Aquestive Therapeutics Inc

NASDAQ:AQST

Earnings Call Analysis

Earnings Call Transcript 2023-Q3

[Operator]

Good morning, and welcome to Aquestive Therapeutics Third Quarter 2023 Conference Call. [Operator Instructions] As a reminder, this call will be recorded. I would now like to introduce your host for today's conference call, Bennett Watson of ICR Westwicke Investor Relations. You may begin.

[Bennett Watson]

Thank you, operator. Good morning, and welcome to today's call. On today's call, I am joined by Dan Barber, Chief Executive Officer; and Ernie Toth, Chief Financial Officer; who are going to provide an overview of recent business developments and performance for the third quarter 2023, followed by a Q&A session.

During the Q&A session, the team will be joined by Dr. Carl Kraus, Chief Medical Officer; Ken Marshall, Chief Commercial Officer; and Dr. Stephen Wargacki, Senior Vice President, Research and Development. As a reminder, the company's remarks today correspond with the earnings release that was issued after market close yesterday. In addition, a recording of today's call will be made available on Aquestive's website within the Investors section shortly following the conclusion of this call.

To remind you, the Aquestive team will be discussing some non-GAAP financial measures this morning as part of its review of third quarter 2023 results. A description of these measures, along with a reconciliation to GAAP can be found in the earnings release issued yesterday, which is posted on the Investors section of Aquestive's website.

During the call, the company will be making forward-looking statements. We remind you of the company's safe harbor language as outlined in yesterday's earnings release as well as the risks and uncertainties affecting the company as described in the Risk Factors section and in other section included in the company's annual report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2023, and in our subsequent quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC.

As with any pharmaceutical company with product candidates under development and products being commercialized, there are significant risks and uncertainties with respect to the company's business and the development, regulatory approval and commercialization of its products and other matters related to operations. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as of the date made. Actual results may differ materially from these statements. All forward-looking statements attributable to Aquestive or any person acting on its behalf are expressly qualified in their entirety by this cautionary statement and the cautionary statements contained in the earnings release issued yesterday. The company assumes no obligation to update its forward-looking statements after the date of this conference call whether as a result of new information, future events or otherwise, except as required under applicable law.

With that, I will now turn the line over to Dan.

[Daniel Barber, executive]

Thank you, Bennett. I am pleased to say that we have been able to accelerate the transformation of Aquestive over the last few months. We achieved important milestones across the clinical, regulatory and financial parts of the business since our last earnings call.

Let me start with our most recent news. We were excited to refinance our debt last week and pleased with how our new lender, a large leading institutional investor has worked with us to maintain flexibility in our business. The $45 million facility provides for interest-only payments into mid-2026, well past our upcoming important clinical and regulatory milestones. Importantly, this agreement contains no revenue, EBITDA or cash covenants, includes zero warrants and allows us the flexibility to launch or partner both Anaphylm and Libervant as we deem appropriate if approved by the FDA. And despite the Fed funds rate having increased by over 120% since our last financing in 2019, our interest rate remains fixed and increased by only 1 percentage point from the prior debt deal. We are truly pleased with this outcome.

This brings me to another important financial point. This past quarter marked the second quarter in a row during which our non-GAAP adjusted EBITDA remained positive after removing our adjusted R&D costs. Simply put, if we weren't investing in the clinical development of Anaphylm/epinephrine sublingual film, our business would have a positive non-GAAP adjusted EBITDA through the first 9 months of 2023. This, along with our continued strong revenue guidance, positions us well as we start to focus on 2024. In fact, our revenue guidance for 2023 has increased by over 25% from our original guidance provided earlier in the year. Ernie will talk more about our results in a few minutes.

Now let me turn to our pipeline. Investing in the clinical development of Anaphylm remains the top priority. We continue to believe Anaphylm has the potential to transform the company and believe this transformation could happen in 2024. As we reported in October, we were pleased with the FDA's feedback on the design for our pivotal Phase III program. We are reaffirming our guidance that we will start the Phase III pivotal study this quarter and expect to provide top line data in the first quarter of 2024. Completing our Phase III pivotal study will represent a major clinical milestone for the company.

We also continue to believe that patient demand for an oral epinephrine product for the treatment of severe allergic reactions, including anaphylaxis, remains high. Now with nasal sprays delayed, we believe the benefits of an orally administered epinephrine rescue medication are more apparent than ever. Literature and survey data clearly show that many patients fail to carry their epinephrine rescue medical device. And even when they have it with them, patients fail to use their device. Our survey data suggests that patients often take an oral antihistamine pill such as Benadryl before using the rescue medical device. We believe Anaphylm as the only oral rescue product under development for anaphylaxis has the potential to replace the incorrect use of antihistamines and thereby speed up time to symptom abatement. One thing allergists universally agree on is that early use of epinephrine is critical to treating anaphylaxis.

Beyond the potentially significant carry and use benefits of Anaphylm, the pharmacodynamic clinical data from our recent studies provides the blueprint for a compelling improvement. According to medical experts, during anaphylaxis, the release of histamines causes blood vessels to expand, thereby rapidly dropping an individual's mean arterial pressure or MAP. Maintaining MAP supports the necessary pressure for vital organs such as the brain and heart to function normally and reduces the risk of anaphylaxis-related outcomes such as loss of consciousness. In our studies, Anaphylm has been shown to preserve MAP in contrast to auto-injectors that have not done so. We are excited about the potential implications for patients and our medical team will spend more time talking about this data as we move into 2024.

To sum up, we believe the projected time line to FDA approval and market entry compared to the variety of nasal sprays under development is now much tighter than it was. The potential of carry and use benefits remain significant, and our mean arterial pressure or MAP data continues to be compelling when compared to auto injectors.

Now turning to Libervant. We continue to progress towards our April 2024 FDA target action date for our NDA for patients between 2 and 5 years old. At this time, there are no open inquiries with the FDA regarding our NDA for this patient group, and we have no reason to believe the FDA won't meet the action date. Market data shows a 31% increase in prescriptions in the 2- to 5-year-old space during the third quarter 2023 when compared to the third quarter of 2022. While over 90% of these scripts were for diazepam rectal gel, the only FDA-approved drug for this age group. We continue to believe the need for an oral product in this space is significant and look forward to working with the FDA to bring Libervant to these patients as soon as possible.

We must remind you that in addition to the usual approval risks, we cannot guarantee that even with approval, the FDA will allow Libervant access to the U.S. market. We also continue to believe that based on past behaviors, competitors may actively seek to block the use of Libervant despite its potential benefits to this critical patient population.

Now let's turn to our epinephrine prodrug platform. I'm pleased today to talk about advancements in our epinephrine prodrug platform, which we have branded as the [ Adenovirus ]. We have completed the initial formulation of a topical product using the [ Adenovirus ] platform and plan on testing this formulation in humans in the coming months. Based on preclinical data, we have seen rapid absorption of epinephrine across ports and tissue. As you know, epinephrine is a vasoconstrictor and does not penetrate well through the skin. However, our [ Adenovirus ] platform may allow for absorption, thereby creating the potential use of this product for a variety of dermatological conditions, the unmet need and prevalence in some of these conditions is significant. We look forward to sharing our findings as we progress this initiative.

Our business development activities remain ongoing. Our Libervant and Anaphylm discussions continue in regions around the world. We also continue to believe that as we meet our expected clinical and regulatory milestones, we will be able to generate significant funding from business development transactions. Our base business remains strong. We anticipate continued growth and remain focused on expanding our business capabilities in 2024.

In summary, the third quarter was yet another crucial quarter for the company. We refinanced our debt. We raised our revenue guidance and narrowed non-GAAP adjusted EBITDA guidance for 2023. We progressed our Anaphylm program and continue to plan for a Q4 start to our pivotal study. We progressed our Libervant 2- to 5-year-old application and remain on track. We completed our initial topical formulations of our [ Adenovirus ] platform, and we continue to see growth in our base business.

With that, I will turn the call over to Ernie.

[Ernie Toth, executive]

Thank you, Dan, and good morning, everyone. By now, you'll have seen our financial results in our earnings release that was issued last evening. As we typically do, we will address most of the discussion related to the third quarter 2023 results into Q&A. During the third quarter, we continue to execute on our financial strategy to strengthen our financial position by refinancing our outstanding debt as well as managing expenses to extend our cash runway to support the continued development of our lead product, Anaphylm, the first and only non-device based orally delivered epinephrine product. .

We recently announced the refinancing of our outstanding obligations under the 12.5% senior secured notes, having a maturity date of June 30, 2025. The new financing of $45 million by a large leading institutional investor will be used to repay all outstanding obligations under the prior credit facility and for general corporate purposes. The notes are senior secured obligations of Aquestive and will mature on November 1, 2028. The notes bear interest at a fixed rate of 13.5% per year payable quarterly. Principal will be repaid starting on June 30, 2026.

Importantly, the notes contain no revenue or cash covenants and no warrants for purchase of the company's common stock were issued under the terms of the transaction. The structure of this nondilutive refinance transaction maximizes our flexibility in the short term and reduces our cash requirements by approximately $28 million through June 30, 2025, the due date of the original credit facility. Despite very difficult market conditions, the investors' willingness to invest in our future represents an important step forward in the continued growth of Aquestive.

Now let's turn to the recap of our quarterly and year-to-date financial results. Excluding the impact of prior year proprietary sales of Sympazan, total revenues increased from $9.2 million in the third quarter 2022 to $13 million in the third quarter of 2023. This 42% increase in revenue was primarily driven by higher revenue from the company's 5 out-licensed products. Total reported revenues were $13 million in the third quarter of 2023 compared to $11.5 million in the third quarter of 2022. For the third quarter 2023 compared to the prior period, we saw a 193% increase in license and royalty revenue, primarily due to Sympazan and [ Assertio ], a 36% increase in manufacture and supply revenue from Suboxone and Sympazan, and a 24% increase in codevelopment and research fees.

Excluding the impact of prior year proprietary sales of Sympazan, total revenues increased from $29.9 million for the 9 months ended September 30, 2022, to $37.4 million for the 9 months ended September 30, 2023, an increase of 25%. Total reported revenues were $37.4 million for the 9 months ended September 30, 2023, compared to $37 million for the 9 months ended September 30, 2022. The increase was primarily due to increases in manufacture and supply revenue and license and royalty revenue, offset by the absence of proprietary product sales subsequent to the out-licensing agreement with Assertio in October 2022.

Net loss for the third quarter of 2023 was $2 million or $0.03 loss per share. The net loss for the third quarter 2022 was $12.5 million or $0.23 loss per share. The change in net loss was primarily driven by increases in revenue as previously described, decreases in selling, general and administrative expense, including severance costs and lower administrative costs in our commercial organization subsequent to the out-licensing of Sympazan in October '22, a decrease in noncash interest expense and a decrease in research and development costs and expenses.

Our net income for the 9 months ended September 30, 2023, was $0.2 million. The net loss for the 9 months ended September 30, 2022, was $42.1 million or $0.90 loss per share. Non-GAAP adjusted EBITDA loss was $1.3 million in the third quarter of 2023 compared to a non-GAAP adjusted EBITDA loss of $7.7 million in the third quarter of 2022. Non-GAAP adjusted EBITDA income, excluding our continued investment in research and development, was $1.7 million for the third quarter of 2023 compared to a non-GAAP adjusted EBITDA loss excluding adjusted R&D expenses of $4.6 million in the third quarter of 2022.

Cash and cash equivalents were $24.9 million as of September 30, 2023. Under the At-the-Market or ATM facility, we accessed $0.2 million during the third quarter of 2023 and $5.3 million during the 9 months ended September 30, 2023. The ATM facility has approximately $27.8 million available at September 30, 2023. In addition, during the 9 months ended September 30, 2023, approximately 8.7 million common stock warrants were exercised with proceeds of approximately $8.3 million. We continue to be focused in 2023 on the advancement of our epinephrine program and commencing our pivotal PK clinical trial in the fourth quarter. Suboxone currently continues to retain a strong presence in both the U.S. commercial and CMS markets and continues to provide a growth opportunity outside the U.S. We anticipate additional revenue from our licensed products during the remainder of 2023. And moreover, we will continue to focus on capital conservation to extend our cash runway as far as possible.

As outlined in the press release issued last night after market closed, based on our third quarter results and positive outlook for the remainder of 2023, we have revised our full year 2023 financial guidance as follows. Total revenues increased to approximately $47 million to $50 million from $44 million to $48 million. And non-GAAP adjusted EBITDA loss narrowed to approximately $14 million to $17 million from $19 million to $22 million. Please note, our revenue guidance for 2023 no longer includes proprietary net sales for Sympazan due to the out-licensing agreement with Assertio, but does include manufacture and supply revenue and royalty fees. In addition, our guidance for 2023 includes continued focused R&D investments related to the continued development of Anaphylm, the first and only nondevice based orally delivered epinephrine product.

With that, I will now turn the line back to the operator to open the volume for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Jason Butler with JMP Securities.

[Jason Butler, analyst]

Congrats on all the progress, especially the debt refinancing. A couple on Anaphylm. Can you maybe just outline for us at a high level of differences in design between the 2 PK pivotal trials? And then do you plan on conducting these sequentially? Or when will you initiate the second PK pivotal study? .

[Daniel Barber, executive]

Jason. Good to hear your voice. So -- and thank you for the congrats on the refinancing. Obviously, we're pleased as well. On Anaphylm, I think a good place to start. Let me give you a couple of my thoughts, and then I will pass it over to Carl Kraus, our Chief Medical Officer, who can walk you through how he thinks about it from a design perspective. But a lot of how we are approaching the final set of studies we need to do here really comes from what we've learned in the marketplace and from the FDA directly, right? So we heard what the -- our competitors, the nasal sprays have put in the public domain. We've obviously been interacting with the FDA. And the one common theme that we really have been able to see is the FDA has been very consistent. They're very consistent in what they're looking for and what they want to see in order to allow a product in the market, and that gives us a lot of confidence in our approach. .

And quite frankly, what they want to see is enough data to get them comfortable that patients in all settings can use the product and have an effective dose that is rapidly administered, right? So obviously, with the nasal sprays, they're dealing with a congestion issue. For us, we outlined previously in our end of Phase II study of the things the FDA is focused on with us. So that's what's led us to the set of studies that we're about to perform. And I will turn it over to Carl, who can walk you through how he's thinking about the design of the studies.

[Carl Kraus, executive]

Thank you for the question. So the studies that were detailed really were revolving around first, the adult pivotal and then subsequently, the pediatric. The adult pivotal, we've already reviewed with the agencies. They have provided us agreement on all the key elements of that study. And we've only included now some additional elements that will result in data that will address sustainability, questions regarding repeat dose, so that will be included, and that will begin as planned in Q4 of this year and data readout in Q1 of next year. And then the subsequent study of pediatric will have to secure alignment on the design, but it should be in accord with a standard pediatric study for the 30-kilogram and above pediatric population. So no real surprises, just working on making sure that we have the protocol tidied up and provided to the agency for agreement.

[Jason Butler, analyst]

Great. And then just real quick on the prodrug platform. Can you speak to the predictive value of the porcine data when you think about applications in human clinical studies. Is this a model that's been validated in the past? .

[Daniel Barber, executive]

So Jason, in a second, I will pass it over to Steve Wargacki, our Head of R&D, who I know you know. But keep in mind, we have been working with different animal models, especially the mini pig model for, I don't know, 15 years. So this is a model we know well. But Steve, if you could give your thoughts.

[Stephen Wargacki, executive]

Yes, I would be happy to. The mini pig model is a well-known established model for something we'll deliver, particularly the anatomy and physiology of the sublingual mucosa where absorption occurs, has the same structure, thickness and features. We're the closest structure -- the features to the human. And thus, that is the model that we've been using for a very long time, and we find it to be very informative.

[Operator]

Our next question comes from the line of Francois Brisebois with Oppenheimer.

[François Brisebois, analyst]

Congrats also on the progress. My first one here, I just wanted to ask about -- in terms of the pivotals, in the press release that mentioned comparable to auto-injectors and then it also talks about the study design being against IM injection. I just want a little clarity on -- are you only going against IM? Or are you still going as to a couple of different auto-injectors in terms of the PK for the pivotal? .

[Daniel Barber, executive]

Thanks, Frank. And there's nothing -- I think the global comment, and again, I will hand it over to Carl to walk through the design. But I think one really important thing to remember for us as we go into this pivotal study is there's nothing new we're doing here. We have compared ourselves to the auto-injectors and to the manual IM continuously through our outer development. So this is really a larger-scale confirmatory approach, what we've already done. But Carl can remind you of how we think about the bracketing process.

[Carl Kraus, executive]

Yes. I think that's the critical word, which is it's not a comparison to one particular agent, but a bracketing target between established reference drug products. So in this instance, it would be the use of the manual injector as well as auto-injectors and demonstration that we are bracketed over a particular time course that partial AUCs that have been discussed and reviewed at the last advisory committee meeting. And we do have agreement on the endpoints of those partial AUC, the Cmax, agreement on the sample side and, of course, agreement on the bracketing approach. The pivotal nature of the study now, of course, includes the added element of demonstration of sustainability, which was expected for the repeat. But overall, the intent here is to demonstrate that we are expanding the population so that we can demonstrate bracketing between the currently used agents in the marketplace.

[François Brisebois, analyst]

Okay. Great. And then just in terms of the pediatric versus adult. So are you giving -- is that fourth quarter start, first quarter? I assume that's not necessarily for the pediatric side. And then also, you mentioned three supportive studies in the press release. Are those -- you just discussed if that's part of the fourth quarter start first quarter data? And then sorry to bombard you with this last one. But because we talk about pediatric and adults, can you just help us understand the difference in market opportunity between the two here?

[Ernie Toth, executive]

So I'll have Carl talk to you about the difference in the studies and timing. And then, Ken, if you could, when Carl is done -- Ken Marshall, our Chief Commercial Officer, if you could talk about the commercial opportunity.

[Carl Kraus, executive]

Yes. So regarding timing, the only study that we are going to move forward with from an operational perspective this year, it would be the pivotal for the adult. As I said earlier, will require further dialogue with the agency regarding agreement on trial design for the pediatric. And then as far as the supportive studies that were previously noted in a prior press release, those are potential studies that would be required for the full NDA submission that will be completed in 2024, but specific timing has not yet been placed on the calendar nor have we full agreement and dialogue with the agency about the specifics of those study designs. So for really the elements that we know are going to happen with a particular place in the calendar, it is just the pivotal and that will happen in Q4 of this year.

[Ken Marshall, executive]

You want me to -- yes, I'll take that. The second part of that question. And looking at it from a weight-based standpoint, rather as we'll probably be labeled, 90% of the market uses the adult dose. So this is the overwhelming majority using the 0.3, usually up to about age 5 or 6, you're using the junior dose, which represents about 10% of the opportunity.

[Operator]

Our next question comes from the line of Andreas Argyrides with Wedbush Securities.

[Caroline Kimberly Pocher, analyst]

This is Caroline on for Andreas. We just have a couple. So just curious what the gating factor is to be getting the pivotal PK study in this quarter? And then on the pediatric study, when do you plan to start the process of aligning with the FDA on the design? Is it still reasonable to assume that the trial would be complete by middle of next year? And then I have a follow-up.

[Ernie Toth, executive]

Sure. Yes. So those are pretty straightforward, Caroline. So Carl, I'll address these for Caroline. There is no gating factor for the pivotal PK study starting in Q4. It's just the process of getting it up and running, right? So we are -- it's all operational pieces that we're focused on. And in terms of the pediatric study, we have been in dialogue with the FDA and continue to be in dialogue with the FDA on the final design of that study. So it's not that we have not approached them, and it's going to be a new discussion. So we feel comfortable that, especially as we get data from the adult study that the pediatric study will be in a good place to begin. In terms of the timing, obviously, conducting a pediatric study is always -- has a little more complication than an adult. But given the size that we believe this study will be and the scope, we do not believe it is an expensive or a long study to run. So yes, we do see that the timing we've laid out is reasonable.

[Caroline Kimberly Pocher, analyst]

Okay. Great. And then I have just have one additional question on Libervant. In the 12-year-old and older population, can you just provide any additional insight into the work you're doing to remove the exclusivity block and bring this product to market?

[Ernie Toth, executive]

Sure. Yes. I would love to give you and the rest of the community a lot of insight into this area, but it's not an area that at this time, we can share a lot. So I would think of Libervant this way in terms of how it fits into our company. I do believe Libervant is a potential important catalyst in 2024, call it, kind of the upside wildcard, the 2- to 5-year-old application, we feel good about it. We think there's a real need in that space, and we think it's a sizable enough opportunity to matter. So we are very focused on that at this point, especially with the near-term target action date ahead of us. But we have not lost sight of the 12 and up application as well. And we continue to believe that there are avenues to bringing our application to market ahead of orphan drug exclusivity expiration for the competing product.

[Operator]

Our next question comes from the line of Thomas Flaten with Lake Street.

[Thomas Flaten, analyst]

And I apologize if I missed this, Dan, but with respect to the upcoming studies that are going on, whether they're pivotal or supportive. Are the time lines in the October 9 press release still valid? I -- maybe I missed it, but it sounds like some of them were. There was only going to be the pivotal study in the fourth quarter. And I know you guys left the fourth quarter, first quarter window in the press release, but I just wanted to confirm that nothing had shifted from those expectations. And at least in my mind, we're kind of set.

[Daniel Barber, executive]

No. Thank you, Thomas. I'm actually glad you asked that question so we could clarify. Yes, the time lines that we put in the October press release just a few weeks ago, remain the same. The additional or supportive studies that Frank asked about before, and Carl walked you through. Just remember, these are smaller studies. So a temperature study, pH study, those are not significant bodies of work that take months and months to complete. So in terms of completing them and where we will complete them throughout the year, we feel comfortable that by the end of next year, we'll have gotten through the work that we need to know where we are in the application process.

[Thomas Flaten, analyst]

Great. And then I don't want to beat the [indiscernible] 2 to 5 things too much. But I'm just curious because there isn't an orphan drug exclusivity in that age group or at least it doesn't appear to be. Is there still a dual process review going on, one with the review division and one with the orphan drug folks?

[Daniel Barber, executive]

Yes. The process remains the same. So the senior group, the review division within the FDA will complete their review and either give an approval or whatever else they give on the action date as they would with any application. And then at the exact same time, our understanding is new Orphan Drug Group would give it's position on whether the patient population is free from an exclusivity block or whether they believe -- deem it to be blocked by exclusivity. So we do expect, based on what we know, that both would happen at the same time.

[Thomas Flaten, analyst]

Got it. Understood. Understood. And just a quick one for Ernie, and I know there tends to be variability here, but there was a substantial bump in gross margin. Just any comments on sustainability of that? Or should we expect it to be relatively variable going forward? .

[Ernie Toth, executive]

Thomas, Nice to hear your voice. So now on the gross margin, we would expect it to trend where it is on a year-to-date basis going forward.

[Operator]

Our next question comes from the line of Raghuram Selvaraju with H.C. Wainwright.

[Raghuram Selvaraju, analyst]

I was just wondering if it would be possible for you to offer some additional context around the target dermatological indications that you intend to pursue with the topical formulation that you had mentioned earlier during your prepared remarks.

[Daniel Barber, executive]

Yes. Thanks, Ram. And so I think the best way to approach giving you more information on that front is there are a variety of indications that we could look at, but it really depends on how the absorption process works as we go through this first study. So I think a good way to educate all of the -- our listeners would be with Steve, if you could talk a little bit about how you see the absorption process happening and what you think the potential effects of that could be with our [ Adenovirus ] platform?

[Stephen Wargacki, executive]

Sure. Happy to. So with our molecules, we believe the prodrug platform allows us to get absorption that straight epinephrine cannot achieve due to the nature of the molecule, both in terms of the way you could absorb as well as the vasoconstriction and the way it interacts with the body. And so we believe we're going to -- we're looking to evaluate how we absorb -- how quickly we absorb, resistance time, tolerability, et cetera, of this [ Adenovirus ] platform through the skin. And from there, it's going to really allow us to hone in on how applicable it is to the different indications that we've got signals for nonclinically. And so it is TBD, but the -- moving forward with this platform and our initial studies is going to really form the path forward there, and we look forward to being able to share more of that with you as the data comes together. .

[Daniel Barber, executive]

So Ram, I know in fairness, you are looking to hear about what the indications are and what the opportunities are. I think once we have that data, as Steve laid out we can really start being more specific in giving you more detail on that front.

[Raghuram Selvaraju, analyst]

Do you have a sense of this juncture as to whether these might include both acute as well as chronic indications? .

[Daniel Barber, executive]

Carl, do you want to take that one?

[Carl Kraus, executive]

Yes. I mean, just to reiterate what Steve and Dan mentioned, the target indications would be reflective of what we learned from the ADME and the penetration and dermal rise. So I think it will be premature to determine what indications may benefit from this intervention until we have more data on the preclinical front.

[Raghuram Selvaraju, analyst]

Okay. And then just one quick question, clarification on the debt financing. It stated in the press release that the noteholders are entitled to a tiered royalty of between 1% and 2% of worldwide net sales of Libervant until the earlier of either the first sale of Anaphylm and 8 years from the first sale of Libervant. So I'm assuming that if what you expect, let's call it, a best-case scenario unfolds for both Libervant and Anaphylm, this tiered royalty on worldwide net sales of Libervant would not likely persist for very long. Am I thinking about that correctly?

[Daniel Barber, executive]

Yes. No. As soon as there is a sale of an Anaphylm product anywhere on the globe, the Libervant royalty goes away. You have that exactly right.

[Operator]

[Operator Instructions] Our next question comes from James Molloy with Alliance Global Partners.

[James Molloy, analyst]

Just a quick question on the remaining trials. What's the all-in cost of the remaining trials? And again, presuming things go well and the trials put up the day you anticipated should. What's the expectation for being ready for an NDA filing?

[Daniel Barber, executive]

Yes. Well, I'll start with the second question first, Jim. We -- as of right now, we continue to guide that we will file by the end of 2024. We have from what we shared the last couple of times from our August earnings call and from our October press release, nothing has changed on that timing. In terms of the all-in cost of the studies that are left to be run, we haven't given that -- we haven't put that number together and put it out publicly. What I would -- and I'll pass it over to Ernie in a second in case he has more color he wants to provide. But what I would leave you with is that remember, these are pharmacokinetic studies in healthy volunteers. So they are very cost-efficient studies that are not expensive to run. But Ernie, did you want to add anything?

[Ernie Toth, executive]

No, I think what you said, considering that we've not given any public guidance on this number that it's not an expensive study for us to complete, and we're well on our way there. So...

[James Molloy, analyst]

Okay, great. Maybe 2 quick follow-ups. Any competitive intelligence on competitor ARS Pharma and Neffy refiling their NDA? And I guess, are you guys still anticipating -- you guys will -- the FDA will ask for an Ad Comm from you guys? .

[Daniel Barber, executive]

Yes. So the only competitive intelligence we have on Neffy is exactly what you or other people in the public domain know. We only hear what's in the public domain. So I'll leave it to ARS and the team there to define what that means for them. In terms of an Ad Comm, I think that is an unknown at this point. We will, of course, be prepared if that is something the FDA does want. You could argue either way on that one. You could say, well, the FDA has already done that come in the space why would they do another one. Or you could say we're a different dosage form maybe they want to spent some time with people in an Ad Comm setting. Either way, we will be ready.

[Operator]

I'm showing no further questions at this time. I would like to turn the conference back to Dan Barber for closing remarks.

[Daniel Barber, executive]

Thank you, Amy. And thank you for joining us this morning. As you've heard, we're very pleased with the Q3 2023 results that we just discussed, and we remain excited for the potential that lies ahead for us and for the company, and we look forward to speaking with all of you again soon. Have a good day.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.