Otter Pharmaceuticals LLC

Second Quarter Net Product Sales Increase 13% Year-Over-Year, Generates $18.6 Million in Cash Flow from Operations Acquisition Expected to be Significantly Accretive to Adjusted EPS in 2024 LAKE FOREST, Ill., Aug. 03, 2023 (GLOBE NEWSWIRE) -- Assertio Holdings, Inc. (“Assertio” or the “Company”) (Nasdaq: ASRT), a specialty pharmaceutical company offering differentiated products to patients, today reported financial results for the second quarter ended June 30, 2023 and provided updates related to the acquisition of Spectrum Pharmaceuticals, Inc. (“Spectrum”), which closed effective July 31, 2023. “The acquisition of Spectrum Pharmaceuticals and its innovative ROLVEDONTM asset is transformative to our Company. ROLVEDON continues its exceptional launch trajectory as second quarter sales increased to $21.0 million1, from $15.6 million in the first quarter. We intend to maintain their highly effective commercial team to continue expanding on the success of this exciting new asset. We also expect to deploy this team’s proven market access and contracting capabilities in support of our other assets, particularly Sympazan, Otrexup and Sprix. Once fully integrated, Assertio will benefit from a more diverse revenue base, greater intellectual property protection and an enhanced commercial capability in support of our long-term growth strategy.” “In the second quarter, we continued to deliver on our core growth, cash flow and portfolio diversification goals, all supported by our innovative and cost efficient digital non-personal sales model,” said Dan Peisert, President and Chief Executive Officer of Assertio. Financial Highlights (unaudited): Three Months Ended June 30, Six Months Ended June 30,(in millions, except per share amounts) 2023 2022 2023 2022Net Product Sales (GAAP)$40.1 $35.4 $81.9 $71.0Net Income (GAAP)$8.5 $7.8 $5.0 $16.9Earnings Per Share (GAAP)$0.13 $0.16 $0.09 $0.36Adjusted EBITDA (Non-GAAP)2$24.8 $22.9 $50.4 $46.8Adjusted Earnings Per Share (Non-GAAP)2$0.19 $0.28 $0.48 $0.66 Second quarter results included the following as compared to the prior year quarter: Net product sales increased 13%, to $40.1 million. Increased sales of Indocin and Otrexup plus the addition of Sympazan more than offset the expected decline in Cambia.Sympazan achieved new peaks in both quarterly and monthly TRx count during the quarter. Gross margin3 in the second quarter was 88.1%, increased from 87.2% in the year-ago quarter, reflecting shifts in sales mix.SG&A expense was $16.8 million in the second quarter of 2023, compared with $10.5 million in the second quarter 2022. The 2023 second quarter included the effect of $3.4 million in transaction related costs, while the prior year second quarter included the benefit of a $2.0 million insurance settlement. Resulting Adjusted EBITDA was $24.8 million, increased from $22.9 million in the second quarter 2022. 1 Unaudited results of Spectrum Pharmaceuticals, Inc. for the three months ended June 30, 2023, prior to the closing of the acquisition.2 Non-GAAP measures are reconciled to the corresponding GAAP measures in the schedules attached. 3 Gross margin represents the ratio of net products sales less cost of sales to net product sales. 2023 Financial Guidance Assertio is withdrawing its 2023 financial outlook to assess the recent news of a generic indomethacin suppository approved by the United States Food and Drug Administration. Balance Sheet and Cash Flow For the quarter ended June 30, 2023, the Company generated $18.6 million in cash flow from operations. At quarter end, cash and cash equivalents totaled $70.2 million. Conference Call and Investor Presentation Information Assertio’s management will host a conference call to discuss its second quarter 2023 financial results today: Date:Thursday, August 3, 2023Time:4:30 p.m. Eastern TimeWebcast (live and archive):http://investor.assertiotx.com/overview/default.aspx (Events & Webcasts, Investor Page)Dial-in numbers:1-929-201-5912 To access the live webcast, the recorded conference call replay, and other materials, please visit Assertio’s investor relations website at http://investor.assertiotx.com/overview/default.aspx. Please connect at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. The replay will be available approximately two hours after the call on Assertio’s investor website. About Assertio Assertio is a specialty pharmaceutical company offering differentiated products to patients utilizing a non-personal promotional model. We have built and continue to build our commercial portfolio by identifying new opportunities within our existing products as well as acquisitions or licensing of additional approved products. To learn more about Assertio, visit www.assertiotx.com. Investor Contact Matt Kreps, Managing DirectorDarrow AssociatesM: 214-597-8200mkreps@darrowir.com Forward Looking Statements The statements in this communication include forward-looking statements concerning Assertio and Spectrum, the proposed transactions and other related matters. Forward-looking statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. Forward-looking statements speak only as of the date they are made or as of the dates indicated in the statements and should not be relied upon as predictions of future events, as there can be no assurance that the events or circumstances reflected in these statements will be achieved or will occur. Forward-looking statements can often, but not always, be identified by the use of forward-looking terminology including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma,” “estimates,” “anticipates,” “designed,” or the negative of these words and phrases, other variations of these words and phrases or comparable terminology. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the statements, including: Assertio’s ability to realize the benefits from its operating model; the entry and sales of generics of Assertio’s products (including the Indocin products which are not patent protected and may face generic competition at any time, including as a result of the generic indomethacin suppositories that were approved by the FDA on or around August 2, 2023) and/or other products competitive with any of Assertio’s products (including indomethacin suppositories compounded by hospitals and other institutions including a 503B compounder that commenced sales of its competitive product in the second half of 2022, in what we believe to be violation of certain provisions of the Food, Drug and Cosmetic Act); the uncertainty around the potential impacts of the recently approved generic indomethacin suppository to Assertio’s future results of operations, financial condition, and cash flows; Assertio’s financial cost and outcomes of clinical trials; risks that the new businesses will not be integrated successfully or that the combined company will not realize estimated cost savings, value of certain tax assets, synergies and growth, or that such benefits may take longer to realize than expected; failure to realize anticipated benefits of the combined operations; risks relating to unanticipated costs of integration; demand for the combined company’s products; the growth, change and competitive landscape of the markets in which the combined company participates; expected industry trends, including pricing pressures and managed healthcare practices; variations in revenues obtained from commercialization agreements, including contingent milestone payments, royalties, license fees and other contract revenues, including non-recurring revenues, and the accounting treatment with respect thereto; Assertio’s and Spectrum’s abilities to obtain and maintain intellectual property protection for their respective products and operate their respective businesses without infringing the intellectual property rights of others; the commercial success and market acceptance of Assertio’s and Spectrum’s products; the outcome of, and Assertio’s intentions with respect to, any litigation or investigations, including antitrust litigation, opioid-related investigations, opioid-related litigation and related claims for negligence and breach of fiduciary duty against Assertio’s former insurance broker, and other disputes and litigation, and the costs and expenses associated therewith; and the ability of Assertio’s and Spectrum’s third-party manufacturers to manufacture adequate quantities of commercially salable inventory and active pharmaceutical ingredients for each of their respective products, and Assertio’s and Spectrum’s abilities to maintain their respective supply chains. For a discussion of additional factors that could cause actual results to differ materially from those contemplated by forward-looking statements, see the sections captioned “Risk Factors” in Assertio’s and Spectrum’s Annual Reports on Form 10-K for the year ended December 31, 2022 and other filings with the Securities and Exchange Commission (the “SEC”). Many of these risks and uncertainties may be exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. Assertio and Spectrum do not assume, and hereby disclaim, any obligation to update forward-looking statements, except as may be required by law. Non-GAAP Financial Measures To supplement the Company’s financial results presented on a U.S. generally accepted accounting principles (“GAAP”) basis, the Company has included information about non-GAAP measures of EBITDA, adjusted EBITDA, adjusted earnings, and adjusted earnings per share as useful operating metrics. The Company believes that the presentation of these non-GAAP financial measures, when viewed with results under GAAP and the accompanying reconciliation, provides supplementary information to analysts, investors, lenders, and the Company’s management in assessing the Company’s performance and results from period to period. The Company uses these non-GAAP measures internally to understand, manage and evaluate the Company’s performance. These non-GAAP financial measures should be considered in addition to, and not a substitute for, or superior to, net income or other financial measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, non-GAAP measures used by other companies. This release also includes estimated full-year non-GAAP adjusted EBITDA information, which the Company believes enables investors to better understand the anticipated performance of the business, but should be considered a supplement to, and not as a substitute for or superior to, financial measures calculated in accordance with GAAP. No reconciliation of estimated non-GAAP adjusted EBITDA to estimated net income is provided in this release because some of the information necessary for estimated net income such as income taxes, fair value change in contingent consideration, and stock-based compensation is not yet ascertainable or accessible and the Company is unable to quantify these amounts that would be required to be included in estimated net income without unreasonable efforts. Specified Items Non-GAAP measures presented within this release exclude specified items. The Company considers specified items to be significant income/expense items not indicative of current operations. Specified items may include adjustments to interest expense and interest income, income tax expense (benefit), depreciation expense, amortization expense, sales reserves adjustments for products the Company is no longer selling, stock-based compensation expense, fair value adjustments to contingent consideration or derivative liability, restructuring costs, amortization of fair value inventory step-up as a result of purchase accounting, transaction-related costs, gains or losses from adjustments to long-lived assets and assets not part of current operations, and gains or losses resulting from debt refinancing or extinguishment. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in thousands, except per share amounts)(unaudited) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenues: Product sales, net$40,083 $35,430 $81,852 $70,977 Royalties and milestones 723 451 1,420 1,443 Other revenue 185 (750) 185 (750)Total revenues 40,991 35,131 83,457 71,670 Costs and expenses: Cost of sales 4,772 4,528 10,239 8,723 Research and development expenses 503 — 503 — Selling, general and administrative expenses 16,771 10,543 33,675 21,184 Change in fair value of contingent consideration 241 1,300 9,408 2,945 Amortization of intangible assets 6,284 7,969 12,568 16,469 Total costs and expenses 28,571 24,340 66,393 49,321 Income from operations 12,420 10,791 17,064 22,349 Other (expense) income: Debt-related expenses — — (9,918) — Interest expense (751) (2,269) (1,873) (4,596)Other gain (loss) 661 (95) 1,463 451 Total other expense (90) (2,364) (10,328) (4,145)Net income before income taxes 12,330 8,427 6,736 18,204 Income tax expense (3,860) (593) (1,750) (1,306)Net income and comprehensive income$8,470 $7,834 $4,986 $16,898 Basic net income per share$0.15 $0.17 $0.09 $0.37 Diluted net income per share$0.13 $0.16 $0.09 $0.36 Shares used in computing basic net income per share 56,142 46,274 53,588 45,746 Shares used in computing diluted net income per share 70,144 47,579 58,010 46,857 CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share data)(unaudited) As of June 30, 2023 December 31, 2022ASSETS Current assets: Cash and cash equivalents$70,175 $64,941 Accounts receivable, net 41,608 45,357 Inventories, net 18,817 13,696 Prepaid and other current assets 2,949 8,268 Total current assets 133,549 132,262 Property and equipment, net 877 744 Intangible assets, net 185,428 197,996 Deferred tax asset 81,587 80,202 Other long-term assets 3,738 2,709 Total assets$405,179 $413,913 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable$11,182 $5,991 Accrued rebates, returns and discounts 42,857 49,426 Accrued liabilities 10,283 12,181 Long-term debt, current portion — 470 Contingent consideration, current portion 14,900 26,300 Other current liabilities 256 948 Total current liabilities 79,478 95,316 Long-term debt 38,251 66,403 Contingent consideration 27,600 22,200 Other long-term liabilities 5,579 4,269 Total liabilities 150,908 188,188 Commitments and contingencies Shareholders’ equity: Common stock, $0.0001 par value, 200,000,000 shares authorized; 56,512,962 and 48,319,838 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively. 5 5 Additional paid-in capital 568,881 545,321 Accumulated deficit (314,615) (319,601)Total shareholders’ equity 254,271 225,725 Total liabilities and shareholders' equity$405,179 $413,913 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited) Six Months Ended June 30, 2023 2022 Operating Activities Net income$4,986 $16,898 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 12,964 16,863 Amortization of debt issuance costs and Royalty Rights 248 48 Recurring fair value measurements of assets and liabilities 9,408 2,945 Debt-related expenses 9,918 — Provisions for inventory and other assets 1,390 259 Stock-based compensation 4,651 2,716 Deferred income taxes (1,385) — Changes in assets and liabilities, net of acquisition: Accounts receivable 3,749 (4,176)Inventories (6,511) (5,029)Prepaid and other assets 4,289 12,108 Accounts payable and other accrued liabilities 4,906 (245)Accrued rebates, returns and discounts (6,569) (331)Interest payable (726) (200)Net cash provided by operating activities 41,318 41,856 Investing Activities Purchases of property and equipment (528) — Purchase of Sympazan (280) — Purchase of Otrexup — (16,518)Net cash used in investing activities (808) (16,518)Financing Activities Payments in connection with 2027 Convertible Notes (10,500) — Payment of direct transaction costs related to convertible debt inducement (1,119) — Payment in connection with 2024 Senior Notes — (11,750)Payment of contingent consideration (15,408) (3,845)Payment of Royalty Rights (459) (630)Proceeds from issuance of common stock — 7,020 Proceeds from exercise of stock options 157 — Payments related to the vesting and settlement of equity awards (7,947) (679)Net cash used in financing activities (35,276) (9,884)Net increase in cash and cash equivalents 5,234 15,454 Cash and cash equivalents at beginning of year 64,941 36,810 Cash and cash equivalents at end of period$70,175 $52,264 Supplemental Disclosure of Cash Flow Information Net cash paid (refunded) for income taxes$2,295 $(8,360)Cash paid for interest$2,351 $4,748 RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EBITDA and ADJUSTED EBITDA (in thousands)(unaudited) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Financial Statement ClassificationGAAP Net Income $8,470 $7,834 $4,986 $16,898 Interest expense 751 2,269 1,873 4,596 Interest expenseIncome tax expense 3,860 593 1,750 1,306 Income tax expenseDepreciation expense 195 196 396 395 Selling, general and administrative expensesAmortization of intangible assets 6,284 7,969 12,568 16,469 Amortization of intangible assetsEBITDA (Non-GAAP) $19,560 $18,861 $21,573 $39,664 Adjustments: Legacy product reserves(1) (185) 750 (185) 750 Other revenueStock-based compensation 2,205 1,734 4,651 2,716 Selling, general and administrative expensesChange in fair value of contingent consideration (2) 241 1,300 9,408 2,945 Change in fair value of contingent considerationDebt-related expenses (3) — — 9,918 — Debt-related expensesTransaction-related expenses (4) 3,448 — 5,803 — Selling, general and administrative expensesOther (5) (495) 266 (790) 700 MultipleAdjusted EBITDA (Non-GAAP) $24,774 $22,911 $50,378 $46,775 (1) Represents removal of the impact of revenue adjustment to reserves for product sales allowances (gross-to-net-sales allowances) estimates related to previously divested products.(2) The fair value of the contingent consideration is remeasured each reporting period, with changes in the fair value resulting from changes in the underlying inputs being recognized as operating expenses until the contingent consideration arrangement is settled.(3) Debt-related expenses consist of an induced conversion expense of approximately $8.8 million and direct transaction costs of approximately $1.1 million incurred as a result of the privately negotiated exchange of $30.0 million principal amount of the Company’s 6.5% Convertible Senior Notes due 2027 in the first quarter of 2023.(4) Represents transaction-related expenses associated with the acquisition of Spectrum, which closed effective July 31, 2023.(5) Other for the three and six months ended June 30, 2023 includes interest income of $0.7 million and $1.1 million, respectively, recognized in Other gain related to the Company’s short-term investments, partially offset by $0.2 million and $0.3 million, respectively, of inventory step-up amortization recognized in Cost of sales related to acquired inventories sold. Other for the three and six months ended June 30, 2022 represents amortization of inventory step-up recognized in Cost of sales related to acquired inventories sold. RECONCILIATION OF GAAP NET INCOME and NET INCOME PER SHARE TO NON-GAAP ADJUSTED EARNINGS and ADJUSTED EARNINGS PER SHARE (1)(in thousands, except per share amounts)(unaudited) Three Months EndedJune 30, 2023 Three Months EndedJune 30, 2022 Amount Diluted EPS (2) Amount Diluted EPS (2)Net income (GAAP)(2)$8,470 $0.13 $7,834 $0.16Add: Debt-related expenses and convertible debt interest expense, net of tax(2) 563 — Adjustments Amortization of intangible assets 6,284 7,969 Legacy products revenue reserves (185) 750 Stock-based compensation 2,205 1,734 Change in fair value of contingent consideration 241 1,300 Contingent consideration cash payable (3) (5,615) (4,568) Transaction-related expenses 3,448 — Other (495) 266 Income tax expense, as adjusted (4) (1,471) (1,863) Adjusted earnings (Non-GAAP)$13,445 $0.19 $13,422 $0.28 Diluted shares used in calculation (GAAP)(2) 70,144 47,579 (1) Certain adjustments included here are the same as those reflected in the Company’s reconciliation of GAAP net income to non-GAAP adjusted EBITDA and therefore should be read in conjunction with that reconciliation and respective footnotes.(2) The Company uses the if-converted method with respect to its convertible debt to compute GAAP and Non-GAAP diluted earnings per share when the effect is dilutive. Under the if-converted method, the Company assumes the 2027 Convertible Notes, which were entered into on August 22, 2022, were converted at the beginning of each period presented and outstanding. As a result, interest expense, net of tax, and any other income statement impact associated with the 2027 Convertible Notes, net of tax, is added back to net income used in the diluted earnings per share calculation. For the three months ended June 30, 2022, the Company used the treasury-stock method to compute GAAP diluted net income per share, as there was no convertible debt outstanding during the period.(3) Represents the accrued cash payable of the INDOCIN contingent consideration for the respective period based on 20% royalty for annual INDOCIN net sales over $20.0 million.(4) Represents the Company’s income tax expense adjusted for the tax effect of pre-tax adjustments excluded from adjusted earnings. The tax effect of pre-tax adjustments excluded from adjusted earnings is computed at the blended federal and state statutory rate of 25%. RECONCILIATION OF GAAP NET INCOME and NET INCOME PER SHARE TO NON-GAAP ADJUSTED EARNINGS and ADJUSTED EARNINGS PER SHARE (1)(in thousands, except per share amounts)(unaudited) Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Amount Diluted EPS (2) Amount Diluted EPS (2)Net income (GAAP)(2)$4,986 $0.09 $16,898 $0.36Add: Convertible debt interest expense and fair value adjustment, net of tax (Non-GAAP) (2) 11,044 — Adjustments Amortization of intangible assets 12,568 16,469 Legacy products revenue reserves (185) 750 Stock-based compensation 4,651 2,716 Change in fair value of contingent consideration 9,408 2,945 Contingent consideration cash payable (3) (7,684) (4,839) Transaction-related expenses 5,803 — Other (790) 700 Income taxes expense, as adjusted (4) (5,943) (4,685) Adjusted earnings (Non-GAAP)$33,858 $0.48 $30,954 $0.66 Diluted shares used in calculation (GAAP)(2) 58,010 46,857 Add: Dilutive effect of 2027 Convertible Notes(2) 12,116 — Diluted shares used in calculation (Non-GAAP)(2) 70,126 46,857 (1) Certain adjustments included here are the same as those reflected in the Company’s reconciliation of GAAP net income to non-GAAP adjusted EBITDA and therefore should be read in conjunction with that reconciliation and respective footnotes.(2) The Company uses the if-converted method with respect to its convertible debt to compute GAAP and Non-GAAP diluted earnings per share when the effect is dilutive. Under the if-converted method, the Company assumes the 2027 Convertible Notes, which were entered into on August 22, 2022, were converted at the beginning of each period presented and outstanding. As a result, interest expense, net of tax, and any other income statement impact associated with the 2027 Convertible Notes, net of tax, is added back to net income used in the diluted earnings per share calculation. For the six ended June 30, 2023, the Company’s potentially dilutive convertible debt under the if-converted method was not included in the computation of GAAP diluted net income per share, because to do so would be anti-dilutive. However, the potentially dilutive convertible debt under the if-converted method and stock-based awards under the treasury-stock method were included in the computation of non-GAAP adjusted earnings and adjusted earnings per share because the effect was dilutive. For the six months ended June 30, 2022, the Company used the treasury-stock method to compute GAAP diluted net income per share, as there was no convertible debt outstanding during the period.(3) Represents the accrued cash payable of the INDOCIN contingent consideration for the respective period based on 20% royalty for annual INDOCIN net sales over $20.0 million.(4) Represents the Company’s income tax expense adjusted for the tax effect of pre-tax adjustments excluded from adjusted earnings. The tax effect of pre-tax adjustments excluded from adjusted earnings is computed at the blended federal and state statutory rate of 25%.

Complementary Commercial Growth Platforms Anticipated to Accelerate ROLVEDON™ (eflapegrastim-xnst) Injection Profitability and Diversify Revenue Streams Combination of Assertio’s Omni-Channel Digital Sales Capabilities and ROLVEDON In-Person Commercial Team to Enhance Market Access and Growth across All Products Transaction Expected to Be Accretive to Assertio’s Adjusted EPS and Operating Cash Flow in 2024 Spectrum Stockholders Will Receive Upfront Consideration of 0.1783 ASRT shares per SPPI Share ($1.14 per share) Plus One CVR for Total Potential Consideration of up to $1.34 per Share Upfront Consideration Represents a Premium of 65% and the Total Potential Consideration Represents a Premium of 94% to Spectrum’s Latest Closing Price Assertio Stockholders to Own Approximately 65% and Spectrum Stockholders to Own Approximately 35% of Combined Company Closing of Transaction Expected in Q3 2023 LAKE FOREST, IL, and BOSTON, MA, USA I April 25, 2023 I Assertio Holdings, Inc. (Nasdaq: ASRT) (“Assertio”), a specialty pharmaceutical company offering differentiated products to patients, and Spectrum Pharmaceuticals, Inc. (Nasdaq: SPPI) (“Spectrum”), a commercial stage biopharmaceutical company focused on novel and targeted oncology, today announced that they have entered into a definitive agreement pursuant to which Assertio will acquire all outstanding shares of Spectrum in an all-stock and contingent value rights (“CVR”) transaction. “The addition of Spectrum’s commercial capabilities and ROLVEDON, a novel long-acting G-CSF product recently launched into a blockbuster market in October 2022, exemplifies Assertio’s attractiveness as an acquirer of new, accretive assets across diverse therapeutic categories, and ability to continue their growth and achieve profitable contributions faster and more efficiently than could be achieved on a standalone basis. We intend to retain the majority of Spectrum’s commercial infrastructure, which we believe is synergistic to our digital non-personal platform, deploying these complementary dual channels to support clinical messaging, reimbursement education and ROLVEDON awareness to further aid and accelerate its launch,” said Dan Peisert, President and Chief Executive Officer of Assertio. “We are excited to combine with Assertio in a transaction that will deliver significant value to our stockholders and the opportunity to share in the future upside of ROLVEDON,” said Tom Riga, President and Chief Executive Officer of Spectrum Pharmaceuticals. “Our mission at Spectrum has always been to make a difference in the lives of patients and with Assertio, we have a partner that will enable us to deliver on this promise. Our combined assets and commercial infrastructure will position us to accelerate ROLVEDON’s launch for the benefit of patients, maximize its potential and drive further growth. We are proud of the launch trajectory our team has achieved with ROLVEDON and look forward to an exciting new chapter.” Terms of the Agreement Under the terms of the agreement, at closing, Spectrum stockholders will receive a fixed exchange ratio of 0.1783 shares of Assertio common stock for each share of Spectrum common stock they own, implying an upfront value of $1.14 per Spectrum share (approximately $248 million) based on Assertio’s stock price on April 24, 2023 and an initial 65% premium to Spectrum’s closing price on such date. Additionally, Spectrum stockholders will receive one CVR per Spectrum share entitling them to receive up to an additional $0.20 per share in total (approximately $43 million), payable in cash or stock at Assertio's election, for $1.34 (approximately $291 million), a total potential premium of 94%. Subject to adjustments, each CVR shall represent the right to receive $0.10 payable upon ROLVEDON net sales (less certain deductions) achieving $175 million during the calendar year ending December 31, 2024, and $0.10 payable upon ROLVEDON net sales (less certain deductions) achieving $225 million during the calendar year ending December 31, 2025. Following the close of the transaction, Assertio stockholders will own approximately 65% of the combined company, and Spectrum stockholders will own approximately 35%, on a fully diluted basis. Transaction Strategic and Financial Rationale Strengthened Commercial Infrastructure and Resources: Assertio’s innovative digital non-personal sales model complements Spectrum’s in-person commercial infrastructure, providing greater market access and resources than either company as a standalone entity. Expected to Be Accretive to Adjusted EPS and Operating Cash Flow in 2024: Assertio intends to retain the majority of Spectrum’s commercial team and add operating costs of approximately $60 million annually. The remaining cost synergies are expected to accelerate and enhance the profit opportunities for the combined company and generate double-digit accretion to adjusted EPS and increased operating cash flow in 2024. Enhanced IP Portfolio: ROLVEDON’s intellectual property protection is anticipated to extend through 2036, complementing Assertio’s portfolio of traditional and non-traditional IP protection, including assets with protection extending beyond 2040 and plans to secure additional protections on existing assets. Improved Strategic Profile: The transaction enables the combined company to have a more scalable and competitive infrastructure for continuing the development and acquisition of existing and prospective new commercial- and late development-stage products suited to Assertio’s unique omni-channel sales strategy. Platform Diversification: In addition to Assertio’s key assets Indocin, Sympazan and Otrexup, Spectrum’s key asset ROLVEDON will represent meaningful further asset diversification. ROLVEDON is a long-acting growth factor (G-CSF) indicated to decrease the incidence of infection, as manifested by febrile neutropenia, in adult patients with non-myeloid malignancies receiving myelosuppressive anti-cancer drugs associated with clinically significant incidence of febrile neutropenia. Access to Capital Markets: With enhanced scale and greater diversification of revenue generating commercial assets, the combined company is expected to have a more attractive profile to investors and to benefit from greater access to the capital markets. Approvals and Timing to Close The transaction, which has been approved by the boards of directors of both companies, is expected to close in the third quarter of 2023, subject to approval by Assertio and Spectrum stockholders and the satisfaction of customary closing conditions. Conference Call and Investor Presentation Information Assertio and Spectrum will host a conference call today, at 8:30 am Eastern Time to discuss the transaction. Please connect at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. The replay will be available approximately two hours after the call on the investor websites. Advisors Guggenheim Securities, LLC is acting as financial advisor to Spectrum, and Gibson, Dunn & Crutcher LLP is serving as legal counsel. SVB Securities and H.C. Wainwright & Co. are acting as financial advisors to Assertio, and Latham & Watkins LLP is serving as legal counsel. About Assertio Assertio is a specialty pharmaceutical company offering differentiated products to patients utilizing a non-personal promotional model. We have built and continue to build our commercial portfolio by identifying new opportunities within our existing products as well as acquisitions or licensing of additional approved products. To learn more about Assertio, visit www.assertiotx.com . About Spectrum Spectrum is a commercial stage biopharmaceutical company, with a strategy of acquiring, developing, and commercializing novel and targeted oncology therapies. We have an in-house clinical development organization with regulatory and data management capabilities, in addition to commercial infrastructure and a field based sales force for our marketed product, ROLVEDON™ (eflapegrastim-xnst) Injection. For additional information on Spectrum please visit www.sppirx.com . About ROLVEDON™ ROLVEDON™ (eflapegrastim-xnst) injection is a long-acting granulocyte colony-stimulating factor (G-CSF) with a novel formulation. Spectrum has received an indication to decrease the incidence of infection, as manifested by febrile neutropenia, in adult patients with non-myeloid malignancies receiving myelosuppressive anti-cancer drugs associated with clinically significant incidence of febrile neutropenia. ROLVEDON is not indicated for the mobilization of peripheral blood progenitor cells for hematopoietic stem cell transplantation. The BLA for ROLVEDON was supported by data from two identically designed Phase 3, randomized, open-label, noninferiority clinical trials, ADVANCE and RECOVER, which evaluated the safety and efficacy of ROLVEDON in 643 early-stage breast cancer patients for the management of neutropenia due to myelosuppressive chemotherapy. In both studies, ROLVEDON demonstrated the pre-specified hypothesis of non-inferiority (NI) in mean duration of severe neutropenia (DSN) and a similar safety profile to pegfilgrastim. ROLVEDON also demonstrated non-inferiority to pegfilgrastim in the mean DSN across all four cycles (all NI p<0.0001) in both trials. Please see the Important Safety Information below and the full prescribing information for ROLVEDON at www.rolvedon.com . Indications and Usage ROLVEDON is indicated to decrease the incidence of infection, as manifested by febrile neutropenia, in adult patients with non-myeloid malignancies receiving myelosuppressive anti-cancer drugs associated with clinically significant incidence of febrile neutropenia. SOURCE: Assertio Holdings

Pivotal study for AQST-109 (epinephrine sublingual film) on track to start in third quarter 2023Financial turnaround actions on track including 18% reduction of outstanding debt and the receipt of $20 million of non-dilutive capital in the first quarter of 2023Continues to engage FDA on next steps for Libervant™ (diazepam) Buccal FilmProvides full year 2023 financial outlookHosts investment community conference call on March 8, 2023 WARREN, N.J., March 07, 2023 (GLOBE NEWSWIRE) -- Aquestive Therapeutics, Inc. (NASDAQ:AQST), a pharmaceutical company advancing medicines to solve patients’ problems with current standards of care and provide transformative products to improve their lives, today reported financial results for the fourth quarter and full year ended December 31, 2022, and provided a progress update on the key 2023 objectives previously outlined by the Company. “Our 2022 results and early progress in 2023 continue to drive the Company towards important upcoming inflection points,” said Daniel Barber, Chief Executive Officer of Aquestive. “Our growing portfolio of approved products and collaborations around the world, along with our pipeline products, create the opportunity for significant long-term growth. Our lead pipeline asset, AQST-109, has the potential, if approved by the FDA and other regulatory bodies, to help the millions of patients who need to carry and depend on a rescue medication for allergic reactions. In addition, our continued progress towards the financial turnaround of the Company remains a key focus.” “We will remain focused on the key initiatives that we outlined at the beginning of 2023: (1) advancing AQST-109 into a pivotal PK study, (2) continuing to work with the FDA to potentially accelerate the U.S. market access for Libervant, (3) exploring new capabilities for our manufacturing business, (4) continuing to expand our base of strategic collaborations with other companies, and (5) strengthening our balance sheet.” EpinephrineAquestive is advancing the development of AQST-109, the first and only orally delivered epinephrine product candidate to demonstrate clinical results comparable to autoinjectors (such as EpiPen® and Auvi-Q®) for the emergency treatment of allergic reactions, including anaphylaxis. Aquestive received final minutes in December 2022 from the End-of-Phase 2 (EOP2) meeting with the United Stated Food and Drug Administration (FDA) for AQST-109, which provided clarity as to the FDA’s expectations for information to be included in a New Drug Application (NDA). Specifically, the FDA introduced the concept to Aquestive of utilizing multiple approved injectable products as reference listed drugs (RLDs) in the Company’s proposed pivotal study, which adds broader flexibility to achieve comparability with the RLDs. Aquestive received further clarification from the FDA in March 2023 indicating that the Company should submit its pivotal study protocol for review once the Company selects its RLDs. The Company is currently conducting an additional clinical study to determine the appropriate RLDs. Aquestive anticipates providing a revised pivotal study protocol to the FDA in the second quarter 2023 and starting the pivotal study in the third quarter 2023. In addition, the Company continues to characterize the administration of AQST-109 under potential conditions of allergic reactions, in a manner consistent with the FDA’s expectations. The Company plans on meeting with the FDA in the second half of 2023 to review the data package related to the characterization of administration. The Company participated in the American Academy of Allergy, Asthma, and Immunology (AAAAI) annual meeting held in February 2023. The Company’s Scientific Advisory Board members also presented four late breaking posters highlighting the results from the Company’s EPIPHAST I and EPIPHAST II studies for AQST-109 completed in 2022 at the American College of Allergy Asthma and Immunology (ACAAI) Annual Scientific Meeting held in November 2022. Data from these posters continued to highlight the rapid increase in epinephrine plasma concentration following administration with a median time of 12 minutes to maximum levels. Rapid absorption is believed to be a critical factor in the utilization of epinephrine for treatment of severe allergic reactions, including anaphylaxis. Commercial CollaborationsThe Company completed three significant licensing and supply transactions in 2022 including (1) the worldwide licensing of Sympazan® (clobazam) to Otter Pharmaceuticals, LLC, a subsidiary of Assertio Holdings, Inc. (“Assertio”), (2) the licensing of Libervant to Atnahs Pharma UK Limited in Europe and certain other territories, and (3) the licensing of Exservan™ (riluzole) Oral Film to Haisco Pharmaceutical Group Co., Ltd.,in China. On a combined basis, these transactions generated over $25 million in non-dilutive capital in 2022. The Company continues to focus on expanding its collaborations activities and potentially generating additional non-dilutive capital in 2023. Effective as of March 2, 2023, the Company amended its existing license and supply agreement with Indivior Inc. (“Indivior”) for the primary purpose of (i) extending the term of the Agreement until August 16, 2026 and thereafter providing for automatic renewal terms of successive one year periods unless Indivior delivers notice to the Company, at least twelve months prior to the expiration of the then current term, of Indivior’s intent not to renew, subject to the earlier termination rights of the parties under the Agreement, and providing that the Agreement will not automatically renew for any renewal term beginning after the expiration of the last to expire of the product patents; and (ii) agreeing to transfer pricing and payment terms for supplied product. In addition, Indivior agreed to pay the Company reimbursable amounts due to the Company under the Agreement in a one-time cash payment of approximately $11.5 million, of which approximately $5.5 million represents: (a) payment of the portion of a 2022 price increase that had not been previously paid and (b) an estimated payment in 2023 for certain price increases. Libervant™Libervant was tentatively approved by the FDA in August 2022 for the acute treatment of intermittent, stereotypic episodes of frequent seizure activity (i.e., seizure clusters, acute repetitive seizures) that are distinct from a patient’s usual seizure pattern in patients with epilepsy 12 years of age and older. Importantly, the recommended dosage of Libervant considers the impact of food and may be administered without regard to food. This is a critical feature for a product intended for urgent and acute use. Libervant is subject to an orphan drug market exclusivity block until January 2027 based on a competing product. The Company submitted clinical data to the FDA in September 2022 to address the orphan drug market exclusivity block. The Company is currently awaiting FDA feedback and the FDA has indicated it is actively reviewing the information and making all efforts to respond in a reasonable timeframe. Patent Litigation Settlement with BioDelivery Sciences International, Inc. (“BDSI”)Aquestive reached a settlement effective March 3, 2023 in the patent infringement lawsuits related to the sale of BDSI’s Bunavail and Belbuca drug film products in the United States. Under the terms of the settlement agreement, all pending patent claims have been resolved between BDSI and Aquestive, as well as Indivior Inc., co-plaintiff in the Belbuca lawsuit, in exchange for a one-time, lump-sum payment of $8.5 million to Aquestive. This settlement continues the Company’s focus on resolving outstanding litigation matters, where possible and appropriate. Fourth Quarter 2022 FinancialsTotal revenues were $10.7 million in the fourth quarter 2022, compared to $11.1 million in the fourth quarter 2021, a decrease of 4%. Comparing the fourth quarter 2022 to the prior year period, the Company saw a 141% increase in license and royalty revenue, a 17% increase in co-development and research fees revenue, and a 16% increase in manufacture and supply revenue offset by a decrease of 79% in proprietary sales related to the licensing of Sympazan to Assertio. Aquestive’s net loss for the fourth quarter 2022 was $12.4 million, or $0.23 loss per share. The net loss for the fourth quarter 2021 was $28.9 million, or $0.72 loss per share. The change in net loss was primarily driven by a one-time loss on extinguishment of debt of $13.8 million in 2021, lower non-cash interest expense related to the KYNMOBI® monetization transaction of $1.8 million, and a decrease in total operational cost and expenses of $1.4 million primarily due to a reduction in the Company’s sales force subsequent to the outlicensing of Sympazan during the fourth quarter 2022, and lower share based compensation expense, offset by higher raw material and production costs. Non-GAAP adjusted loss before interest, taxes, depreciation, amortization, share based compensation and other adjustments (adjusted EBITDA loss) was $9.6 million in the fourth quarter 2022, compared to a $9.2 million loss in the fourth quarter 2021. Full Year 2022 FinancialsTotal revenues were $47.7 million for the full year 2022, compared to $50.8 million for the full year 2021, a decrease of 6%. Excluding non-recurring revenue of $4.1 million that was recognized in 2021, total revenue increased by 2%. Comparing the year ended 2022 to the prior year period, the Company saw a 3% increase in manufacture and supply revenue and a 10% decrease in proprietary sales due to the outlicensing of Sympazan. The Company’s net loss for the full year 2022 was $54.4 million, or $1.12 loss per share. The net loss for the full year 2021 was $70.5 million, or $1.85 loss per share. The change in net loss was primarily driven by a one-time loss on extinguishment of debt of $13.8 million in 2021, lower non-cash interest expense related to the KYNMOBI® monetization transaction of $6.5 million, and lower interest expense of $3.5 million, offset by higher costs and expenses of $4.2 million, including severance expenses. Non-GAAP adjusted loss before interest, taxes, depreciation, amortization, share based compensation and other adjustments (adjusted EBITDA loss) was $35.3 million in the full year 2022, compared to $24.9 million in the full year 2021. The year-over-year change in non-GAAP adjusted EBITDA was primarily driven by the items described above. As of December 31, 2022, cash and cash equivalents were $27.3 million. During the fourth quarter 2022, the Company accessed capital net proceeds of $0.9 million under its “At-the-Market” (ATM) facility. 2023 OutlookAquestive is providing its full year 2023 financial outlook. The Company expects: Guidance Total revenue (in millions)$37 to $41 Non-GAAP adjusted EBITDA loss (in millions)$31 to $36 Please note the Company’s revenue guidance for 2023 no longer includes proprietary net sales for Sympazan due to the license of Sympazan to Assertio, but it does include manufacturing and supply revenue and royalty fees. In addition, the guidance for 2023 includes continued focused R&D investments related to the development of AQST-109. Tomorrow’s Conference Call and Webcast ReminderThe Company will host a conference call at 8:00 a.m. ET on Wednesday, March 8, 2023. In order to participate, please register in advance here to obtain a local or toll-free phone number and your personal pin. A live webcast of the call will be available on Aquestive’s website at: Fourth Quarter 2022 Results. The webcast will be archived for 30 days. About Aquestive TherapeuticsAquestive Therapeutics, Inc. (NASDAQ: AQST) is a pharmaceutical company advancing medicines to solve patients’ problems with current standards of care and provide transformative products to improve their lives. We are developing orally administered products to deliver complex molecules, providing novel alternatives to invasive and inconvenient standard of care therapies. Aquestive has five commercialized products marketed by its licensees in the U.S. and around the world, and is the exclusive manufacturer of these licensed products. The Company also collaborates with pharmaceutical companies to bring new molecules to market using proprietary, best-in-class technologies, like PharmFilm®, and has proven drug development and commercialization capabilities. Aquestive is advancing a late-stage proprietary product pipeline focused on treating diseases of the central nervous system and an earlier stage pipeline for the treatment of severe allergic reactions, including anaphylaxis. For more information, visit Aquestive.com and follow us on LinkedIn. Non-GAAP Financial InformationThis press release and our webcast earnings call regarding our quarterly financial results contains financial measures that do not comply with U.S. generally accepted accounting principles (GAAP), such as non-GAAP adjusted EBITDA loss, non-GAAP adjusted gross margins, non-GAAP adjusted costs and expenses and other adjusted expense measures, because such measures exclude, as applicable, share-based compensation expense, interest expense, interest expense related to the sale of future revenue, interest income, depreciation, amortization, and income taxes.  Specifically, the Company adjusts net income (loss) for loss on the extinguishment of debt; certain non-cash expenses, including share-based compensation expenses; depreciation and amortization; and interest expense related to the sale of future revenue, interest income and other income (expense), net and income taxes, with a result of adjusted EBITDA loss. Similarly, manufacture and supply expense, research and development expense, and selling, general and administrative expense were adjusted for certain non-cash expenses of share-based compensation expense and depreciation and amortization. Adjusted EBITDA loss and these non-GAAP expense categories are used as a supplement to the corresponding GAAP measures to provide additional insight regarding the Company’s ongoing operating performance.  These measures supplement the Company’s financial results prepared in accordance with GAAP. Aquestive management uses these measures to analyze its financial results, and its future manufacture and supply expenses, gross margins, research and development expense and selling, general and administrative expense and to help make managerial decisions. In management’s opinion, these non-GAAP measures provide added transparency into the operating performance of Aquestive and added insight into the effectiveness of our operating strategies and actions. The Company may provide one or more revenue measures adjusted for certain discrete items, such as fees collected on certain licensed products, in order to provide investors added insight into our revenue stream and breakdown, along with providing our GAAP revenue. Such measures are intended to supplement, not act as substitutes for, comparable GAAP measures and should not be read as a measure of liquidity for Aquestive. Adjusted EBITDA loss and the other non-GAAP measures are also likely calculated in a way that is not comparable to similarly titled measures reported by other companies. Non-GAAP OutlookIn providing the outlook for non-GAAP adjusted EBITDA and non-GAAP gross margin, we exclude certain items which are otherwise included in determining the comparable GAAP financial measures. In order to inform our outlook measures of non-GAAP adjusted EBITDA and non-GAAP gross margin, a description of the 2022 and 2021 adjustments which have been applicable in determining non-GAAP Adjusted EBITDA and non-GAAP gross margin for these periods are reflected in the tables below. In providing outlook for non-GAAP gross margin, the Company adjusts for non-cash share-based compensation expense and depreciation and amortization. The Company is providing such outlook only on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments for the forward-looking period such as share-based compensation expense, income tax, amortization, and certain other adjusted items, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to reported results. Forward-Looking StatementCertain statements in this press release include “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 the advancement and related timing of our product candidate AQST-109 through clinical development and approval by the FDA and other regulatory authorities, including the Company’s ability to provide sufficient data in its new drug application (NDA) submission to address the FDA’s concerns; statements regarding the potential benefits AQST-109 could bring to patients; statements regarding the approval of Libervant by the FDA for U.S. market access and overcoming orphan drug market exclusivity of a competing FDA approved product extending to January 2027; statements regarding the potential and related timing for expanding the Company’s manufacturing capabilities and supporting the growth of demand for other existing and potential future licensed products in the U.S. and other countries; statements regarding potential outlicensing of our product pipeline in the U.S. and abroad and opportunities for long-term growth and generating additional capital; statements regarding entering into commercial transactions with other companies; statements regarding the Company’s ability to strengthen its balance sheet and available cash and cash equivalents; and other statements that are not historical facts. These forward-looking statements are subject to the uncertain impact of the COVID-19 global pandemic on the Company’s business including with respect to its clinical trials including site initiation, enrollment and timing and adequacy of clinical trials; on regulatory submissions and regulatory reviews and approval of AQST-109; pharmaceutical ingredient and other raw materials supply chain, manufacture, and distribution; and ongoing availability of an appropriate labor force and skilled professionals. These forward-looking statements are based on the Company’s 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 the Company’s product development activities and clinical trials for AQST-109 and other product candidates; risk of the Company’s failure to generate sufficient data in its NDA submission for FDA approval of AQST-109; risk of the Company’s failure to address the concerns identified in the FDA End of Phase 2 meeting for AQST-109; risk of delays in or the failure to receive FDA approval of AQST-109, including the risk that the FDA may require additional clinical studies for FDA approval of AQST-109, and there can be no assurance that the Company will be successful in obtaining such approval; risks that the FDA will not approve Libervant for U.S. market access by overcoming the seven year orphan drug market exclusivity of an FDA approved competing product in effect until January 2027, and there can be no assurance that the Company will be successful in obtaining such approval; risk inherent in commercializing a new product (including technology risks, financial risks, market risks and implementation risks and regulatory limitations); risk of our ability to out-license our proprietary products or enter into other commercial transactions with third parties; risk of insufficient capital and cash resources, including insufficient access to available debt and equity financing and revenues from operations, to satisfy all of the Company’s short-term and longer term liquidity and 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; short-term and long-term liquidity and cash requirements, cash funding and cash burn; risk that we are unable to refinance our current corporate debt on terms and conditions satisfactory to the Company, or not at all; risk of eroding market share for Suboxone® and risk of a sunsetting product, which accounts for the substantial part of our current operating revenue; risk of the rate and degree of market acceptance of our licensed 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; uncertainties related to general economic, political, business, industry, regulatory and market conditions and other unusual items; and other risks and uncertainties affecting the Company described in the “Risk Factors” section and in other sections included in its Annual Report on Form 10-K, in its Quarterly Reports on Form 10-Q, and in its Current Reports on Form 8-K filed with the Securities and Exchange Commission. 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 the Company or any person acting on its 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®, Sympazan® and the Aquestive logo are registered trademarks of Aquestive Therapeutics, Inc. All other registered trademarks referenced herein are the property of their respective owners. Investor inquiries: ICR WestwickeStephanie Carringtonstephanie.carrington@westwicke.com646-277-1282 AQUESTIVE THERAPEUTICS, INC.Consolidated Balance Sheets(In thousands, except share and per share amounts)(Unaudited) December 31, 2022 2021 Assets Current assets: Cash and cash equivalents$27,273 $28,024 Trade and other receivables, net 4,704 12,120 Inventories, net 5,780 4,038 Prepaid expenses and other current assets 2,131 3,077 Total current assets 39,888 47,259 Property and equipment, net 4,085 5,055 Right-of-use assets, net 3,816 2,725 Intangible assets, net 1,435 51 Other non-current assets 6,451 6,903 Total assets$55,675 $61,993 Liabilities and stockholders’ deficit Current liabilities: Accounts payable$9,946 $8,314 Accrued expenses 7,967 8,736 Lease liabilities, current 406 899 Deferred revenue 1,513 765 Liability related to the sale of future revenue, current 1,147 1,225 Loans payable, current 18,700 2,025 Total current liabilities 39,679 21,964 Loans payable, net 33,448 51,551 Liability related to the sale of future revenue, net 64,112 59,059 Lease liabilities 3,539 1,946 Deferred revenue, net of current portion 31,417 7,122 Other non-current liabilities 2,034 2,485 Total liabilities 174,229 144,127 Contingencies Stockholders’ deficit: Common stock, $0.001 par value. Authorized 250,000,000 shares; 54,827,734 and 41,228,736 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively 55 41 Additional paid-in capital 192,598 174,621 Accumulated deficit (311,207) (256,796)Total stockholders’ deficit (118,554) (82,134)Total liabilities and stockholders’ deficit$55,675 $61,993 AQUESTIVE THERAPEUTICS, INC.Consolidated Statements of Operations and Comprehensive Loss(In thousands, except share and per share data amounts)(Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, 2022 2021 2022 2021 Revenues$10,682 $11,078 $47,680 $50,832 Costs and expenses: Manufacture and supply 5,305 3,366 19,386 14,989 Research and development 4,278 4,400 17,481 17,047 Selling, general and administrative 11,812 14,981 52,879 53,475 Total costs and expenses 21,395 22,747 89,746 85,511 Loss from operations (10,713) (11,669) (42,066) (34,679)Other income (expenses): Interest expense (1,650) (1,744) (6,552) (10,049)Interest expense related to the sale of future revenue (54) (1,845) (5,891) (12,412)Interest income and other income, net 65 135 99 423 Loss on the extinguishment of debt — (13,822) — (13,822)Net loss before income taxes (12,352) (28,945) (54,410) (70,539)Income taxes — — — — Net loss$(12,352) $(28,945) $(54,410) $(70,539)Comprehensive loss$(12,352) $(28,945) $(54,410) $(70,539) Net loss per share – basic and diluted$(0.23) $(0.72) $(1.12) $(1.85) Weighted-average number of common shares outstanding - basic and diluted 54,390,696 40,391,538 48,734,377 38,077,660 AQUESTIVE THERAPEUTICS, INC.Reconciliation of Non-GAAP Adjustments - Net Loss to Adjusted EBITDA(In Thousands)(Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, 2022 2021 2022 2021 Net loss$(12,352) $(28,945) $(54,410) $(70,539)Share-based compensation expense 712 1,691 4,381 6,819 Interest expense 1,650 1,744 6,552 10,049 Interest expense related to the sale of future revenue 54 1,845 5,891 12,412 Interest income and other income (expense), net (65) (135) (99) (423)Income taxes — — — — Depreciation, amortization, and impairment 397 731 2,387 2,964 Loss on extinguishment of debt — 13,822 — 13,822 Total non-GAAP adjustments$2,748 $19,698 $19,112 $45,643 Adjusted EBITDA$(9,604) $(9,247) $(35,298) $(24,896) AQUESTIVE THERAPEUTICS, INC.Reconciliation of Non-GAAP Adjustments - Total Costs and Expenses to Adjusted Costs and Expenses(In Thousands)(Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, 2022 2021 2022 2021 Total costs and expenses$21,395 $22,747 $89,746 $85,511 Non-GAAP adjustments: Share-based compensation expense (712) (1,691) (4,381) (6,819)Depreciation, amortization, and impairment (397) (731) (2,387) (2,964)Adjusted costs and expenses$20,286 $20,325 $82,978 $75,728 AQUESTIVE THERAPEUTICS, INC.Reconciliation of Non-GAAP Adjustments - Manufacture & Supply Expense to Adjusted Manufacture and Supply Expense(In Thousands, except percentages)(Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, 2022 2021 2022 2021 Manufacture and supply expense$5,305 $3,366 $19,386 $14,989 Gross Margin on total revenue 50% 70% 59% 71%Non-GAAP adjustments: Share-based compensation expense (44) (72) (203) (313)Depreciation, amortization, and impairment (317) (580) (1,890) (2,324)Adjusted manufacture and supply expense$4,944 $2,714 $17,293 $12,352 Non-GAAP Gross Margin on total revenue 54% 76% 64% 76% AQUESTIVE THERAPEUTICS, INC.Reconciliation of Non-GAAP Adjustments - Research and Development Expense to Adjusted Research and Development Expense(In Thousands)(Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, 2022 2021 2022 2021 Research and development expense$4,278 $4,400 $17,481 $17,047 Non-GAAP adjustments: Share-based compensation expense (266) (211) (672) (881)Depreciation, amortization, and impairment (37) (48) (173) (208)Adjusted research and development expense$3,975 $4,141 $16,636 $15,958 AQUESTIVE THERAPEUTICS, INC.Reconciliation of Non-GAAP Adjustments - Selling, General and Administrative Expenses to Adjusted Selling, General andAdministrative Expenses(In Thousands)(Unaudited) Three Months EndedDecember 31, Year EndedDecember 31, 2022 2021 2022 2021 Selling, general and administrative expenses$11,812 $14,981 $52,879 $53,475 Non-GAAP adjustments: Share-based compensation expense (402) (1,408) (3,506) (5,625)Depreciation, amortization, and impairment (43) (103) (324) (432)Adjusted selling, general and administrative expenses$11,367 $13,470 $49,049 $47,418