Aquestive Therapeutics Stock: A First Take (NASDAQ:AQST)

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Corrupt politicians make the other ten percent look bad. -Henry Kissinger

Today we take a first look at Aquestive Therapeutics, Inc. (NASDAQ:AQST). This biopharma has several products on the market and is pushing two key drug candidates forward. Revenue is expected to grow by about 50% in fiscal 2023, but cash burn is a concern. What’s on the horizon for Aquestive Therapeutics? An analysis follows below.

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Company presentation:

Aquestive Therapeutics is based just outside of New York. The company leverages its highly customizable PharmFilm® technology to deliver products that deliver existing drugs more efficiently. This small biopharmaceutical company has several products on the market including:

PharmFilm®: drugs that can be used for undertreated patients

January 2021 Company presentation

Sympazan

It is an oral soluble film formulation of clobazam for the treatment of Lennox-Gastaut syndrome

Suboxone

A sublingual film formulation of buprenorphine and naloxone for the treatment of opioid dependence

Zuplenz

It is an oral soluble film formulation of ondansetron for the treatment of nausea and vomiting associated with chemotherapy and postoperative recovery

Azstarys

A once-daily product for the treatment of Attention Deficit Hyperactivity Disorder.

The stock currently trades at just under $1.50 per share and has a market capitalization of around $75 million.

Product portfolio and pipeline

June Company Presentation

The company has two leading acute rescue drugs in development that are moving through its pipeline. The first of them is Libervant, which is a diazepam (known under the brand name Valium) buccal film for the potential treatment of epileptic clusters. Approval was expected to take place in late 2021, but was delayed by the FDA. The company is in talks with the government agency to get the approval process back on track.

Libervant Approval Process

June Company Presentation

The second candidate moving forward and hopefully soon in the company’s product portfolio is the AQST-109. It is a sublingual epinephrine film for the potential treatment of severe allergic reactions, including anaphylaxis.

LAQT-109

June Company Presentation

You can see the company’s progress in 2022, moving this pipeline asset through the approval process. Aquestive is on track to initiate a pivotal study for this candidate before years are out. Positive topline results in mid-June of its EPIPHAST study gave the stock a brief boost when they were disclosed and paved the way for this critical next step in the AQST-109 approval journey.

AQST-109 Attributes

June Company Presentation

Second quarter results:

The company recorded the second quarter Numbers August 2. Aquestive posted a GAAP loss of 36 cents per share in the quarter, which was in line with expectations. Revenue fell just under 14% year over year to $13.3 million. This was above consensus but below the $15.3 million in 2Q2021. However, last year’s results include a one-time payment of $2 million. The company raised its full-year sales forecast to a range of $46 million to $49 million from its previous revenue range of $42 million to $47 million. Management also forecast a lower net loss for fiscal 2022.

Updated guidance Advance advice
Total turnover (in millions) $46 to $49 $42 to $47
Non-GAAP adjusted gross margins 70% to 75% 70% to 75%
Non-GAAP Adjusted EBITDA loss (in millions) $37 to $43 $51 to $58

Analysts’ comments and results:

Since the second quarter earnings release, JMP Securities ($10 price target), Wedbush ($4 price target), and HC Wainwright ($6 price target) have all reissued buy ratings on the title.

Several insiders bought just over $150,000 worth of stock in the first half of June. This is the only insider activity in stocks this year. Only 2% of the outstanding float is currently held short. After posting a net loss of $16.3 million in the second quarter, the company had only $17.7 million in cash and marketable securities on the balance sheet.

Balance sheet

June Company Presentation

The company has potential access to a $30 million credit facility following Libervant’s approval. Management also recently implemented such spending cuts, which included ‘resizing‘ its non-commercial infrastructure. In addition, he had additional means of financing, as described above.

Verdict:

The current analyst consensus the company loses just over $1.25 per share in fiscal 2022 as revenue drops 6% to $48 million. Sales are expected to rebound more than 50% in fiscal 2023 and losses should be reduced by a third.

2022 milestones

June Company Presentation

The company has several potential milestones on the horizon and growth is expected to reaccelerate in 2023. Unfortunately, management risks further diluting stockholders before Aquestive Therapeutics can break even. Therefore, until I see the company significantly reduce its quarterly cash burn, I plan to avoid stocks.

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