Aquestive Therapeutics, Inc. (NASDAQ: AQST), a pharmaceutical
company focused on developing and commercializing differentiated
products that address patients’ unmet needs and solve therapeutic
problems, announced today that it has entered a royalty
monetization agreement with an affiliate of Marathon Asset
Management, a leading global investment firm (“Marathon”), that
will result in proceeds to the Company of up to $125 million. In
exchange for this funding, Marathon will be entitled to receive all
royalties and other payments due under Aquestive’s license
agreement with Sunovion Pharmaceuticals Inc. (“Sunovion”) as a
result of Sunovion’s commercialization of KYNMOBI™ (apomorphine
HCI) sublingual film for the acute, intermittent treatment of OFF
episodes in patients with Parkinson’s disease. Net proceeds of the
transaction will be used to repay certain senior notes and fund the
Company’s ongoing development and commercialization of its
proprietary product pipeline candidates, as well as for working
capital purposes. KYNMOBI received approval from the U.S. Food and
Drug Administration (FDA) on May 21, 2020.
Under the terms of the agreement, Aquestive will
receive $40 million at closing and is eligible to receive up to $85
million of contingent payments at various points, beginning as
early as the fourth quarter of 2020, based on the achievement of
certain worldwide royalty targets and certain other commercial
milestones. The transaction is anticipated to close later this
month.
With the upfront net proceeds of the
monetization, the Company will repay $22.5 million of senior notes,
and issue $4.0 million of new senior notes in lieu of paying a
prepayment premium on the early repayment of the senior notes,
bringing outstanding senior notes to $51.5 million in the
aggregate. In addition, the holders of the senior notes have
extended to December 31, 2021 the Company’s ability to access, at
the Company’s option, $30 million of senior notes re-openers under
the Company’s senior debt indenture. The first $10 million senior
notes re-opener represents a commitment of such amount by current
holders of senior notes, contingent upon FDA approval of the
Company’s product candidate Libervant™ (diazepam) Buccal Film for
the management of seizure clusters. A second $20 million senior
notes re-opener represents a right, at the Company’s option, to
market to current senior note holders or other lenders additional
senior notes up to such amount, contingent upon FDA approval of
Libervant for U.S. market access. If and to the extent that these
re-openers are accessed by the Company, the Company will grant
warrants to purchase up to 714,000 shares of the Company’s common
stock, with an exercise price calculated based on the 30-day volume
weighted average closing price of the Company’s common stock at the
time the senior notes are issued. In addition, upon the closing of
the transaction, the Company will issue warrants to purchase
143,000 shares of the Company’s common stock prior to closing.
“This financing from Marathon provides Aquestive
with immediate and substantial capital to reduce our debt and
advance key initiatives of the Company, including supporting the
FDA approval of Libervant, and the ongoing clinical development of
AQST-108, an oral sublingual formulation delivering systemic
epinephrine,” stated Keith Kendall, President and Chief Executive
Officer of Aquestive. “The capital from this transaction extends
our cash runway through the third quarter of 2021 and possibly
beyond. Additionally, the extension of the opportunity to access
the $30 million of additional notes under our senior credit
facility represents significant additional capital potentially
available to the Company as early as mid-2021. The transaction
demonstrates the strong value of our PharmFilm® technology in
bringing therapeutic solutions to address patients’ unmet needs. We
are delighted to have partnered with Marathon Asset Management and
our senior lenders for this important milestone for Aquestive,”
concluded Mr. Kendall.
“This investment allows Aquestive to efficiently
finance the advancement of an array of innovative and
differentiated therapies that have the potential to meaningfully
benefit patients,” said Bruce Richards, Chairman & Chief
Executive Officer of Marathon. “We are pleased to be able to
support those efforts while delivering attractive, uncorrelated
returns to our investors as we continue to build on our success in
the healthcare financing space and, in particular, the royalty
monetization sector.”
“We are glad that our structured financing has
enabled Aquestive to pursue its developmental goals and look
forward to a successful working relationship. The impact that
KYNMOBI will have for people living with Parkinson’s disease is a
positive development,” stated Dr. Evan Bedil, Managing Director and
head of Healthcare Credit and Royalty Monetization at Marathon.
Morgan Stanley & Co. LLC acted as sole
structuring agent and Dechert LLP acted as special transaction
counsel to Aquestive on the transaction.
About Aquestive
TherapeuticsAquestive Therapeutics is a pharmaceutical
company that applies innovative technology to solve therapeutic
problems and improve medicines for patients. Aquestive is advancing
a late-stage proprietary product pipeline to treat CNS conditions
and provide alternatives to invasively administered standard of
care therapies. The Company also collaborates with other
pharmaceutical companies to bring new molecules to market using
proprietary, best-in-class technologies, like PharmFilm®, and has
proven capabilities for drug development and commercialization.
About MarathonMarathon Asset
Management, L.P. is a New York-based global investment advisor with
approximately $19 billion AUM. The firm was found in 1998 by Louis
Hanover and Bruce Richards and employs 155 professionals.
Marathon’s corporate headquarters are in New York City with
international offices in London and Tokyo. Marathon is a Registered
Investment Adviser with the Securities and Exchange Commission. For
more information, please visit the company’s web site at
www.marathonfund.com.
Forward-Looking Statement
This press release includes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Words such as “believe,” “anticipate,” “plan,”
“expect,” “estimate,” “intend,” “may,” “will,” or the negative of
those terms, and similar expressions, are intended to identify
forward-looking statements. These forward-looking statements
include, but are not limited to, statements regarding therapeutic
benefits and plans and objectives for regulatory approvals of
AQST-108 and Libervant; ability to address the concerns identified
in the FDA’s Complete Response Letter dated September 25, 2020
regarding the New Drug Application for Libervant and obtain FDA
approval of Libervant for U.S. market access; ability to obtain FDA
approval and advance AQST-108, Libervant and our other product
candidates to the market; about our growth and future financial and
operating results and financial position; regulatory approval and
pathway; clinical trial timing and plans; our and our competitors’
orphan drug approval and resulting drug exclusivity for our
products or products of our competitors; short-term and long-term
liquidity and cash requirements, cash funding and cash burn;
business strategies, market opportunities, and other statements
that are not historical facts. These forward-looking statements are
also subject to the uncertain impact of the COVID-19 global
pandemic on our business including with respect to our clinical
trials including site initiation, patient enrollment and timing and
adequacy of clinical trials; on regulatory submissions and
regulatory reviews and approvals of our product candidates;
pharmaceutical ingredient and other raw materials supply chain,
manufacture, and distribution; sale of and demand for our products;
our liquidity and availability of capital resources; customer
demand for our products and services; customers’ ability to pay for
goods and services; and ongoing availability of an appropriate
labor force and skilled professionals. Given these uncertainties,
the Company is unable to provide assurance that operations can be
maintained as planned prior to the COVID-19 pandemic. These
forward-looking statements are based on our current expectations
and beliefs and are subject to a number of risks and uncertainties
that could cause actual results to differ materially from those
described in the forward-looking statements. Such risks and
uncertainties include, but are not limited to, risks associated
with the Company’s development work, including any delays or
changes to the timing, cost and success of our product development
activities and clinical trials and plans; risk of delays in FDA
approval of Libervant and our other drug candidates or failure to
receive approval; risk of our ability to demonstrate to the FDA
“clinical superiority” within the meaning of the FDA regulations of
our drug candidate Libervant relative to FDA-approved diazepam
rectal gel and nasal spray products including by establishing a
major contribution to patient care within the meaning of FDA
regulations relative to the approved products as well as risks
related to other potential pathways or positions which are or may
in the future be advanced to the FDA to overcome the seven year
orphan drug exclusivity granted by the FDA for the approved nasal
spray product of a competitor in the U.S. and there can be no
assurance that we will be successful; risk that a competitor
obtains FDA orphan drug exclusivity for a product with the same
active moiety as any of our other drug products for which we are
seeking FDA approval and that such earlier approved competitor
orphan drug blocks such other product candidates in the U.S. for
seven years for the same indication; risk inherent in
commercializing a new product (including technology risks,
financial risks, market risks and implementation risks and
regulatory limitations); risks for consummating the monetization
transaction for KYNMOBI and other risks and uncertainties
concerning the royalty and other revenue stream of KYNMOBI,
achievement of royalty targets worldwide or in any jurisdiction and
certain other commercial targets required for contingent payments
under the monetization transaction, and of sufficiency of net
proceeds of the monetization transaction after satisfaction of and
compliance with 12.5% Senior Notes obligations, as applicable, and
for funding the Company’s operations; risk of development of our
sales and marketing capabilities; risk of legal costs associated
with and the outcome of our patent litigation challenging third
party at risk generic sale of our proprietary products; risk of
sufficient capital and cash resources, including access to
available debt and equity financing and revenues from operations,
to satisfy all of our short-term and longer term cash requirements
and other cash needs, at the times and in the amounts needed; risk
of failure to satisfy all financial and other debt covenants and of
any default; risk related to government claims against Indivior for
which we license, manufacture and sell Suboxone® and which accounts
for the substantial part of our current operating revenues; risk
associated with Indivior’s cessation of production of its
authorized generic buprenorphine naloxone film product, including
the impact from loss of orders for the authorized generic product
and risk of eroding market share for Suboxone and risk of
sunsetting product; risks related to the outsourcing of certain
marketing and other operational and staff functions to third
parties; risk of the rate and degree of market acceptance of our
product and product candidates; the success of any competing
products, including generics; risk of the size and growth of our
product markets; risks of compliance with all FDA and other
governmental and customer requirements for our manufacturing
facilities; risks associated with intellectual property rights and
infringement claims relating to the Company’s products; risk of
unexpected patent developments; the impact of existing and future
legislation and regulatory provisions on product exclusivity;
legislation or regulatory actions affecting pharmaceutical product
pricing, reimbursement or access; claims and risks that may arise
regarding the safety or efficacy of the Company’s products and
product candidates; risk of loss of significant customers; risks
related to legal proceedings, including patent infringement,
investigative and antitrust litigation matters; changes in
government laws and regulations; risk of product recalls and
withdrawals; uncertainties related to general economic, political,
business, industry, regulatory and market conditions and other
unusual items; and other uncertainties affecting the Company
described in the “Risk Factors” section and in other sections
included in our Annual Report on Form 10K, in our Quarterly Reports
on Form 10-Q, and in our Current Reports on Form 8-K filed with the
Securities Exchange Commission (SEC). Given those uncertainties,
you should not place undue reliance on these forward-looking
statements, which speak only as of the date made. All subsequent
forward-looking statements attributable to us or any person acting
on our behalf are expressly qualified in their entirety by this
cautionary statement. The Company assumes no obligation to update
forward-looking statements or outlook or guidance after the date of
this press release whether as a result of new information, future
events or otherwise, except as may be required by applicable
law.
PharmFilm® and the Aquestive logo are registered
trademarks of Aquestive Therapeutics, Inc. All other registered
trademarks referenced herein are the property of their respective
owners.
Aquestive Investor Inquiries:Westwicke, an ICR CompanyStephanie
Carringtonstephanie.carrington@westwicke.com646-277-1282
Marathon Media Inquiries:
Prosek PartnersJosh Clarksonjclarkson@prosek.com
212-279-3115
