two arms were designed to assess the impact of (1) administering the film sublingually two minutes after consuming a peanut butter sandwich and (2) swallowing the film whole immediately with water. Part 3 study results demonstrated consistent Tmax of 12 minutes with sublingual administration of AQST-109 epinephrine oral film, after consuming a peanut butter sandwich.
The final two arms were designed to assess the impact of (1) administering the film sublingually two minutes after consuming a peanut butter sandwich and (2) swallowing the film whole immediately with water. Part 3 study results demonstrated consistent Tmax of 12 minutes with sublingual administration of Anaphylm epinephrine oral film, after consuming a peanut butter sandwich.
Part 3 study also showed positive results with an unexpectedly high level of gastrointestinal absorption after swallowing AQST-109 whole immediately with water that was distinct from the sublingually absorbed profile. In September 2022, we reported positive topline results from the EPIPHAST II trial for AQST-109.
Part 3 study also showed positive results with an unexpectedly high level of gastrointestinal absorption after swallowing Anaphylm whole immediately with water that was distinct from the sublingually absorbed profile. In September 2022, we reported positive topline results from the EPIPHAST II trial for Anaphylm.
We received a positive written feedback from the FDA after our initial EoP2 meeting request to discuss Chemistry, Manufacturing, and Controls (CMC) for AQST-109, which we believe indicates that our approach to characterizing attributes of AQST-109 appears reasonable in the context of a potential future filing.
We received a positive written feedback from the FDA after our initial EoP2 meeting request to discuss Chemistry, Manufacturing, and Controls (CMC) for Anaphylm, which we believe indicates that our approach to characterizing attributes of Anaphylm appears reasonable in the context of a potential future filing.
Proprietary CNS Product Candidate We believe the application of PharmFilm 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 significant opportunity to develop additional products in the CNS market.
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.
Not all collaborative or licensed products of the Company that may be commercially launched in the future will necessarily be manufactured by us, such as the case with KYNMOBI®.
Not all collaborative or licensed products of Aquestive that may be commercially launched in the future will necessarily be manufactured by us, such as the case with KYNMOBI.
The EPIPHAST II trial was designed to compare single doses of AQST-109 to EpiPen 0.3mg and epinephrine IM 0.3mg, as well as repeat doses of AQST-109 to repeat doses of epinephrine IM 0.3mg. Results from the single dose administration showed AQST-109 achieved a significantly faster Tmax (12 minutes), compared to both EpiPen (22.5 minutes) and epinephrine IM 0.3mg (45 minutes).
The EPIPHAST II trial was designed to compare single doses of Anaphylm to EpiPen 0.3mg and epinephrine IM 0.3mg, as well as repeat doses of Anaphylm to repeat doses of epinephrine IM 0.3mg. Results from the single dose administration showed Anaphylm achieved a significantly faster Tmax (12 minutes), compared to both EpiPen (22.5 minutes) and epinephrine IM 0.3mg (45 minutes).
In July 2022, we reported positive topline results from the final two arms of Part 3 of the EPIPHAST study for AQST-109. The purpose of Part 3 was to continue to study the administration of the film under a variety of conditions to further characterize its PK, PD and safety.
In July 2022, we reported positive topline results from the final two arms of Part 3 of the EPIPHAST study for Anaphylm. The purpose of Part 3 was to continue to study the administration of the film under a variety of conditions to further characterize its PK, PD and safety.
Supporting that philosophy, our management team is responsible for ensuring that our policies and procedures reflect and reinforce the Company’s desired corporate culture including policies and procedures related to risk management, ethics and compliance.
Supporting that philosophy, our management team is responsible for ensuring that our policies and procedures reflect and reinforce our desired corporate culture including policies and procedures related to risk management, ethics and compliance.
The expiration dates for patents covering these products and product candidates, and for pending applications if issued as patents, extend from 2023 to 2042 , 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 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.
We designed AQST-109, a “first of its kind” oral sublingual film formulation delivering systemic epinephrine, as a rescue medicine for the treatment of anaphylaxis, using Aquestive’s proprietary PharmFilm® technologies, to improve patient compliance and lower the total cost of care.
We designed Anaphylm, a “first of its kind” oral sublingual film formulation delivering systemic epinephrine, as a rescue medicine for the treatment of anaphylaxis, using Aquestive’s proprietary PharmFilm technologies, to improve patient compliance and lower the total cost of care.
On January 29, 2021, the Bankruptcy Court approved an agreement pursuant to which the license and supply agreement between Aquestive and Fortovia was terminated, and all rights to commercialize Zuplenz returned to us, effective January 30, 2021. • Azstarys TM – an FDA-approved, once-daily product for the treatment of attention deficit hyperactivity disorder (ADHD) in patients age six years or older.
On January 29, 2021, the Bankruptcy Court approved an agreement pursuant to which the license and supply agreement between Aquestive and Fortovia was terminated, and all rights to commercialize Zuplenz returned to us, effective January 30, 2021. • Azstarys TM – an FDA-approved, once-daily product for the treatment of ADHD in patients age six years or older.
Further, an independent institutional review board, or IRB, covering each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and informed consent information for subjects before the trial commences at that site and it must monitor the study until completed.
Further, an independent IRB, covering each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and informed consent information for subjects before the trial commences at that site and it must monitor the study until completed.
Zambon is responsible for the regulatory approval and marketing of Exservan in the countries where Zambon seeks to market the product, and Aquestive will be responsible for the development and manufacture of the product.
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.
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 the Brazilian regulatory authority (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 Zuplenz to Hypera in Brazil (which Hypera markets as Ondif). Hypera received approval to market Zuplenz in Brazil from ANVISA on February 21, 2022.
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 2023 and 2042.
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.
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 50% (increased to 70% pursuant to the Bipartisan Budget Act of 2018, effective as of 2019) 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 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.
Under the Prescription Drug User Fee Act, or 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 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.
Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal studies to assess the characteristics and potential safety and efficacy of the product. The conduct of the preclinical tests must comply with federal regulations and requirements, including current Good Laboratory Practices (GLPs).
Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal studies to assess the characteristics and potential safety and efficacy of the product. The conduct of the preclinical tests must comply with federal regulations and requirements, including current GLP.
Exservan was approved by the FDA on November 22, 2019. During the fourth quarter of 2019, we announced the grant of a license to Zambon S.p.A. ("Zambon") for the development and commercialization of Exservan in the European Union (EU) for the treatment of ALS. Zambon is a multinational pharmaceutical company with a focus on the CNS therapeutic area.
Exservan was approved by the FDA on November 22, 2019. During the fourth quarter of 2019, we announced the grant of a license to Zambon for the development and commercialization of Exservan in the for the treatment of ALS. Zambon is a multinational pharmaceutical company with a focus on the CNS therapeutic area.
Under this termination arrangement, the Company has the right to participate in any and all value that Zevra may derive from the commercialization or any other monetization of KP-415 and KP-484 compounds or their derivatives.
Under this termination arrangement, we have the right to participate in any and all value that Zevra may derive from the commercialization or any other monetization of KP-415 and KP-484 compounds or their derivatives.
Under the terms of the license agreement with Zambon, an upfront payment was 8 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.
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.
As of December 31, 2022, 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 Securities Exchange Act of 1934, as amended (the "Exchange Act").
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.
Orphan drug exclusivity does not prevent competitors from developing or marketing different drugs for the indication protected by exclusivity, or the same drug for a different indication. Patents Our patent portfolio currently comprises at least 232 issued patents worldwide, of which at least 43 are U.S. patents, and more than 120 pending patent applications worldwide.
Orphan drug exclusivity does not prevent competitors from developing or marketing different drugs for the indication protected by exclusivity, or the same drug for a different indication. Patents Our patent portfolio currently comprises at least 150 issued patents worldwide, of which at least 30 are U.S. patents, and more than 130 pending patent applications worldwide.
As of December 31, 2022, Suboxone retains approximately 34% film market share as generic film-based products have penetrated this market. We have filed patent infringement lawsuits against certain companies relating to generic film-based products for buprenorphine-naloxone. More details regarding these lawsuits are described in Part II Item 8.
As of December 31, 2023, Suboxone branded products retain approximately 31% film market share as generic film-based products have penetrated this market. We have filed patent infringement lawsuits against certain companies relating to generic film-based products for buprenorphine-naloxone. More details regarding these lawsuits are described in Part II Item 8.
Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an abbreviated new drug application, or ANDA, or a 505(b)(2) NDA.
Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an ANDA or a 505(b)(2) NDA.
In Part 1 of the EPIPHAST study, multiple oral film formulations and dosage strengths of AQST-109 were evaluated. The lead formulation of AQST-109 has shown clinically meaningful blood concentrations when delivered in two different physical configurations, with a median time to maximum concentration (Tmax) of 13.5 minutes and 22.5 minutes, respectively.
The EPIPHAST study was also conducted in Canada. In Part 1 of the EPIPHAST study, multiple oral film formulations and dosage strengths of Anaphylm were evaluated. The lead formulation of Anaphylm has shown clinically meaningful blood concentrations when delivered in two different physical configurations, with a median time to maximum concentration (Tmax) of 13.5 minutes and 22.5 minutes, respectively.
These patent families provide process, composition of matter protection for our PharmFilm ® technology, and comprise at least 49 issued patents worldwide, of which at least 12 are U.S. patents, and related pending patent applications worldwide.
PharmFilm – Our Oral Film Technology Our PharmFilm technology is covered by at least 12 patent families. These patent families provide process, composition of matter protection for our PharmFilm technology, and comprise at least 49 issued patents worldwide, of which at least 12 are U.S. patents, and related pending patent applications worldwide.
As a condition of NDA approval, the FDA may require a REMS, or Risk Evaluation and Mitigation Strategy, to help ensure that the benefits of the drug outweigh the potential risks. If the FDA determines a REMS is necessary during review of the application, the drug sponsor must agree to the REMS plan at the time of approval.
As a condition of NDA approval, the FDA may require a REMS to help ensure that the benefits of the drug outweigh the potential risks. If the FDA determines a REMS is necessary during review of the application, the drug sponsor must agree to the REMS plan at the time of approval.
Subject to the supervision of our internal clinical development staff, we use third-party contract research organizations, or CROs, to administer and conduct many aspects of our planned clinical trials including monitoring and managing data, and we will rely upon such CROs, as well as medical institutions, clinical investigators and consultants, to conduct our trials in accordance with our clinical protocols.
Subject to the supervision of our internal clinical operations, we use third-party CROs to administer and conduct many aspects of our planned clinical trials including monitoring and managing data, and we will rely upon such CROs, as well as medical institutions, clinical investigators and consultants, to conduct our trials in accordance with our clinical protocols.
Financial Statements and Supplementary Data, Note 20, Contingencies . • Exservan ® – an oral film formulation of riluzole, has been developed by the Company for the treatment of amyotrophic lateral sclerosis (ALS). We believe that Exservan can bring meaningful assistance to patients who are diagnosed with ALS and face difficulties swallowing traditional forms of medication.
Financial Statements and Supplementary Data, Note 22, Contingencies , contained herein. • Exservan ® – an oral film formulation of riluzole, has been developed by Aquestive for the treatment of ALS. We believe that Exservan can bring meaningful assistance to patients who are diagnosed with ALS and face difficulties swallowing traditional forms of medication.
A single Phase 3 trial with other confirmatory evidence may be sufficient in rare instances where the study is a large multicenter trial demonstrating internal consistency and a statistically persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible. 14 After completion of the required clinical testing, an NDA is prepared and submitted to the FDA.
A single Phase 3 trial with other confirmatory evidence may be sufficient in rare instances where the study is a large multicenter trial demonstrating internal consistency and a statistically persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible.
Suboxone is the most prescribed branded product in its category and was the first sublingual film product for the treatment of opioid dependence. We are the sole and exclusive supplier and manufacturer of Suboxone and have produced over 2.5 billion doses of Suboxone since its launch in 2010.
Suboxone was launched by our licensee, Indivior Inc., or Indivior, in 2010. Suboxone is the most prescribed branded product in its category and was the first sublingual film product for the treatment of opioid dependence. We are the sole and exclusive supplier and manufacturer of Suboxone and have produced over 2.7 billion doses of Suboxone since its launch in 2010.
Aquestive is advancing a product pipeline for the treatment of severe allergic reactions, including anaphylaxis. The Company has also developed a product pipeline focused on treating diseases of the central nervous system, or CNS. Our production facilities are located in Portage, Indiana, and our corporate headquarters and primary research laboratory facilities are based in Warren, New Jersey.
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 CNS. Our production facilities are located in Portage, Indiana, and our corporate headquarters and primary research laboratory facilities are based in Warren, New Jersey.
Further, there can be no assurance that a competitor will not obtain other FDA market exclusivity that blocks U.S. market access for Libervant. Material Agreements More details regarding material agreements are described in Part IV Notes to Consolidated Financial Statements, Note 6, Material Agreements .
Further, there can be no assurance that another company will not obtain other FDA market exclusivity that blocks U.S. market access for Libervant for any age group in this patient population. Material Agreements More details regarding material agreements are described in Part IV Notes to Consolidated Financial Statements, Note 6, Material Agreements .
PharmFilm, which is similar in thickness and size to a postage stamp, can be administered via buccal, sublingual or lingual oral delivery. 5 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: • preferred alternative to more invasive drug administration methods such as injection, rectal or nasal applications; • faster, or at least equivalent, onset of action; • ease of administration and availability (no device required, no gel to transport); • direct absorption into the bloodstream reducing or avoiding “first pass” effects in the liver; • reduced gastrointestinal, or GI, side effects; • positive dosing outcomes, especially for patients with physical ( e.g. , dysphagia) or psychological barriers to other methods of drug administration; • stable, durable, portable and quick dissolving (with or without water); • customizable delivery routes for tailored pharmacokinetic, or PK, profiles (buccal, sublingual or lingual); and • customizable taste profiles.
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.
In each case, the facilities have passed inspection and are subject to periodic re-inspection. Failure to comply with these and other statutory and regulatory requirements subjects a manufacturer to possible legal or regulatory action, including warning letters, the seizure or recall of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations and civil and criminal penalties.
Failure to comply with these and other statutory and regulatory requirements subjects a manufacturer to possible legal or regulatory action, including warning letters, the seizure or recall of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations and civil and criminal penalties.
AZSTARYS consists of serdexmethylphenidate, a prodrug of d-methylphenidate (d-MPH), co-formulated with immediate release d-MPH. In March 2012, the Company entered into an agreement with Zevra Therapeutics, Inc. (formerly KemPharm, Inc.) (“Zevra”), to terminate a Collaboration and License Agreement entered into by the Company and Zevra in April 2011.
AZSTARYS consists of serdexmethylphenidate, a prodrug of d-methylphenidate (d-MPH), co-formulated with immediate release d-MPH. In March 2012, we entered into an agreement with Zevra to terminate a Collaboration and License Agreement entered into by Aquestive and Zevra in April 2011.
Based on topline results of a recent second Phase 1 PK trial in 28 healthy adult volunteers conducted by Aquestive, AQST-108 was generally well-tolerated, with systemic adverse events observed that are consistent with the known adverse events profile for epinephrine. Additional indications and delivery methods are currently being explored preclinically.
Based on topline results of a prior Phase 1 PK trial in 28 healthy adult volunteers conducted by Aquestive, AQST-108 was generally well-tolerated, with systemic adverse events observed that are consistent with the known adverse events profile for epinephrine. • Adrenaverse - (epinephrine prodrug platform) – Additional indications and delivery methods are currently being explored under our epinephrine prodrug platform, which we have branded as Adrenaverse.
Upon completion of the preclinical work, we will request a pre-IND meeting for AQST-108 with the FDA and plan to disclose the indication and path forward for development, once we have received feedback from the FDA.
Upon completion of the preclinical and feasibility work relating to this program, we expect to request a pre-IND meeting for Adrenaverse with the FDA and plan to disclose the indication and path forward for development, once we have received feedback from the FDA.
The active programs in our complex molecule pipeline portfolio are: • AQST-109-SF (or sublingual film)– the first and only orally delivered epinephrine product candidate that has shown clinical results comparable to autoinjectors (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, 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.
We purchase our raw materials, including active pharmaceutical ingredients, from qualified, approved vendors both domestically and internationally. While we typically source raw materials from the lowest cost provider whenever possible, we continue to pursue a multi-supplier strategy for critical raw materials, where available or appropriate. Our product packaging foil is supplied by a single manufacturer.
We purchase our raw materials, including active pharmaceutical ingredients, from qualified, approved vendors both domestically and internationally. Whenever possible, we continue to pursue a multi-supplier strategy for critical raw materials, where available or appropriate. Our product packaging foil is supplied by a single manufacturer. Such manufacturer utilizes multiple manufacturing facilities for production of our packaging foil.
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 2042.
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.
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.
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.
Culture and Colleagues Engagement We believe that our colleagues are an essential element of our strategy and critical to our continued success.
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.
Additional information regarding these programs is discussed under the heading “If we are unable to achieve and maintain adequate levels of coverage and reimbursement for our products or product candidates, if approved, their commercial success may be severely hindered” in the “Risk Factors” section of this Annual Report on Form 10-K. 20 Other Regulation We are also subject to various laws and regulations regarding laboratory practices, the experimental use of animals, and the use and disposal of hazardous or potentially hazardous substances in connection with our research.
Additional information regarding these programs is discussed under the heading “If we are unable to achieve and maintain adequate levels of coverage and reimbursement for our products or product candidates, if approved, their commercial success may be severely hindered” in the “Risk Factors” section of this Annual Report on Form 10-K.
W e are required to register our facilities and adhere to current Good Manufacturing Practices (cGMP) standards. These standards require manufacturers to follow elaborate design, testing, control, documentation and other quality assurance procedures throughout the entire manufacturing process. Our facilities have undergone inspections by the FDA, DEA, TGA, and several quality assurance inspections by pharmaceutical companies for cGMP compliance.
These standards require manufacturers to follow elaborate design, testing, control, documentation and other quality assurance procedures throughout the entire manufacturing process. Our facilities have undergone inspections by the FDA, DEA, TGA, and several quality assurance inspections by pharmaceutical companies for cGMP compliance. In each case, the facilities have passed inspection and are subject to periodic re-inspection.
The FDA has concluded that Libervant has met all required quality, safety, and efficacy standards for approval. Due to an existing FDA regulatory grant of orphan drug market exclusivity for Valtoco®, a diazepam nasal spray product sold by another company, Libervant is not yet eligible for marketing in the United States.
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.
Proprietary Growth Drivers Complex Molecule Portfolio Our PharmFilm ® technology allows us to develop medicines that offer non-invasive delivery, customized suitability for patients with dysphagia, or trouble swallowing, can be administered without water and ensures consistent therapeutic dosing.
Proprietary Growth Drivers Complex Molecule Portfolio Our PharmFilm technology allows us to develop medicines that offer non-invasive delivery, customized suitability for patients with dysphagia, or trouble swallowing, can be administered without water and ensures consistent therapeutic dosing. We believe that these characteristics will permit us to achieve the desired patient outcomes, while potentially reducing the total cost of patient care.
We licensed commercial rights for Zuplenz to Fortovia Therapeutics Inc. (previously Midatech Pharma PLC, "Fortovia") in the United States, Canada, and China. Fortovia launched Zuplenz in the United States in 2015. We had been the sole and exclusive manufacturer of Zuplenz for Fortovia.
We received a $0.9 million milestone payment in connection with this transaction. We licensed commercial rights for Zuplenz to Fortovia (previously Midatech Pharma PLC) in the United States, Canada, and China. Fortovia launched Zuplenz in the United States in 2015. We had been the sole and exclusive manufacturer of Zuplenz for Fortovia.
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. 16 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.
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.
("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. Under the terms of the MTHA license agreement, Aquestive is the exclusive manufacturer and supplier of Exservan for MTHA in the United States.
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.
For the year ended December 31, 2021, the Company received payment of $2.0 million under this arrangement, which was included in License and royalty revenues. 9 • Libervant™ - a buccal film formulation of diazepam tentatively approved by the FDA 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.
During the year ended December 31, 2023, we recorded $1.5 million as milestone revenues for Zevra. • Libervant TM - a buccal film formulation of diazepam tentatively approved by the FDA 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.
Pharmanovia will lead the regulatory and commercialization activities for Libervant in the Territory and the Company will serve as the exclusive sole manufacturer and supplier of Libervant in the Territory.
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.
Human Capital As of December 31, 2022, we employed approximately 130 colleagues. All of our colleagues were employed in the U.S. Of these colleagues, 16 are directly involved in research and development, 81 are involved in manufacturing operations, and 33 are involved in business development and general and administrative activities. Our colleagues are not represented by a labor union.
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.

… 88 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

116 edited+13 added−45 removed478 unchanged
Biggest changeFDA, and comparable foreign regulatory agencies, which may impact regulatory review and approval timelines. • If any third-party in our supply chain for any materials, including active pharmaceutical ingredients and other raw materials supply, which we need for our product candidates for our clinical trials and for the approved products we manufacture and distribute, are adversely impacted by restrictions resulting from the coronavirus pandemic, including staffing shortages, production slowdowns, or disruptions in freight and other transportation services and delivery distribution systems, our supply chain may be disrupted, limiting our ability to manufacture our product candidates for our clinical trials, conduct our research, development and clinical operations, and manufacture, distribute and sell our approved products. • Although we have reopened our business office after several months of closure during the coronavirus pandemic, if there is a resurgence of COVID-19 exposures, we may be forced to close our business office again.
Biggest changeDepending upon the length and severity of the pandemic or any resurgence, which cannot be predicted, we may experience disruptions that could materially and adversely impact our business including: • Various aspects of our clinical trials, including delays or difficulties in enrolling patients in our clinical trials, in clinical trial site initiation, and in recruiting clinical site investigators and clinical site staff; increased rates of patients withdrawing from clinical trials; diversion of healthcare resources away from the conduct of clinical trials; interruption of key clinical trial activities such as clinical trials site data monitoring due to limitations on travel imposed or recommended by federal or state governments; impact on employees and others or interruption of clinical trial visits or study procedures which may impact the integrity of subject data and clinical study endpoints; and interruption or delays in the operations of the FDA, and comparable foreign regulatory agencies, which may impact regulatory review and approval timelines. • If any third-party in our supply chain for any materials, including active pharmaceutical ingredients and other raw materials supply, which we need for our product candidates for our clinical trials and for the approved products we manufacture and distribute, are adversely impacted by restrictions resulting from the coronavirus pandemic, including staffing shortages, production slowdowns, or disruptions in freight and other transportation services and delivery distribution systems, our supply chain may be disrupted, limiting our ability to manufacture our product candidates for our clinical trials, conduct our research, development and clinical operations, and manufacture, distribute and sell our approved products. • Although we have reopened our business office after several months of closure during the coronavirus pandemic, if there is a resurgence of COVID-19 exposures, we may be forced to close our business office again.
Should such a resurgence occur, our increased reliance on colleagues and other third parties on whom we rely working from home or having health issues may negatively impact productivity and could limit commercial launch activities for any new approved product, or disrupt, delay, or otherwise adversely impact our business.
Should such a resurgence occur, our increased reliance on colleagues and other third parties on whom we rely on working from home or having health issues may negatively impact productivity and could limit commercial launch activities for any new approved product, or disrupt, delay, or otherwise adversely impact our business.
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) or less than $700 million as of such date and annual revenues of less than $100 million during the most recently completed fiscal year.
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.
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; • 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; • 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.
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.
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.
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; 30 • 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: • 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.
As a result, this could delay timely completion of preclinical activities, including completing Investigational New Drug (IND)/Clinical Trial Application (CTA) enabling studies or our ability to select future development candidates, and initiation of clinical or other of our development programs and production and delivery of our products. • The FDA and comparable foreign regulatory agencies may experience disruptions, have slower response times or be under-resourced to continue to monitor our clinical trials or to conduct required activities and review of our product candidates seeking regulatory review and such disruptions could materially affect the development, timing and approval of our product candidates. • The coronavirus pandemic may impact the requirements of our customers and growth of our approved products.
As a result, this could delay timely completion 62 of preclinical activities, including completing Investigational New Drug (IND)/Clinical Trial Application (CTA) enabling studies or our ability to select future development candidates, and initiation of clinical or other of our development programs and production and delivery of our products. • The FDA and comparable foreign regulatory agencies may experience disruptions, have slower response times or be under-resourced to continue to monitor our clinical trials or to conduct required activities and review of our product candidates seeking regulatory review and such disruptions could materially affect the development, timing and approval of our product candidates. • The coronavirus pandemic may impact the requirements of our customers and growth of our approved products.
Although we are in the process of testing and developing proprietary product candidates and may seek to acquire rights in other approved drugs, we anticipate that our ability to generate revenue and to become profitable in the near future will depend upon the continued commercial success of Sympazan, Suboxone, Exservan, Azstarys, and KYNMOBI in the U.S., the continued commercial success of Ondif® in Brazil, and our ability to commercialize our product candidate Libervant subject to FDA approval for U.S. market access, including our ability to overcome the current orphan drug market exclusivity of another approved drug, which is difficult to establish and with limited precedent.
Although we are in the process of testing and developing proprietary product candidates and may seek to acquire rights in other approved drugs, we anticipate that our ability to generate revenue and to become profitable in the near future will depend upon the continued commercial success of Sympazan, Suboxone, Exservan, and Azstarys in the U.S., the continued commercial success of Ondif in Brazil, and our ability to commercialize our product candidate Libervant subject to FDA approval for U.S. market access, including our ability to overcome the current orphan drug market exclusivity of another approved drug, which is difficult to establish and with limited precedent.
If adequate funds are not available for our liquidity needs and cash requirements, as and when needed, from the sources referred to above or otherwise, or at all, 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 research and development programs and clinical and other product development activities, or reducing our planned commercialization efforts 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.
If adequate funds are not available for our liquidity needs and cash requirements, as and when needed, from the sources referred to above or otherwise, or at all, 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 research and development programs and clinical and other product development activities, or reducing our future commercialization efforts 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.
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 33 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.
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.
Our amended and restated certificate of incorporation provides that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, any action asserting a claim against us 51 arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our amended and restated bylaws or any other action asserting a claim against us that is governed by the internal affairs doctrine.
Our amended and restated certificate of incorporation provides that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our amended and restated bylaws or any other action asserting a claim against us that is governed by the internal affairs doctrine.
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; 40 • 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; • 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 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 56 determined to be invalid or unenforceable.
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; 49 • 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; 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 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; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which 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 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 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.
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.
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.
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.
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.
Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. We have previously been the target of a phishing attack that resulted in unauthorized access to email.
Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. We have previously been the target of a phishing attack that resulted in unauthorized access to our email system.
In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce or which we choose not to seek to patent, and any other elements of our drug development and reformulation processes that involve proprietary know-how, information or technology that is not covered by 44 patents.
In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce or which we choose not to seek to patent, and any other elements of our drug development and reformulation processes that involve proprietary know-how, information or technology that is not covered by patents.
We also may be required to evaluate additional licensing opportunities, if any become available, of our proprietary product and product candidate programs that we currently plan to self-commercialize or explore other potential liquidity opportunities or other alternatives or options or strategic alternatives, including asset sales, although we cannot assure that any of these actions would be available or available on reasonable terms.
We also may be required to evaluate additional licensing 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, including asset sales, although we cannot assure that any of these actions would be available or available on reasonable terms.
Reimbursement decisions by third-party payors depend upon a number of factors, including, among other things, each third-party payor’s determination that use of a product is: • a covered benefit under its health plan; 32 • appropriate and medically necessary for the specific condition or disease; • cost effective; and • neither experimental nor investigational.
Reimbursement decisions by third-party payors depend upon a number of factors, including, among other things, each third-party payor’s determination that use of a product is: • a covered benefit under its health plan; • appropriate and medically necessary for the specific condition or disease; • cost effective; and • neither experimental nor investigational.
While our systems have been secured and strengthened, there can be no assurance that we will not experience cyber-attacks in the future, suffer indirect consequences from cyber-attack on a third-party, or fail to anticipate, identify or offset such threats of potential cyber-attacks or security breaches in a timely manner.
While our systems have been secured and strengthened, there can be no assurance that we will not experience cyber-attacks in the future, suffer indirect consequences from a cyber-attack on a third-party, or fail to anticipate, identify or offset threats of potential cyber-attacks or security breaches in a timely manner.
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.
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, a recession, depression or other sustained adverse market event could materially and adversely affect the financial markets, our business, the value of our Common Stock and our ability to obtain on favorable terms, or at all, equity or debt financing or any potential monetization of our royalty streams. 52 The coronavirus pandemic continues to evolve.
In addition, a recession, depression or other sustained adverse market event could materially and adversely affect the financial markets, our business, the value of our Common Stock and our ability to obtain on favorable terms, or at all, equity or debt financing or any potential monetization of our royalty streams. The coronavirus pandemic continues to evolve.
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.
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.
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.
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.
All of the risks relating to product development, regulatory approval and commercialization apply to the activities of our existing and future collaborators. 39 Additionally, conflicts may arise between us and our third-party collaborators, such as conflicts concerning the interpretation of clinical data, the achievement of milestones, the interpretation of financial provisions or the ownership of intellectual property developed during the collaboration.
All of the risks relating to product development, regulatory approval and commercialization apply to the activities of our existing and future collaborators. Additionally, conflicts may arise between us and our third-party collaborators, such as conflicts concerning the interpretation of clinical data, the achievement of milestones, the interpretation of financial provisions or the ownership of intellectual property developed during the collaboration.
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.
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.
District Court for the District of Delaware for the approval by the FDA of generic versions of Suboxone in the United States. Of these, cases against all but one of the six generic companies have been resolved. We are also seeking to enforce our patent rights in multiple cases as further described in Part II Item 8.
District Court for the District of Delaware for the approval by the FDA of generic versions of Suboxone in the United States. Of these, cases against all but one of the six generic companies have been resolved. We are also seeking to enforce our patent rights as further described in Part II Item 8.
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.
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.
We rely on limited sources of supply for our thin film foil, and any disruption in the chain of supply may impact production and sales and cause delay in developing and commercializing our proprietary PharmFilm ® Technology product candidates. 36 We currently have relationships with two third parties for the manufacture of our thin film foil.
We rely on limited sources of supply for our thin film foil, and any disruption in the chain of supply may impact production and sales and cause delay in developing and commercializing our proprietary PharmFilm Technology product candidates. We currently have relationships with two third parties for the manufacture of our thin film foil.
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.
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.
The United States Patent and Trademark Office, or USPTO, has developed new and untested regulations and procedures to govern the full implementation of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only 45 became effective in March 2013.
The United States Patent and Trademark Office, or USPTO, has developed new and untested regulations and procedures to govern the full implementation of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective in March 2013.
In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are common, and there are numerous grounds upon which a third-party can assert invalidity or unenforceability of a patent. Third 47 parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation.
In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are common, and there are numerous grounds upon which a third-party can assert invalidity or unenforceability of a patent. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation.
The EU General Data Protection Regulation (GDPR) replaced the Data Protection Directive (with an enforcement date of May 25, 2018) and is designed to harmonize data privacy laws across Europe and to protect all EU citizens’ data privacy and will have a significant impact on how certain data is processed and handled.
The EU General Data Protection Regulation (GDPR) replaced the Data Protection Directive (with an enforcement date of May 25, 2018) and is designed to harmonize data privacy laws across Europe and to protect all EU citizens’ data privacy and will have a significant impact on 63 how certain data is processed and handled.
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.
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.
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.
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.
Guidelines and recommendations published by government agencies can reduce the use of our products or product candidates. 31 Government agencies promulgate regulations and guidelines applicable to certain drug classes which may include our products and product candidates. Regulations and guidelines of government agencies may relate to such matters as usage, dosage, route of administration and use of concomitant therapies.
Guidelines and recommendations published by government agencies can reduce the use of our products or product candidates. Government agencies promulgate regulations and guidelines applicable to certain drug classes which may include our products and product candidates. Regulations and guidelines of government agencies may relate to such matters as usage, dosage, route of administration and use of concomitant therapies.
Any delay or interruption in our ability to meet commercial 37 demand may result in the loss of significant potential revenues and could adversely affect our ability to gain market acceptance for approved products as well as a potential default of our supply commitments or obligations.
Any delay or interruption in our ability to meet commercial demand may result in the loss of significant potential revenues and could adversely affect our ability to gain market acceptance for approved products as well as a potential default of our supply commitments or obligations.
Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these 53 claims and even if we are successful, litigation could result in substantial cost and be a distraction to our management and other colleagues from our core business.
Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these claims and even if we are successful, litigation could result in substantial cost and be a distraction to our management and other colleagues from our core business.
Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. 43 Seeking foreign regulatory approval could result in difficulties and costs and require additional non-clinical studies or clinical trials which could be costly and time consuming.
Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and costs and require additional non-clinical studies or clinical trials which could be costly and time consuming.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our Common Stock could decline. The trading market for our Common Stock relies, in part, on the research and reports that industry and financial analysts publish about us or our business.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our Company, the price of our Common Stock could decline. The trading market for our Common Stock relies, in part, on the research and reports that industry and financial analysts publish about us or our business.
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. 35 We expect that we may experience more rigorous coverage criteria and additional downward pricing pressure as the result of these and other healthcare reform measures that may be adopted in the future.
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. 43 We expect that we may experience more rigorous coverage criteria and additional downward pricing pressure as the result of these and other healthcare reform measures that may be adopted in the future.
If our current products are not commercially successful, our ability to generate manufacturing and sale margins and licensing or royalty revenues will be impaired. Without those revenues, our ability to continue planned development initiatives and commercialization efforts would be limited.
If our current products are not commercially successful, our ability to generate manufacturing and sale margins and licensing or royalty revenues will be impaired. Without those revenues, our ability to continue planned development initiatives and commercialization efforts 33 would be limited.
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 AQST-109 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; 25 • 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/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.
Among 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: 34 • 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; • 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 Bipartisan Budget Act of 2018, or 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.
Among 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.
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 institutional review boards, 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 clinical research organizations, or 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; 29 • 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; • 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.
We intend to satisfy our current and future debt service obligations with our existing cash and cash equivalents and potential access to other funding. However, we may not have sufficient funds, and may be unable to arrange for additional financing, to pay the amounts due under the Indenture and 12.5% Notes or any other debt instruments we may enter into.
We intend to satisfy our current and future debt service obligations with our existing cash and cash equivalents and potential access to other funding. However, we may not have sufficient funds, and may be unable to arrange for additional financing, to pay the amounts due under the Indenture and 13.5% Notes or any other debt instruments we may enter into.
Financial Statements and Supplementary Data, Note 20. 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.
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.
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.
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.
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; • 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 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.
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; • 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 the Company; 22 • 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; • 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.
The litigation involves allegations that we have engaged in conduct intended to interfere with the introduction of generic drug products that would compete with Suboxone in the marketplace. On October 19, 2022, the court in that lawsuit entered an order dismissing all claims against the Company in the lawsuit.
The litigation involves allegations that we have engaged in conduct intended to interfere with the introduction of generic drug products that would compete with Suboxone in the marketplace. On October 19, 2022, the court in that lawsuit entered an order dismissing all claims against Aquestive in the lawsuit.
In either case, such a license may not be available on commercially reasonable terms or at all. 48 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. 58 Our success will depend in part on our ability to operate without infringing the intellectual property and proprietary rights of third parties.
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. 56 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. 66 Item 1B. Unresolved Staff Comments None.
Therefore, these stockholders may have, through their respective ownership positions, the ability to effectively influence or control matters requiring stockholder approval, including elections of directors, amendments of our organizational documents or approval of any merger, sale of assets or other major corporate transaction.
Therefore, these stockholders may have, through their respective ownership positions, the ability to influence matters requiring stockholder approval, including elections of directors, amendments of our organizational documents or approval of any merger, sale of assets or other major corporate transaction.
Although it is not expected to be imminent, if our Company needs to expand to meet demands in growth of our manufacturing operations, commercialization of Libervant, if granted U.S. market access, or additions to our product pipeline in the future, we would expect to expand our employee base to increase our managerial, scientific and engineering, operational, sales, marketing, financial and other resources and to hire more consultants and contractors.
Although it is not expected to be imminent, if we need to expand to meet demands in growth of our manufacturing operations, commercialization of Libervant, if granted U.S. market access, or additions to our product pipeline in the future, we would expect to expand our employee base to increase our managerial, scientific and engineering, operational, sales, marketing, financial and other resources and to hire more consultants and contractors.
We cannot guarantee that 41 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.
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, or our API and component manufacturers, must supply all necessary documentation in support of our regulatory filings for our product candidates on a timely basis and must adhere to the FDA’s good laboratory practices, or GLP, and cGMP regulations enforced by the FDA through its facilities inspection program, and the equivalent standards of the regulatory authorities in other countries.
We, or our API and component manufacturers, must supply all necessary documentation in support of our regulatory filings for our product candidates on a timely basis and must adhere to the FDA’s GLP and cGMP regulations enforced by the FDA through its facilities inspection program, and the equivalent standards of the regulatory authorities in other countries.
Financial Statements and Supplementary Data, Note 20, Contingencies to our consolidated financial statement s. 46 Third parties may commence legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a negative impact on the success of our business.
Financial Statements and Supplementary Data, Note 22, Contingencies to our consolidated financial statement s. Third parties may commence legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a negative impact on the success of our business.
For more information, please see Part IV, Note 20, Contingencies to our consolidated financial statements. Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
For more information, please see Part IV, Note 22, Contingencies to our consolidated financial statements. 57 Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Schobel with a tax gross-up payment, we may not take a federal tax deduction for Mr. Schobel’s excess parachute payments. 50 If an “excess parachute payment” is made to Mr. Schobel, we may incur substantial costs related to a change in control of the Company due to the gross-up payment and the lost federal tax deduction for Mr.
Schobel with a tax gross-up payment, we may not take a federal tax deduction for Mr. Schobel’s excess parachute payments. If an “excess parachute payment” is made to Mr. Schobel, we may incur substantial costs related to a change in control of Aquestive due to the gross-up payment and the lost federal tax deduction for Mr. Schobel’s excess parachute payments.
On December 20, 2021, we received notification from the FDA that it was not ready to act by the PDUFA target goal date of December 23, 2021 for the Company’s NDA for Libervant Buccal Film, and was unable to provide an estimate of the timing of an expected action.
On December 20, 2021, we received notification from the FDA that it 34 was not ready to act by the PDUFA target goal date of December 23, 2021 for our NDA for Libervant Buccal Film and was unable to provide an estimate of the timing of an expected action.
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, 2022, our executive officers and directors beneficially owned approximately 5.5% 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, 2023, our executive officers and directors beneficially owned approximately 9.5% of our outstanding common stock.
If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that would likely result in our stockholders losing most, if not all, of their investment in the Company.
If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that would likely result in our stockholders losing most, if not all, of their investment in Aquestive.
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 76% and 73% of our revenues for 2022 and 2021, 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 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.
The Company’s cash requirements for 2023 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, as well as costs to comply with the requirements of being a public company operating in a highly regulated industry.
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.
Financial Statements and Supplementary Data, Note 20, Contingencies to our consolidated financial statements, a number of our issued patents are involved in litigation.
Financial Statements and Supplementary Data, Note 22, Contingencies to our consolidated financial statements, a number of our issued patents are involved in litigation.
Suboxone, Zuplenz, Sympazan, Exservan, KYNMOBI, and Azstarys have been approved by the FDA, and other product candidates may be approved by the FDA in the future.
Suboxone, Zuplenz, Sympazan and Exservan have been approved by the FDA, and other product candidates may be approved by the FDA in the future.
Schobel’s excess parachute payments. Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. We have incurred substantial losses since the inception of our company and do not expect to become profitable in the near future, if ever.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. We have incurred substantial losses since the inception of our company and do not expect to become profitable in the near future, if ever.
We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product; • i f 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 AQST- 109 and our other product candidates; • failure to generate sufficient data in our PK and PD comparability submission for FDA approval of AQST-109; • 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 contract research organizations 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; • 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 have relied upon and plan to continue to rely upon third-party contract research organizations, or CROs, to monitor and manage data for our preclinical and clinical programs. We rely on these parties for execution of our preclinical studies and clinical trials, and control only certain aspects of their activities.
We have relied upon and plan to continue to rely upon third-party CROs to monitor and manage data for our preclinical and clinical programs. We rely on these parties for execution of our preclinical studies and clinical trials, and control only certain aspects of their activities.
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, 2022 and 2021, Indivior represented 76% and 73% 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, 2023 and 2022, Indivior represented 80% and 76% of our total revenue, respectively.
The order dismissing all claims against the Company could be appealed by the plaintiffs in the case. The Company is not able to determine or predict whether the plaintiffs will appeal the order or the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.
The order dismissing all claims against Aquestive could be appealed by the plaintiffs in the case. We are not able to determine or predict whether the plaintiffs will appeal the order or the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.
For example, on March 10, 2023, Silicon Valley Bank ("SVB") was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation ("FDIC") as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each sent into receivership.
For example, on March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each sent into receivership.
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. 24 Aquestive has experienced a history of net losses and our accumulated deficits totaled $311.2 million as of December 31, 2022.
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.
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, 2022, we had an aggregate principal amount of $51.5 million of outstanding indebtedness, represented by the 12.5% 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, 2023, we had an aggregate principal amount of $45.0 million of outstanding indebtedness, represented by the 13.5% Notes.
This may prevent or discourage unsolicited acquisition proposals or offers for our Common Stock that you may believe are in your best interest as one of our stockholders. We may incur substantial costs relating to “excess parachute payments” under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended. We entered into an employment agreement with A.
This may prevent or discourage unsolicited acquisition proposals or offers for our Common Stock that you may believe are in your best interest as one of our stockholders. 60 We may incur substantial costs relating to “excess parachute payments” under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended.
For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation.
While we were an emerging growth company, we were able to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including exemption from compliance with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation.
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.
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.

… 94 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed2 unchanged
Biggest changeIn October 2017, we extended our Melton facility lease which will expire during March 2023 under the same terms and conditions as the prior lease. We also lease a 73,000-square-foot facility (Ameriplex) in Portage, Indiana, to house additional packaging, R&D and other operations.
Biggest changeOn February 28, 2023, we extended our Melton facility lease which will expire March 31, 2028 under the same terms and conditions as the prior lease. We also lease a 73,000-square-foot facility (Ameriplex) in Portage, Indiana, to house additional packaging, R&D and other operations.
As amended, this lease has a term that extends through our lease to 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 20, Contingencies .
As 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.
Removed
Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed2 unchanged
Biggest changeItem 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 under the symbol “AQST”. Prior to that date there was no public market for our Common Stock.
Biggest changeItem 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”.
Recent Sale of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
Recent Sale of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. Reserved 68
Holders of Record As of March 1, 2023, we had approximately 110 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.
Prior 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.

Item 7. Management's Discussion & Analysis

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

71 edited+41 added−33 removed48 unchanged
Biggest changeKey factors and assumptions inherent in our planned continued operations and anticipated growth include, without limitation, those related to the following: • 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; • 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; 64 • access to debt or equity markets if, and at the time, needed for any necessary future funding; • 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 12.5% Notes, including our ability to comply with our debt service obligations as required thereunder; • absence of significant unforeseen cash requirements; and • our ability to access funding through the Company's ATM facility and under the Lincoln Park Purchase Agreement.
Biggest changeKey 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.
The nature and 58 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 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.
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 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, including the approval of Anaphylm, full approval of Libervant by the FDA for U.S. market access, and regulatory oversight and other factors.
Other costs include facility and related costs not otherwise included in research and development expenses such as: professional fees for patent-related and other legal expenses, consulting, tax and accounting services; insurance; market research; advisory board and key opinion leaders; depreciation; and general corporate expenses, inclusive of IT systems related costs.
Other costs include facility and related costs not otherwise included in research and development expenses such as: professional fees for patent-related and other legal expenses, regulatory fees, consulting, tax and accounting services; insurance; market research; advisory board and key opinion leaders; depreciation; and general corporate expenses, inclusive of IT systems-related costs.
We also may be required to evaluate additional licensing 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.
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.
Financial Operations Overview Revenues Our revenues to date have been earned from our manufactured products made to order for licensees, as well as revenue from our self-developed, recently-outlicensed proprietary product, Sympazan. Revenues are also earned from our product development services provided under contracts with customers, and from the licensing of our intellectual property.
Financial Operations Overview Revenues Our revenues to date have been earned from our manufactured products made to order for licensees, as well as revenue from our self-developed, now outlicensed proprietary product, Sympazan. Revenues are also earned from our product development services provided under contracts with customers, and from the licensing of our intellectual property.
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 14, 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 not transferred. See Note 16, Sale of Future Revenue , to our consolidated financial statements for further detail.
The Company will periodically assess the expected royalty payments using a combination of internal projections and forecasts from external resources. To the extent our future estimates of royalty payments are greater or less than previous estimates or the interest timing of such payments is materially different than its previous estimates, the Company will prospectively adjust the related interest expense.
We periodically assess the expected royalty payments using a combination of internal projections and forecasts from external resources. To the extent our future estimates of royalty payments are greater or less than previous estimates or the timing of such payments is materially different than its previous estimates, we will prospectively adjust the related interest expense.
For functional licenses that do not require further development or other ongoing activities by the Company, the customer is viewed as acquiring the right to use the license as, and when, transferred and revenues are generally recorded at a point in time, subject to contingencies or constraints.
For functional licenses that do not require further development or other ongoing activities by Aquestive, the customer is viewed as acquiring the right to use the license as, and when, transferred and revenues are generally recorded at a point in time, subject to contingencies or constraints.
For symbolic licenses providing substantial value only in conjunction with other performance obligations to be provided by the Company, revenues are generally recorded over the term of the license agreement. Such other obligations provided by the Company generally include manufactured products, additional development services or other deliverables that are contracted to be provided during the license term.
For symbolic licenses providing substantial value only in conjunction with other performance obligations to be provided by Aquestive, revenues are generally recorded over the term of the license agreement. Such other obligations provided by Aquestive generally include manufactured products, additional development services or other deliverables that are contracted to be provided during the license term.
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. 66 Revenue recognition arising from milestone payments is dependent upon the facts and circumstances surrounding the milestone payments.
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.
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, 2022 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, 2023 under the Monetization Agreement.
If the customer is able to benefit from the license without provision of any other performance obligations by the Company and the license is thereby viewed as a distinct or functional license, the Company 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 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.
Liability, royalty revenue, and interest expense related to sale of future revenue The Company treated the sale of future revenue related to KYNMOBI ® as debt financing in accordance with ASC 470 Debt, amortized under the effective interest rate method over the estimated life of the related expected royalty stream.
Liability and interest expense related to sale of future revenue We treated the sale of future revenue related to KYNMOBI as debt financing in accordance with ASC 470 Debt, amortized under the effective interest rate method over the estimated life of the related expected royalty stream.
In doing so, we plan to continue to focus on the core drivers of value for our stockholders, including, more importantly, continued investments in our ongoing product development activities in support AQST-109 and AQST-108.
In doing so, we plan to continue to focus on the core drivers of value for our stockholders, including, more importantly, continued investments in our ongoing product development activities in support of Anaphylm and AQST-108.
In October 2022, we entered into a License Agreement ("Assertio Agreement") with Otter Pharmaceuticals, LLC, a subsidiary of Assertio Holdings, Inc. (NASDAQ: ASRT) (“Assertio”), a specialty pharmaceutical company offering differentiated products to patients, pursuant to which the Company granted an exclusive, worldwide license of its intellectual property for Sympazan to Assertio during the term of that agreement.
In October 2022, we entered into the Assertio Agreement with Otter Pharmaceuticals, LLC, a subsidiary of Assertio (NASDAQ: ASRT), 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.
Results of Operations Comparison of Years Ended December 31, 2022 and 2021 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, 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.
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, AQST-109 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 12.5% 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 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.
We will continue to manage business costs to prepare for a potential future decline in Suboxone revenue, the manufacturing costs related to Sympazan and other external factors affecting our business, as we continue to focus on our core business: • Continuing the development of AQST-109 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 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.
As a result of many factors, such as those set forth under “Risk Factors” in Part 1 Item 1A of this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. All dollar amounts are stated in thousands. Overview Aquestive Therapeutics, Inc.
As a result of many factors, such as those set forth under “Risk Factors” in Part 1 Item 1A of this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. All dollar amounts are stated in thousands.
Research and development expenses primarily consist of: • employee-related expenses, including compensation, benefits, share-based compensation and travel expense; 59 • external research and development expenses incurred under arrangements with third parties, such as contract research organizations, investigational sites and consultants; • the cost of acquiring, developing and manufacturing clinical study materials; and • costs associated with preclinical and clinical activities and regulatory operations.
Research and development expenses primarily consist of: • employee-related expenses, including compensation, benefits, share-based compensation and travel expense; • external research and development expenses incurred under arrangements with third parties, such as CROs, investigational sites and consultants; • the cost of acquiring, developing and manufacturing clinical study materials; and • costs associated with preclinical and clinical activities and regulatory operations.
While the Company’s ability to execute its business objectives and achieve profitability over the longer term cannot be assured, the Company's on-going business, existing cash and equivalents, 62 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 the Company to fund its 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, 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.
We expect to continue to seek to rationalize and manage costs to prepare for a potential decline in Suboxone volumes as the generics in that market continue to take market share, offset by anticipated manufacturing revenue of our proprietary and licensed product including Sympazan, subsequent to the Assertio Agreement in October 2022.
We expect to continue to seek to rationalize and manage costs to prepare for a potential decline in Suboxone volumes as the generics in that market continue to take market share, at least partially offset by anticipated manufacturing revenue of our licensed product including Sympazan, subsequent to the Assertio Agreement in October 2022.
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 AQST-109, AQST-108 and others, and we identify and develop or 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 we identify and develop or 70 acquire additional product candidates and technologies.
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 expect to significantly reduce our cost on commercialization in 2023 compared to 2022.
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.
On October 7, 2021, the Company entered into the Fourth Supplemental Indenture, pursuant to which the amortization schedule for the 12.5% Notes was amended to provide for the date of the first amortization payment to be extended to March 30, 2023.
On October 7, 2021, we entered into a supplemental indenture for the 12.5% Notes, pursuant to which the amortization schedule for the 12.5% Notes was amended to provide for the date of the first principal payment to be extended to March 30, 2023.
In order to determine the amortization of the liability related to the sale of future revenue, the Company is required to estimate the total amount of future royalty and milestone payments to Marathon over the life of the Monetization Agreement and contingent milestone payments from Marathon to the Company.
In order to determine the 71 amortization of the liability related to the sale of future revenue, we are required to estimate the total amount of future royalty and milestone payments to Marathon over the life of the Monetization Agreement and contingent milestone payments from Marathon.
For more information regarding our commitments, see Part II, Item 8. Financial Statements and Supplementary Data, Note 20, Contingencies . For more information regarding our future lease payments, see Part II, Item 8. Financial Statements and Supplementary Data, Note 9, Right of Use Assets and Lease Liabilities for our minimum lease payments schedule.
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.
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 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.
Interest expense decreased 35% or $3,497 for the year ended December 31, 2022 compared to the same period in 2021.
Interest expense decreased 3% or $215 for the year ended December 31, 2023 compared to the same period in 2022.
In connection with the Fourth Supplemental Indenture, the Company entered into a Consent Fee Letter with the holders of the 12.5% Notes, pursuant to which the Company 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.
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.
We are the exclusive sole manufacturer and supplier of Sympazan for Assertio and began recognizing Manufacture and Supply Revenue subsequent to the Assertio Agreement.
We are the exclusive sole manufacturer and supplier of Sympazan for Assertio and began recognizing Manufacture and Supply Revenues and License and Royalty Revenues subsequent to entering into the Assertio Agreement.
Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2022 decreased by $18,547 compared to the same period in 2021.
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.
We expect to continue to manage business costs to appropriately reflect the anticipated general decline in Suboxone revenue, the proceeds from the KYNMOBI Monetization Agreement, and other external resources or factors affecting our business including, if available, any future potential issuances of additional 12.5% Notes under the Indenture, net proceeds or 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, as well as the uncertainties associated with the coronavirus pandemic.
Interest expense related to the sale of future revenue was $5,891 for the year ended December 31, 2022.
Interest expense related to the sale of future revenue was $220 for the year ended December 31, 2023.
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 repayments of our 12.5% Notes, see Part II, Item 8. Financial Statements and Supplementary Data, Note 12, 12.5% Senior Secured Notes and Loans Payable .
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 .
The Lincoln Park Purchase Agreement contains an ownership limitation such that we will not issue, and Lincoln Park will not purchase, shares of Common Stock if it would result in Lincoln Park's beneficial ownership of our outstanding Common Stock exceeding 9.99%.
The Lincoln Park Purchase Agreement contains an ownership limitation such that we will not issue, and Lincoln Park will not purchase, shares of Common Stock if it would result in Lincoln Park’s beneficial ownership of our outstanding Common Stock exceeding 9.99%, which is equivalent to 6,486,623 shares at December 31, 2023.
For the year ended December 31, 2022, the Company 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.
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.
If such growth should occur for higher volume product opportunities such as Suboxone, 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. Research and Development Expenses Since our inception, we have focused significant resources on our research and development activities.
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.
The Company's 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 sources of funds.
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”.
As a result the Company discontinued recording interest expense related to the sale of future revenue in the fourth quarter of 2022, which led to a decrease in 2022. See Note 14, Sale of Future Revenue to our Consolidated Financial Statements for details.
As a result, we discontinued recording interest expense related to the sale of future revenue in the fourth quarter of 2022, which led to a decrease in interest expense related to the sale of future revenue by $5,671 in 2023 as compared to 2022. See Note 16, Sale of Future Reven ue to our Consolidated Financial Statements for details.
Our general and administrative costs include costs related to accounting, audit, legal regulatory, and tax-related services required to maintain compliance with exchange listing and SEC regulations, director and officer insurance costs, and investor and public relations costs.
In addition, these expenses also include warehousing, distribution, selling and business development and other costs, Our general and administrative costs include costs related to accounting, audit, legal regulatory, and tax-related services required to maintain compliance with exchange listing and SEC regulations, director and officer insurance costs, and investor and public relations costs.
Liquidity and Capital Resources Sources of Liquidity We had $27,273 in cash and cash equivalents as of December 31, 2022.
Liquidity and Capital Resources Sources of Liquidity We had $23,872 in cash and cash equivalents as of December 31, 2023.
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 debt repayment and debt service obligations and have principal repayments related to our 12.5% Notes due through the debt maturity date, which is further discussed in Note 12, 12.5% Senior Secured Notes and Loans Payable 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, which is further discussed in Note 14, Long-Term Debt to our Consolidated Financial Statements.
Lincoln Park has covenanted under the Lincoln Park Purchase Agreement not to cause or engage in any manner whatsoever any direct or indirect short selling or hedging of our Common Stock.
Lincoln Park has covenanted under the Lincoln Park Purchase Agreement not to cause or engage in any manner whatsoever any direct or indirect short selling or hedging of our Common Stock. For the year ended December 31, 2023, we did not sell shares in connection with the Lincoln Park Purchase Agreement.
The decrease was primarily due to less Common Stock purchase proceeds under the ATM facility and premium paid to retire debt in 2022, partially offset by proceeds from issuance of Common Stock and warrants under private equity offerings in 2022. See Note 1, Company Overview and Equity Transactions to our Consolidated Financial Statements for detail.
Additionally, the net decrease in proceeds from issuance of Common Stock and warrants under private equity offerings was partially offset by higher Common Stock purchase proceeds under the ATM facility in 2023 as compared to 2022. See Note 1, Company Overview and Equity Transactions and Note 14, Long-Term Debt to our Consolidated Financial Statements for details.
The increase in manufacture and supply costs was due to higher costs related to raw material and production. Research and development expenses increased 3% or $434 for the year ended December 31, 2022 compared to the same period in 2021.
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 sum of future royalty payments less the $50,000 in proceeds received and future contingent payments will be recorded as interest expense over the life of the Monetization Agreement. 60 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 next eight years.
The decrease was driven by the timing of the achievement of research and development performance obligations and are expected to fluctuate from one reporting period to the next. Proprietary product sales, net decreased 10% or $847 for the year ended December 31, 2022 compared to the same period in 2021.
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.
Additionally, while the potential economic impact brought on by and the duration of the coronavirus pandemic is difficult to assess or predict, the significant impact of the coronavirus pandemic on the global financial markets, and on our own stock trading price, may reduce our ability to access additional capital, which would negatively impact our short-term and longer-term liquidity. 65 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 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.
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.
These reserves are based on estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale.
These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale.
We also earn royalties based on our licensees' sales of products that use our intellectual property that are marketed and sold in the countries where we have patented technology rights. Royalty revenue related to the sale of future revenue is described further in this section under Critical Accounting Policies and Use of Estimates.
We also earn royalties based on our licensees’ sales of products that use our intellectual property that are marketed and sold in the countries where we have patented technology rights.
Royalty revenue related to the sale of future revenue is reflected in license fees and royalties, and amortization of debt is reflected as interest expense related to the sale of future revenue in the Consolidated Statement of Operations and Comprehensive Loss. For further discussion of the sale of the future revenue, refer to Note 14, Sale of Future Revenue .
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.
Net Cash Used for Investing Activities Net cash used for investing activities for the year ended December 31, 2022 increased by $1,611 compared to the same period in 2021. The use of cash was related to capital expenditures and additions to intangible assets.
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.
Proprietary Product Sales, Net We commercialized our first proprietary CNS product, Sympazan, in December 2018. Revenues from sales of proprietary product are recorded net of prompt payment discounts, wholesaler service fees, returns allowances, rebates and co-pay support redemptions, each of which are described in more detail below.
Revenues from sales of proprietary product are recorded net of prompt payment discounts, wholesaler service fees, returns allowances, rebates and co-pay support redemptions, each of which are described in more detail below. These reserves are based on estimates of the amounts earned or to be claimed on the related sales.
For the year ended December 31, 2021, the Company sold 6,550,486 shares which provided net proceeds of approximately $29,778 after deducting commissions and other transaction costs of $1,291. For the year ended December 31, 2022, the Company sold 2,860,538 shares which provided net proceeds of approximately $3,907 after deducting commissions and other transaction costs of $289.
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.
Interest Expense Interest expense consists of interest costs on our 12.5% Notes at a fixed rate of 12.5%, payable quarterly, as well as amortization of loan costs and the debt discount. The 12.5% Notes are discussed in Note 12, 12.5% Senior Secured Notes and Loans Payable , to our consolidated financial statements.
Interest Expense Interest expense consists of interest costs on the outstanding balances of our 12.5% Notes and 13.5% Notes at a fixed rate of 12.5% and 13.5%, respectively, payable quarterly, as well as amortization of loan costs and debt discounts.
Change 2022 2021 $ % (In thousands, except %) Manufacture and supply revenue $ 36,378 $ 35,312 $ 1,066 3 % License and royalty revenue 2,351 5,380 (3,029) (56 %) Co-development and research fees 1,293 1,635 (342) (21 %) Proprietary product sales, net 7,658 8,505 (847) (10) % Revenues $ 47,680 $ 50,832 $ (3,152) (6 %) Revenues decreased 6% or $3,152 in 2022 compared to the same period in 2021.
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.
The change in operating assets and liabilities was primarily due to the one-time loss on extinguishment of debt in 2021 that did not reoccur in 2022, lower interest expense related to the sale of future revenue, less amortization of debt issuance costs, and less share-based compensation expense.
Other changes were due to a decrease in interest expense related to the sale of future revenue, lower share-based compensation and depreciation and amortization and impairment expenses offset by a one-time loss on extinguishment of debt in 2023 that did not occur in 2022 and higher amortization of debt issuance costs and discounts.
Recent Accounting Pronouncements Refer to Part II Item 8. 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. 67 Item 7A.
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.
Expenses: The following table sets forth our expense data for the periods indicated: 61 Change 2022 2021 $ % (In thousands, except %) Manufacture and supply $ 19,386 $ 14,989 $ 4,397 29 % Research and development 17,481 17,047 434 3 % Selling, general and administrative 52,879 53,475 (596) (1 %) Interest expense 6,552 10,049 (3,497) (35 %) Interest expense related to the sale of future revenue 5,891 12,412 (6,521) (53 %) Interest income and other income, net (99) (423) 324 77 % Loss on extinguishment of debt — 13,822 (13,822) 100 % Manufacture and supply costs and expenses increased 29% or $4,397 for the year ended December 31, 2022 compared to the same period in 2021.
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.
("we", "Aquestive", or the "Company") is a pharmaceutical company advancing medicines to solve patients' problems with current standards of care and provide transformative products to improve their lives. We are developing pharmaceutical products to deliver complex molecules through alternative administrations to invasive and inconvenient standard of care therapies.
Overview Aquestive Therapeutics, Inc. 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.
License and royalty revenue decreased 56% or $3,029 for the year ended December 31, 2022 compared to the same period in 2021.
Manufacture and supply revenue increased 20% or $7,427 for the year ended December 31, 2023 compared to the same period in 2022.
We received net proceeds of approximately $7,796, after deducting placement agent fees and expenses and estimated offering expenses payable by us. The pre-funded warrants were fully exercised and no Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised during the year ended December 31, 2022.
We received net proceeds of approximately $7,796,000, after deducting placement agent fees and offering expenses payable by Aquestive. We used the net proceeds from the offering for general corporate purposes. The pre-funded warrants were fully exercised in 2022.
The decrease was related to payments received from license and supply agreements that we entered into in 2022, and a lower net loss of $16,129, offset by the change in operating assets and liabilities.
The decrease was primarily related to a lower net loss by $46,540 offset by the decrease in 2023 in payments received from license and supply agreements and changes in operating assets and liabilities, mainly in Trade receivables and other receivables driven mostly by Indivior activity and changes due to outlicensing of Sympazan to Assertio.
Funding Requirements The Company's 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 the Company, subject to the limitations imposed by the baby shelf rules, see "Liquidity and Capital Resources".
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 sources of funds. On November 1, 2023, we issued $45,000 in aggregate principal amount of 13.5% Notes due November 1, 2028.
In 2019, we established an “At-The-Market” (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.
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.
See Liquidity and Capital Resources below for further detail on our 12.5% Notes. Interest Expense related to Sale of Future Revenue and Royalty Revenue On November 3, 2020, we entered into a Purchase and Sale Agreement (the "Monetization Agreement") with MAM Pangolin Royalty, LLC, an affiliate of Marathon Asset Management ("Marathon").
Interest Expense related to Sale of Future Revenue On November 3, 2020, we entered into the Monetization Agreement with Marathon.
This increase was due to increased manufacturing volume of Zuplenz subsequent to receiving foreign regulatory approval in February 2022, increased manufacturing volume of Sympazan subsequent to the outlicensing agreement with Assertio in October 2022, offset by a decline in Suboxone manufacturing volume in 2022.
This increase was primarily due to increased revenues of $4,382 for Suboxone primarily related to price increases, increased revenues of $2,141 for Zuplenz and increased revenues of $587 for Sympazan subsequent to the outlicensing agreement with Assertio in October 2022.
The decrease was due to lower license and royalty revenue, co-development and research fees and net proprietary product sales, partially offset by an increase in manufacture and supply revenue. Manufacture and supply revenue increased approximately 3% or $1,066 for the year ended December 31, 2022 compared to the same period in 2021.
The increase was due to higher manufacture and supply revenues, license and royalty revenue and co-development and research fees offset by the lack of proprietary product sales in 2023 as a result of the outlicensing agreement with Assertio in October 2022.
Cash Flows The following table provides information regarding our cash flows for the years ended December 31, 2022 and 2021: (In thousands) 2022 2021 Net cash used for operating activities $ (9,789) $ (32,979) Net cash used for investing activities (2,524) (913) Net cash provided by financing activities 11,562 30,109 Net (decrease) increase in cash and cash equivalents $ (751) $ (3,783) Net Cash Used for Operating Activities Net cash used for operating activities for the year ended December 31, 2022 decreased by $23,190 compared to the same period in 2021.
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.
Removed
Business Update Regarding COVID-19 The extent to which COVID-19 impacts our business, operations, clinical trials, regulatory approval process, capital, financial and monetization markets, financial results and financial condition, and those of our suppliers, distributors, customers and other third parties necessary to our business including those involved in the regulatory approval process, will depend on future developments, which are highly uncertain and cannot be predicted with certainty or clarity, including the duration and continuing severity of the outbreak, resurgence of the outbreak, continued or additional government actions to contain COVID-19, efficacy of vaccines, and new information that will emerge concerning the short-term and long-term impact of COVID-19.
Added
Royalty revenue related to the sale of future revenue is described further in this section under Critical Accounting Policies and Use of Estimates . 69 Proprietary Product Sales, Net We commercialized our first proprietary CNS product, Sympazan, in December 2018.
Removed
To date, we have been able to continue to manufacture and supply our products and currently do not anticipate any significant interruption in supply, although we continue to monitor this situation closely and there is no assurance that disruptions or delay will not occur as a result of COVID-19.
Added
Research and Development Expenses Since our inception, we have focused significant resources on our research and development activities.
Removed
We are also monitoring demand for our products, which could be negatively impacted during the COVID-19 pandemic, as well as the financial condition of our customers and licensees. For additional information on various uncertainties and risks caused by the COVID-19 pandemic, see Item Part I. Item IA. Risk Factors included in this report.
Added
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.
Removed
A significant portion of selling, general and administrative expenses in 2022 and 2021 relates to the sale and marketing of our proprietary product, Sympazan prior to the Assertio Agreement in October 2022. Subsequently, we have significantly reduced expenses related to the marketing and sales of Sympazan.
Added
Interest Expense related to Royalty Obligations In connection with the issuance of the 13.5% Notes, we entered into the Royalty Rights Agreements with each of the Note Holders granting the Note Holders a tiered royalty between 1.0% and 2.0% of annual worldwide net sales of Anaphylm (epinephrine) Sublingual Film for a period of eight years from the first sale of Anaphylm on a global basis.
Removed
Until Libervant receives FDA approval for U.S. market access, which cannot be assured, we do not plan to increase the size and resources dedicated to our commercial organization.

… 65 more changes not shown on this page.

Other AQST 10-K year-over-year comparisons