What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-31 compared with 2022-03-08 · 183 added, 180 removed, 406 unchanged (47% of the section changed)

Business Overview

Aquestive Therapeutics, Inc.

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 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", "Aquestive", 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 that 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 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.

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 all of our 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 are the exclusive manufacturer of these licensed products.

Aquestive also collaborates with pharmaceutical companies to bring new molecules to market using proprietary, best-in-class technologies, like PharmFilm®, and has proven drug development and commercialization capabilities.

Aquestive 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 manufacture licensed products at our facilities and anticipate that our current manufacturing capacity is sufficient for commercial quantities of our products and product candidates currently in development.

Our facilities have been inspected by the Food and Drug Administration (FDA), Australian Government Department of Health's Therapeutics Goods Administration (TGA), and Drug Enforcement Agency (DEA), and are subject to inspection by all applicable health agencies, including the Brazilian Health Regulatory Agency (ANVISA) and European Medicines Agency (EMA).

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®.

21 unchanged sentences

• customizable taste profiles.

We chose to initially focus our development efforts on the CNS market because 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.

Additionally, our know-how and proprietary position have broad application beyond CNS, and we plan to explore the applications of PharmFilm in other disease areas.

Our Product Portfolio and Pipeline

The following table outlines our pipeline of products and product candidates.

The following table outlines our proprietary growth drivers and licensed products.

Sympazan ® , Zuplenz ® , PharmFilm ® and the Aquestive logo are registered trademarks of Aquestive Therapeutics, Inc.

1 unchanged sentence

Proprietary Growth Drivers

Proprietary CNS Product Portfolio

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

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.

Our two most advanced assets within our proprietary CNS portfolio, focused in 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 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 from the Company.

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

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.

CDER 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.

The FDA stated in a letter to the Company dated February 15, 2022 that “the Agency is continuing to consider whether the orphan-drug exclusivity (ODE) identified for another diazepam product in FDA’s publication Approved Drug Products With Therapeutic Equivalence Evaluations (the Orange Book) affects the approvability of your 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 the Office of Orphan Drug Development and 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 believe that we have provided a strong set of facts supporting a decision by the FDA of clinical superiority to prior approved drugs receiving orphan drug marketing exclusivity for seven years for this indication 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 this Item I.

Business of this 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.

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

The active programs in our complex molecule pipeline portfolio are:

• AQST-109- SF – 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.

Epinephrine is the standard of care in the treatment of anaphylaxis and is currently administered via intramuscular injection

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.

• 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.

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.

As a result of this route of administration, many patients and their caregivers are reluctant to use currently available products.

2 unchanged sentences

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.

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 (PK) and pharmacodynamics (PD) of epinephrine delivered via AQST-109 oral film compared to epinephrine IM.

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.

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.

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.

Part 1 also showed arithmetic mean maximum concentrations (Cmax) of 771 pg/mL and 580 pg/mL for the two configurations, or geometric mean Cmax values of 258pg/mL and 268pg/mL for the two configurations, respectively.

These geometric mean Cmax and median Tmax values are consistent with those previously reported for approved injectable epinephrine devices such as EpiPen.

Under the EPIPHAST study, the healthy volunteers were also exposed to a 0.5mg intramuscular injection (IM) of epinephrine, allowing for a comparison with the pharmacokinetics, safety, and tolerability of the higher end of the approved dosage range of epinephrine, consistent with guidance received from the FDA in a written response to our Investigational New Drug Application (IND) for AQST-109.

Under the EPIPHAST study, the healthy volunteers were also exposed to a 0.5mg IM of epinephrine, allowing for a comparison with the PK, safety, and tolerability of the higher end of the approved dosage range of epinephrine, consistent with guidance received from the FDA in a written response to our Investigational New Drug Application (IND) for AQST-109.

The findings show that these two configurations of the selected AQST-109 formulation can deliver clinically meaningful blood concentrations of epinephrine sooner than that observed with the higher dose of epinephrine IM injection, and in line with existing epinephrine autoinjectors.

1 unchanged sentence

The EPIPHAST trial indicated that treatment was well tolerated, with no serious adverse events, significant medical events, or treatment-related severe adverse events reported.

We commenced Part 2 of the EPIPHAST study and expect to report topline results of Part 2 of the EPIPHAST study in the first half of 2022.

Part 2 is a randomized, crossover design comparing AQST-109 12mg to epinephrine IM 0.3mg.

On February 24, 2022, the FDA cleared our IND, allowing for clinical investigation of AQST-109 in the U.S.

The FDA confirmed that 505(b)(2) approval pathway is acceptable for the development of AQST-109 and indicated AQST-109 has the potential for Fast Track designation.

We expect to move forward with the manufacture of registration batches and to conduct pivotal studies in 2022.

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

AQST-108 is composed of the prodrug dipivefrin which is enzymatically cleaved systemically into epinephrine after administration.

The FDA confirmed that the 505(b)(2) approval pathway is acceptable for the development of AQST-109.

The FDA granted Fast Track designation in March 2022 to AQST-109 for the emergency treatment of allergic reactions, including anaphylaxis.

In April 2022, we reported positive topline results from Part 2 of the EPIPHAST study for AQST-109.

Part 2 is a randomized, crossover design comparing AQST-109 12mg to 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 AQST-109, compared to 50 minutes for the epinephrine IM 0.3mg.

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.

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.

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.

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).

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.

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.

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.

In late December 2022, we received the final minutes from the EoP2 meeting with the FDA which provided clarity as to the FDA’s expectations regarding key program areas.

We are conducting an additional PK study to aide in the selection of the comparator products to be used in the upcoming pivotal trial in the second half of 2023.

We anticipate conducting the pivotal PK study in the third quarter of 2023, and continue to plan for a potential launch in 2025, if approved by the FDA.

• AQST-108-SF – AQST-108 is composed of the prodrug dipivefrin which is enzymatically cleaved into epinephrine after administration.

Dipivefrin is currently available outside of the U.S.

for ophthalmic indications.

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.

• AQST-305- SF – is a sublingual film formulation of octreotide, a small peptide that has a similar pharmacological profile to natural somatostatin, for the treatment of acromegaly, as well as severe diarrhea and flushing associated with carcinoid syndrome.

Acromegaly is a hormone disorder that results in the overproduction of growth hormone in middle-aged adults.

Octreotide is the standard of care for the treatment of acromegaly.

The current market leader, Sandostatin, is administered via deep subcutaneous or intramuscular injections once a month.

This monthly treatment regimen can result in loss of efficacy toward the end of the monthly treatment cycle.

We are developing AQST-305 as a non-invasive, pain-free alternative to Sandostatin to reduce treatment burden, healthcare costs and the potential loss of efficacy in the treatment cycle.

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.

A sublingual film formulation

delivering systemic epinephrine has been development by Aquestive for the treatment of conditions other than anaphylaxis.

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.

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.

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.

Additionally, our know-how and proprietary position have broad application beyond CNS, and we plan to explore the applications of PharmFilm in other disease areas.

Our most advanced asset within our proprietary CNS portfolio, focused in epilepsy, is as follows:

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

Aquestive developed 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 FDA 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 provided the FDA with additional clinical data in September 2022 and were informed that the FDA was reviewing this data.

Furthermore, in October 2022, we provided the FDA with a draft protocol for a head-to-head comparative PK study of Libervant versus the competing product.

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 earlier than January 2027, the schedule date for expiration of orphan drug market exclusivity, if this effort is not successful.

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

market access for Libervant.

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

Business of this 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 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 (the "Territory") during the term of the Pharmanovia licensee.

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

3 unchanged sentences

• Suboxone ® – a sublingual film formulation of buprenorphine and naloxone, respectively an opioid agonist and antagonist, that is marketed in the United States and internationally for the treatment of opioid dependence.

Suboxone Sublingual Film was launched by our licensee, Indivior Inc., or Indivior, 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 Sublingual Film and have produced over 2.2 billion doses of Suboxone since its launch in 2010.

As of December 31, 2021, Suboxone branded products retain approximately 40% film market share as generic film-based products have penetrated this market.

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.

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.

1 unchanged sentence

Financial Statements and Supplementary Data, Note 20, Contingencies .

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

• 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.

3 unchanged sentences

Zambon is a multinational pharmaceutical company with a focus on the CNS therapeutic area.

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.

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.

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.

During the fourth quarter of 2022, Aquestive received a $0.5 million milestone payment upon in connection with the receipt of regulatory approval for Exservan pursuant to the terms of the license agreement with Zambon.

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.

1 unchanged sentence

("Haisco") for Haisco to develop and commercialize Exservan for the treatment of ALS in China.

Haisco Pharmaceutical Group is a China-based public pharmaceutical company.

Haisco is a China-based public pharmaceutical company.

Haisco will lead the regulatory and commercialization activities for Exservan in China.

Aquestive will serve as the exclusive sole manufacturer and supplier for the product.

Aquestive will receive a $7.0 million upfront cash payment, regulatory milestone payments, and double-digit royalties on net sales of Exservan in China and will earn manufacturing revenue as the exclusive supplier of Exservan.

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

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.

3 unchanged sentences

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 $50.0 million through December 31, 2021 under the Monetization Agreement.

Under the Monetization Agreement, additional aggregate contingent payments of up to $75.0 million 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 $125.0 million.

Based on the current forecast of estimated KYNMOBI sales as of December 31, 2021, 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 markets as 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.

4 unchanged sentences

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.

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

• Azstarys TM – an FDA-approved, once-daily product for the treatment of attention deficit hyperactivity disorder (ADHD) in patients age six years or older.

AZSTARYS consists of serdexmethylphenidate, KemPharm’s prodrug of d-methylphenidate (d-MPH), co-formulated with immediate release d-MPH.

In March 2012, the Company entered into an agreement with KemPharm, Inc.

(“KemPharm”), to terminate a Collaboration and License Agreement entered into by the Company and KemPharm in April 2011.

Under this termination arrangement, the Company has the right to participate in any and all value that KemPharm may derive from the commercialization or any other monetization of KP-415 and KP-484 compounds or their derivatives.

Among these monetization transactions are those related to any business combinations involving KemPharm and collaborations, royalty arrangements, or other transactions from which KemPharm may realize value from these compounds.

During September 2019, the Company received $1.0 million from its 10% share of milestone payments paid to KemPharm, under its licensing of KP-415 and KP-484 to a third party.

The Company also received payment of $0.5 million under this arrangement, which was included in License and royalty revenues for the year ended December 31, 2020, in connection with the FDA's acceptance of a New Drug Application ("NDA") filing for KP-415.

On March 2, 2021, KemPharm announced FDA approval of KP 415 (AZTARYS TM ) a new once-daily treatment for ADHD.

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.

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.

Among these monetization transactions are those related to any business combinations involving Zevra and collaborations, royalty arrangements, or other transactions from which Zevra may realize value from these compounds, including the product Azstarys.

On March 2, 2021, Zevra announced FDA approval of Azstarys for the treatment of ADHD.

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.

• 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.

The Company entered into a License and Supply Agreement with Atnahs Pharma UK Limited, a company registered in England and Wales ("Pharmanovia"), effective as of September 26, 2022 (the "Pharmanovia Agreement"), pursuant to which the Company granted Pharmanovia an exclusive license to certain of the Company's intellectual property to develop and commercialize Libervant 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 (the "Territory") during the term of the Pharmanovia Agreement.

Under 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.

We commercially launched Sympazan in December 2018.

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

(“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.

Market Overview

Anaphylaxis is a severe systemic allergic reaction that can be triggered by certain foods, medications, insect stings and latex, among other allergens.

Signs and symptoms of anaphylaxis typically occur within seconds or minutes of exposure and may include low blood pressure, skin rash or itching, constric tion of the airway and difficulty breathing and nausea and vomiting.

If not treated immediately, anaphylaxis can lead to death due to airway restriction or cardiac arrest.

Anaphylaxis is a potentially life-threatening systemic allergic reaction, with an estimated incidence of 50 to 112 episodes per 100,000 people per year.

An international study found that hospital admissions for anaphylaxis has increased over a 15-year study period.

The most common causes of reactions that can include anaphylaxis are medications, foods (such as peanuts), and venom from insect stings.

Because anaphylaxis can progress quickly, the ability to administer a reliable and accurate dose of epinephrine as quickly as possible following a reaction is critical for patient recovery and survival.

Treatment of anaphylaxis typically consists of an intramuscular injection of epinephrine administered at the earliest opportunity, followed by additional intramuscular or intravenous injections as needed.

A generic form of epinephrine auto-injector (brand form EpiPen®) is the leading self-administered form of epinephrine.

People with known allergies and who are at risk for anaphylaxis are advised to carry two epinephrine auto-injectors with them at all times and self-administer at the first signs of an anaphylactic reaction.

Auto-injectors can be inconvenient to transport and many patients and caregivers dislike injections as a delivery method.

Proper dosing and the ability to effectively administer epinephrine in a timely, reliable manner is critical for patients experiencing anaphylaxis.

However, we believe that the inability to administer complex molecules via oral administration has limited the development of treatments that have the potential to provide significant patient benefit.

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 believe there is a significant market opportunity for a non-injectable, easier to administer product with a fast onset of action.

A product with this profile could enable patients to conveniently and rapidly self-administer a reliable and accurate dose of epinephrine during an anaphylactic reaction, which we believe will improve patient compliance.

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 is a chronic CNS disorder characterized by recurrent seizure activity.

4 unchanged sentences

Chronic medicines are used on a daily basis to suppress seizure activity.

Approximately 1.1 million of those 3.4 million people suffering from epilepsy will continue to suffer with breakthrough seizures and may require an acute (rescue) management strategy.

Approximately 1.1 million of those suffering from epilepsy will continue to suffer with breakthrough seizures and may require an acute (rescue) management strategy.

Patients are routinely prescribed antiepileptic drugs, or AEDs, as “maintenance” therapy to control chronic seizure activity.

Most AEDs specifically target neuronal excitation or neuronal inhibitory pathways.

There are currently more than 25 AEDs approved for use in the United States, and therapeutic choice depends on the epileptic syndrome being considered.

Patients are routinely prescribed benzodiazepines as “rescue” therapy for the management of acute seizure emergencies.

2 unchanged sentences

Diazepam has historically been marketed as a product administered rectally and more recently, a nasal spray product was introduced to the market.

Although the rectal gel has been the preferred drug prescribed by physicians, its rectal administration presents a particular challenge for patients.

As a result, only approximately 100,000 patients out of 1.1 million potential patients who could benefit from this treatment currently use this therapy.

The remaining sufferers either pursue less effective treatments or forego treatment altogether.

We have been developing Libervant as an alternative to the device-dependent rescue therapies currently available to patients with refractory epilepsy.

Rectal administration of this drug

presents a particular challenge for patients.

We developed our product candidate Libervant as an alternative to the device-dependent rescue therapies currently available to patients with refractory epilepsy.

See “Our Product Portfolio and Pipeline” above and “Competition” below in this Item 1.

Business of this Form 10-K for additional information concerning the Libervant FDA approval process and market access issues.

There are multiple epileptic syndromes including LGS, which is a rare, intractable form of epilepsy affecting approximately 48,000 patients in the United States.

There are multiple epileptic syndromes including LGS, which is a rare, intractable form of epilepsy.

Patients with LGS are often drug resistant, predisposing them to recurrent seizures, and are typically prescribed a combination of antiepileptic medications, which often includes clobazam.

1 unchanged sentence

Generic versions of the clobazam tablet and suspension formulation are available to patients, as well.

Clobazam generated combined sales revenue of $237 million with more than 700,000 prescriptions filled in 2021.

Sympazan was developed to reduce the burden associated with drug administration and cost.

Anaphylaxis is a severe systemic allergic reaction that can be triggered by certain foods, medications, insect stings and latex, among other allergens.

If not treated immediately, anaphylaxis can lead to death due to airway restriction or cardiac arrest.

Anaphylaxis is a potentially life-threatening systemic allergic reaction, with an estimated incidence of 50 to 112 episodes per 100,000 people per year.

An international study found that hospital admissions for anaphylaxis has increased over a 15-year study period.

The most common causes of reactions that can include anaphylaxis are medications, foods (such as peanuts), and venom from insect stings.

A branded form of epinephrine auto-injector known as the EpiPen ® , is the leading self-administered form of epinephrine.

People with known allergies and who are at risk for anaphylaxis are advised to carry an auto-injector with them at all times and self-administer at the first signs of an anaphylactic reaction.

Auto-injectors can be inconvenient to transport and many patients and caregivers dislike injections as a delivery method.

Proper dosing and the ability to effectively administer

epinephrine in a timely, reliable manner is critical for patients experiencing anaphylaxis.

We designed AQST-109, a “first of its kind” oral sublingual film formulation delivering systemic epinephrine that is in development 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 believe there is a significant market opportunity for a non-injectable, easier to administer product with a fast onset of action.

Sympazan was developed as an alternative to these other routes of administration of clobazam.

Manufacturing and Product Supply

We operate two manufacturing and primary packaging facilities located in Portage, Indiana, where we currently manufacture proprietary CNS products, as well as our licensed products, Suboxone and Exservan, on an exclusive basis.

These facilities are expected to have a combined capacity to accommodate the production of our proprietary and licensed products, as well as our pipeline product candidates, without any current need for additional infrastructure.

We will 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 four years.

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.

These facilities are expected to have a combined capacity to accommodate the production of our proprietary product pipeline candidates and licensed products, without any current need for additional infrastructure.

In 2022, we completed work to expand our manufacturing capabilities to include serialization and secondary packaging.

This expansion allows us to support our existing and possible future business collaborations more broadly.

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.

As a company, our research and development laboratories are registered with the DEA for Schedule II-V drugs.

14 unchanged sentences

We intend for such CROs to play a significant role in the subsequent collection and analysis of data from such trials.

Additionally, we continue to outsource secondary packaging and third-party logistics for our proprietary products.

We compete with pharmaceutical and biotechnology companies that develop and commercialize therapeutics for the treatment of a broad range of disease areas and indications.

9 unchanged sentences

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 and was granted orphan-drug-exclusivity for this drug commencing as of January 10, 2020.

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.

A company that obtains FDA approval for a designated orphan drug receives orphan market exclusivity for that drug for the designated indication for a period of seven years from the grant date in the United States.

2 unchanged sentences

In assessing whether a drug candidate sponsor has demonstrated that its drug candidate provides a “major contribution to patient care” over and above the currently approved drugs, which is evaluated by the FDA on a case by case basis, there is no single objective standard and the FDA may, in appropriate circumstances, consider such factors as convenience of treatment location, duration of treatment, patient comfort, reduced treatment burden, advances in ease and comfort of drug administration, longer periods between doses, and potential for self-administration.

We are seeking to demonstrate that Libervant will, if approved by the FDA for U.S.

market access, represent a "major contribution to patient care" within the meaning of FDA regulations and guidance, to manage seizure clusters in epilepsy patients.

However, such a demonstration to overcome such seven-year market 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.

The FDA 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 our competitor's diazepam nasal spray product discussed above, Libervant is not yet eligible for marketing in the United States.

As a result of the FDA determination, the FDA cannot give final approval for Libervant until the expiration or inapplicability of the orphan drug market exclusivity.

We are actively engaging the FDA regarding its determination.

We provided the FDA with additional clinical data in September 2022 and were informed that the FDA was reviewing this data.

Furthermore, in October 2022, we provided the FDA with a draft protocol for a head-to-head comparative PK study of Libervant versus the competing product.

market access.

There is also a risk that a competitor could obtain other FDA marketing exclusivity that blocks U.S.

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

market access for Libervant.

Any failure to obtain FDA approval of and to demonstrate clinical superiority for Libervant would have a material adverse effect on our business, financial condition and results of operations in 2022 and later.

Material Agreements

10 unchanged sentences

patents, and more than 120 pending patent applications worldwide.

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, epinephrine and octreotide.

These patents and, if issued as patents, pending patent applications will likely expire between 2023 and 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, epinephrine and octreotide 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 2042.

The projected expiration dates exclude any patent term adjustment or patent term extension.

41 unchanged sentences

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 GLPs.

The conduct of the preclinical tests must comply with federal regulations and requirements, including current Good Laboratory Practices (GLPs).

The results of preclinical testing are submitted to the FDA as part of an IND application along with other information, including information about product chemistry, manufacturing and controls and a proposed clinical trial protocol.

15 unchanged sentences

FDA approval of the NDA is required before marketing of the product may begin in the United States.

The NDA must include the results of all preclinical, clinical and

other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls.

The NDA must include the results of all preclinical, clinical and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls.

Under federal law, the submission of most NDAs is subject to a substantial application user fee, and applicant under an approved NDA is also subject to an annual program fee for each prescription drug product, which beginning in Fiscal Year 2018 replaced the product and establishment fees.

33 unchanged sentences

Regulatory authorities may require remediation, withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems or new concerns are subsequently discovered.

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, 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.

39 unchanged sentences

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.

For example, a company may obtain five years of non-patent exclusivity upon NDA approval of a new chemical entity, or NCE, which is a

drug that contains an active moiety that has not been approved by the FDA in any other NDA.

For example, a company may obtain five years of non-patent exclusivity upon NDA approval of a new chemical entity, or NCE, which is a drug that contains an active moiety that has not been approved by the FDA in any other NDA.

An “active moiety” is defined as the molecule or ion responsible for the drug substance’s physiological or pharmacologic action.

26 unchanged sentences

Although we would not submit claims directly to payors, manufacturers can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label.

In addition, our future activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under this law.

For example, pharmaceutical companies have been found liable under the Federal False Claims Act in connection with their off-label promotion of drugs.

In addition, our activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under this law.

For example, pharmaceutical companies have been found liable under the Federal False Claims Act in

connection with their off-label promotion of drugs.

Penalties for a False Claims Act violation include three times the actual damages sustained by the government, plus mandatory civil penalties of between $10,000 and $25,000 for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the Federal False Claims Act is a civil statute, conduct that results in a False Claims Act violation may also implicate various federal criminal statutes.

In addition, private individuals can bring actions under the Federal False Claims Act and certain states have enacted laws modeled after the Federal False Claims Act.

In addition to the privacy and security requirements of the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, (which we refer to collectively as HIPAA), HIPPA also expanded and created several additional federal crimes, including healthcare fraud and false statements relating to healthcare matters.

In addition to the privacy and security requirements of the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (which we refer to collectively as HIPAA), HIPAA also expanded and created several additional federal crimes, including healthcare fraud and false statements relating to healthcare matters.

The healthcare fraud statute prohibits, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors.

4 unchanged sentences

Still other states require the reporting of certain pricing information, including information pertaining to and justification of price increases, or prohibit prescription drug price gouging.

In addition, states such as California, Connecticut, Nevada, and Massachusetts require pharmaceutical companies to implement compliance programs and/or marketing codes.

In addition, states such as California, Connecticut, Nevada, Massachusetts and the District of Columbia require pharmaceutical companies to implement compliance programs and/or marketing codes.

Many of these laws contain ambiguities as to what is required to comply with the laws.

In addition, as discussed below, a similar federal requirement requires manufacturers to track and report to the federal government certain payments made to physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives and teaching hospitals made in the previous calendar year.

These laws may affect our sales, marketing and other promotional activities by imposing administrative and compliance burdens on us.

In addition, given the lack of clarity with respect to these laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent state, and soon federal, authorities.

2 unchanged sentences

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 will require substantial resources.

Because of the breadth of these various fraud and abuse laws, it is possible that some of our business activities could be subject to challenge under one or more of such laws.

Compliance with such laws and regulations requires substantial resources.

While we no longer engage in the commercial sale of any proprietary drug products, because of the breadth of these various fraud and abuse laws, it is possible that some of our business activities in the past could be subject to challenge under one or more of such laws.

Such a challenge could have material adverse effects on our business, financial condition and results of operations.

In the event governmental authorities conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations, they may impose sanctions under these laws, which are potentially significant and may include civil monetary penalties, damages, exclusion of an entity or individual from participation in government health care programs, criminal fines and individual imprisonment, additional reporting requirements if we become subject to a corporate integrity agreement or other settlement to resolve allegations of violations of these laws, as well as the potential curtailment or restructuring of our operations.

In the event governmental authorities conclude that our business practices did not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations, they may impose sanctions under these laws, which are potentially significant and may include civil monetary penalties, damages, exclusion of an entity or individual from participation in government health care programs, criminal fines and individual imprisonment, additional reporting requirements if we become subject to a corporate integrity agreement or other settlement to resolve allegations of violations of these laws, as well as the potential curtailment or restructuring of our operations.

Further, we may be subject to contractual damages and reputational harm as result of such non-compliance.

12 unchanged sentences

The centralized procedure is compulsory for human medicines that are:

derived from biotechnology

processes, such as genetic engineering, contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases and other immune dysfunctions, and officially designated orphan medicines.

derived from biotechnology processes, such as genetic engineering, contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases and other immune dysfunctions, and officially designated orphan medicines.

For medicines that do not fall within these categories, an applicant has the option of submitting an application for a centralized marketing authorization to the EMA, as long as the medicine concerned is a significant therapeutic, scientific or technical innovation, or if its authorization would be in the interest of public health.

22 unchanged sentences

It is unclear whether the PPACA will be overturned, repealed, replaced, or further amended.

Moreover, other legislative changes have been proposed and adopted since the PPACA was enacted.

In August 2011, then President Obama signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals for spending reductions.

The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs.

This includes reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments, including the BBA, will remain in effect.

Pursuant to the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, these reductions are suspended from May 1, 2020 through December 31, 2020 due to the COVID-19 pandemic.

As the legislation currently stands, the reductions went back into effect January 2021 and will remain in effect through 2030 unless additional Congressional action is taken.

Further, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

In addition, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics.

There has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics.

Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

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;

(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;

(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);

3 unchanged sentences

While some proposed measures will require authorization through additional legislation to become effective, Congress has indicated that they will continue to pursue new legislative and/or administrative measures to control drug costs, including price or patient reimbursement constraints, discounts, restrictions on certain access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

With the election of a new Presidential administration, it is unclear at this time to predict what legislative initiatives the President and Congress may propose related to drug pricing.

Most recently, the Inflation Reduction Act of 2022, or IRA, included a number of significant drug pricing reforms, which include the establishment of a drug price negotiation program within the U.S.

Department of Health and Human Services, or HHS (beginning in 2026) that requires manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers under Medicare Parts B and D to penalize price increases that outpace inflation (first due in 2023), and a redesign of the Part D benefit, as part of which manufacturers are required to provide discounts on Part D drugs (beginning in 2025).

It is difficult at this time to predict whether additional executive or legislative initiatives may be proposed related to drug pricing.

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.

We expect that the PPACA, as currently enacted or as it may be amended or replaced in the future, and other healthcare reform measures that may be adopted in the future could have a material adverse effect on our industry generally and on our ability to maintain or increase sales of products for which we receive regulatory approval or to successfully commercialize our product candidates, if approved.

We expect that healthcare reform measures that may be adopted in the future could have a material adverse effect on our industry generally and on our ability to maintain or increase sales of products for which we receive regulatory approval or to successfully commercialize our product candidates, if approved.

Coverage and Reimbursement

The commercial success of our products and product candidates, if and when approved, is partially dependent on the availability of coverage and adequate reimbursement from public (i.e., federal and state government) and private (i.e .

The commercial success of our products and product candidates, if and when approved, is partially dependent on the availability of coverage and adequate reimbursement from public ( i.e.

, federal and state government) and private ( i.e.

, commercial) payors.

4 unchanged sentences

Our results of operations and business could be adversely affected by current and future third‑party payor policies, as well as healthcare legislative reforms.

Additionally, we must offer discounted pricing or rebates on purchases of pharmaceutical products under various federal and state healthcare programs, including:

Additionally, discounted pricing or rebates on purchases of pharmaceutical products must be offered under various federal and state healthcare programs, including:

the Centers for Medicare & Medicaid Services’ Medicaid Drug Rebate Program, Medicare Part B Program and Medicare Part D Coverage Gap Discount Programs, the U.S.

Department of Veterans Affairs’ Federal Supply Schedule Program, and the Health Resources and Services Administration’s 340B Drug Pricing Program.

We must also report specific prices to government agencies under healthcare programs, such as the Medicaid Drug Rebate Program.

Specific prices must be reported to government agencies under healthcare programs, such as the Medicaid Drug Rebate Program.

The calculations necessary to determine the prices reported are complex and the failure to report prices accurately may expose us to penalties.

1 unchanged sentence

In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.

There can be no assurance that our products will be considered medically reasonable and necessary for a specific indication, that our products will be considered cost‑effective by third‑party payors, that an adequate level of reimbursement will be available, or that the third‑party payors’ reimbursement policies will not adversely affect our ability to sell our products profitably.

There can be no assurance that our products and product candidates will be considered medically reasonable and necessary for a specific indication, that our products and product candidates will be considered cost‑effective by third‑party payors, that an adequate level of reimbursement will be available, or that the third‑party payors’ reimbursement policies will not adversely affect our ability to sell our products and product candidates, if approved, profitably.

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.

5 unchanged sentences

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 60 are involved in commercialization and sales and general and administrative activities.

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.

2 unchanged sentences

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.

Supporting that philosophy, our management team is responsible for ensuring that our policies & 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 the Company’s desired corporate culture including policies and procedures related to risk management, ethics and compliance.

We engage advisors to ensure that we design, plan and execute competitive compensation strategies and benefit programs to help us attract and retain a diverse workforce with the appropriate skills and talent that drive the organization's success.

4 unchanged sentences

We provide ongoing training in support of that commitment.

We remain proactive in ensuring the safety of our colleagues, their families, our patients and our products as we continue to navigate through a worldwide pandemic.

We were able to overcome many of the challenges presented by COVID-19 by engaging colleagues early and often through organizational messaging aimed at reinforcing our commitment to safety.

We demonstrated our commitment by isolating our Research and Development lab from our office workers, and segregating our manufacturing site to accommodate essential only workers.

These actions allowed us to have the uninterrupted ability throughout the pandemic to produce critical products.

Additionally, we provided testing, quarantined colleagues when necessary, followed the CDC guidance and the science as information evolved.

In 2021, our colleagues provided insight to vaccination status and allowed the Company to reach a voluntary vaccination status of approximately 90%, including 100% of our customer facing and field sales personnel.

We remain proactive in ensuring the safety of our colleagues, their families, our patients and our products as we continue to monitor the COVID-19 landscape both in the United States and globally.

We were able to overcome many of the challenges presented by the worldwide COVID-19 pandemic by engaging colleagues early and often through organizational messaging aimed at reinforcing our commitment to safety.

We continue to engage and educate our colleagues to prevent the spread of COVID-19 to minimize any impact to our business.

We follow the CDC guidelines and provide testing to and quarantining of colleagues, when necessary.

Environmental Safety

3 unchanged sentences

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").

We make available, free of charge, on our website our proxy statement, annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports and other publicly filed information available as soon as reasonable practicable after we electronically file such material with, or furnish it to the SEC.

Our Internet address where these documents and other information can be found is https//aquestive.com.

Information contained on our website is not incorporated by reference into this Annual Report, and you should not consider that information to be part of this Annual Report.

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.

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-K

Item 1. Business