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TICKERS: AQST

'Undervalued' Biopharma Features Robust Pipeline, Future Upside
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The case for investing in this company was made in an H.C. Wainwright & Co. report.

In an April 22, 2019 research note, analyst Ram Selvaraju reported that H.C. Wainwright & Co. initiated coverage on Aquestive Therapeutics Inc. (AQST:NASDAQ), "an undervalued specialty pharma with a plethora of shots on goal."

The financial institution initiated on Aquestive with a Buy rating and a $10 per share price target. In comparison, the biopharma's stock is trading at around $6.29 per share. The current market valuation is unwarranted, Selvaraju indicated, and, therefore, presents an opportune time to buy.

The analyst described Aquestive, its existing products and advanced pipeline candidates.

Through its PharmFilm platform, Aquestive is developing existing drugs in an oral, dissolving film formulation, providing an alternative to tablets and capsules, particularly for patients with trouble swallowing. The films are either buccal, placed inside the cheek; sublingual, placed under the tongue; or lingual, placed on the tongue.

Aquestive already has made and commercialized film versions for Suboxone (a combination of buprenorphine and naloxone) for treating opioid addiction, Zuplenz (ondansetron) as a therapy for nausea and vomiting and Sympazan (clobazam) for treating Lennox-Gastaut syndrome (LGS), a pediatric epilepsy disorder.

Also, the biopharma has several products in late-stage development. The two Selvaraju expects to reach the market in 2020 are Libervant (diazepam), a buccal film for treating refractory seizures, and Exservan (riluzole), an oral film therapeutic for amyotrophic lateral sclerosis.

A third, being developed with partner Sunovion, is APL-130277 (apomorphine), a sublingual film for treating Parkinson's disease. Were APL-130277 approved, it could "yield low single-digit royalties on net sales to Aquestive, along with up to $45 million in milestone payments," highlighted Selvaraju.

He went on to point out the Aquestive story's other positive aspects. One is that the target markets for the company's products are "attractive due to their large size." For instance, in the United States, about 1.1 million patients have refractory epilepsy—potential users of Libervant—and about 500,000 patients have Parkinson's disease and experience off episodes—possible takers of APL-130277.

In addition, Selvaraju noted, the targeted prescribers are primarily made up of specialists, like neurologists, "who represent small populations typically prescribing substantial volumes of these kinds of drugs." As such, he added, Aquestive should be able to commercialize its products like Sympazan and Libervant with a small salesforce and, "establish easily defensible niches, particularly among patients with dysphagia." Uptake should be rapid, given the products' well-known and proven mechanisms of action.

Another advantage for Aquestive is that all of its films are eligible for approval via the accelerated 505(b)(2) pathway.

Further, the company's business model is dual layered, meaning it "melds royalty streams from partners with sales of proprietary niche products that the company intends to self-commercialize," Selvaraju commented.

Lastly, Selvaraju highlighted that potential upside exists, largely because H.C. Wainwright's $10 target price only takes into account future revenues from Sympazan, Libervant, Suboxone, Zuplenz and APL-13027, not any of the pipeline agents.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from H.C. Wainwright & Co., Aquestive Therapeutics Inc., Initiating Coverage, April 22, 2019

Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.

I, Raghuram Selvaraju, Ph.D., certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.

None of the research analysts or the research analyst's household has a financial interest in the securities of Aquestive Therapeutics, Inc., Acorda Therapeutics, Inc., IntelGenx Technologies Corp., Ironwood Pharmaceuticals, Inc. and Intec Pharma Ltd. (including, without limitation, any option, right, warrant, future, long or short position).

As of March 31, 2019 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Aquestive Therapeutics, Inc., Acorda Therapeutics, Inc., IntelGenx Technologies Corp., Ironwood Pharmaceuticals, Inc. and Intec Pharma Ltd.

Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.

A research analyst of the firm and/or the research analyst’s household has a financial interest in and own the securities of Adamas Pharmaceuticals, Inc. (including, without limitation, any option, right, warrant, future, long or short position).

As of March 31, 2019 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Adamas Pharmaceuticals, Inc.

The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.

The Firm or its affiliates did not receive compensation from Aquestive Therapeutics, Inc., Acorda Therapeutics, Inc., Adamas Pharmaceuticals, Inc., Ironwood Pharmaceuticals, Inc. and Intec Pharma Ltd. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.

The Firm or its affiliates did receive compensation from IntelGenx Technologies Corp. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.

H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for Inovio Pharmaceuticals, Inc. during the past 12 months.

The Firm does not make a market in IntelGenx Technologies Corp. as of the date of this research report.

The Firm does not make a market in Aquestive Therapeutics, Inc., Acorda Therapeutics, Inc., Adamas Pharmaceuticals, Inc., IntelGenx Technologies Corp., Ironwood Pharmaceuticals, Inc. and Intec Pharma Ltd. as of the date of this research report.





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