What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-01 compared with 2022-08-02 · 182 added, 195 removed, 325 unchanged (54% of the section changed)

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Words such as “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “may,” “will,” or the negative of those terms, and similar expressions are intended to identify forward-looking statements.

These forward-looking statements include, but are not limited to, statements regarding the advancement and related timing of Libervant™, AQST-109 and AQST-108 through the regulatory and development pipeline;

the focus on growing our commercial sales of Sympazan ® and continuing to manufacture Suboxone ®, Exservan ® and other licensed products;

the ability to address the concerns identified in the FDA's Complete Response Letter dated September 25, 2020 regarding the New Drug Application ("NDA") for Libervant and obtain FDA approval of Libervant for U.S.

These forward-looking statements include, but are not limited to, statements regarding the advancement and related timing of AQST-109 and AQST-108 through the regulatory and development pipeline;

the focus on continuing to manufacture Suboxone ® , Exservan ® , Sympazan® and other licensed products;

the likelihood that we can overcome the seven year orphan drug exclusivity granted by the FDA for the approved nasal spray product of a competitor in the U.S.

in order for Libervant® to be granted U.S.

market access;

the ability to obtain approval from the NMPA of the Marketing Authorization for the sale of Exservan in China and to transfer the NDA for Exservan to the Company from a third-party licensee of Exservan in the United States, and the risk of receiving payments under the Haisco Agreement relating thereto;

clinical trial timing and plans for AQST-109 and AQST-108;

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These forward-looking statements are also based on our current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Such risks and uncertainties include, but are not limited to, risks associated with our development work, including any delays or changes to the timing, cost and success of our product development activities and clinical trials;

risk of delays in regulatory advancement through the FDA of Libervant and our other drug candidates or failure to receive approval, including the failure to receive orphan drug exclusivity;

risk of our ability to demonstrate to the FDA “clinical superiority” within the meaning of the FDA regulations of Libervant relative to FDA-approved diazepam rectal gel and nasal spray products including by establishing a major contribution to patient care within the meaning of FDA regulations relative to the approved products as well as risks related to other potential pathways or positions which are or may in the future be advanced to the FDA to overcome the seven year orphan drug exclusivity granted by the FDA for the approved nasal spray product of a competitor in the U.S.

and there can be no assurance that we will be successful;

risk that a competitor obtains FDA orphan drug exclusivity for a product with the same active moiety as any of our other drug products for which we are seeking FDA approval and that such earlier approved competitor orphan drug blocks such other product candidates in the U.S.

Such risks and uncertainties include, but are not limited to, the risk that we may not overcome the seven year orphan drug exclusivity granted by the FDA for the approved nasal spray product of a competitor in the U.S.

in order for Libervant to be granted U.S.

market access;

risks associated with our development work, including any delays or changes to the timing, cost and success of our product development activities and clinical trials;

risk of delays in regulatory advancement through the FDA of AQST-109 and our other drug candidates or failure to receive approval;

the risk that a competitor obtains FDA orphan drug exclusivity for a product with the same active moiety as any of our other drug products for which we are seeking FDA approval and that such earlier approved competitor orphan drug blocks such other product candidates in the U.S.

for seven years for the same indication;

risk in obtaining market access for Libervant and our other product candidates for other reasons;

risk inherent in commercializing a new product (including technology risks, financial risks, market risks and implementation risks and regulatory limitations) and the related risk of the failure to obtain such approval on our ability to access additional funding under the 12.5% Notes;

risk in obtaining market access for our product candidates for other reasons;

risk inherent in commercializing a new product (including technology risks, financial risks, market risks and implementation risks and regulatory limitations);

the risk of the failure to obtain U.S.

market access for Libervant to restrict our ability to access additional funding under the Company's 12.5% Notes;

risks and uncertainties concerning the revenue stream from the monetization of our royalty rights for the product KYNMOBI ® , as well as the achievement of royalty targets worldwide or in any jurisdiction and certain other commercial targets required for contingent payments under the KYNMOBI monetization transaction;

risk of development of our sales and marketing capabilities;

risk of sufficient capital and cash resources, including access to available debt and equity financing, including under the Company's ATM and the Lincoln Park Purchase Agreement, and revenues from operations, to satisfy all of our short-term and longer-term cash requirements and other cash needs, at the times and in the amounts needed;

risk of sufficient capital and cash resources, including access to available debt and equity financing, including under the Company's ATM facility and the Lincoln Park Purchase Agreement, and revenues from operations, to satisfy all of our short-term and longer-term cash requirements and other cash needs, at the times and in the amounts needed, including near-term debt amortization schedules;

risk of failure to satisfy all financial and other debt covenants and of any default;

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risks related to the outsourcing of certain marketing and other operational and staff functions to third parties;

risk of the rate and degree of market

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acceptance of our product and product candidates;

risk of the rate and degree of market acceptance of our product and product candidates;

the success of any competing products including generics, risk of the size and growth of our product markets;

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risk of loss of significant customers;

risks related to claims and legal proceedings including patent infringement, securities, investigative, product safety or efficacy and antitrust litigation matters;

risks related to claims and legal proceedings including patent infringement, securities, business torts,

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investigative, product safety or efficacy and antitrust litigation matters;

risk of product recalls and withdrawals;

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These factors include the matters discussed and referenced in the risk factors of our 2021 Annual Report on Form 10-K.

We are 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 orally administered products to deliver complex molecules, providing novel alternatives to invasive and inconvenient standard of care therapies.

Aquestive has five commercialized products on the U.S.

market, four licensed products and one stand-alone proprietary product to date, Sympazan® (clobazam) oral film for the treatment of seizures associated with Lennox-Gastaut Syndrome.

Our licensees market their products in the U.S.

We are a pharmaceutical company advancing current standards of care to solve patients’ problems through simplifying complex delivery methods.

The Company is developing pharmaceutical products to deliver complex molecules through alternative administrations to invasive and inconvenient standard of care therapies.

Aquestive has five licensed commercialized products which are marketed by our licensees in the U.S.

and around the world.

The Company is the exclusive manufacturer of these licensed products.

The Company 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.

The Company is advancing a late-stage proprietary product pipeline focused on treating diseases of the central nervous system, or CNS, and an earlier stage pipeline for the treatment of severe allergic reactions, including anaphylaxis.

The Company is advancing an early stage 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, sales and commercialization operations and primary research laboratory facilities are based in Warren, New Jersey.

We manufacture licensed and proprietary products at our FDA, Australian Government Department of Health's Therapeutics Goods Administration, or TGA, and Drug Enforcement Agency, or DEA, inspected facilities and anticipate that our current manufacturing capacity is sufficient for commercial quantities of our products and product candidates currently in development.

We manufacture licensed products at our FDA, Australian Government Department of Health's Therapeutics Goods Administration, or TGA, and Drug Enforcement Agency, or DEA, inspected facilities and anticipate that our current manufacturing capacity is sufficient for commercial quantities of our products and product candidates currently in development.

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®.

Proprietary CNS Product Portfolio

We have initially focused our proprietary product pipeline on certain difficult to treat CNS diseases.

Our two most advanced assets within our proprietary CNS portfolio, focused on epilepsy, are as follows:

• Sympazan ® – an oral soluble film formulation of clobazam used for the treatment of seizures associated with a rare, intractable form of epilepsy known as Lennox-Gastaut syndrome, or LGS, was approved by the FDA on November 1, 2018.

We commercially launched Sympazan in December 2018.

Sympazan was launched as a precursor and complement to our product candidate Libervant and continues to progress on key performance metrics including prescriber growth, repeat prescribers, quarterly growth in retail shipments and pharmacy claims reimbursements.

• Libervant™ – a buccally, or inside of the cheek, administered soluble film formulation of diazepam is our most advanced proprietary investigational product candidate.

Aquestive is developing Libervant as an alternative to device-dependent rescue therapies currently available to patients with refractory epilepsy, which are a rectal gel and nasal sprays.

In late September 2020, we received a complete response letter ("CRL") from the FDA focusing on doses

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tested in certain weight groups.

At a Type A meeting with the FDA in November 2020, the FDA confirmed that the issues identified in the CRL may be addressed by utilizing modeling and simulations for an updated dosing regimen.

We submitted a revised weight-based dosing regimen with modeling and simulations in December 2020.

In February 2021, the FDA provided feedback on the December 2020 submission which provided clarity regarding the information that the Agency expected to see in our population pharmacokinetic ('PK") model and the presentation of safety data as it relates specifically to the patient population included in the studies.

In June 2021, we resubmitted our New Drug Application ("NDA") to the FDA.

In July 2021, the FDA accepted our resubmission filing of the NDA and assigned a Prescription Drug User Fee Act ("PDUFA") target goal date of December 23, 2021.

In addition to responding to a number of information requests, the FDA concluded a Postmarketing Adverse Drug Experience (PADE) reporting audit, requested and received additional information about the patent coverage for the product, approved for use the trade name for Libervant, and made recommendations for changes in language related to our packaging.

We also completed labeling negotiations of the prescribing information and no additional information was required by the FDA from the Company.

Concurrently, we spoke with the FDA Office of Orphan Products Development ("OOPD") and provided additional information supplementing our original correspondence to OOPD.

On December 20, 2021, we received notification from the FDA that it was not ready to act by the PDUFA date of December 23, 2021 for the Company’s NDA for Libervant and was unable to provide an estimate of the timing of an expected action.

Subsequent to the FDA notification, we have had several interactions with the Agency.

The Center for Drug Evaluation and Research ("CDER") indicated in correspondence to the Company that CDER had finished its review of the NDA submission and did not require additional information from the Company at this time and that it is actively engaged with other groups in the Agency to reach a decision on the Company's NDA for Libervant based on the regulatory issues related to the approvability of the application.

Based on our communications with the Agency, we believe that the regulatory issues at hand are related to orphan drug exclusivity, which are being reviewed by OOPD and the Office of Chief Counsel.

The Agency did not provide a timeline or commitment for resolution but reiterated that the Agency did not require additional information from the Company at this time.

We appreciate the complexity of the related issues and are prepared to respond to the Agency, if and when needed.

We continue to believe that we have provided a strong set of facts supporting a decision by the FDA of clinical superiority to prior approved drugs in that Libervant represents a major contribution to patient care as compared to the device driven rectal and nasal spray alternatives.

Preparations are advancing with payer and sales force planning underway for the commercial launch of Libervant, if approved by the FDA for U.S.

market access, as soon as possible after approval.

We anticipate that capital available within our existing debt facility will be available to support the launch of this product, if approved by the FDA for U.S.

market access.

However, 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 marketing exclusivity and approve Libervant for U.S.

market access.

Further, there can be no assurance that a competitor will not obtain other FDA marketing exclusivity that blocks U.S.

market access for Libervant.

Any failure to obtain FDA approval to demonstrate clinical superiority or obtain U.S.

market access for Libervant would have a material adverse effect on our business, financial condition and results of operations in 2022 and later.

More details on this product approval are described in the “Competition” section of Item I.

Business of our 2021 Annual Report on Form 10-K.

Complex Molecule Portfolio

We have also developed a proprietary pipeline of complex molecule-based product candidates as alternatives to invasively administered standard of care injectable therapeutics addressing large market opportunities beyond CNS indications.

The active programs in our complex molecule pipeline portfolio are:

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We completed a first-in-human Phase 1 clinical trial for AQST-109 in Canada.

This Phase 1 randomized, single-ascending dose study was performed in order to assess the safety, tolerability, and pharmacologic profile of

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This Phase 1 randomized, single-ascending dose study was performed in order to assess the safety, tolerability, and pharmacologic profile of AQST-109.

On February 25, 2022, we reported positive topline data from Part 1 of our crossover study of AQST-109, EPIPHAST, a randomized, open-label, three-part adaptive design, crossover study in healthy adult subjects comparing the pharmacokinetics and pharmacodynamics of epinephrine delivered via AQST-109 oral film compared to intramuscular injection of epinephrine.

The EPIPHAST study was also conducted in Canada.

In Part 1 of the EPIPHAST study, multiple oral film formulations and dosage strengths of AQST-109 were evaluated.

In Part 1 of the

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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 Tmax of 13.5 minutes and 22.5 minutes, respectively.

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Part 3 study results also showed an unexpectedly high level of gastrointestinal absorption after swallowing AQST-109 whole immediately with water.

Aquestive is conducting its EPIHPHAST II study comparing AQST-109 to epi 0.3mg IM injection (repeat dose) and AQST-109 to EpiPen 0.3mg (single dose).

This data, along with the data from the complete EPIPHAST study, will be the basis for the End-of-Phase 2 meeting with the FDA that the Company plans to request in the fourth quarter 2022.

This study will be designed to show the direct comparison of AQST-109 to EpiPen.

We expect to move forward with the manufacture of registration batches, have an additional meeting with the FDA and, based on those studies, begin pivotal studies of AQST-109 by the end of 2022.

In September 2022, we reported positive topline results from the EPIPHAST II trial for AQST-109.

The EPIPHAST II trial was designed to compare single doses of AQST-109 to EpiPen® 0.3mg and epinephrine 0.3mg intramuscular (IM) injection, as well as repeat doses of AQST-109 to repeat doses of epinephrine 0.3mg IM injection.

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 0.3mg IM injection (45 minutes).

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 maximum concentration (Cmax) of AQST-109 was 465 pg/mL after one dose and 2,958 pg/mL after two doses.

In comparison, the epi 0.3mg IM injection Cmax was 489 pg/mL after one dose and 911 pg/mL after two doses.

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 complete EPIPHAST study, will be the basis for our second End-of-Phase 2 (EoP2) meeting with the FDA.

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 indicates that our approach to characterizing attributes of AQST-109 appears reasonable in the context of a potential future filing.

We plan to obtain guidance and or concurrence on specific questions relating to the clinical components of a potential AQST-109 filing during the EoP2 meeting.

At this meeting, we also anticipate receiving feedback on our EPIPHAST study data as well as the proposed clinical development plan for AQST-109.

This meeting has been granted by the FDA and is scheduled to occur prior to the end of 2022.

• AQST-108 – is a sublingual film formulation delivering systemic epinephrine that is also in development by Aquestive for the treatment of conditions other than anaphylaxis.

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Based on top-line results of a recent second Phase 1 PK trial in 28 healthy adult volunteers, AQST-108 was generally well-tolerated, with systemic adverse events observed that are consistent with the known adverse events profile for epinephrine.

We are on track to request a pre-IND meeting for AQST-108 with the FDA in 2022 and plan to disclose the indication and path forward for development, once we have received feedback from the agency.

We are on track to request a pre-IND meeting for AQST-108 with the FDA in 2023 and plan to disclose the indication and path forward for development, once we have received feedback from the FDA.

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AQST-305 has shown promising preclinical and human proof of concept results.

While we focus our efforts on Libervant, AQST-109, and AQST-108, in the short-term, we have taken the necessary steps to prepare AQST-305 for additional research trials.

While we focus our efforts on AQST-109, and AQST-108, in the short-term, we have taken the necessary steps to prepare AQST-305 for additional research trials.

We initially focused the Company's proprietary product pipeline on certain difficult to treat CNS diseases, in the area of epilepsy, as follows:

We commercially launched Sympazan in December 2018.

Sympazan was launched as a precursor and complement to our product candidate Libervant.

On October 26, 2022, the Company entered into a License Agreement with Otter Pharmaceuticals, LLC, a subsidiary of Assertio Holdings, Inc.

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.

The Company is the exclusive sole manufacturer and supplier of Sympazan for Assertio.

• Libervant™ – a buccally, or inside of the cheek, administered soluble film formulation of diazepam is our most advanced proprietary investigational product candidate.

Aquestive is developing Libervant as an alternative to device-dependent rescue therapies currently available to patients with refractory epilepsy, which are a rectal gel and nasal sprays.

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.

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.

As a result of the FDA determination, the Agency cannot give final approval for Libervant until the expiration or inapplicability of the orphan drug market exclusivity, including, for example, by a reversal of the FDA’s decision and determination that Libervant is “clinically superior” to Valtoco.

We are actively engaging the FDA regarding its determination.

We continue to believe that, particularly in the case of our submitted studies on the effect of food on the absorption of diazepam formulations, Libervant has the distinct advantage of being able to be readily administered when needed without regard to food, providing an important benefit to patients.

market access.

Further, there can be no assurance that a competitor will not obtain other FDA marketing exclusivity that blocks U.S.

market access for Libervant.

More details on this product approval are described in the “Competition” section of Item I.

Business of our 2021 Annual Report on Form 10-K.

In September 2022, we announced the grant of an exclusive license to Atnahs Pharma UK Limited ("Pharmanovia") for Pharmanovia to develop and commercialize Libervant (diazepam) Buccal Film for the treatment of prolonged or acute, convulsive seizures in all ages in certain countries of the European Union, the United Kingdom, Switzerland, Norway and the Middle East and North Africa ("Territory") during the term of the Pharmanovia Agreement.

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.

Licensed Commercial Products and Product Candidates

Our portfolio also includes products and product candidates that we have licensed, or will seek to license, or for which we have licensed our intellectual property for commercialization.

In the years ended December 31, 2021 and 2020, our licensed product portfolio generated $42.3 million and $40.2 million in revenue to Aquestive, respectively.

Our portfolio also includes other products and product candidates that we have licensed, or will seek to license, or for which we have licensed our intellectual property for commercialization.

In the years ended December 31, 2021 and 2020, our

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licensed product portfolio generated $42.3 million and $40.2 million in revenue to Aquestive, respectively.

Those products include:

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We are the sole and exclusive supplier and manufacturer of Suboxone Sublingual Film and have produced over 2.3 billion doses of Suboxone since its launch in 2010.

As of June 30, 2022, Suboxone branded products retain approximately 36% film market share as generic film-based products have penetrated this market.

As of September 30, 2022, Suboxone branded products retain approximately 35% 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.

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Contingencies, contained herein.

• Exservan TM (riluzole) – an oral film formulation of riluzole, has been developed for the treatment of amyotrophic lateral sclerosis (ALS).

• Exservan TM (riluzole) – 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.

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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.

In January 2021, we announced our exclusive license to Mitsubishi Tanabe Pharma Holdings America, Inc.

In January 2021, we announced that the Company granted an exclusive license to Mitsubishi Tanabe Pharma Holdings America, Inc.

("MTHA") for the commercialization in the United States of Exservan.

MTHA is a multinational pharmaceutical company with a focus on patients with ALS.

Under the terms of the MTHA license agreement, upfront payments were paid to Aquestive with additional payments due upon the occurrence of certain milestone events in advance of launch.

Aquestive will also be paid double-digit royalties on net sales of the product in the United States and will earn revenue pursuant to the exclusive supply agreement.

The product launched in June 2021.

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.

Exservan may potentially fulfill a critical need for ALS patients, given it can be administered safely and easily, twice daily, without water.

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Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China.

Under the Haisco Agreement, Haisco is obligated to pay Aquestive an upfront cash payment, regulatory milestone payments, and double-digit royalties on net sales of Exservan in China and Aquestive will earn manufacturing revenue on the sale of Exservan in China as the exclusive supplier 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.

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

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by the FDA on May 21, 2020 and commercially launched by Sunovion in September 2020.

KYNMOBI was approved by the FDA on May 21, 2020 and commercially launched by Sunovion in September 2020.

On November 3, 2020, we entered into a Purchase and Sale Agreement (the "Monetization Agreement") with MAM Pangolin Royalty, LLC, an affiliate of Marathon Asset Management ("Marathon").

Under the terms of the Monetization Agreement, we sold all of our contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion's apomorphine product, KYNMOBI.

We received an aggregate amount of $50,000 through June 30, 2022 under the Monetization Agreement.

Under the Monetization Agreement, additional aggregate contingent payments of up to $75,000 may be due us upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential gross proceeds under the Monetization Agreement of $125,000.

Based on the current forecast by Sunovion of estimated KYNMOBI sales as of June 30, 2022, the Company may not receive any of the additional aggregate contingent payments under the Monetization agreement.

• Zuplenz – an oral soluble film formulation of ondansetron, a 5-HT antagonist, was developed for the treatment of nausea and vomiting associated with chemotherapy and post-operative recovery.

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.

We licensed commercial rights for Zuplenz to Hypera in Brazil (which Hypera refers as to Ondif).

Hypera received approval to market Zuplenz in Brazil from the Brazilian regulatory authority (ANVISA) on February 21, 2022.

We licensed commercial rights for Zuplenz to Fortovia Therapeutics Inc.

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On August 31, 2020 Fortovia filed a Chapter 11 bankruptcy proceeding in the Bankruptcy Court for the Eastern District of North Carolina.

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.

On January 29, 2021, the Bankruptcy Court approved an agreement pursuant to which the license and supply agreement between Aquestive and

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Fortovia was terminated, and all rights to commercialize Zuplenz returned to us, effective January 30, 2021.

While not expected to be a material product for us, we are seeking a new partner to commercialize Zuplenz in the United States.

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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, one of whom delayed remittance of certain payments due to us for development services provided but ultimately made such payments.

Our office-based colleagues have generally been working from home since March 2020.

With additional protections and protocols, we have maintained appropriate and necessary staffing levels at both our laboratory and manufacturing sites.

While we previously suspended in-person interactions by our sales and marketing personnel and engaged remotely to support our commercialization efforts, our sales and marketing practices continue to evolve in accordance with changing local rules and

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We believe the opportunity for in-person interactions with healthcare providers should increase as the vaccination rate continues to grow.

The landscape continues to evolve as localities reestablish and or ease restrictions, as the case may be, with the rise and fall of new case rates and the pace of vaccinations.

Critical Accounting Policies and Use of Estimates

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In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act, subject to certain conditions contained therein and, as a result, we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or (iii) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

These exemptions will apply for a period of five years following the consummation of our IPO or until we no longer meet the requirements of being an emerging growth company, whichever is earlier.

These exemptions will apply for a period of five

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years following the consummation of our IPO or until we no longer meet the requirements of being an emerging growth company, whichever is earlier.

We are also a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a “smaller reporting company,” and have either:

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We expect future manufacture and supply revenue from licensed products to be based on volume demand for existing licensed products, and for manufacturing and supply rights under license and supply agreements for existing or new agreements for successful product development collaborations.

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Co-development and Research Fees

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We commercialized our first proprietary CNS product, Sympazan, in December 2018.

We currently sell Sympazan through wholesalers for distribution through retail and specialty pharmacies.

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.

Prior to our license of the product on October 26, 2022, we sold Sympazan through wholesalers for distribution through retail and specialty pharmacies.

Revenues from sales of proprietary product are recorded net of prompt payment discounts, wholesaler service fees, returns

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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.

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development of our pipeline of proprietary product candidates;

and selling, general and administrative expenses, including pre-launch and post-launch commercialization efforts, intellectual property procurement, protection, prosecution and litigation expenses, corporate management functions, medical and clinical affairs administration;

and selling, general and administrative expenses, including launch commercialization efforts, intellectual property procurement, protection, prosecution and litigation expenses, corporate management functions, medical and clinical affairs administration;

public company costs, share-based compensation expenses and interest on our corporate borrowings.

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These costs can increase or decrease based on the amount of direct labor and materials required to produce a product and the allocation of fixed overhead, which is dependent on the levels of production.

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We expect to continue to seek to rationalize and manage costs to reflect the declining production volumes of Suboxone.

We reduced the cost of manufacturing and supply in late 2019 and continued throughout 2020 and in 2021 in order to recognize the declining volume of Suboxone that will continue declining in 2022.

We expect our manufacture and supply costs and expenses to decrease over the next several years due to the decline in Suboxone volumes as the generics in that market continue to take market share, modestly offset by the commercialization of our proprietary product, Sympazan launched in December 2018.

In addition to our proprietary products coming online, we may add licensee products which may need additional resources to manufacture.

We may add licensee products to our production line which may need additional resources to manufacture.

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.

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• costs associated with preclinical and clinical activities and regulatory operations.

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, AQST-305 and others, and we identify and develop or acquire additional product candidates and technologies.

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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 and AQST-108 and others, and we identify and develop or acquire additional product candidates and technologies.

We may hire or engage additional skilled colleagues or third parties to perform these activities, conduct clinical trials and ultimately seek regulatory approvals for any product candidate that successfully completes those clinical trials.

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and general corporate expenses, inclusive of IT systems related costs.

A significant portion of selling, general and administrative expenses relates to the sale and marketing of our proprietary product, Sympazan.

Sympazan is the precursor and complement to the launch of Libervant, assuming that it is approved and granted U.S.

market access by the FDA.

We believe there is a very high degree of overlap and correlation between prescribers of Sympazan and the likely prescribers of an approved Libervant.

While Sympazan continues to grow, we will continue to rationalize its contribution to move towards profitability while continuing to introduce epilepsy prescribers and patients to Aquestive and PharmFilm® technology in advance of the anticipated launch of Libervant, assuming FDA approval for U.S.

market access, which cannot be assured.

The current commercial organization would begin the launch of Libervant, subject to its approval for U.S.

market access, shortly after its approval.

Until a Libervant launch is certain, we do not plan to increase the costs of our commercial organization and expect to continue to improve the efficiency of the Sympazan commercial investments.

A significant portion of selling, general and administrative expenses relates to the sale and marketing of Sympazan.

Sympazan was developed as the precursor and complement to the launch of Libervant, while pending approval for U.S.

market access by the FDA, as we believed that there was a very high degree of overlap and correlation between prescribers of Sympazan and the likely prescribers of an approved Libervant.

With the recent exclusive license of Sympazan to Assertio and the tentative approval of Libervant from the FDA withholding U.S.

market access, we expect to significantly reduce the costs of our commercial organization.

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.

We continue to incur significant costs in seeking to protect our intellectual property rights, including significant litigation costs in connection with seeking to enforce our rights concerning third parties’ at-risk launch of generic products.

We continue to manage business costs to appropriately reflect the declining state of Suboxone revenue, the marketing and sales costs related to Sympazan and other external factors affecting our business, including the continuing impact of the COVID-19 pandemic, as we continue to focus on our core business:

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We continue to manage business costs to appropriately reflect the declining state of Suboxone revenue, the out-license of Sympazan and other external factors affecting our business, including the continuing impact of the COVID-19 pandemic, as we continue to focus on our core business:

• Seeking to obtain the approval and subsequent launch of Libervant, subject to approval by the FDA for U.S.

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• Continuing the development of AQST-109 and AQST-108 along the 505(b)(2) pathway.

• Growing the revenue contribution from Sympazan as a first step to position Aquestive in the epilepsy community.

Interest Expense

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Although we sold all of our rights to receive royalties and milestones, as a result of our ongoing obligations related to the generation of these royalties, we will account for these royalties as revenue.

We have received an aggregate amount of $50,000 through June 30, 2022 under the Monetization Agreement.

Under the Monetization Agreement, additional aggregate contingent payments of up to $75,000 may be due to us upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $125,000.

We have received an aggregate amount of $50,000 through September 30, 2022 under the Monetization Agreement.

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potential proceeds of $125,000.

Based on the current forecast by Sunovion of estimated KYNMOBI sales as of September 30, 2022, the Company may not receive any of the additional aggregate contingent payments under the Monetization agreement.

During the second quarter of 2020, under the Sunovion License Agreement, we recognized $8,000 of royalty revenue and corresponding royalty receivable, related to the eight $1,000 annual minimum guaranteed royalty that is due.

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Results of Operations

Comparison of the Three and Six Months Ended June 30, 2022 and 2021

Comparison of the Three and Nine Months Ended September 30, 2022 and 2021

The following table sets forth our revenue data for the periods indicated.

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Three Months Ended

Six Months Ended June 30,

September 30,

Nine Months Ended September 30,

(In thousands, except %) 2022 2021 $ % 2022 2021 $ %

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Total revenues $ 11,463 $ 13,287 $ (1,824) (14) % $ 36,998 $ 39,754 $ (2,756) (7) %

For the three months ended June 30, 2022, total revenues decreased 14% or $2,080 compared to same period in the prior year.

For the six months ended June 30, 2022, total revenues decreased 4% or $932 compared to same period in the prior year.

The decrease was primarily due to lower revenue from license and royalty as well as co-development and research fees.

Manufacture and supply revenue decreased 7% or $791 for the three months ended June 30, 2022 compared to the same period in the prior year due to a decline in Suboxone manufacturing volume.

Manufacture and supply revenue increased 11% or $1,869 for the six months ended June 30, 2022 compared to the same period in the prior year.

This increase was due to higher Suboxone manufacturing volume.

License and royalty revenue decreased 76% or $1,759 for the three months ended June 30, 2022 compared to the same period in the prior year.

License and royalty revenue decreased 77% or $3,614 for the six months ended June 30, 2022 compared to the same period in the prior year.

This decrease was primarily due to the remaining deferred revenue of $2,098 from the terminated license and supply agreement with Fortovia Therapeutics Inc., as well as milestone revenue earned from KemPharm, Inc.

For the three months ended September 30, 2022, total revenues decreased 14% or $1,824 compared to same period in the prior year.

The decrease was primarily due to lower revenue from co-development and research fees, as well as manufacture and supply, partially offset by an increase in proprietary product sales as well as license and royalty revenue.

For the nine months ended September 30, 2022, total revenues decreased 7% or $2,756 compared to same period in the prior year.

The decrease was primarily due to lower license and royalty revenue as well as co-development and research fees, partially offset by an increase in proprietary product sales revenue.

Manufacture and supply revenue decreased 19% or $2,036 for the three months ended September 30, 2022 compared to the same period in the prior year due to a decline in Suboxone manufacturing volume.

Manufacture and supply revenue remained flat for the nine months ended September 30, 2022 compared to the same period in the prior year.

License and royalty revenue increased 15% or $48 for the three months ended September 30, 2022 compared to the same period in the prior year.

This increase was primarily due to milestone revenue earned from Hypera.

License and royalty revenue decreased 71% or $3,566 for the nine months ended September 30, 2022 compared to the same period in the prior year.

The decrease was primarily due to the remaining deferred revenue of $2,098 from the terminated license and supply agreement with Fortovia Therapeutics Inc., as well as milestone revenue earned from KemPharm, Inc.

of $2,000 that were recognized in 2021 and did not reoccur in 2022.

Co-development and research fees decreased 47% or $215 for the three months ended June 30, 2022 compared to the same period in the prior year.

Co-development and research fees decreased 28% or $250 for the six months ended June 30, 2022 compared to the same period in the prior year.

Co-development and research fees decreased 24% or $128 for the three months ended September 30, 2022 compared to the same period in the prior year.

Co-development and research fees decreased 27% or $378 for the nine months ended September 30, 2022 compared to the same period in the prior year.

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 increased 36% or $685 for the three months ended June 30, 2022 compared to the same period in the prior year.

Proprietary product sales, net increased 29% or 1,063 for the six months ended June 30, 2022 compared to the same period in the prior year.

The increase was due to a steady rise in acceptance with the medical and patient communities over time which led to increased prescriptions for Sympazan, our proprietary product.

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Proprietary product sales, net increased 15% or $292 for the three months ended September 30, 2022 compared to the same period in the prior year.

Proprietary product sales, net increased 24% or 1,355 for the nine months ended September 30, 2022 compared to the same period in the prior year.

The increase was due to a steady rise in acceptance with the medical and patient communities over time which led to increased prescriptions for Sympazan.

Expenses and Other:

Three Months Ended

June 30, Change Six Months Ended June 30, Change

September 30, Change Nine Months Ended September 30, Change

(In thousands, except %) 2022 2021 $ % 2022 2021 $ %

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Interest expense related to the sale of future revenue, net 2,039 3,767 (1,728) (46) % 5,837 10,567 (4,730) (45) %

Interest and other income, net (32) (373) 341 91 % (29) (321) 292 91 %

Manufacture and supply costs and expenses increased 17% or $776 for the three months ended June 30, 2022 compared to the same period in the prior year.

Interest and other (income) expense, net (5) 33 (38) (115) % (34) (288) 254 88 %

Manufacture and supply costs and expenses increased 5% or $225 for the three months ended September 30, 2022 compared to the same period in the prior year.

Manufacture and supply costs and expenses increased 21% or $2,458 for the nine months ended September 30, 2022 compared to the same period in the prior year.

The increase was due to higher costs related to raw material and production.

Manufacture and supply costs and expenses increased 31% or $2,233 for the six months ended June 30, 2022 compared to the same period in the prior year.

The increase was to support volume growth, along with higher costs related to raw material and production.

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Research and development expenses increased 22% or $936 for the three months ended June 30, 2022 compared to the same period in the prior year.

Research and development expenses increased 26% or 2,050 for the six months ended June 30, 2022 compared to the same period in the prior year.

Research and development expenses decreased 32% or $1,494 for the three months ended September 30, 2022 compared to the same period in the prior year.

Research and development expenses increased 4% or $556 for the nine months ended September 30, 2022 compared to the same period in the prior year.

Research and development expenses are driven primarily by the timing of clinical trial and other product development activities associated with our pipeline.

Selling, general and administrative expenses increased 19% or $2,453 for the three months ended June 30, 2022 as compared to the same period in the prior year.

Selling, general and administrative expenses increased 9% or 2,243 for the six months ended June 30, 2022 as compared to the same period in the prior year.

The increase was related to severance cost of $2,336 recorded during the three months ended June 30, 2022 and litigation expense that arose through the course of business during the three and six months ended June 30, 2022.

Interest expense decreased 41% or $1,122 and 41% or $2,265 for the three and six months ended June 30, 2022, compared to the same respective periods in the prior year.

Selling, general and administrative expenses increased 3% or $330 for the three months ended September 30, 2022 as compared to the same period in the prior year.

Selling, general and administrative expenses increased 7% or $2,573 for the nine months ended September 30, 2022 as compared to the same period in the prior year.

The increase was related to severance cost and litigation expense that arose through the course of business.

Interest expense decreased 41% or $1,138 for the three months ended September 30, 2022 compared to the same period in the prior year.

Interest expense decreased 41% or $3,403 for the nine months ended September 30, 2022 compared to the same period in the prior year.

The decrease was driven by a loss on the extinguishment of debt that was recognized in connection with the Fourth Supplemental Indenture to the 12.5 % Senior Secured Notes during the fourth quarter of 2021, which resulted in a lower net carrying value of debt in 2022.

Interest expense related to the sale of future revenue, net was $1,937 and 3,798 for the three and six months ended June 30, 2022.

Interest expense related to the sale of future revenue, net was $2,039 and 5,837 for the three and nine months ended September 30, 2022.

This amount is due to the accounting associated with the sale of future revenue related to KYNMOBI® sold to Marathon on November 3, 2020 and does not represent a monetary obligation or cash outflow at any time during the life of the transaction.

This current forecast resulted in a decrease to the interest expense related to the sale of future revenue.

See Note 15 for details.

Interest and other income, net increased $341 and $292 for the three and six months ended June 30, 2022 compared to the same period in the prior year.

Interest and other expense, net decreased $38 and increased $254 for the three and nine months ended September 30, 2022 compared to the same period in the prior year.

This was due to the fair value adjustment of the put option related to the 12.5% Notes.

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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.

In addition, pursuant to the Fifth Supplemental Indenture, the holders of the 12.5% Notes extended to March 31, 2023 from June 30, 2022 our ability to access, at our option, up to $30,000 of 12.5% Notes re-openers under the Indenture, subject to the Company obtaining FDA approval of Libervant for U.S.

In addition, pursuant to the Fifth Supplemental Indenture, the holders

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of the 12.5% Notes extended to March 31, 2023 from June 30, 2022 our ability to access, at our option, up to $30,000 of 12.5% Notes re-openers under the Indenture, subject to the Company obtaining FDA approval of Libervant for U.S.

market access, and that the holders of 12.5% Notes have the right, but not the obligation, to purchase the $30,000 12.5% Notes re-openers.

We had $17,695 in cash and cash equivalents as of June 30, 2022.

We had $18,649 in cash and cash equivalents as of September 30, 2022.

However, the Company’s ability to fund the execution of our business objectives cannot be assured.

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In exchange for the sale of these rights, we received an upfront payment 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 June 30, 2022 under the Monetization Agreement.

We have received an aggregate amount of $50,000 through September 30, 2022 under the Monetization Agreement.

With the upfront proceeds of the monetization, we repaid $22,500 of the 12.5% Notes, and issued $4,000 of new 12.5% Notes in lieu of paying a prepayment premium on the early repayment of the 12.5% Notes, reducing the aggregate principal balance of 12.5% Notes outstanding to $51,500.

In addition, as of the closing of this transaction, we issued to the holders of the 12.5% Notes warrants to purchase 143,000 shares of our Common Stock.

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On September 30, 2021, the Company entered into a waiver agreement (the “Waiver”) with the holders of the 12.5% Notes pursuant to which the principal payment due under the 12.5% Notes on September 30, 2021 was deferred in order to provide sufficient time for the execution of the Fourth Supplemental Indenture (the “Fourth Supplemental Indenture”).

On October 7, 2021, the Company entered into the Fourth Supplemental Indenture, by and among the Company and the Trustee and collateral agent thereunder, to the Indenture in connection with the 12.5% Notes.

Pursuant to the Fourth Supplemental Indenture, 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, 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.

The Fourth Supplemental Indenture did not change the maturity date of the Notes or the interest payment obligation due under the Notes.

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If and to the extent that we access these re-openers, we will grant warrants to the holders of the 12.5% Notes to purchase up to 714,000 shares of the Company's Common Stock, with the strike price calculated based on the 30-day volume weighted average closing price of our Common Stock at the warrant grant date.

In 2019, we established an “At-The-Market” (ATM) facility pursuant to which we may offer up to $25,000 of shares of common stock.

In the first quarter of 2021, we filed a prospectus supplement to offer up to an additional $50,000 of shares of common stock under the ATM facility.

Since inception to June 30, 2022, we sold 8,886,297 shares which generated net cash proceeds of approximately $38,306, net of commissions and other transaction costs of $1,903.

For the six months ended June 30, 2022, we sold 1,404,878 shares which provided net proceeds of approximately $2,473, net of commissions and other transaction costs of $139.

This ATM facility has approximately $34,791 available at June 30, 2022.

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 under the ATM facility.

Since inception to September 30, 2022, we sold 9,387,769 shares which generated net cash proceeds of approximately $38,850, net of commissions and other transaction costs of $2,001.

For the nine months ended September 30, 2022, we sold 1,906,350 shares which provided net proceeds of approximately $3,017, net of commissions and other transaction costs of $237.

This ATM facility has approximately $34,358 available at September 30, 2022.

On April 12, 2022, we entered into the Lincoln Park Purchase Agreement, which provides that, upon the terms and subject to the conditions and limitations under the Lincoln Park Purchase Agreement, we have the right, but not the obligation, to sell to Lincoln Park up to $40,000 worth of shares of our Common Stock from time to time over the 36-month term of the Lincoln Park Purchase Agreement.

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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 six months ended June 30, 2022, the Company sold 1,611,181 shares including commitment shares, which provided proceeds of approximately $1,987 in connection with the Lincoln Park Purchase Agreement.

For the nine months ended September 30, 2022, the Company sold 1,611,181 shares including commitment shares of Common Stock, which provided proceeds of approximately $1,987 in connection with the Lincoln Park Purchase Agreement.

On April 13, 2022, the Company filed a prospectus supplement in connection with this offering.

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On June 6, 2022, we entered into securities purchase agreements ("Securities Purchase Agreements") with certain purchasers.

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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 six-months ended June 30, 2022.

Six Months Ended June 30, 2022 and 2021

The pre-funded warrants were fully exercised and no Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised during the nine-months ended September 30, 2022.

Nine Months Ended September 30, 2022 and 2021

(in thousands) 2022 2021

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Net Cash (Used for) Operating Activities

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Net cash used for operating activities for the six months ended June 30, 2022 increased by $5,191 compared to the same period in the prior year.

The increase was related to a higher net loss of $2,483 and lower non-cash operating expenses of $5,521, offset by changes in operating assets and liabilities of $2,813.

The lower non-cash operating expenses were primarily due to less interest expense related to sale of future revenue ($3,007) and less amortization of debt issuance costs ($2,279).

The change in operating assets and liabilities was primarily due to higher trade and other receivables, as well as increased deferred revenue related to a License, Development and Supply Agreement that we entered into with Haisco.

Net cash used for operating activities for the nine months ended September 30, 2022 decreased by $6,683 compared to the same period in the prior year.

The decrease was related to changes in operating assets and liabilities of $16,764, partially offset by a higher net loss of $464 and lower non-cash operating expenses of $9,617.

The change in operating assets and liabilities was primarily due to lower trade and other receivables and higher accounts payable due to timing, as well as increased deferred revenue related to License and Supply Agreements that we entered into in 2022.

The lower non-cash operating expenses were primarily due to less interest expense related to sale of future revenue ($4,774), less amortization of debt issuance costs ($3,447), and less share-based compensation expense ($1,461).

Net Cash (Used for) Investing Activities

Net cash used for investing activities for the six months ended June 30, 2022 increased by $484 compared to the same period in the prior year.

The use of cash was related to capital expenditures.

Net Cash (Used for) Financing Activities

Net cash provided for financing activities for the six months ended June 30, 2022 decreased by $7,081 compared to the same period in the prior year.

The decrease was due to less share purchase proceeds under the ATM facility in 2022, partially offset by proceeds from issuance of common stocks and warrants under private equity offerings in 2022.

See Note 1 for details.

Net cash used for investing activities for the nine months ended September 30, 2022 increased by $2,118 compared to the same period in the prior year.

The use of cash was related to capital expenditures and additions to intangible assets.

Net Cash Provided by Financing Activities

Net cash provided for financing activities for the nine months ended September 30, 2022 decreased by $13,297 compared to the same period in the prior year.

The decrease was primarily due to less share purchase proceeds under the ATM facility and premium paid to retire debt in 2022, partially offset by proceeds from issuance of common stocks and warrants under private equity offerings in 2022.

See Note 1 for detail.

Funding Requirements

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market access.

Due to to the FDA decision in August 2022, discussed above under "-Overview - Proprietary CNS Product Portfolio - Libervant," however, we must overcome the seven year orphan drug exclusivity granted by the FDA for the approved nasal spray product of a competitor in the U.S.

in order for Libervant to be granted U.S.

market access.

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.

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• 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;

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• continued ability of our customers to pay, in a timely manner, for presently contracted and future anticipated orders for our manufactured goods, Suboxone, Sympazan and Exservan, including effects of generics and other competitive pressures as currently envisioned;

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• access to debt or equity markets if, and at the time, needed for any necessary future funding;

• full FDA approval of our drug candidate Libervant for U.S.

market access;

• our ability to issue up to $30,000 in additional 12.5% Notes, which is contingent upon approval of Libervant by the FDA for U.S.

market access;

• continuing review and appropriate adjustment of our cost structure consistent with our anticipated revenues and funding;

• continued growth and market penetration of Sympazan within expected commercialization cost levels for this product, including anticipated patient and physician acceptance and our ability to obtain adequate price and payment support from government agencies and other private medical insurers;

• continued growth and market penetration of Sympazan within expected commercialization cost levels for this product, 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;

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• 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;

• continued compliance with all covenants under our 12.5% Notes;

• 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;

• our ability to access funding through the Company's ATM facility and under the Lincoln Park Purchase Agreement.

• our ability to collect the upfront payment due from Haisco.

We expect to continue to manage business costs to appropriately reflect the anticipated general decline in Suboxone revenue, the marketing and sales costs related to Sympazan, 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.

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 and planned commercialization activities in support of Libervant, AQST-109 and AQST-108.

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.

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, AQST-108 and our other pipeline products.

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.

We plan to conservatively manage our pre-launch spending as to both timing and level relating to Libervant, including cost rationalization associated with marketing and selling Sympazan.

In this regard, absent spending on launch activities for Libervant, we expect to continue to spend similar or less on commercialization in 2022 compared to 2021.

market access, and to meet our other cash requirements, including debt service, specifically our 12.5% Notes.

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 2022 compared to 2021.

Even as such, we expect to incur losses and negative cash flows for the foreseeable future and, therefore, we expect to be dependent upon external financing and funding to achieve our operating plan.

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Our operating revenues have fluctuated in the past and can be expected to fluctuate in the future.

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 13.

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12.5% Notes due through the debt maturity date, which is further discussed in Note 13.

A substantial portion of our current and past revenues has been dependent upon our licensing, manufacturing and sales with one customer, Indivior, which is expected to continue while we commercialize our own proprietary products and it could take significantly longer than planned to achieve anticipated levels of cash flows to help fund our operations and cash needs from sales of our proprietary products.

To the extent that we raise additional funds by issuance of equity securities, our stockholders would experience further dilution and the terms of these securities could include liquidation or other preferences (if and to the extent permitted under the Indenture) that would adversely affect our stockholders’ rights.

Our ability to secure additional equity financing could be significantly impacted by numerous factors including our operating performance and prospects, positive or negative developments in the regulatory approval process for our proprietary products, timely achievement of regulatory approval of our late-stage proprietary products, our existing level of debt which is secured by substantially all of our assets, restriction under the Indenture, and general financial market conditions, and there can be no assurance that we will continue to be successful in raising capital or that any such needed financing will be available, available on favorable or acceptable terms or at the times, or in the amounts needed, if at all.

Our ability to secure additional equity financing could be significantly impacted by numerous factors including our operating performance and prospects, positive or negative developments in the regulatory approval process for our proprietary products, timely achievement of regulatory approval of our late-stage proprietary product, our existing level of debt which is secured by substantially all of our assets, restriction under the Indenture, and general financial market conditions, and there can be no assurance that we will continue to be successful in raising capital or that any such needed financing will be available, available on favorable or acceptable terms or at the times, or in the amounts needed, if at all.

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.

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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, 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.

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, 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, such asset sales, although we cannot assure that any of these actions would be available or available on reasonable terms.

See also the risk factors below concerning the significant risks and uncertainties concerning our business, operations, financial results and capital resources associated with the impact of the global coronavirus pandemic.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis