AQST: FDA Update Sparks Potential for Anaphylm™ Growth

Company Overview

Aquestive Therapeutics (NASDAQ: AQST) is a specialty pharmaceutical company known for its proprietary oral film drug-delivery technology. Over 20 years, Aquestive has leveraged this platform to secure six FDA approvals and deliver over 2.5 billion doses via oral films (www.globenewswire.com). The company’s portfolio includes licensed products (e.g. Suboxone® for opioid dependence, Sympazan® for seizures) and its own pipeline focusing on unmet needs in drug delivery. Aquestive’s lead pipeline candidate is Anaphylm™ (epinephrine sublingual film), a novel, non-invasive treatment for severe allergic reactions (anaphylaxis). If approved, Anaphylm would be the first and only orally delivered form of epinephrine, offering a needle-free alternative to autoinjectors (e.g. EpiPen) (www.nasdaq.com). Management believes Anaphylm could provide greater convenience for patients at risk of anaphylaxis (www.nasdaq.com). A recent FDA update on Anaphylm’s New Drug Application (NDA) has significant implications for the company’s growth prospects.

FDA Regulatory Status: Aquestive submitted an NDA for Anaphylm in early 2025, which the FDA accepted and assigned a target action date of January 31, 2026 (www.globenewswire.com) (www.drugdiscoveryonline.com). Notably, the FDA decided no advisory committee meeting was needed for Anaphylm (www.biospace.com) (www.nasdaq.com), a positive sign that initially boosted investor confidence. However, on Jan 30, 2026, the FDA issued a Complete Response Letter (CRL) instead of an approval (www.globenewswire.com). Importantly, the CRL identified only minor deficiencies related to packaging and administration – specifically, issues in a human factors study where patients had difficulty opening the film pouch or placed the film incorrectly (www.globenewswire.com). No problems were noted with Anaphylm’s chemistry, manufacturing, or clinical efficacy/safety data (www.globenewswire.com). Aquestive has already modified the packaging/instructions and will conduct a quick human-factors validation and a pharmacokinetic study to address the FDA’s concerns (www.globenewswire.com) (www.globenewswire.com). The FDA indicated these fixes can be tested in parallel, and no additional efficacy trials are needed (www.globenewswire.com). Aquestive expects to resubmit the Anaphylm NDA by Q3 2026 and will request an expedited review (www.globenewswire.com). Management remains confident in Anaphylm’s safety, effectiveness, and its fast-acting profile comparable to epinephrine autoinjectors (www.globenewswire.com) (www.globenewswire.com). While the 2026 CRL delays the U.S. launch timeline, the narrow scope of issues has preserved Anaphylm’s potential – hence the view that this FDA update, once resolved, could spark renewed growth for the product.

Dividend Policy and Cash Flow

Aquestive does not pay any dividends and has no plans to initiate dividends in the foreseeable future. The company has never declared or paid cash dividends on its common stock, instead intending to reinvest any future earnings to fund development and growth (www.sec.gov). Management has explicitly stated they do not expect to pay dividends for the foreseeable future, given the firm’s focus on pipeline progress over shareholder payouts (www.sec.gov). Consequently, AQST’s dividend yield is 0%, and any investor return in the near term would come from stock price appreciation rather than income (www.sec.gov). Traditional REIT cash flow metrics like FFO/AFFO are not applicable here – as a clinical-stage pharma with net losses, Aquestive generates negative operating cash flow (–$66.7 million in 2024 operating cash outflow, which is –117% of revenue) (www.trefis.com). In other words, the company is not yet cash-flow-generative and relies on external funding rather than internal free cash flow to finance its operations (www.trefis.com).

Cash Burn and Funding: In 2024, Aquestive’s revenues were $57.6 million against operating expenses well over $80 million, resulting in significant net losses (www.sec.gov) (www.sec.gov). The company’s 2024 operating margin was about –129% (operating loss of ~$56 million) (www.trefis.com). Until Anaphylm or other proprietary products reach the market, cash burn will continue, and management has been proactive in securing funding. As of year-end 2024, Aquestive held $71.5 million in cash and equivalents (www.sec.gov). The company has supplemented its cash via at-the-market equity issuances (ATM) – raising ~$11.8 million net in 2024 and another $21.4 million in early 2025 (www.sec.gov) (www.sec.gov). It also filed a new $250 million shelf registration in 2024 (including a $100 million ATM facility) to enable future equity raises (www.sec.gov). These measures, plus non-dilutive financing (see below), were part of ~$160 million in recent financings that management believes position the company well to fund Anaphylm’s launch plans (www.nasdaq.com). In fact, Aquestive stated after the CRL that it “remains well-capitalized” and expects to end 2026 with significant cash on hand despite the delay (www.globenewswire.com). This implies confidence that current liquidity (and access to the ATM or partnerships) can cover operations through the NDA resubmission period. Nevertheless, investors should monitor the ongoing cash burn and future capital raises, as dilution risk remains if approvals or partnerships are delayed.

Leverage and Debt Maturities

Aquestive carries a high-cost debt load, but with no imminent maturities. In November 2023, the company refinanced its prior 12.5% notes due 2025 into a new $45 million 13.5% Senior Secured Note, extending its debt timeline (www.sec.gov) (www.sec.gov). The 13.5% note matures on November 1, 2028, and bears interest payable quarterly (www.sec.gov) (www.sec.gov). Importantly, the note is interest-only until June 30, 2026, after which principal repayments begin each quarter on a fixed amortization schedule through 2028 (www.sec.gov) (www.sec.gov). This structure gives Aquestive a grace period before it must start repaying principal, aligning with the expected window in which Anaphylm (and other products) could begin generating revenue if approved. However, the 13.5% interest rate means annual interest expense of ~$6.1 million, a substantial burden (for context, cash interest expense in 2024 was $11.1 million, up 76% due to the new note) (www.sec.gov) (www.sec.gov).

The refinancing deal came with additional obligations: as an incentive, noteholders received royalty rights on Aquestive’s future product sales. Specifically, the lenders are entitled to a tiered 1–2% royalty on Anaphylm’s net sales (for 8 years) and on Libervant (a diazepam seizure film) sales until Anaphylm’s launch (www.sec.gov). Aquestive classifies these royalties as a debt-like liability, and the effective interest expense includes amortizing the $56.9 million of estimated future royalty payments (www.sec.gov). In 2024, ~$5.46 million of non-cash interest was recorded for these royalty obligations (www.sec.gov). Aside from the secured note and related royalty liability, the company has no other significant long-term loans. (Previous debt tied to a 2020 royalty monetization with Marathon – secured by KYNMOBI® royalties – has essentially run off, as that product was withdrawn, meaning no further payouts are expected (www.sec.gov).) Overall, total debt stands at $45 million (par value) with no maturities until 2026–2028, giving the company some breathing room to execute its strategy.

Coverage and Liquidity

Despite the manageable maturity schedule, debt service coverage is a concern. With operating losses and negative EBITDA, Aquestive currently lacks earnings to cover its ~$6–7 million annual cash interest obligations – interest coverage (EBIT/interest) is effectively below 1x. In 2024, interest expense (cash and non-cash) totaled $16.8 million, while the company’s operating income was about –$56 million (www.trefis.com) (www.sec.gov). In other words, operating cash flow does not come close to covering interest payments, let alone future principal installments. Aquestive has been using its cash reserves – bolstered by equity issuances – to meet these obligations. The risk is that persistent losses could strain liquidity by the time principal repayments start in mid-2026.

However, management has outlined plans to maintain liquidity through selective spending and potential asset monetization. They intend to “satisfy current and future debt service obligations with existing cash… and potential access to other funding,” acknowledging that additional capital raises may be needed if cash flows from operations fall short (www.sec.gov) (www.sec.gov). Indeed, the company has covenants restricting new debt, so further financing likely means new equity or partnerships (www.sec.gov). It’s worth noting that Aquestive has historically been able to raise capital when needed (through ATM programs, private placements, and licensing deals). As of December 31, 2024 the company had net cash (cash minus debt) of roughly $26 million, meaning net debt-to-equity is actually negative (–24%) (www.trefis.com). This low net leverage is due to holding more cash ($71.5 M) than debt, and it provides a temporary cushion (www.sec.gov). Additionally, about 62% of Aquestive’s 2024 revenues came from a single partner (Indivior) marketing Suboxone® (www.sec.gov) (www.sec.gov). Any decline in that revenue (as Suboxone faces generic erosion) could further squeeze cash available for debt service – underscoring the importance of Anaphylm or new revenue streams coming online by 2026. For now, liquidity is sufficient for near-term needs: management asserts that current cash plus expense management and financing options can fund operations for “at least the next twelve months” (through end of 2025) (www.sec.gov). They even anticipate still having “significant” cash left at 2026’s end, assuming timely NDA resubmission and controlled launch spending (www.globenewswire.com). Investors will want to verify this as events unfold, since any setbacks could necessitate more fundraising (dilution or debt) and put pressure on coverage ratios.

Valuation and Comparables

Aquestive’s valuation reflects its high hopes for Anaphylm rather than current earnings. The company is not profitable, so traditional metrics like P/E are not meaningful (2024 EPS was negative). Instead, investors look at revenue multiples and pipeline potential. At the end of January 2026 (just before the FDA decision), AQST traded around $3.24 per share, equating to a market capitalization of roughly $350–360 million (www.trefis.com). Based on 2024 revenues of $57.6 million, the stock’s Price-to-Sales ratio is about 6.2×. This multiple is elevated relative to the company’s historical low growth (2021–2024 revenue was roughly flat in the ~$45–50M range (stockanalysis.com)) and reflects the market’s expectation for a dramatic sales ramp if Anaphylm gains approval. On an enterprise basis, EV/Sales is slightly lower (~5.8×) given the net cash position. For a late-clinical stage biotech, a mid-single-digit P/S is not unusual – it indicates investors are valuing the potential future Anaphylm franchise (the U.S. epinephrine market is estimated in the high hundreds of millions annually) more than legacy royalties.

It’s instructive to compare Aquestive with ARS Pharmaceuticals (NASDAQ: SPRY), a competitor who in late 2024 launched the first needle-free epinephrine alternative (neffy® nasal spray). ARS Pharma, with its intranasal epinephrine approved in 2024 (ir.ars-pharma.com), had a market cap around $700 million in early 2025 and over $300 million in cash (ir.ars-pharma.com) (ir.ars-pharma.com) – a much stronger balance sheet. While ARS has started generating revenue (neffy had $7.1 M sales in Q4 2024 after launch) (ir.ars-pharma.com), it still trades at a rich multiple of expected peak sales due to growth potential. Aquestive’s valuation gap vs. ARS partly reflects funding differences and the fact that Anaphylm is now delayed. Notably, short interest in AQST is relatively high (~18% of float) (www.trefis.com), signaling that many traders are skeptical about the company’s prospects or see the stock as overvalued pending FDA approval. This could present volatility – a short squeeze is possible on any positive catalysts, but conversely, downside if fundamentals don’t improve (www.trefis.com). Overall, AQST’s current market value suggests investors assign a significant probability that Anaphylm will eventually reach the market and capture a meaningful share, albeit discounting for execution risks.

Risks and Challenges

Regulatory and Development Risk: The primary risk is that Anaphylm might face further approval delays or hurdles. The recent CRL means launch is on hold until at least 2027, and while the issues were limited in scope, there’s no guarantee the FDA won’t raise new questions upon resubmission. Any slippage in completing the required human-factor and PK studies, or an unfavorable outcome from them, could push timelines out further. Aquestive must also secure international approvals – positive feedback from the EMA (no new trials needed) is encouraging, and the company plans to file in Europe and Canada in H2 2026 (www.globenewswire.com), but those regulatory processes carry their own uncertainty. Failure to ultimately obtain FDA approval for Anaphylm would be devastating to the investment thesis, given how central this product is to Aquestive’s growth.

Commercial and Competitive Risk: Even if approved, Anaphylm will enter a competitive market for epinephrine. Injectable autoinjectors (EpiPen®, generic epinephrine pens, etc.) are the entrenched standard of care. Patients and physicians will need to be convinced that a sublingual film can deliver epinephrine as reliably and rapidly as an injection in a life-threatening allergic emergency. Competitor ARS Pharma’s neffy® – a nasal spray epinephrine – is already on the U.S. market (launched Q4 2024) and is positioning itself as the needle-free alternative of choice (ir.ars-pharma.com) (ir.ars-pharma.com). In its first quarter on sale, neffy gained over 3,000 prescribing physicians and broad insurance coverage, signaling strong uptake (ir.ars-pharma.com) (ir.ars-pharma.com). By the time Anaphylm could launch (likely 2027 if all goes well), neffy will have a multi-year head start in capturing needle-phobic allergy patients. Head-to-head competitiveness is an open question: Anaphylm’s sublingual administration vs. neffy’s intranasal – each has pros and cons. Aquestive’s studies show Anaphylm achieves a pharmacokinetic profile comparable to leading autoinjectors (www.globenewswire.com), but real-world perception of efficacy will matter. If neffy is perceived as easier or faster (spray vs. unfolding a film), Anaphylm could face a tougher market entry. Beyond ARS, other innovators could emerge (for instance, orally disintegrating tablets or improved autoinjectors), and traditional autoinjector manufacturers (e.g. Viatris, Kaleo) may respond with pricing or new features. Aquestive will likely need substantial marketing and physician education efforts to drive adoption, which is challenging for a smaller company and could require a commercial partner or significant expenses.

Financial and Execution Risk: Aquestive’s high leverage and ongoing cash burn present risk. The 13.5% debt has restrictive covenants and requires the company to maintain compliance and make quarterly interest payments (www.sec.gov) (www.sec.gov). If Anaphylm’s approval or revenue is delayed beyond expectations, liquidity could tighten by 2026–2027, just as debt amortization kicks in. The company may need to raise additional capital under less favorable conditions, diluting shareholders or increasing interest costs. Notably, management acknowledges the need for additional financing in the future and the difficulty of obtaining it with so much debt already on the books (www.sec.gov) (www.sec.gov). Another risk is revenue concentration: historically ~60–80% of revenue came from one customer (Indivior) due to Suboxone® film manufacturing (www.sec.gov) (www.sec.gov). Suboxone is a mature product facing generic competition, and those manufacturing revenues declined by $4 million in 2024 (www.sec.gov). If Indivior’s orders keep shrinking (or if any key license deal like Sympazan’s with Assertio falters), Aquestive’s baseline cash flows will erode further. The company’s increased spending ahead of an anticipated Anaphylm launch is another challenge – SG&A jumped ~58% in 2024 (with investments in commercial readiness, personnel, and regulatory fees) (www.sec.gov). Should approval be delayed significantly, sustaining an expanded commercial infrastructure could be wasteful. Conversely, if they scaled back to conserve cash, they might be under-prepared to launch when the time comes. Balancing these decisions is a key execution risk for management.

Red Flags and Governance

A few red flags warrant investor caution:

- Dilution and Share Count Growth: Aquestive has aggressively issued equity to fund operations. Through its ATM programs and past offerings, the company sold nearly 20 million new shares since 2019 (www.sec.gov), and continued issuing in 2023–25. Shares outstanding were ~98.9 million as of March 2025 (www.sec.gov), up from ~27 million at IPO in 2018. This >3× dilution significantly reduces per-share value for early investors. Further equity issuance is authorized (up to $100 M via ATM) (www.sec.gov), so dilution remains an overhang.

- High Cost of Capital: The 13.5% interest rate on debt and the attached royalties indicate limited financing options. Issofact, the company had to promise a slice of Anaphylm’s future sales to secure funding (www.sec.gov). Such expensive capital can cap equity upside (since a portion of future revenue is pre-pledged) and reflects creditors’ perceived risk in the business.

- Reliance on “Sunsetting” Products: Suboxone film, a key revenue source, is in decline – 2024 Suboxone manufacturing revenue fell ~9% due to lower volume (www.sec.gov). Management even calls Suboxone a “sunsetting product” that still accounts for a substantial part of current revenue (www.sec.gov). This is unsustainable long-term. The company’s other proprietary product, Libervant® (diazepam buccal film for seizures), has a restricted market approval (approved only for pediatric patients 2–5 years old due to a competitor’s orphan exclusivity blocking adult use until 2027) (www.sec.gov) (www.sec.gov). Thus Libervant’s near-term commercial opportunity is limited. These red flags underscore that Aquestive’s legacy business may not cover its costs if Anaphylm’s ramp is slow.

- Short Seller Sentiment: As mentioned, short interest ~18% suggests that a segment of the market is betting on AQST’s decline (www.trefis.com). While not inherently damning, it raises the question of whether informed investors see overvaluation or foresee negative events (e.g. further delays or financing needs). Such a large short position can also increase stock volatility around news events.

- Management Turnover: In mid-2022, co-founder and then-CEO Keith Kendall departed (under a separation agreement) (www.sec.gov), and current CEO Daniel Barber took the helm. While leadership changes are not uncommon, investors should monitor how the new team executes, especially with Barber’s focus on the allergy space (he has reorganized the company around Anaphylm’s opportunity). Stability and clear communication will be key; any missteps in guiding through the CRL resolution or launch plans could erode investor trust.

Open Questions and Catalysts

Looking ahead, several open questions will determine AQST’s trajectory:

- How quickly can Anaphylm win approval? – The company estimates a Q3 2026 NDA resubmission and will seek rapid FDA review (www.globenewswire.com). Can they complete the required human-factor and PK studies in time? If the FDA grants a 6-month priority review, approval could come as early as late Q1 2027. Any delay in data collection or review (or need for additional studies) might push approval beyond 2027, straining resources further. Investors will watch for the FDA Type A meeting feedback (likely in H1 2026) and signs that the remediation plan is on track.

- Will Aquestive commercialize Anaphylm alone or seek a partner? – Initially, the company planned a self-launch in Q1 2026 (before the CRL) (www.nasdaq.com). It even began building commercial infrastructure (hiring sales roles, etc.). Now with a delay, they must decide whether to maintain a go-it-alone U.S. launch strategy or partner with a larger pharma for marketing. A partnership could provide upfront cash and an established sales force in the allergy market – which might be prudent given ARS Pharma’s aggressive marketing of neffy. On the other hand, retaining U.S. rights offers greater long-term profit if Anaphylm succeeds. Management’s recent statements still reference “our launch” of Anaphylm, suggesting they lean toward solo commercialization if feasible. This could change as approval nears or if a compelling partnership offer emerges.

- How will Anaphylm be positioned versus neffy® and EpiPen®? – The presence of another needle-free epinephrine (neffy nasal spray) changes the competitive dynamics. Aquestive will need to differentiate Anaphylm’s sublingual film: possibly emphasizing attributes like portability (small oral film vs. a spray bottle or pen), stability, or patient preference for oral delivery. Pricing will also be key. Neffy’s insurer coverage reached 80% of commercial lives in under a year (ir.ars-pharma.com), likely aided by competitive pricing and formulary placement. Will Aquestive price Anaphylm similarly to epinephrine autoinjectors (often ~$300 for a two-pack list price) or try a lower price to speed uptake? Can it secure equivalent insurance coverage out of the gate? The outcomes here will heavily influence sales ramp and peak market share.

- Can legacy product revenues stabilize or be augmented? – In the interim before Anaphylm’s approval, can Aquestive find ways to boost cash flow? This might include monetizing non-core assets or licensing pipeline candidates. For example, the company has another epinephrine project (AQST-108 topical for alopecia) and other film formulations; partnering or out-licensing these could bring in milestone payments. Also, once Libervant’s adult indication clears orphan exclusivity in 2027, that product could contribute more – but that is a few years away (www.sec.gov) (www.sec.gov). Any new contract manufacturing deals or extensions (perhaps producing films for other pharma) could also help offset Suboxone’s decline. Investors are essentially asking: does Aquestive have a Plan B for revenue if Anaphylm’s timeline slips? So far, the strategy is heavily “all-in” on Anaphylm’s success, which heightens the stakes.

- How will the capital structure evolve? – By 2026, with hopefully an approved Anaphylm on deck, the company’s debt and royalties obligations will still be in place. Will Aquestive consider refinancing the 13.5% note (for example, if the stock appreciates, they might swap debt for equity to reduce interest burden)? Alternatively, if the stock is strong post-approval, issuing equity to pay down debt could de-leverage the balance sheet. There’s also the question of whether the current cash will truly last through 2026 as management projects (www.globenewswire.com). This depends on controlling expenses and perhaps moderating launch spend until revenue comes in. Any unforeseen needs – e.g. a larger Phase IV study request, or a need to scale up manufacturing – could alter the cash runway. Keeping an eye on quarterly cash burn and management’s guidance updates will be crucial for investors to gauge if further financing (and dilution) is coming.

Catalysts: In the next 12–18 months, key stock catalysts include the FDA meeting minutes (which will confirm the plan to fix CRL issues), progress updates on the human factor/PK studies (possibly mid-2026), and the eventual NDA resubmission news. Approval decisions in Europe/Canada in late 2026/early 2027 could also boost sentiment if positive. Conversely, any hiccup in these milestones would likely hurt the stock. Operationally, watch for Anaphylm partnership announcements (if any) and how ARS’s neffy performs – strong continued uptake for neffy will both validate the market for needle-free epinephrine (a positive sign) but also raise the competitive bar for Anaphylm’s launch.

Conclusion

In summary, Aquestive Therapeutics offers a high-risk, high-reward profile centered on Anaphylm. The recent FDA feedback, while delaying approval, validated that Anaphylm’s core technology is sound – the only barriers to approval are fixable packaging/user-experience issues (www.globenewswire.com) (www.globenewswire.com). This has sparked optimism that Anaphylm can still become a reality, potentially unlocking a significant growth runway as a first-in-class oral epinephrine film. The opportunity is compelling: millions of patients carry epinephrine for allergies, yet compliance and timely use are issues; a small, easy-to-administer film could be a game-changer if adopted (www.nasdaq.com). However, investors must weigh the execution challenges, from navigating the final regulatory steps to commercial competition and the company’s stretched finances. AQST’s management will need to demonstrate financial discipline (to avoid distress before the finish line) and strategic savvy in rolling out Anaphylm against a well-funded rival. For now, the pieces are in place for Anaphylm’s potential growth, but the coming year is critical to turn that potential into reality. The stock’s performance will likely hinge on each milestone toward approval – and ultimately, on whether Anaphylm can carve out a profitable niche in the epinephrine market in the face of stiff competition and prior red flags.

Sources: Aquestive 2024 10-K Annual Report (www.sec.gov) (www.sec.gov) (www.sec.gov) (www.sec.gov) (www.sec.gov); Aquestive Investor Presentation and Press Releases (www.globenewswire.com) (www.globenewswire.com) (www.nasdaq.com) (www.nasdaq.com); ARS Pharma Press Release (neffy nasal spray launch) (ir.ars-pharma.com) (ir.ars-pharma.com); Trefis and Nasdaq/Zacks equity research (www.trefis.com) (www.nasdaq.com).