Aquestive Plunges 37% As FDA Rejects Seizure Drug; Street Stays Bullish

Shares in Aquestive Therapeutics (AQST) plunged 37% in Friday’s after-hours trading after the U.S. Food and Drug Administration (FDA) issued a complete response letter (CRL) regarding the New Drug Application for Libervant (diazepam) Buccal Film for management of seizure clusters.

The FDA issues a CRL to indicate that the review cycle for an application is complete but the application cannot be approved in its current form.

In the CRL, the FDA cited that, in a study submitted by the company with the application, certain weight groups showed a lower drug exposure level than desired.

“The company intends to provide to the FDA additional information on PK modeling to demonstrate that dose adjustments will obtain the desired exposure levels” Aquestive stated.

There were no other safety, clinical pharmacology/biopharmaceutics or CMC issues identified in the CRL.

However, the FDA did also refer to a small number of protocol deviations in blood draws in one of the studies in the NDA.

Aquestive believes that, based on discussions with the FDA, it will not need to conduct any further clinical studies to resolve these issues. It plans to request a Type A meeting with the FDA in the coming weeks and to resubmit the NDA before the end of 2020 with the adjusted dosage regimen for the identified weight groups at issue.

“While we are surprised by and disappointed with the Agency’s decision, we remain committed to continuing to work with the FDA toward approval of Libervant to provide epilepsy patients with the first orally administered treatment for breakthrough and seizure clusters,” said Keith J. Kendall, CEO of Aquestive.

“We believe that the Company will be able to provide the necessary data to the FDA to allow for Libervant’s approval,” he added.

A submission before the end of the year should result in a PDUFA Action Date in the 1^st half of 2021.

Libervant is a buccally, or inside of the cheek, administered soluble film formulation of diazepam, a benzodiazepine intended for rapid treatment of acute uncontrolled seizures in selected, refractory patients with epilepsy on stable regimens of AEDs who require intermittent use of diazepam to control bouts of increased seizure activity.

Aquestive is developing Libervant as an alternative to Diastat (diazepam rectal gel), the current standard of care rescue therapy for patients with refractory epilepsy which as a rectal gel, is invasive, inconvenient, and difficult to administer. As a result, the company says that a large portion of the patient population does not receive adequate treatment or foregoes treatment altogether.

Shares in AQST are up 30% year-to-date and the stock scores a Strong Buy Street consensus based on 4 recent buy ratings. Their average price target of $16.50 indicates shares can more than double from current levels.

Following the news RBC Capital’s Randall Stanicky reiterated his buy rating on AQST but dropped his $8 price target to $7 to reflect the delay. That indicates marginal downside potential from the current share price.

“The news is disappointing and came as somewhat of a surprise to us as we had viewed the approval hurdle as fairly low with greater debate around FDA’s orphan drug exclusivity (ODE) decision” the analyst commented. (See Aquestive stock analysis on TipRanks).

“That said, the path forward appears manageable and AQST could conceivably make it to market as early as ~mid-2021” he told investors on September 27. Stanicky now assumes that Libervant launches in 2H2021 and pushed out peak sales by one year to 2025E. Encouragingly, he left his risk adjustment unchanged at 75%.