10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____  to _____

Commission File Number: 001-38599

Aquestive Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	30 Technology Drive, Warren, NJ 07059	82-3827296
(State or other jurisdiction of Incorporation or organization)	( 908) 941-1900	(I.R.S. Employer Identification Number)

(Address, Zip Code and Telephone Number of Registrant’s Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	AQST	NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes  ☒ No

The number of outstanding shares of the registrant’s common stock, par value of $0.001 per share (the "Common Stock"), as of the close of business on November 3, 2023 was 66,767,283.

Table of Content

AQUESTIVE THERAPEUTICS, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page No.
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022	4
	Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three months and nine months ended September 30, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	44
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	47
SIGNATURES		46

2

Table of Content

PART I – FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS (Unaudited)

AQUESTIVE THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	24,917	$	27,273
Trade and other receivables, net	8,550		4,704
Inventories, net	7,079		5,780
Prepaid expenses and other current assets	1,911		2,131
Total current assets	42,457		39,888
Property and equipment, net	4,551		4,085
Right-of-use assets, net	5,669		5,211
Intangible assets, net	1,317		1,435
Other non-current assets	5,454		6,451
Total assets	$	59,448	$	57,070
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable	$	9,994	$	9,946
Accrued expenses	5,468		7,967
Lease liabilities, current	367		255
Deferred revenue, current	2,637		1,513
Liability related to the sale of future revenue, current	985		1,147
Loans payable, current	4,606		18,700
Total current liabilities	24,057		39,528
Loans payable, net	34,555		33,448
Liability related to the sale of future revenue, net	63,511		64,112
Lease liabilities	5,509		5,085
Deferred revenue	32,732		31,417
Other non-current liabilities	2,011		2,034
Total liabilities	162,375		175,624
Contingencies (Note 19)
Stockholders’ deficit:
Common stock, $0.001 par value. Authorized 250,000,000 shares; 66,740,765 and 54,827,734 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	67		55
Additional paid-in capital	207,972		192,598
Accumulated deficit	(310,966)		(311,207)
Total stockholders’ deficit	(102,927)		(118,554)
Total liabilities and stockholders’ deficit	$	59,448	$	57,070

See accompanying notes to the condensed consolidated financial statements.

3

Table of Content

AQUESTIVE THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share and per share data amounts)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues	$	13,002	$	11,463	$	37,377	$	36,998
Costs and expenses:
Manufacture and supply	4,798		4,625		16,152		14,081
Research and development	3,196		3,232		10,216		13,203
Selling, general and administrative	7,385		12,459		22,200		41,067
Total costs and expenses	15,379		20,316		48,568		68,351
Loss from operations	(2,377)		(8,853)		(11,191)		(31,353)
Other income/ (expenses):
Interest expense	(1,256)		(1,649)		(4,064)		(4,902)
Interest expense related to the sale of future revenue, net	(56)		(2,039)		(163)		(5,837)
Interest and other income (expense), net	1,514		5		16,156		34
Loss on extinguishment of debt	—		—		(353)		—
Net income (loss) before income taxes	(2,175)		(12,536)		385		(42,058)
Income taxes	(140)		—		144		—
Net income (loss)	$	(2,035)	$	(12,536)	$	241	$	(42,058)
Comprehensive income (loss)	$	(2,035)	$	(12,536)	$	241	$	(42,058)
Earnings (loss) per share attributable to common stockholders:
Basic (in dollars per share)	$	(0.03)	$	(0.23)	$	—	$	(0.90)
Diluted (in dollars per share)	$	(0.03)	$	(0.23)	$	—	$	(0.90)
Weighted average common shares outstanding:
Basic (in shares)	64,678,761		53,424,922		59,252,768		46,828,218
Diluted (in shares)	64,678,761		53,424,922		61,513,736		46,828,218

See accompanying notes to the condensed consolidated financial statements.

4

Table of Content

AQUESTIVE THERAPEUTICS, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

Three Months Ended March 31 2023, June 30, 2023 and September 30, 2023

(In thousands, except share amounts)

(Unaudited)

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity/Deficit
	Shares	Amount
Balance at December 31, 2022	54,827,734	$	55	$	192,598	$	(311,207)	$	(118,554)
Common Stock issued under public equity offering	1,078,622	1		992		—		993
Costs of common stock issued under public equity offering	—	—		(77)		—		(77)
Share-based compensation expense	—	—		344		—		344
Vested restricted stock units	16,005			(8)				(8)
Other	—	—		(1)		—		(1)
Net Income	—	—		—		8,068		8,068
Balance at March 31, 2023	55,922,361	56		193,848		(303,139)		(109,235)
Common Stock issued upon warrant exercises	3,689,452	4		3,538		—		3,542
Common Stock issued under public equity offering	1,981,937	2		4,407		—		4,409
Costs of common stock issued under public equity offering	—	—		(235)		—		(235)
Shares issued under employee stock purchase plan	18,699	—		31		—		31
Share-based compensation expense	—	—		631		—		631
Vested restricted stock units	3,510	—		(3)		—		(3)
Other	—	—		1		—		1
Net loss	—	—		—		(5,792)		(5,792)
Balance at June 30, 2023	61,615,959	62		202,218		(308,931)		(106,651)
Common Stock issued upon warrant exercises	5,000,000	5		4,795		—		4,800
Common Stock issued under public equity offering	124,181	—		264		—		264
Costs of common stock issued under public equity offering	—	—		(80)		—		(80)
Share-based compensation expense	—	—		774		—		774
Options Exercised	625	—		1		—		1
Net loss	—	—		—		(2,035)		(2,035)
Balance at September 30, 2023	66,740,765	$	67	$	207,972	$	(310,966)	$	(102,927)

5

Table of Content

AQUESTIVE THERAPEUTICS, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

Three Months Ended March 31 2022, June 30, 2022 and September 30, 2022

(In thousands, except share amounts)

(Unaudited)

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity/Deficit
	Shares	Amount
Balance at December 31, 2021	41,228,736	$	41	$	174,621	$	(256,796)	$	(82,134)
Common Stock issued under public equity offering	391,652	—		1,360		—		1,360
Costs of common stock issued under public equity offering	—	—		(62)		—		(62)
Share-based compensation expense	—	—		913		—		913
Other	—	—		1		(1)		—
Net loss	—	—		—		(13,220)		(13,220)
Balance at March 31, 2022	41,620,388	41		176,833		(270,017)		(93,143)
Fair value of warrants issued	—	—		5,874		—		5,874
Common Stock issued under private equity offering	6,686,491	7		4,622		—		4,629
Costs of common stock issued under private equity offering	—	—		(824)		—		(824)
Common Stock issued upon warrant exercises	4,000,000	4		(4)		—		—
Common Stock issued under public equity offering	1,013,226	1		1,251		—		1,252
Costs of common stock issued under public equity offering	—	—		(77)		—		(77)
Shares issued under employee stock purchase plan	23,884	—		15		—		15
Share-based compensation expense	—	—		2,219		—		2,219
Other	—	—		(1)		1		—
Net loss	—	—		—		(16,302)		(16,302)
Balance at June 30, 2022	53,343,989	53		189,908		(286,318)		(96,357)
Common Stock issued under public equity offering	501,472	1		641		—		642
Costs of common stock issued under public equity offering	—	—		(98)		—		(98)
Share-based compensation expense	—	—		535		—		535
Vested restricted stock units	6,665	—		(3)		—		(3)
Other	—	—		(1)		(1)		(2)
Net loss	—	—		—		(12,536)		(12,536)
Balance at September 30, 2022	53,852,126	$	54	$	190,982	$	(298,855)	$	(107,819)

    

See accompanying notes to the condensed consolidated financial statements.

6

Table of Content

AQUESTIVE THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2023		2022
Operating activities:
Net income (loss)	$	241	$	(42,058)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation, amortization, and impairment	878		1,990
Share-based compensation	1,749		3,667
Amortization of debt issuance costs and discounts	174		157
Interest expense related to the sale of future revenue, net	—		5,683
Other, net	(239)		60
Changes in operating assets and liabilities:
Trade and other receivables, net	(3,177)		1,257
Inventories, net	(1,299)		(2,687)
Prepaid expenses and other assets	1,217		2,111
Accounts payable	48		2,758
Accrued expenses and other liabilities	(3,469)		(2,357)
Deferred revenue	2,439		10,509
Loans payable	—		675
Net cash used for operating activities	(1,438)		(18,235)
Investing activities:
Capital expenditures	(979)		(998)
Additions to intangible assets	—		(1,500)
Net cash used for investing activities	(979)		(2,498)
Financing activities:
Proceeds from common stock issued under public equity offering, net	5,274		3,017
Proceeds from common stock issued under private equity offering, net	—		3,805
Proceeds from issuance and exercise of warrants	8,342		5,874
Proceeds from shares issued under employee stock purchase plan	31		15
Repayment of debt principal including lease liabilities	(12,548)		—
Premium paid to retire debt	(1,027)		(1,350)
Payments for taxes on share-based compensation	(11)		(3)
Net cash provided by financing activities	61		11,358
Net (decrease) increase in cash and cash equivalents	(2,356)		(9,375)
Cash and cash equivalents:
Cash and cash equivalents at beginning of period	27,273		28,024
Cash and cash equivalents at end of period	$	24,917	$	18,649
Supplemental disclosures of cash flow information:
Cash payments for interest	$	2,827	$	4,828

See accompanying notes to the condensed consolidated financial statements.

7

Table of Content

AQUESTIVE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited, in thousands, except share and per share information)

Note 1.    Company Overview and Basis of Presentation

(A) Company Overview

Aquestive Therapeutics, Inc. (together with its subsidiary, “we”, “Aquestive” or the “Company”) is a pharmaceutical company advancing medicines to solve patients' problems with current standards of care and provide transformative products to improve their lives. The Company is developing pharmaceutical products that deliver complex molecules through alternative administrations to invasive and inconvenient standard of care therapies. The Company has five licensed commercialized products which are marketed by its licensees in the U.S. and around the world. The Company 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. The Company is advancing a product pipeline for the treatment of severe allergic reactions, including anaphylaxis. The Company has also developed a product pipeline focused on treating diseases of the central nervous system, or CNS. The Company’s production facilities are located in Portage, Indiana, and its corporate headquarters and primary research laboratory facilities are based in Warren, New Jersey.

(B) Equity Transactions

Equity Offering of Common Stock

On September 11, 2019, the Company established an “At-The-Market” ("ATM") facility pursuant to which the Company may offer up to $25,000 worth of shares of common stock, par value $0.001 per share, of the Company (the "Common Stock"). On November 20, 2020, the Company began utilizing the ATM facility. On March 26, 2021, the Company filed a prospectus supplement to offer up to an additional $50,000 worth of shares of Common Stock under the ATM (the “2021 Prospectus”). The 2019 registration statement covering the shares under the ATM expired under its terms on September 17, 2022. On September 7, 2022, the Company filed a prospectus supplement to register the offer and sale of up to $35,000 worth of shares of Common Stock pursuant to the Amended Equity Distribution Agreement with Piper Sandler Companies (successor to Piper Jaffray & Co.) under a shelf registration statement on Form S-3 (“Registration Statement No. 333-254775” or “the 2021 Registration Statement”), that was declared effective by the Securities and Exchange Commission (“SEC”) on April 5, 2021. The Company discontinued using the 2021 Prospectus upon the filing of the prospectus supplement on September 7, 2022.

For the nine months ended September 30, 2023, the Company sold 3,184,740 shares of Common Stock under the ATM which provided net proceeds of approximately $5,274 after deducting commissions and other transaction costs of $392. This ATM facility has approximately $27,750 worth of shares of Common Stock available at September 30, 2023. For the nine months ended September 30, 2022, the Company sold 1,906,350 shares which provided net proceeds of approximately $3,017 after deducting commissions and other transaction costs of $237.

On April 12, 2022, the Company entered into a purchase agreement (the "Lincoln Park Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), which provides that, upon the terms and subject to the conditions and limitations set forth in the Lincoln Park Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park up to $40,000 worth of shares of Common Stock from time to time over the 36-month term of the Lincoln Park Purchase Agreement. The Lincoln Park Purchase Agreement contains an ownership limitation such that the Company will not issue, and Lincoln Park will not purchase, shares of Common Stock if it would result in Lincoln Park's beneficial ownership exceeding 9.99% of the Company’s then outstanding Common Stock. Lincoln Park has covenanted under the Lincoln Park Purchase Agreement not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s Common Stock. In 2022, the Company sold 1,600,000 shares, in addition to 236,491 commitment shares, which provided proceeds of approximately $1,987 in connection with the Lincoln Park Purchase Agreement. The Company did not sell shares in connection with the Lincoln Park Purchase Agreement in the nine months ended September 30, 2023.

On June 6, 2022, the Company entered into securities purchase agreements (the "Securities Purchase Agreements") with certain purchasers named therein. The Securities Purchase Agreements provided for the sale and issuance by the Company of an aggregate of: (i) 4,850,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to 4,000,000 shares of Common Stock and (iii) Common Stock warrants (the "Common Stock Warrants") to purchase up to 8,850,000 shares of Common Stock. The Company received net proceeds of approximately $7,796, after deducting placement agent fees and expenses and estimated offering expenses payable by the Company. The Company used the net proceeds from the offering for general corporate purposes. The pre-funded warrants were fully exercised in 2022. On June 14, 2023, warrants to purchase

8

Table of Content

3,689,452 shares of Common Stock issued pursuant to the Securities Purchase Agreements were exercised with proceeds paid to the Company thereon of approximately $3,542.

On August 1, 2023, the Company entered into an Inducement Offer to Exercise Common Stock Purchase Warrants (the “Letter Agreement”) with the holder (the “Exercising Holder”) of the remaining warrants to purchase 5,000,000 shares of Common Stock (the “Existing Warrants”) under the Securities Purchase Agreements. Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the Exercising Holder would exercise all of its Existing Warrants for shares of Common Stock underlying the Existing Warrants at $0.96 per share of Common Stock, the current exercise price of the Existing Warrants. Under the Letter Agreement, in consideration of the Exercising Holder exercising the Existing Warrants, the Company issued to the Exercising Holder new warrants to purchase up to an aggregate of 2,750,000 shares of Common Stock (the “New Warrants”). The New Warrants are exercisable after February 2, 2024, expire on February 2, 2029 and are issuable only for cash, subject to exception if the shares of Common Stock underlying the New Warrants are not registered in accordance with the terms of the Letter Agreement, in which case the New Warrants may also be exercised, in whole or in part, at such time by means of a “cashless exercise”. The New Warrants have an exercise price of $2.60 per share. On August 2, 2023, 5,000,000 of the Existing Warrants were exercised pursuant to the Securities Purchase Agreements with the Exercising Holder, with the Company receiving gross proceeds therefrom of $4,800. In total, warrants to exercise 8,689,452 shares of Common Stock issued pursuant to the Securities Purchase Agreements, with proceeds of approximately $8,342 paid to the Company thereon, were exercised during the nine months ended September 30, 2023.

(C) Nasdaq Stock Market Notifications

On December 30, 2022, the Company received a notice from the Nasdaq Stock Market (“Nasdaq”) that the Company was not in compliance with Nasdaq’s Listing Rule 5450(a)(1), as the minimum bid price of the Company’s Common Stock had been below $1.00 per share for 30 consecutive business days (the “Minimum Bid Price Requirement”). The notification of noncompliance had no immediate effect on the listing or trading of the Company’s Common Stock on The Nasdaq Global Market. The Company had 180 calendar days, or until June 28, 2023, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the minimum bid price of the Company’s Common Stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-calendar day grace period. On April 13, 2023, the Company received a notice from Nasdaq informing the Company that it had regained compliance with Nasdaq’s Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Market, as the minimum bid price of the Company’s Common Stock had met or exceeded $1.00 per share for a minimum of ten consecutive business days during this 180-day calendar period.

(D) Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and with Article 10 of Regulation S-X for interim financial reporting. In compliance with those rules, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2023 (the “2022 Annual Report on Form 10-K”). As included herein, the Condensed Consolidated Balance Sheet as of December 31, 2022 is derived from the audited consolidated financial statements as of that date. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results of interim periods have been included. The accompanying financial statements reflect certain reclassifications from previously issued financial statements to conform to the current presentation. The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited condensed consolidated financial statements.

Any reference in these notes to applicable guidance refers to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Note 2.    Summary of Significant Accounting Policies

(A) Recent Accounting Pronouncements

As an emerging growth company, the Company has elected to take advantage of the extended transition period afforded by the Jumpstart Our Business Startups Act for the implementation of new or revised accounting standards and, as a result, the Company will comply with new or revised accounting standards no later than the relevant dates on which adoption of such standards is required for emerging growth companies. The Company believes that the impact of recently issued accounting

9

Table of Content

standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Recent Accounting Pronouncements Adopted as of September 30, 2023:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), amending existing guidance on the accounting for credit losses on financial instruments within its scope. The guidance provides for use of a forward-looking expected loss model for estimating credit losses, replacing the incurred loss model that is based on past events and current conditions. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The Company adopted the new guidance on January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The accounting standard update was issued to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The Company adopted the new guidance on January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405-50) Disclosure of Supplier Finance Program Obligations, to increase the transparency of supplier finance programs regarding the use of such programs by the buyer party (that is, the disclosing entity) and the programs’ effects on an entity’s working capital, liquidity, and cash flows. ASU 2022-04 is effective for all entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The requirement on rollforward information is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Adopted as of September 30, 2023:

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This Accounting Standards Update was issued to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. Among other provisions, the amendments in this ASU significantly change the guidance on the issuer’s accounting for convertible instruments and the guidance on the derivative scope exception for contracts in an entity’s own equity such that fewer conversion features will require separate recognition, and fewer freestanding instruments, like warrants, will require liability treatment. More specifically, the ASU reduces the number of models that may be used to account for convertible instruments from five to three, amends diluted EPS calculations for convertible instruments, modifies the requirements for a contract that may be settled in an entity’s own shares to be classified in equity and requires expanded disclosures intended to increase transparency. These amendments will be effective for the Company beginning January 1, 2024, with early adoption of the amendments permitted. The Company is currently evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements but does not expect to have a material impact on the Company’s consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This Accounting Standards Update was issued to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, and to introduce new disclosure requirements for such equity securities. These amendments will be effective for the Company beginning January 1, 2024, with early adoption of the amendments permitted. The Company is currently evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements but does not expect to have a material impact on the Company’s consolidated financial statements.

Note 3.    Risks and Uncertainties

The Company assesses liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company’s cash requirements for 2023 and beyond include expenses related to continuing development and clinical evaluation of its products, manufacture and supply costs, costs of regulatory filings, patent prosecution expenses and litigation expenses, expenses related to commercialization of its products, as well as costs to comply with the requirements of being a public company operating in a highly regulated industry. As of September 30, 2023, the Company had $24,917 of cash and cash equivalents.

The Company has experienced a history of net losses in prior periods. The Company’s accumulated deficits totaled $(310,966) as of September 30, 2023. The net losses and accumulated deficits were partially offset by gross margins from

10

Table of Content

license fees, milestone and royalty payments from commercial licensees and co-development parties. The Company’s funding requirements have been met by its cash and cash equivalents, as well as its existing equity and debt offerings, including the 12.5% Senior Secured Notes (as hereinafter defined).

The Company began utilizing its ATM facility in November 2020. Since inception to September 30, 2023, the Company sold 13,526,697 shares of Common Stock which generated net cash proceeds of approximately $44,979, net of commissions and other transaction costs of $2,476. For the nine months ended September 30, 2023, the Company sold 3,184,740 shares of Common Stock which provided net proceeds of approximately $5,274, net of commissions and other transaction costs of $392. This ATM facility has approximately $27,750 worth of shares of Common Stock available at September 30, 2023.

While the Company’s ability to execute its business objectives and achieve profitability over the longer term cannot be assured, the Company’s on-going business, existing cash, expense management activities, including, but not limited to potentially ceasing nearly all R&D activities, refinancing the 12.5% Senior Secured Notes, as well as access to the equity capital markets, including through its ATM facility and under the Lincoln Park Purchase Agreement, provide near term liquidity for the Company to fund its operating needs, including making the interest payments on the 13.5% Senior Secured Notes, for at least the next twelve months as it continues to execute its business strategy. See Note 13, 12.5% Senior Secured Notes and Loans Payable and Note 20, Subsequent Events for details.

Note 4.    Revenues and Trade Receivables, Net

The Company’s revenues include (i) sales of manufactured products pursuant to contracts with commercialization licensees, (ii) license and royalty revenues, and (iii) co-development and research fees generally in the form of milestone payments. The Company recognizes revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this core principle, a five-step model is applied that includes (1) identifying the contract with a customer, (2) identifying the performance obligation in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing when, or as, an entity satisfies a performance obligation.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the current revenue recognition standard. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. At contract inception, the Company assesses the goods promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a distinct good. When identifying performance obligations, the Company considers all goods or services promised in a contract regardless of whether explicitly stated in the contract or implied by customary business practice. The Company’s performance obligations consist mainly of transferring goods and services identified in the contracts, purchase orders or invoices.

Manufacture and supply revenue – this revenue is derived from products manufactured exclusively for specific customers according to their strictly-defined specifications, subject only to specified quality control inspections. Accordingly, at the point in time when quality control requirements are satisfied, revenue net of related discounts is recorded.

Proprietary product sales, net - this net revenue is recognized when product is shipped and title passes to the customer, typically at time of delivery. At the time of sale, estimates for various revenue allowances are recorded based on historical trends and judgmental estimates. For sales of Sympazan (prior to its outlicensing by the Company to Otter Pharmaceuticals, LLC in October 2022), returns allowances and prompt pay discounts are estimated based on contract terms and historical return rates, if available, and these estimates are recorded as a reduction of receivables. Similarly determined estimates are recorded relating to wholesaler service fees, co-pay support redemptions, Medicare, Medicaid and other rebates, and these estimates are reflected as a component of accrued liabilities. Once all related variable considerations are resolved and uncertainties as to collectable amounts are eliminated, estimates are adjusted to actual allowance amounts. Provisions for these estimated amounts are reviewed and adjusted on no less than a quarterly basis.

License and Royalty Revenue – license revenues are determined based on an assessment of whether the license is distinct from any other performance obligations that may be included in the underlying licensing arrangement. If the customer is able to benefit from the license without provision of any other performance obligations by the Company and the license is thereby viewed as a distinct or functional license, the Company then determines whether the customer has acquired a right to use the license or a right to access the license. For functional licenses that do not require further development or other ongoing activities by the Company, the customer is viewed as acquiring the right to use the license as, and when, transferred and revenues are generally recorded at a point in time, subject to contingencies or constraints. For symbolic licenses providing substantial value only in conjunction with other performance obligations to be provided by the Company, revenues are generally recorded over the term of the license agreement. Such other obligations provided by the Company generally include

11

Table of Content

manufactured products, additional development services or other deliverables that are contracted to be provided during the license term. Payments received in excess of amounts ratably or otherwise earned are deferred and recognized over the term of the license or as contingencies or other performance obligations are met.

Royalty revenue is estimated and recognized when sales under supply agreements with commercial licensees are recorded, absent any contractual constraints or collectability uncertainties.

Co-development and Research Fees – co-development and research fees are earned through performance of specific tasks, activities or completion of stages of development defined within a contractual development or feasibility study agreement with a customer. The nature of these performance obligations, broadly referred to as milestones or deliverables, are usually dependent on the scope and structure of the project as contracted, as well as the complexity of the product and the specific regulatory approval path necessary for that product. Accordingly, the duration of the Company’s research and development projects may range from several months to approximately three years. Although each contractual arrangement is unique, common milestones included in these arrangements include those for the performance of efficacy and other tests, reports of findings, formulation of initial prototypes, production of stability clinical and/or scale-up batches, and stability testing of those batches. Additional milestones may be established and linked to clinical results of the product submission and/or approval of the product by the FDA and the commercial launch of the product.

Revenue recognition arising from milestone payments is dependent upon the facts and circumstances surrounding the milestone payments. Milestone payments based on a non-sales metric such as a development-based milestone (e.g., an NDA filing or obtaining regulatory approval) represent variable consideration and are included in the transaction price subject to any constraints. If the milestone payments relate to future development, the timing of recognition depends upon historical experience and the significance a third party has on the outcome. For milestone payments to be received upon the achievement of a sales threshold, the revenue from the milestone payments is recognized at the later of when the actual sales are incurred or the performance obligation to which the sales relate to has been satisfied.

Contract Assets - in certain situations, customer contractual payment terms provide for invoicing in arrears. Accordingly, some, or all performance obligations may be completely satisfied before the customer may be invoiced under such agreements. In these situations, billing occurs after revenue recognition, which results in a contract asset supported by the estimated value of the completed portion of the performance obligation. These contract assets are reflected as a component of other receivables within Trade and other receivables within the Condensed Consolidated Balance Sheet. As of September 30, 2023, and December 31, 2022, such contract assets were $1,744 and $2,139, respectively, consisting primarily of products and services provided under specific contracts to customers for which earnings processes have been met prior to shipment of goods or full delivery of completed services, as well as estimated receivables from contracts with 3rd parties.

Contract Liabilities - in certain situations, customer contractual payment terms are structured to permit invoicing in advance of delivery of a good or service. In such instances, the customer’s cash payment may be received before satisfaction of some, or any, performance obligations that are specified. In these situations, billing occurs in advance of revenue recognition, which results in contract liabilities. These contract liabilities are reflected as deferred revenue within the Condensed Consolidated Balance Sheet. As remaining performance obligations are satisfied, an appropriate portion of the deferred revenue balance is credited to earnings. As of September 30, 2023 and December 31, 2022, such contract liabilities were $35,369 and $32,930, respectively.

The Company’s revenues were comprised of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Manufacture and supply revenue	$	11,409	$	8,411	$	32,807	$	27,456
License and royalty revenue	1,103		376		3,503		1,434
Co-development and research fees	490		395		1,067		1,039
Proprietary product sales, net	—		2,281		—		7,069
Total revenues	$	13,002	$	11,463	$	37,377	$	36,998

12

Table of Content

Disaggregation of Revenue

The following table provides disaggregated net revenue by geographic area:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	9,894	$	9,078	$	25,372	$	31,416
Ex-United States	3,108		2,385		12,005		5,582
Total revenues	$	13,002	$	11,463	$	37,377	$	36,998

Ex-United States revenues are derived primarily from Hypera Pharma (“Hypera”) and Indivior Inc. (“Indivior”) for product manufactured for markets outside of the United States.

Trade and other receivables, net consist of the following:

	September 30, 2023		December 31, 2022
Trade receivables	$	6,846	$	3,274
Contract and other receivables	1,744		2,139
Less: allowance for doubtful accounts	(40)		(40)
Less: sales-related allowances	—		(669)
Trade and other receivables, net	$	8,550	$	4,704

The following table presents the changes in the allowance for doubtful accounts:

	September 30, 2023		December 31, 2022
Allowance for doubtful accounts at beginning of the period	$	40	$	40
Additions charged to expense	—		—
Write-downs charged against the allowance	—		—
Allowance for doubtful accounts at end of the period	$	40	$	40

Sales-Related Allowances and Accruals

Revenues from sales of products are recorded net of prompt payment discounts, wholesaler service fees, returns allowances, rebates and co-pay support redemptions. These reserves are based on estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale. The Company includes these estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. The calculation of some of these items requires management to make estimates based on sales data, historical return data, contracts and other related information that may become known in the future. The adequacy of these provisions is reviewed on a quarterly basis.

The following table provides a summary of activity with respect to sales-related allowances and accruals for the nine months ended September 30, 2023:

	Total Sales-Related Allowances
Balance at December 31, 2022	$	669
Provision	—
Payments / credits	(87)
Reclassifications	$	(582)
Balance at September 30, 2023	$	—

Total reductions of gross product sales from sales-related allowances and accruals were $0 for the nine months ended September 30, 2023 due to the outlicensing of Sympazan. Accruals for returns allowances and prompt pay discounts are reflected as a direct reduction of trade receivables and accruals for wholesaler service fees, co-pay support redemptions and

13

Table of Content

rebates as current liabilities. The accrued balances relative to these provisions included in Trade and other receivables, net and Accounts payable and accrued expenses were $0 and $659, respectively, as of September 30, 2023, and $669 and $1,012, respectively, as of December 31, 2022.

Concentration of Major Customers

Customers are considered major customers when net revenue exceeds 10% of total revenue for the period or outstanding receivable balances exceed 10% of total receivables. For the nine months ended September 30, 2023, Indivior represented approximately 79% of total revenue. As of September 30, 2023, Indivior and Assertio Holdings, Inc. (“Assertio”) represented 71% and 10%, respectively, of outstanding receivables. For the nine months ended September 30, 2022, Indivior represented approximately 75% of total revenue. As of December 31, 2022, Indivior and Cardinal Health represented 60% and 12%, respectively, of total trade and other receivables.

Note 5.    Material Agreements

Commercial Exploitation Agreement with Indivior

In August 2008, the Company entered into a Commercial Exploitation Agreement with Reckitt Benckiser Pharmaceuticals, Inc. (with subsequent amendments collectively, the “Indivior License Agreement”). Reckitt Benckiser Pharmaceuticals, Inc. was later succeeded to in interest by Indivior Inc. Pursuant to the Indivior License Agreement, the Company agreed to manufacture and supply Indivior’s requirements for Suboxone®, a sublingual film formulation, both inside and outside the United States on an exclusive basis.

Under the terms of the Indivior License Agreement, the Company is required to manufacture Suboxone in accordance with current Good Manufacturing Practice standards and according to the specifications and processes set forth in the related quality agreements the Company entered into with Indivior. Additionally, the Company is required to obtain Active Pharmaceutical Ingredients (“API”) for the manufacture of Suboxone directly from Indivior. The Indivior License Agreement specifies a minimum annual threshold quantity of Suboxone that the Company is obligated to fill and requires Indivior to provide the Company with a forecast of its requirements at various specified times throughout the year. The Indivior License Agreement provides for payment by Indivior of an agreed upon purchase price per unit until January 1, 2025 and, thereafter, that is subject to annual adjustment based on changes in an agreed upon price index. In addition to the purchase price for the Suboxone supplied, Indivior is required to make certain single digit percentage royalty payments tied to net sales value (as provided for in the Indivior License Agreement) outside of the U.S., subject to annual maximum amounts and limited to the life of the related patents.

The Indivior License Agreement contains customary contractual termination provisions, including with respect to a filing for bankruptcy or corporate dissolution, an invalidation of the intellectual property surrounding Suboxone, and commission of a material breach of the Indivior License Agreement by either party. Additionally, Indivior may terminate the Indivior License Agreement if the FDA or other applicable regulatory authority declares the Company’s manufacturing site to no longer be suitable for the manufacture of Suboxone or Suboxone is no longer suitable to be manufactured due to health or safety reasons. The initial term of the Indivior License Agreement was seven years from the commencement date. Thereafter, the Indivior License Agreement automatically renewed for successive one year periods.

Effective as of March 2, 2023, the Company and Indivior entered into Amendment No. 11 to the Indivior License Agreement (the “Indivior Amendment”). The Indivior Amendment was entered into for the primary purpose of amending the Agreement as follows: (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 covered under the Indivior License Agreement; and (ii) agreeing to transfer pricing and payment terms for supplied product under the Indivior License Agreement.

Supplemental Agreement with Indivior

On September 24, 2017, the Company entered into an agreement with Indivior, or the Indivior Supplemental Agreement. Pursuant to the Indivior Supplemental Agreement, the Company conveyed to Indivior all existing and future rights in the settlement of various ongoing patent enforcement legal actions and disputes related to the Suboxone product. The Company also conveyed to Indivior the right to sublicense manufacturing and marketing capabilities to enable an Indivior licensed generic buprenorphine product to be produced and sold by parties unrelated to Indivior or Aquestive. Under the Indivior Supplemental Agreement, the Company was entitled to receive certain payments from Indivior commencing on the date of the Indivior Supplemental Agreement through January 1, 2023. Once paid, all payments made under the Indivior Supplemental Agreement are non-refundable. Through February 20, 2019, the at-risk launch date of the competing generic products of Dr. Reddy’s Labs and Alvogen, the Company received an aggregate of $40,750 from Indivior under the Indivior Supplemental Agreement. Further payments under the Indivior Supplemental Agreement were suspended until adjudication of

14

Table of Content

related patent infringement litigation is finalized. No further payments are due to the Company under the Indivior Supplemental Agreement. See Note 19, Contingencies for details.

All payments made by Indivior to the Company pursuant to the Indivior Supplemental Agreement were in addition to, and not in place of, any amounts owed by Indivior to the Company pursuant to the Indivior License Agreement.

License Agreement with Sunovion Pharmaceuticals, Inc.

On April 1, 2016, the Company entered into a license agreement with Cynapsus Therapeutics Inc. (which was later succeeded to in interest by Sunovion Pharmaceuticals, Inc.), referred to as the Sunovion License Agreement, pursuant to which Sunovion obtained an exclusive, worldwide license (with the right to sub-license) to certain intellectual property, including existing and future patents and patent applications, covering all oral films containing apomorphine for the treatment of off episodes in Parkinson’s disease patients. Sunovion used this intellectual property to develop its apomorphine product KYNMOBI®, which was approved by the FDA on May 21, 2020. This approval triggered Sunovion’s obligation to remit a payment of $4,000 due on the earlier of: (a) the first day of product availability at a pharmacy in the United States; or (b) within six months of FDA approval of the product. This amount was received as of September 30, 2020 and was included in License and royalty revenues for the twelve months ended December 31, 2020.

Effective March 16, 2020, the Company entered into a first amendment (the “First Amendment”) to the Sunovion License Agreement. The Amendment was entered into for the primary purpose of amending the Sunovion License Agreement as follows: (i) including the United Kingdom and any other country currently in the European Union (EU) which later withdraws as a member country in the EU for purpose of determining the satisfaction of the condition triggering the obligation to pay the third milestone due under the Sunovion License Agreement, (ii) extending the date after which Sunovion has the right to terminate the Sunovion License Agreement for convenience from December 31, 2024 to March 31, 2028, (iii) modifying the effective inception date of the first minimum annual royalty due from Sunovion to the Company form January 1, 2020 to April 1, 2020, and (iv) modifying the termination provision to reflect the Company’s waiver of the right to terminate the Sunovion License Agreement in the event that KYNMOBI was not commercialized by January 1, 2020. This Sunovion License Agreement will continue until terminated by Sunovion in accordance with the termination provisions of the Amendment to the Sunovion License Agreement. The Sunovion License Agreement continues (on a country-by-country basis) until the expiration of all applicable licensed patents unless earlier terminated under the termination provisions contained therein. Upon termination of the Sunovion License Agreement, all rights to intellectual property granted to Sunovion to develop and commercialize apomorphine-based products will revert to the Company.

On October 23, 2020, the Company amended the Sunovion License Agreement to clarify the parties” agreement with respect to certain provisions in the Sunovion License Agreement, specifically the date after which Sunovion has the right to terminate the Sunovion License Agreement and the rights and obligations of the parties regarding the prosecution and maintenance of the Company’s patents covered under the Sunovion License Agreement.

In consideration of the rights granted to Sunovion under the Sunovion License Agreement, the Company received aggregate payments totaling $22,000 to date. In addition to the upfront payment of $5,000, the Company has also earned an aggregate of $17,000 in connection with specified regulatory and development milestones in the United States and Europe (the “Initial Milestone Payments”), all of which have been received to date. With the Monetization Agreement (defined below) entered into on November 3, 2020 relating to KYNMOBI as described in the paragraph below, the Company is no longer entitled to receive any payments under the Sunovion License Agreement.

Purchase and Sale Agreement with an affiliate of Marathon Asset Management

On November 3, 2020, the Company entered into a Purchase and Sale Agreement (the “Monetization Agreement”) with MAM Pangolin Royalty, LLC, an affiliate of Marathon Asset Management (“Marathon”). Under the terms of the Monetization Agreement, we sold to Marathon all of our contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion’s apomorphine product, KYNMOBI. In exchange for the sale of these rights, we received an upfront payment from Marathon of $40,000 and an additional payment of $10,000 through the achievement of the first milestone. We have received an aggregate amount of $50,000 through September 30, 2023 under the Monetization Agreement.

Under the Monetization Agreement, additional contingent payments of up to $75,000 may be due to us upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $125,000. Based on the current public forecast by Sunovion of estimated KYNMOBI sales as of September 30, 2023, the Company likely will not receive any of the additional contingent payments under the Monetization Agreement. See Note 15, Sale of Future Revenue for further details on the accounting for the Monetization Agreement.

15

Table of Content

Agreement to Terminate CLA with Zevra Therapeutics, Inc. (formerly KemPharm, Inc.)

In March 2012, the Company entered into an agreement with Zevra Therapeutics Inc. (formerly KemPharm, Inc.) (“Zevra”) to terminate a Collaboration and License Agreement entered into by the Company and Zevra in April 2011. Under this termination arrangement, the Company has the right to participate in any and all value that Zevra may derive from the commercialization or any other monetization of Zevra’s KP-415 and KP-484 compounds or their derivatives. Among these monetization transactions are those related to any business combinations involving Zevra and collaborations, royalty arrangements, or other transactions from which Zevra may realize value from these compounds or their derivatives.

Licensing and Supply Agreement with Haisco for Exservan™ (Riluzole Oral Film) for ALS Treatment in China

The Company entered into a License, Development and Supply Agreement with Haisco, a Chinese limited company listed on the Shenzhen Stock Exchange, effective as of March 3, 2022 (the “Haisco Agreement”), pursuant to which Aquestive granted Haisco an exclusive license to develop and commercialize Exservan™ (riluzole oral film) for the treatment of amyotrophic lateral sclerosis, or ALS (“Exservan”), in China. Under the terms of the Haisco Agreement, Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China. Under the Haisco Agreement, as amended, the Company received a $7,000 upfront cash payment in September 2022, and will receive regulatory milestone payments and double-digit royalties on net sales of Exservan in China and earn manufacturing revenue upon the sale of Exservan in China.

Compensatory Arrangements of Certain Officers

On May 17, 2022, the Company announced that Keith J. Kendall, former President and Chief Executive Officer of the Company, was leaving the Company and the Company’s Board of Directors, effective May 17, 2022. In connection with his departure, Mr. Kendall and the Company entered into a Separation Agreement, including a Consulting Agreement (collectively, the “Separation Agreement”), dated as of May 17, 2022. Pursuant to the Separation Agreement, Mr. Kendall’s employment with the Company ceased effective as of May 17, 2022 (the “Termination Date”). Under the Separation Agreement, Mr. Kendall received the following principal severance benefits, contingent upon Mr. Kendall’s compliance with a customary release of claims entered into at the time: (i) a cash payment consisting of the sum of any previously unpaid base salary through the Termination Date and any accrued and unused vacation time for the 2022 calendar year; (ii) a cash payment consisting of his pro-rata portion of his target bonus in the amount of $280; (iii) a cash payment in the amount of $150, representing 90 days of his base pay in lieu of the required notice period under Mr. Kendall’s employment agreement; (iv) severance payments consisting of (a) a cash payment of $263, which represents an acceleration of the first three installments of Mr. Kendall’s 18 months severance which he is entitled to under his employment agreement; (b) monthly severance payments of $53 per month for the first through the seventh months following the Termination Date; (c) $70 paid for the eighth month after the Termination Date; and (d) monthly severance payments of $88 for the ninth through eighteenth months following the Termination Date; (v) accelerated vesting of unvested outstanding equity awards, with options remaining exercisable for the duration of the stated term of each award; and (vi) continuing coverage under the Company’s group health and life insurance plans at the same levels and on the same terms and conditions as are provided to similarly-situated executives, for a period of 18 months. Under the terms of the Separation Agreement, Mr. Kendall served as a consultant to the Company, on an as-needed basis, providing transition services, strategic planning, financial planning, merger and acquisition advice and consultation, for a period of time from the Separation Date to December 31, 2022. For these services, Mr. Kendall received a consulting fee of $10 per month.

Licensing and Supply Agreement with Atnahs Pharma UK Limited

The Company entered into a License and Supply Agreement with Atnahs Pharma UK Limited, a company registered in England and Wales (“Pharmanovia”), effective as of September 26, 2022 (the “Pharmanovia Agreement”), pursuant to which the Company granted Pharmanovia an exclusive license to certain of the Company’s intellectual property to develop and commercialize Libervant™ (diazepam) Buccal Film for the treatment of prolonged or acute, convulsive seizures in all ages in certain countries of the European Union, the United Kingdom, Switzerland, Norway and the Middle East and North Africa (the “Territory”) during the term of the Pharmanovia Agreement. Under the Pharmanovia Agreement, Pharmanovia will lead the regulatory and commercialization activities for Libervant in the Territory and the Company will serve as the exclusive sole manufacturer and supplier of Libervant in the Territory. Pursuant to the Pharmanovia Agreement, the Company received $3,500 upon agreement execution and, upon the occurrence of certain conditions set forth in the Pharmanovia Agreement, will receive additional milestone payments and profit shares, as well as manufacturing fees and royalty fees through the expiration of the Pharmanovia Agreement. Effective March 27, 2023, the Company amended the Pharmanovia Agreement (the “Pharmanovia Amendment”) to expand the scope of territory for the license of Libervant to cover the rest of the world, excluding the U.S., Canada and China. Under the Pharmanovia Amendment, Pharmanovia will be responsible for seeking applicable regulatory approval in the expanded territories, which includes Latin America, Africa and Asia Pacific. Pursuant to the terms of the Pharmanovia Amendment, the Company received a non-refundable payment of $2,000 from Pharmanovia in connection with the execution of the Pharmanovia Amendment.

16

Table of Content

Licensing Agreement with Assertio Holdings, Inc.

Effective as of October 26, 2022, the Company entered into a License Agreement with Otter Pharmaceuticals, LLC, a subsidiary of Assertio to license Sympazan® (clobazam) oral film for the adjunctive treatment of seizures associated with Lennox‐Gastaut syndrome in patients aged two years of age and older (the “Assertio Agreement”). Under the terms of the Assertio Agreement, the Company granted to Assertio an exclusive, worldwide license of its intellectual property for Sympazan during the term of the Assertio License Agreement for an upfront payment of $9,000. In addition, Aquestive received a $6,000 milestone payment subsequent to Aquestive’s receipt of a notice of allowance from the United States Patent and Trademark Office (PTO) of the Company’s patent application U.S. Serial No. 16/561,573, and payment by the Company of the related allowance fee. The Company received the notice of allowance from the PTO and paid the related allowance fee on October 27, 2022. Further, under the Assertio Agreement, the Company will receive royalties from Assertio for the sale of the product through the expiration of the Assertio Agreement. The Company also entered into a long-term supply agreement with Assertio for Sympazan pursuant to which the Company is the exclusive sole worldwide manufacturer and supplier of the product and will receive manufacturing fees from Assertio for the product through the expiration of such supply agreement.

Note 6.    Financial Instruments – Fair Value Measurements

Certain assets and liabilities are reported on a recurring basis at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•Level 1 — Observable quoted prices in active markets for identical assets or liabilities.

•Level 2 — Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

•Level 3 — Unobservable inputs that are supported by little or no market activity, such as pricing models, discounted cash flow methodologies and similar techniques.

The carrying amounts reported in the balance sheets for trade and other receivables, prepaid and other current assets, accounts payable and accrued expenses, and deferred revenue approximate their fair values based on the short-term maturity of these assets and liabilities.

The Company granted warrants to certain noteholders in connection with its debt repayment and debt refinancing during 2020 and 2019, respectively. Those warrants were valued based on Level 3 inputs and their fair value was based primarily on an independent third-party appraisal prepared as of the grant date consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation. See Note 14, Warrants for further information on these warrants.

The Company’s 12.5% Senior Secured Notes contain a repurchase offer or put option which gives holders of the option the right, but not the obligation, to require the Company to redeem the 12.5% Notes up to a capped portion of milestone payments resulting from the Monetization Agreement. This put option was valued based on Level 3 inputs and its fair value was based primarily on an independent third-party appraisal consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants Accounting and Valuation Guide. See Note 13, 12.5% Senior Secured Notes and Loans Payable for further discussion.

In June 2022, the Company issued pre-funded warrants to purchase up to 4,000,000 shares of Common Stock and Common Stock Warrants to purchase up to 8,850,000 shares of Common Stock in connection with its Securities Purchase Agreements with certain purchasers. Those warrants were valued based on Level 3 inputs and their fair value was based primarily on an independent third-party appraisal prepared as of the grant date consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide. See Note 14, Warrants for further information on these warrants.

On August 1, 2023, the Company entered into the Letter Agreement with the Exercising Holder of the remaining warrants to purchase 5,000,000 of the shares of Common Stock. Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the Exercising Holder would exercise all of its Existing Warrants for shares of Common Stock underlying the Existing Warrants at $0.96 per share of Common Stock, the current exercise price of the Existing Warrants. Under the Letter Agreement, in consideration of the Exercising Holder exercising the Existing Warrants, the Company issued to the Exercising Holder new warrants to purchase up to an aggregate of 2,750,000 shares of Common Stock (the “New

17

Table of Content

Warrants”). Those warrants were valued based on Level 3 inputs and their fair value was based primarily on an independent third-party appraisal prepared as of the grant date consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide. See Note 14, Warrants for further information on these warrants.

Note 7.    Inventories, Net

The components of Inventory, net are as follows:

	September 30, 2023		December 31, 2022
Raw material	$	1,902	$	1,899
Packaging material	3,427		2,914
Finished goods	1,750		967
Total inventory, net	$	7,079	$	5,780

Note 8.    Property and Equipment, Net

	Useful Lives	September 30, 2023		December 31, 2022
Machinery	3-15 years	$	20,176	$	19,810
Furniture and fixtures	3-15 years	769		769
Leasehold improvements	(a)	21,386		21,375
Computer, network equipment and software	3-7 years	2,627		2,627
Construction in progress		2,305		1,467
		47,263		46,048
Less: accumulated depreciation and amortization		(42,712)		(41,963)
Total property and equipment, net		$	4,551	$	4,085

(a)Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives.

Total depreciation, amortization, and impairment related to property and equipment was $218 and $557 for the three months ended September 30, 2023 and 2022, respectively. For the respective nine month periods, these expenses totaled $760 and $1,926.

Note 9.    Right-of-Use Assets and Lease Obligations

The Company leases all realty used at its production and warehouse facilities, corporate headquarters, commercialization operations center and research and laboratory facilities. None of these three leases include the characteristics specified in ASC 842, Leases, which require classification as financing leases and, accordingly, these leases are accounted for as operating leases. These leases, as amended, provide remaining terms between 4.5 and 10.0 years, including renewal options expected to be exercised to extend the lease periods.

During the nine months ended September 30, 2023, the Company recognized a lease supporting its manufacturing facilities as a finance lease. Commitments under finance leases are not significant, and are included in Property and equipment, net, Loans payable, current and Loans payable, net on the consolidated balance sheet.

The Company does not recognize a right-to use asset and lease liability for short-term leases, which have terms of 12 months or less on its consolidated balance sheet. For longer-term lease arrangements that are recognized on the Company’s consolidated balance sheet, the right-of-use asset and lease liability is initially measured at the commencement date based upon the present value of the lease payments due under the lease. These payments represent the combination of the fixed lease and fixed non-lease components that are due under the arrangement. The costs associated with the Company’s short-term leases, as well as variable costs relating to the Company’s lease arrangements, are not material to the Company’s financial results.

The implicit interest rates of the Company’s lease arrangements are generally not readily determinable and as such, the Company applies an incremental borrowing rate, which is established based upon the information available at the lease commencement date, to determine the present value of lease payments due under an arrangement. Measurement of the operating lease liability reflects a range of an estimated discount rate of 14.8% to 15.6% applied to minimum lease payments, including expected renewals, based on the incremental borrowing rate experienced in the Company’s collateralized debt refinancing.

The Company’s lease costs are recorded in manufacture and supply, research and development and selling, general and administrative expenses in its Consolidated Statements of Operations and Comprehensive Income (Loss). For the three and nine

18

Table of Content

months ended September 30, 2023, total operating lease expenses totaled $438 and $1,308, respectively, including variable lease expenses such as common area maintenance and operating costs of $109 and $338, respectively. For the three and nine months ended September 30, 2022, total operating lease expenses totaled $424 and $1,267, respectively, including variable lease expenses such as common area maintenance and operating costs of $110 and $333, respectively.

Maturities of the Company’s operating lease liabilities are as follows:

Remainder of 2023	$	303
2024	1,230
2025	1,266
2026	1,300
2027 and thereafter	6,318
Total future lease payments	10,417
Less: imputed interest	(4,541)
Total operating lease liabilities	$	5,876

Note 10.    Intangible Assets, Net

The following table provides the components of identifiable intangible assets, all of which are finite lived:

	September 30, 2023		December 31, 2022
Purchased intangible	$	3,858	$	3,858
Purchased patent	509		509
	4,367		4,367
Less: accumulated amortization	(3,050)		(2,932)
Intangible assets, net	1,317		1,435

Amortization expense was $39 and $39 for each of the three-month periods ended September 30, 2023 and 2022. For the corresponding nine-month periods, these expenses totaled $117 and $64, respectively. During the remaining life of the purchased intangible assets, estimated amortization expense is $39 for the remainder of 2023 and $156 in 2024, respectively. 

Note 11.    Other Non-current Assets

The following table provides the components of other non-current assets:

	September 30, 2023		December 31, 2022
Royalty receivable	4,000		5,000
Other	1,454		1,451
Total other non-current assets	$	5,454	$	6,451

During the second quarter of 2020, under the Sunovion License Agreement, the Company recognized $8,000 of royalty revenue and corresponding royalty receivable, related to the eight $1,000 annual minimum guaranteed royalty payments that are due to the Company. In connection with the Monetization Agreement, the Company performed an assessment under ASC 860, Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded it was not transferred. Royalty receivable consists of five annual minimum payments due from Sunovion, the last of which is due in March 2028. The current portion of the royalty receivable is included in Trade and other receivables, net. See Note 15, Sale of Future Revenue for further details on how this receivable relates to the Monetization Agreement transaction.

19

Table of Content

Note 12.    Accrued Expenses

Accrued expenses consisted of the following:

	September 30, 2023		December 31, 2022
Accrued compensation	$	2,831	$	6,389
Real estate and personal property taxes	377		322
Accrued distribution expenses and sales returns provision	659		1,012
Other	1,601		244
Total accrued expenses	$	5,468	$	7,967

Note 13.    12.5% Senior Secured Notes and Loans Payable

On July 15, 2019, the Company completed a private placement of up to $100,000 aggregate principal of its 12.5% Senior Secured Notes due 2025 (the “12.5% Notes” or “12.5% Senior Secured Notes”) and issued warrants for 2,000,000 shares of Common Stock (the “Warrants”), at $0.001 par value per share.

Upon closing of the indenture for the 12.5% Notes (the “Base Indenture”), the Company issued $70,000 of the 12.5% Notes (the “Initial Notes”) along with the Warrants and rights of first offer (the “First Offer Rights”) to the noteholders participating in this transaction. Issuance of the Initial Notes and Warrants provided net proceeds of $66,082.

On November 3, 2020, the Company entered into the First Supplemental Indenture (the “First Supplemental Indenture” and, together with all other subsequent supplemental indentures and the Base Indenture, collectively, the “Indenture”) by and among the Company and U.S. Bank National Association, as Trustee (the “Trustee”) and Collateral Agent thereunder to the Base Indenture, by and between the Company and the Trustee. Under the Second Supplemental Indenture, the Company repaid $22,500 of its $70,000 outstanding 12.5% Notes from the upfront proceeds received under the Monetization Agreement. Further, the Company entered into an additional Purchase Agreement with its lenders whereby the Company issued in aggregate $4,000 of additional 12.5% Notes (the “Additional Notes”) in lieu of paying a prepayment premium to two lenders on the early repayment of the 12.5% Notes discussed above. The result of these two transactions reduced the net balance of the Company’s 12.5% Notes outstanding in the aggregate to $51,500 at December 31, 2020. The $4,000 principal issuance would be repaid proportionally over the same maturities as the other 12.5% Notes. The Company also paid one of its lenders a $2,250 premium as result of the early retirement of debt.

The Company accounted for the $22,500 debt repayment as a debt modification of the 12.5% Notes. The fees paid to lenders inclusive of (i) a $2,250 early premium prepayment and (ii) $4,000 issuance of Additional Notes in lieu of paying a prepayment penalty were recorded as additional debt discount, amortized over the remaining life of the 12.5% Notes using the effective interest method. Loan origination costs of $220 associated with the Additional Notes were expensed as incurred. Existing deferred discounts and loan origination fees on the 12.5% Notes are amortized as an adjustment of interest expense over the remaining term of modified debt using the effective interest method.

The First Supplemental Indenture contains a provision whereby, as the Company receives any cash proceeds from the Monetization Agreement, each noteholder has the right to require the Company to redeem all or any part of such noteholder's outstanding 12.5% Notes at a repurchase price in cash equal to 112.5% of the principal amount, plus accrued and unpaid interest. This repurchase offer is capped at 30% of the cash proceeds received by the Company as the contingent milestones are attained, if any, up through June 30, 2025. A valuation study was performed by an independent third party appraiser and updated as of September 30, 2023. Based on the valuation study, the put option is valued at $0.00 and has been recorded in Other non-current liabilities. The embedded put option is deemed to be a derivative under ASC 815, Derivatives and Hedging, which requires the recording of the embedded put option at fair value and subject to remeasurement at each reporting period. In addition, as of the closing of this transaction, the Company issued to the holders of the 12.5% Notes warrants to purchase 143,000 shares of its Common Stock.

On August 6, 2021, pursuant to the Third Supplemental Indenture, the holders of the 12.5% Notes extended to June 30, 2022 from December 31, 2021, the Company’s ability to access, at the Company’s option, $30,000 of the 12.5% Notes re-openers under the Indenture. Under the Third Supplemental Indenture, the first $10,000 of 12.5% Notes re-openers represented a commitment of such amount by current holders of the 12.5% Notes, at the option of the Company, contingent upon FDA approval of the Company’s product candidate Libervant (the "First Additional Securities"). In addition, under the Third Supplemental Indenture, a second $20,000 12.5% Notes re-opener represented a right, at the Company’s option, to market to current holders of the Company’s 12.5% Notes, and or other noteholders, additional 12.5% Notes up to such amount, contingent upon FDA approval of Libervant for U.S. market access (the "Second Additional Securities"). Under the Third Supplemental Indenture, the Company agreed that, if and to the extent that the Company accessed these re-openers, it would

20

Table of Content

grant to the noteholders warrants to purchase up to 714,000 shares of Common Stock, with the strike price calculated based on the 30-day volume weighted average closing price of the Common Stock at the warrant grant date.

On October 7, 2021, the Company entered into the Fourth Supplemental Indenture, pursuant to which the amortization schedule for the 12.5% Notes was amended to provide for the date of the first amortization payment to be extended from September 30, 2021 to March 30, 2023. The Fourth Supplemental Indenture did not change the maturity date of the 12.5% Notes or the interest payment obligation due under the 12.5% Notes. In connection with the Fourth Supplemental Indenture, the Company entered into a Consent Fee Letter with the holders of the 12.5% Notes (the “Consent Fee Letter”), pursuant to which the Company agreed to pay the holders of the 12.5% Notes an additional cash payment ("Consent Fee") of $2,700 in the aggregate, payable in four quarterly payments beginning May 15, 2022. Additionally, the Company recognized a loss on the extinguishment of debt of $13,822 for fees and expenses related to the Fourth Supplemental Indenture during the fourth quarter of 2021. As of September 30, 2023, the Company paid its $2,700 Consent Fee payment to the holders of the 12.5% Notes in full.

On May 13, 2022, pursuant to the Fifth Supplemental Indenture, the holders of the 12.5% Notes further extended to March 31, 2023 from June 30, 2022, the Company’s ability to access, at the Company’s option, $30,000 of 12.5% Notes re-openers under the Indenture, subject to the full approval of Libervant by the FDA for market access in the United States. Because FDA approval for U.S. market access was not obtained by March 31, 2023, the Company’s option to access the re-openers expired on such date.

The 12.5% Notes provide a stated fixed interest rate of 12.5%, payable quarterly in arrears, with the final quarterly principal repayment of the 12.5% Notes due at maturity on June 30, 2025. As of September 30, 2023, the Company recorded its principal payment obligations as Loans payable, current and Loans payable, net on its Condensed Consolidated Balance Sheet.

The Company may elect, at its option, to redeem the 12.5% Notes at any time at premiums that range from 101.56% of outstanding principal if prepayment occurs on or after the fifth anniversary of the issue date of the Initial Notes to 112.50% if payment occurs during the third year after the issuance of the 12.5% Notes. The Indenture also includes change of control provisions under which the Company may be required to redeem the 12.5% Notes at 101% of the remaining principal plus accrued interest at the election of the noteholders.

During the first quarter of 2023, the Company redeemed $5,647 of its outstanding 12.5% Notes. The Company also paid $353 in prepayment premium as result of the early retirement of debt which was reflected as a loss on extinguishment of debt. The prepayments along with the scheduled principal repayments made during 2023 reduced the net balance of the 12.5% Notes outstanding in the aggregate to $38,975 as of September 30, 2023. In accordance with the third quarter invoice, the third quarter principal and interest payments of $4,585 and $1,218, respectively, were made on October 2, 2023.

The Company capitalizes legal and other third-party costs incurred in connection with obtaining debt as deferred debt issuance costs and applies the unamortized portion as a reduction of the outstanding face amount of the related loan. Similarly, the Company amortizes debt discounts, such as those represented by warrants issued to its lenders, and offsets those as a direct reduction of its outstanding debt. Amortization expense arising from deferred debt issuance costs and debt discounts related to the 12.5% Notes for the three and nine months ended September 30, 2023 were $3 and $11, respectively, while comparative amortization expense for the three and nine months ended September 30, 2022 were $4 and $12, respectively. Unamortized deferred debt issuance costs and deferred debt discounts totaled $16 and $27 as of September 30, 2023 and December 31, 2022, respectively.

Collateral for the loan under the 12.5% Notes consists of a first priority lien on substantially all property and assets, including intellectual property of the Company. This secured obligation provides payment rights that are senior to all existing and future subordinated indebtedness of the Company and provides the holders of the 12.5% Notes with perfected security interests in substantially all of the Company’s assets.

A debt maturity table prior to the refinancing of the Company's debt on November 1, 2023 and described in Note 20, Subsequent Events is presented below:

Remainder of 2023	$	9,171
2024	19,487
2025	10,317
Total	$	38,975

In line with the debt refinancing as discussed in Note 20, Subsequent Events and in accordance with ASC 470, Debt, the amounts for the Loans payable, current and Loans payable, net have been adjusted such that Loans payable, current reflects the current portion of the principal payment on the 12.5% Senior Secured notes due and paid on October 2, 2023 in the amount of $4,585, paid out of working capital, and the Loans payable, net of $34,390 represents the amount that has been repaid from

21

Table of Content

the net proceeds of the Company's offering of its new 13.5% Senior Secured Notes due 2028 (the “13.5% Notes”) refinancing transaction.

A revised debt maturity table subsequent to the debt refinancing on November 1, 2023 is presented below.

Remainder of 2023	$	—
2024	—
2025	—
2026	9,540
2027	14,535
2028	20,925
Total	$	45,000

Note 14.    Warrants

Warrants Issued to 12.5% Senior Secured Noteholders

Warrants that were issued in conjunction with the Initial Notes (the “Initial Warrants”) and Additional Notes (the “Additional Warrants”) expire on June 30, 2025 and entitled the noteholders to purchase up to 2,143,000 shares of Common Stock and included specified registration rights. Management estimated the fair value of the Initial Warrants to be $6,800 and the Additional Warrants to be $735, each based on an assessment by an independent third-party appraiser. The fair value of the respective warrants was treated as a debt discount, amortizable over the term of the respective warrants, with the unamortized 12.5% Notes portion applied to reduce the aggregate principal amount of the 12.5% Notes in the Company’s unaudited Condensed Consolidated Balance Sheet. Additionally, since the Initial Warrants and Additional Warrants issued do not provide warrant redemption or put rights within the control of the holders that could require the Company to make a payment of cash or other assets to satisfy the obligations under the warrants, except in the case of a “cash change in control”, the fair value attributed to the warrants is presented in Additional Paid-in Capital in the Company’s unaudited Condensed Consolidated Balance Sheet. There were no warrants exercised as it relates to the Initial Warrants and the Additional Warrants during the nine months ended September 30, 2023 or 2022, respectively.

Warrants Issued Under Securities Purchase Agreements

In June 2022, the Company issued pre-funded warrants and Common Stock warrants to certain purchasers in connection with the Securities Purchase Agreements. The pre-funded warrants entitled purchasers to purchase up to 4,000,000 shares of Common Stock and were exercised in full during the year ended December 31, 2022. The Common Stock warrants expire on June 8, 2027 and entitled the purchasers to purchase up to 8,850,000 shares of Common Stock at a price ranging from $0.96 to $1.09 per share. Management estimated the fair value of the pre-funded warrants and Common Stock warrants to be $5,874 based on an assessment by an independent third-party appraiser. The fair value of the pre-funded and Common Stock warrants is treated as equity and presented in Additional Paid-in Capital in the Company’s unaudited Condensed Consolidated Balance Sheet. On June 14, 2023, 3,689,452 Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised with proceeds of approximately $3,542.

On August 1, 2023, the Company entered into the Letter Agreement with the Exercising Holder of 5,000,000 of the remaining Common Stock Warrants. Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the Exercising Holder would exercise all of its Existing Warrants for shares of Common Stock underlying the Existing Warrants at $0.96 per share of Common Stock, the current exercise price of the Existing Warrants. Under the Letter Agreement, in consideration of the Exercising Holder exercising the Existing Warrants, the Company issued to the Exercising Holder new warrants to purchase up to an aggregate of 2,750,000 shares of Common Stock (the “New Warrants”). The New Warrants are exercisable after February 2, 2024, expire on February 2, 2029 and are issuance only for cash, subject to exception if the shares of Common Stock underlying the New Warrants are not registered in accordance with the terms of the Letter Agreement, in which case the New Warrants may also be exercised, in whole or in part, at such time by means of a "cashless exercise". The New Warrants have an exercise price of $2.60 per share. On August 2, 2023, 5,000,000 of the Existing Warrants were exercised pursuant to the Securities Purchase Agreement with the Exercising Holder, with the Company receiving gross proceeds therefrom of $4,800. In total, 8,689,452 Common Stock warrants issued pursuant to the Securities Purchase Agreements with proceeds of approximately $8,342 were exercised during the nine months ended September 30, 2023.

In addition to the warrants to purchase 2,750,000 shares of Common Stock described above, there remain outstanding warrants to purchase 160,548 shares of Common Stock of $1.09 of the original warrants to purchase 8,850,000 shares of Common Stock issued in connection with the Securities Purchase Agreements. Lastly, there are warrants to purchase 1,714,429

22

Table of Content

shares of Common Stock outstanding related to the original issuance of the 12.5% Notes prior to the debt refinancing described above in this Note 14.

Note 15.    Sale of Future Revenue

On November 3, 2020, the Company entered into the Monetization Agreement with Marathon. Under the terms of the Monetization Agreement, the Company sold all of its contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion's apomorphine product, KYNMOBI, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, which received approval from the FDA on May 21, 2020. In exchange for the sale of these rights, the Company received an upfront payment of $40,000 and an additional payment of $10,000 through the achievement of the first milestone. The Company has received an aggregate amount of $50,000 through September 30, 2023 under the Monetization Agreement.

Under the Monetization Agreement, additional contingent payments of up to $75,000 may be due to the Company upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $125,000.

The Company recorded the upfront proceeds of $40,000 and subsequent first milestone of $10,000, reduced by $2,909 of transaction costs, as a liability related to the sale of future revenue that will be amortized using the effective interest method over the life of the Monetization Agreement. As future contingent payments are received, they will increase the balance of the liability related to the sale of future revenue. Although the Company sold all of its rights to receive royalties and milestones, as a result of ongoing obligations related to the generation of these royalties, the Company will account for these royalties as revenue. Its ongoing obligations include the maintenance and defense of the intellectual property and to provide assistance to Marathon in executing a new license agreement for KYNMOBI in the event Sunovion terminates the Sunovion License Agreement in one or more jurisdictions of the licensed territory under the Sunovion License Agreement. The accounting liabilities, as adjusted over time, resulting from this transaction and any non-cash interest expenses associated with those liabilities do not and will not represent any obligation to pay or any potential future use of cash.

During the second quarter of 2020, under the Sunovion License Agreement, the Company recognized $8,000 of royalty revenue and corresponding royalty receivable, related to the $1,000 annual minimum guaranteed royalty that is due. In connection with the Monetization Agreement, the Company performed an assessment under ASC 860, Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded that the receivable was not transferred.

As royalties are remitted to Marathon from Sunovion, the collection of the royalty receivable and balance of the liability related to the sale of future revenue will be effectively repaid over the life of the agreement. In order to determine the amortization of the liability related to the sale of future revenue, the Company is required to estimate the total amount of future royalty and milestone payments to Marathon over the life of the Monetization Agreement and contingent milestone payments from Marathon to the Company. The sum of future royalty payments less the $50,000 in proceeds received and future contingent payments has been recorded as interest expense over the life of the Monetization Agreement. At execution, the estimate of this total interest expense resulted in an effective annual interest rate of approximately 24.9%. This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the life of the Monetization Agreement. The Company will periodically assess the estimated royalty and milestone payments to Marathon from Sunovion and contingent milestone payments from Marathon to the Company. To the extent the amount or timing of such payments is materially different from the original estimates, an adjustment will be recorded prospectively to increase or decrease interest expense. There are a number of factors that could materially affect the amount and timing of royalty and milestone payments to Marathon from Sunovion and, correspondingly, the amount of interest expense recorded by the Company, most of which are not under the Company’s control. Such factors include, but are not limited to, changing standards of care, the initiation of competing products, manufacturing or other delays, generic competition, intellectual property matters, adverse events that result in government health authority imposed restrictions on the use of products, significant changes in foreign exchange rates as the royalties remitted to Marathon are made in U.S. dollars (USD) while a portion of the underlying sales of KYNMOBI will be made in currencies other than USD, and other events or circumstances that are not currently foreseen. Changes to any of these factors could result in increases or decreases in both royalty revenue and interest expense related to the sale of future revenue. Based on the current public forecast by Sunovion of estimated KYNMOBI sales as of September 30, 2023, the Company likely will not receive any of the additional contingent payments under the Monetization Agreement. As a result, the Company discontinued recording interest expense related to the sale of future revenue.

23

Table of Content

The following table shows the activity of the liability related to the sale of future revenue for the nine months ended September 30, 2023:

Liability related to the sale of future revenue, net at December 31, 2022	$	65,259
Royalties related to the sale of future revenue	(926)
Amortization of issuance costs	163
Interest expense related to the sale of future revenue	—
Liability related to the sale of future revenue, net (includes current portion of $985)	$	64,496

Note 16.    Net Earnings (Loss) Per Share

Basic net earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares.

The following table reconciles the basic to diluted weighted average shares outstanding for the nine months ended September 30, 2023. Diluted EPS is adjusted by the effect of dilutive securities, including options and awards under the Company’s equity compensation plans, warrants and the Employee Stock Purchase Plan ("ESPP"). The treasury method was used to calculate the dilutive shares. The anti-dilutive options, awards and warrants for the nine months ended September 30, 2023 are included in the footnotes below. As a result of the Company’s net loss incurred for the three months ended September 30, 2023 and the three and nine months ended September 30, 2022, all potentially dilutive instruments outstanding would have anti-dilutive effects on per-share calculations. Therefore, basic and diluted net loss per share were the same for the three months ended September 30, 2023 and the three and nine months ended September 30, 2022 as reflected below.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	(2,035)	$	(12,536)	$	241	$	(42,058)
Denominator:
Weighted-average number of common shares – basic	64,678,761		53,424,922		59,252,768		46,828,218
Effect of dilutive stock options (a)	—		—		57,471		—
Effect of restricted stock units (b)	—		—		654,682		—
Effect of warrants (c)	—		—		1,547,751		—
Effect of Employee Stock Purchase Plan	—		—		1,064		—
Weighted-average number of common shares – diluted	64,678,761		53,424,922		61,513,736		46,828,218
Earnings per share attributable to common stockholders:
Earnings (Loss) per common share – basic	$	(0.03)	$	(0.23)	$	—	$	(0.90)
Earnings (Loss) per common share – diluted	$	(0.03)	$	(0.23)	$	—	$	(0.90)

(a)For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, outstanding stock options of 5,912,647, 5,967,492, 5,339,130 and 5,967,492 shares of Common Stock, respectively, were anti-dilutive and excluded from the computation of diluted EPS.

(b)For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, outstanding restricted stock units of 3,280,313, 168,050, 605,650 and 168,050 shares of Common Stock, respectively were anti-dilutive and excluded from the computation of diluted EPS.

(c)For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, outstanding warrants of 4,464,429, 10,564,429, 4,464,429 and 10,564,429 shares of Common Stock, respectively, were anti-dilutive and excluded from the computation of diluted EPS.

24

Table of Content

Note 17.    Share-Based Compensation

The Company recognized share-based compensation in its unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) during 2023 and 2022 as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Manufacture and supply	$	59	$	66	$	155	$	159
Research and development	105		75		277		406
Selling, general and administrative	610		394		1,334		3,104
Total share-based compensation expenses	$	774	$	535	$	1,766	$	3,669
Share-based compensation from:
Restricted stock units	$	312	$	58	$	532	$	97
Stock options	462		477		1,217		3,570
Employee stock purchase plan (ESPP)	—		—		17		2
Total share-based compensation expenses	$	774	$	535	$	1,766	$	3,669

Share-Based Compensation Equity Awards

The following tables provide information about the Company’s restricted stock unit and stock option activity during the nine month period ended September 30, 2023:

Restricted Stock Unit Awards (RSUs) - Time-based:	Number of Units	Weighted Average Grant Date Fair Value
	(in thousands)
Unvested as of December 31, 2022	162	$	2.38
Granted	1,874	$	0.91
Vested	(31)	$	2.33
Forfeited	(57)	$	2.03
Unvested as of September 30, 2023	1,948	$	0.97
Vested and expected to vest as of September 30, 2023	1,788	$	0.97

Restricted Stock Unit Awards (RSUs) - Performance-based:	Number of Units	Weighted Average Grant Date Fair Value
	(in thousands)
Unvested as of December 31, 2022	—	$	—
Granted	1,332	2.03
Vested	—	—
Forfeited	—	—
Unvested as of September 30, 2023	1,332	$	2.03
Vested and expected to vest as of September 30, 2023	1,166	$	2.03

2022 Inducement Equity Incentive Plan

In accordance with Nasdaq Listing Rule 5635(c)(4), the Company adopted the 2022 Equity Inducement Plan approved by the Compensation Committee of the Board of Directors of the Company effective as of July 29, 2022. There were 150,000 awards granted and outstanding under this Plan as of September 30, 2023 and included in the time-based restricted stock units granted in the table above.

25

Table of Content

As of September 30, 2023, $1,243 and $2,320 of unrecognized compensation expense related to unvested time-based restricted stock units and unvested performance-based restricted stock units, respectively, are expected to be recognized over a weighted average period of 2.43 years and 2.59 years, respectively, from the date of grant.

Stock Option Awards:	Number of Options	Weighted Average Exercise Price
	(in thousands)
Outstanding as of December 31, 2022	6,028	$	5.48
Granted	150	2.02
Exercised	(1)	0.88
Forfeited/Expired	(264)	2.30
Outstanding as of September 30, 2023	5,913	$	5.54
Vested and expected to vest as of September 30, 2023	5,836	$	5.59
Exercisable as of September 30, 2023	4,437	$	6.56

The fair values of stock options granted during the nine months ended September 30, 2023 were estimated using the Black-Scholes pricing model based on the following assumptions:

Expected dividend yield	—%
Expected volatility	100%
Expected term (years)	5.5
Risk-free interest rate	4.0%

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2023 was $0.7981. During the nine months ended September 30, 2023, stock options were granted with an exercise price of $2.02 and accordingly, given the Company’s share price of $1.53 at September 30, 2023, the intrinsic value provided by certain shares granted during this period was de minimus.

As of September 30, 2023, $1,869 of unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted average period of 1.3 years from the date of grant.

Note 18.    Income Taxes

The Company has accounted for income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts and respective tax bases of existing assets and liabilities, as well as net operating loss carryforwards and research and development credits. Valuation allowances are provided if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. For the three and nine months ended September 30, 2023, the effective income tax rate was 6.4% and 37.4%, respectively, and the Company recorded $(140) and $144 from its pretax (loss) income of $(2,175) and $385, respectively. For the three and nine months ended September 30, 2022, the Company recorded no income tax benefit from its pretax loss of $12,536 and $42,058, respectively.

The primary factors impacting the effective tax rate for nine months ended September 30, 2023 is the anticipated full year pre-tax book loss, the expected utilization of net operating losses and research and development credits to offset current year tax liabilities, and a full valuation allowance against any associated net deferred tax assets.

Note 19.    Contingencies

From time to time, the Company has been and may again become involved in legal proceedings arising in the course of its business, including product liability, intellectual property, securities, civil tort, and commercial litigation, and environmental or other regulatory matters.

Patent-Related Litigation

Indivior Inc., Indivior UK Ltd., and Aquestive Therapeutics, Inc. v. Alvogen Pine Brook LLC

On September 14, 2017, Indivior initiated a lawsuit against Alvogen Pine Brook LLC (“Alvogen”) asserting infringement of the ’454 patent. On February 7, 2018, the Company and Indivior filed an Amended Complaint, adding the Company as a plaintiff and asserting infringement of the’221 patent. On April 3, 2018, the Company and Indivior initiated a

26

Table of Content

separate lawsuit against Alvogen asserting infringement of the ’305 patent. On May 29, 2018, the cases were consolidated. On February 26, 2019, the court granted the parties’ agreed stipulation to drop the ’221 patent from the case. On January 9, 2020, the court entered a stipulated order of non-infringement of the ’305 patent based on the court’s claim construction ruling, and the Company and Indivior preserved the right to appeal the claim construction ruling.

On November 21, 2019, Alvogen filed an amended answer and counterclaims asserting monopolization, attempted monopolization, and conspiracy to monopolize against the Company and Indivior under federal and New Jersey antitrust laws. The court denied the Company’s motion to dismiss Alvogen’s counterclaims on August 24, 2020. On November 2, 2020, Alvogen filed a second amended answer and counterclaims, removing its allegations of monopolization and attempted monopolization against the Company and asserting only conspiracy to monopolize against the Company. Fact discovery on Alvogen’s antitrust counterclaims concluded on January 29, 2021. Expert discovery concluded on October 8, 2021, and dispositive motions were filed by the parties on October 26, 2021. On June 26 2023, the court granted in part and denied in part plaintiff's' joint motion and denied all other parties' motions. On August 11, 2023, the Company filed a motion for reconsideration of the court’s ruling on its dispositive motion and the parties are awaiting the court’s decision on that motion for reconsideration There is no trial date set. The Company is not able to determine or predict the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or losses, if any, in this matter.

California Litigation

Neurelis, Inc. v. Aquestive Therapeutics, Inc.

On December 5, 2019, Neurelis Inc. filed a lawsuit against us in the Superior Court of California, County of San Diego alleging the following three causes of action: (1) Unfair Competition under California Business and Professional Code § 17200 (“UCL”); (2) Defamation; and (3) Malicious Prosecution. Neurelis filed a First Amended Complaint on December 9, 2019, alleging the same three causes of action. The Company filed a Motion to Strike Neurelis’s Complaint under California’s anti-SLAPP (“strategic lawsuit against public participation”) statute on January 31, 2020, which Neurelis opposed. On August 6, 2020, the Court issued an order granting in part and denying in part the Company’s anti-SLAPP motion. The parties cross-appealed the ruling to the California Court of Appeal. The appeals court held oral argument on the appeal on October 14, 2021, and issued its ruling on November 17, 2021. Under the ruling, the court struck the entirety of the malicious prosecution claim and struck portions of the UCL and defamation claims. On April 12, 2022, Neurelis filed a Second Amended Complaint in response to the Court of Appeal's decision. The Second Amended Complaint also added a cause of action for Trade Libel. On May 3, 2022, the Company filed a "demurrer" challenge to the sufficiency of the allegations of the Second Amended Complaint. Oral argument on the Company’s motion for attorney fees related to the anti-SLAPP motion and on the Second Amended Complaint and demurer challenge was held on June 17, 2022. The Court entered an order granting the Company’s motion for attorney fees, awarding $156 and ordering Neurelis to pay the fees within 60 days of June 17, 2022. The Court denied the Company’s demurrer and the parties are proceeding with discovery on the claims in the Second Amended Complaint. The plaintiff filed a motion to file a third amended complaint. The hearing on this motion is currently scheduled for November 17, 2023. No trial date has been set. The Company is not able to determine or predict the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.

Federal Securities Class Action

Deanna Lewakowski v. Aquestive Therapeutics, Inc., et al.

On March 1, 2021, a securities class action lawsuit was filed in the United States District Court for the District of New Jersey alleging that the Company and certain of its officers engaged in violations of the federal securities laws relating to public statements made by the Company regarding the FDA approval of Libervant. Following the court’s appointment of a lead plaintiff, an amended complaint was filed by the plaintiffs on June 25, 2021. Defendants filed a motion to dismiss on August 16, 2021, which became fully briefed as of November 1, 2021. On March 14, 2023, the Court entered an order granting Defendants’ motion to dismiss without prejudice and permitting plaintiffs leave to file a final, Second Amended Complaint by April 14, 2023. On April 7, 2023, the parties filed a Stipulation of Voluntary Dismissal stating that plaintiffs determined not to file an amended complaint and agreed to dismiss the action as to them with prejudice. On April 10, 2023, the Court so-ordered the stipulation and terminated the lawsuit.

Shareholder Derivative Litigation

Loreen Niewenhuis v. Keith Kendall, et al.

On December 15, 2021, a purported Aquestive shareholder instituted a derivative action captioned Loreen Niewenhuis v. Keith Kendall, et al. in the United States District Court for the District of New Jersey, purportedly on behalf of the Company, against certain current and former officers and directors of the Company. The case was designated as related to the pending federal securities class action Deanna Lewakowski v. Aquestive Therapeutics, Inc., referenced above, and accepted by the same judge presiding over the securities class action. The complaint in this matter alleges claims for breach of fiduciary duty and contribution. The factual allegations that form the basis of these claims are similar to the disclosure-related allegations asserted

27

Table of Content

in the class action. On April 4, 2022, the plaintiff filed an amended complaint asserting the same claims against the same defendants. The Company filed a motion to dismiss the amended complaint on April 25, 2022, which became fully briefed as of June 27, 2022. On April 20, 2023, the parties filed a Stipulation of Voluntary Dismissal stating that plaintiff agreed to dismiss the action as to her with prejudice. On April 21, 2023, the Court so-ordered the stipulation and terminated the lawsuit.

Note 20.    Subsequent Events

On November 1, 2023, the Company redeemed its 12.5% Notes due 2025 and entered into a new financing through the issuance (the "Offering") of new 13.5% Senior Secured Notes due 2028 (the “13.5% Notes”). A portion of the net proceeds of the new debt financing of $45,000 under a new Indenture by a large leading institutional investor and affiliated entities (collectively, the “Note Holders”) was used by Aquestive to repay all outstanding notes issued under the 12.5% Notes and expenses relating to the Offering, and the balance of the net proceeds is available for general corporate purposes. The 13.5% Notes are senior secured obligations of Aquestive and will mature on November 1, 2028, unless earlier redeemed or repurchased in accordance with their terms. The 13.5% Notes bear interest at a fixed rate of 13.5% per year, payable quarterly commencing on December 30, 2023. Principal on the 13.5% Notes will be repaid starting on June 30, 2026. The 13.5% Notes contain no revenue or cash covenants, and no warrants for purchase of the Company’s common stock were issued under the terms of the transaction.

In connection with the financing transaction, the Company entered into agreements (the “Royalty Agreements”) with each of the Note Holders granting the Note Holders a tiered royalty between 1.0% and 2.0% of annual worldwide net sales of Anaphylm™ (epinephrine) Sublingual Film for a period of eight years from the first sale of Anaphylm on a global basis. The Note Holders are also entitled to a tiered royalty between 1.0% to 2.0% of annual worldwide net sales of Libervant™ (diazepam) Buccal Film until the earlier of (1) the first sale of Anaphylm and (2) eight years from the first sale of Libervant.

In line with this refinancing and in accordance with ASC 470, Debt, the amounts for the Loans payable, current and Loans payable, net have been adjusted such that Loans, Payable, current reflects the current portion of the principal payment on the 12.5% Notes due and paid on October 2, 2023 in the amount of $4,585, paid out of working capital, and the Loans payable, net of $34,390 represents the amount which has been repaid as part of the Offering of 13.5% Notes.

28

Table of Content

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read this section in conjunction with our unaudited condensed interim consolidated financial statements and related notes included in Part I Item 1 of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations for the years ended December 31, 2022 and 2021 included in our 2022 Annual Report on Form 10-K. All dollar amounts are stated in thousands except for share data.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and certain other communications made by us 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 Anaphylm™ (epinephrine) Sublingual Film through clinical development and approval by the U.S. Food and Drug Administration (FDA), including filing of a pivotal pharmacokinetic (PK) clinical trial and other supporting clinical studies for Anaphylm; regarding the Company’s ability to provide sufficient data in its New Drug Application (NDA) submission for Anaphylm to address the recent comments of the FDA on the Company’s proposed pivotal PK study protocol and the FDA’s other concerns provided to the Company following the End-of-Phase 2 (EOP2) meeting with the FDA; regarding the FDA’s approval and related timing of the filing of the NDA for Libervant™ (diazepam) Buccal Film with the FDA 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 between two and five years of age; regarding the approval for U.S. market access of Libervant for these epilepsy patients aged 12 years and older, and overcoming the orphan drug market exclusivity of a competing FDA approved nasal spray product extending to January 2027 for this age group of the patient population; regarding the potential benefits our products, including Anaphylm and Libervant, could bring to patients; the potential outlicensing of our product pipeline in the U.S. and abroad, including with respect to Anaphylm and Libervant; the focus on continuing to manufacture Suboxone®, Exservan®, Sympazan®, Ondif® and other licensed products; the potential benefits our products could bring to patients; the ability to fund our business operations; the 2023 financial outlook; our growth and future financial and operating results and financial position, regulatory approvals and pathways, clinical trial timing and plans, the achievement of clinical and commercial milestones, product orders and fulfillment, short-term and longer term liquidity and cash requirements, cash funding and cash burn; and business strategies, market opportunities, financing and other statements that are not historical facts. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include, but are not limited to, risks associated with our development work, including any delays or changes to the timing, cost and success of our product development activities and clinical trials and plans relating to Anaphylm and Libervant and our other product candidates; risk of delays in regulatory advancement through the FDA of Anaphylm and Libervant and our other drug candidates, including the risk that the FDA may require additional clinical studies for FDA approval, or failure to receive approval at all, and there can be no assurance that the Company will be successful in obtaining such approval; the risk of the Company’s ability to generate sufficient data in its NDA submission for FDA approval of Anaphylm; risk of the Company’s failure to address the FDA’s comments on the Company’s pivotal PK study protocol and other FDA concerns following the EOP2 meeting with the FDA; the risk that we may not overcome the seven year orphan drug exclusivity granted by the FDA for an FDA approved nasal spray product of another company in order for Libervant to be granted U.S. market access prior to the expiration of such exclusivity in January 2027, and there can be no assurance that the Company will be successful in obtaining such approval; risk of delays in or the failure to receive FDA approval of the NDA for Libervant for these epilepsy patients between two and five years of age, including the risk that the FDA may require additional clinical studies for approval of Libervant for this age group, and there can be no assurance that the Company will be successful in obtaining such FDA approval, including for U.S. market access for this age group; risk that a competing pediatric epilepsy product of Libervant will receive FDA approval prior to the Company’s receipt of FDA approval of the Libervant NDA for these epilepsy patients between two and five years of age; risk relating to the unpredictability of the FDA’s decisions regarding orphan drug exclusivity; risk of litigation brought by third parties relating to overcoming their orphan drug exclusivity of an FDA approved product should the FDA approve Libervant for U.S. market access for any age group of epilepsy patients; risk in obtaining market access for Libervant for other reasons; risk in obtaining market access from the FDA for our other product candidates; risk of our ability to license our proprietary products in the U.S. and abroad and risks that such product candidates will receive regulatory approval in those licensed territories; risk of eroding market share for Suboxone® and risk as a sunsetting product, which accounts for the substantial part of our current operating revenue; risk of the size and growth of our product markets; risk that our manufacturing capabilities will be sufficient to support demand for existing and potential future licensed products in the U.S. and other countries; risk of our ability to enter

29

Table of Content

into other commercial transactions with third parties that will support growth of the business and execution of key initiatives; risk inherent in commercializing a new product (including technology risks, financial risks, market risks and implementation risks and regulatory limitations); risk of development of a sales and marketing capability for future commercialization of our product candidates; our ability to manage our costs and expenses; risk of sufficient capital and cash resources, including access to available debt and equity financing, including under the Company’s ATM facility and the Lincoln Park Purchase Agreement, and revenues from operations, to satisfy all of our short-term and longer-term cash requirements and other cash needs, at the times and in the amounts needed, including near-term debt amortization schedules; 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 related to government and civil claims against Indivior Inc. for which we license, manufacture and sell Suboxone®; risks related to the outsourcing of certain operational and staff functions to third parties; risk of the rate and degree of market acceptance of our product and product candidates; the success of any competing products including generics, risk of the size and growth of our product markets; risk 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 our products; risk of unexpected patent developments; risk of legislation and regulatory actions and changes in laws or regulations affecting our business including relating to our products and products candidates and product pricing, reimbursement or access therefor; risk of loss of significant customers; risks related to claims and legal proceedings including patent infringement, securities, business torts, investigative, product safety or efficacy and antitrust litigation matters; risk of product recalls and withdrawals; adverse developments affecting the financial services industry; risks related to inflation and rising interest rates; risks from the COVID or other pandemics; uncertainties related to general economic, political (including acts of war and terrorism), business, industry, regulatory, financial and market conditions and other unusual items; and other uncertainties affecting us including those described in the "Risk Factors" section and in other sections included in this and our other Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K and our other filings with the Securities and Exchange Commission ("SEC"). These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include the matters discussed and referenced in the risk factors of the Company’s 2022 Annual Report on Form 10-K filed with the SEC. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as the date made. All subsequent forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We assume no obligation to update forward-looking statements, or outlook or guidance after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise, except as may be required by applicable law. Readers should not rely on the forward-looking statements included in this Quarterly Report on Form 10-Q as representing our views as of any date after the date of the filing of this Quarterly Report on Form 10-Q.

Overview

Aquestive Therapeutics, Inc. ("we", "Aquestive", or the "Company") is a pharmaceutical company advancing medicines to bring meaningful improvement to patients' lives through innovative science and delivery technologies. We are developing pharmaceutical products to deliver complex molecules through administrations that are alternatives to invasive and inconvenient standard of care therapies. We have five licensed commercialized products which are marketed by our licensees in the U.S. and around the world. We are the exclusive manufacturer of these licensed products. Aquestive 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. We are advancing a product pipeline for the treatment of severe allergic reactions, including anaphylaxis. We have also developed a product pipeline focused on treating diseases of the central nervous system, or CNS.

We manufacture licensed products at our facilities and anticipate that our current manufacturing capacity is sufficient for commercial quantities of our licensed products and product candidates currently in development. Our facilities have been inspected by the Food and Drug Administration ("FDA"), Australian Government Department of Health's Therapeutics Goods Administration ("TGA"), and Drug Enforcement Agency ("DEA"), and are subject to inspection by all applicable health agencies, including the Brazilian Health Regulatory Agency ("ANVISA") and European Medicines Agency ("EMA"). Not all collaborative or licensed products of the Company that may be commercially launched in the future will necessarily be manufactured by us, such as the case with KYNMOBI®.

Complex Molecule Portfolio

We have developed a proprietary pipeline of complex molecule-based product candidates as alternatives to invasively administered standard of care therapeutics addressing large market opportunities. The active programs in our complex molecule pipeline portfolio are:

30

Table of Content

•Anaphylm™ (epinephrine sublingual film) – the first and only non-device based, orally delivered epinephrine product candidate that has shown clinical results comparable to auto-injectors (such as EpiPen® and Auvi-Q®) for the emergency treatment of allergic reactions, including anaphylaxis. Epinephrine is the standard of care in the treatment of anaphylaxis and is currently administered via intramuscular injection (IM) including auto-injectors, such as EpiPen and Auvi-Q, which require patients or their caregivers to inject epinephrine into the patient's thigh during an emergency allergic reaction. As a result of this route of administration, many patients and their caregivers are reluctant to use currently available products. However, Anaphylm would, if approved by the FDA, allow a patient to simply place a dissolvable strip, approximately the size and weight of a postage stamp, under the tongue, providing an appropriate medication where it is needed, when it is needed and, in a form, preferred by patients.

We completed a first-in-human Phase 1 clinical trial for Anaphylm in Canada. This Phase 1 randomized, single-ascending dose study was performed in order to assess the safety, tolerability, and pharmacologic profile of Anaphylm.

On February 24, 2022, the FDA cleared our IND, allowing for clinical investigation of Anaphylm in the U.S. The FDA confirmed that the 505(b)(2) approval pathway is acceptable for the development of Anaphylm. The FDA granted Fast Track designation in March 2022 to Anaphylm for the emergency treatment of allergic reactions, including anaphylaxis.

On February 25, 2022, we reported positive topline data from Part 1 of our crossover study of Anaphylm, EPIPHAST, a randomized, open-label, three-part adaptive design, crossover study in healthy adult subjects comparing the pharmacokinetics (PK) and pharmacodynamics (PD) of epinephrine delivered via Anaphylm compared to epinephrine IM. The EPIPHAST study was also conducted in Canada. In Part 1 of the EPIPHAST study, multiple oral film formulations and dosage strengths of Anaphylm were evaluated. The lead formulation of Anaphylm has shown clinically meaningful blood concentrations when delivered in two different physical configurations, with a median time to maximum concentration (Tmax) of 13.5 minutes and 22.5 minutes, respectively. Part 1 also showed arithmetic mean maximum concentrations (Cmax) of 771 pg/mL and 580 pg/mL for the two configurations, or geometric mean Cmax values of 258pg/mL and 268pg/mL for the two configurations, respectively. These geometric mean Cmax and median Tmax values are consistent with those previously reported for approved injectable epinephrine devices such as EpiPen. Under Part I of the EPIPHAST study, the healthy volunteers were also exposed to a 0.5mg IM of epinephrine, allowing for a comparison with the PK, safety, and tolerability of the higher end of the approved dosage range of epinephrine, consistent with guidance received from the FDA in a written response to our Investigational New Drug Application (IND) for Anaphylm. The findings show that these two configurations of the selected Anaphylm formulation can deliver clinically meaningful blood concentrations of epinephrine sooner than that observed with the higher dose of epinephrine IM injection, and in line with existing epinephrine auto-injectors. In addition, dosing with Anaphylm resulted in changes in blood pressure and heart rate that were comparable to epinephrine auto-injectors. The Part I EPIPHAST study indicated that treatment was well tolerated, with no serious adverse events, significant medical events, or treatment-related severe adverse events reported.

In April 2022, we reported positive topline results from Part 2 of the EPIPHAST study for Anaphylm. Part 2 is a randomized, crossover design comparing Anaphylm 12mg to epinephrine IM 0.3mg. Utilizing a replicate crossover design, Part 2 confirmed in a larger population of 24 healthy subjects the key PK and PD measures observed in Part 1 of the EPIPHAST study and the first-in-human PK study. The median Tmax was observed to be 15 minutes for Anaphylm, compared to 50 minutes for the epinephrine IM 0.3mg.

In July 2022, we reported positive topline results from the final two arms of Part 3 of the EPIPHAST study for Anaphylm. The purpose of Part 3 was to continue to study the administration of the film under a variety of conditions to further characterize its PK, PD and safety. The final two arms were designed to assess the impact of (1) administering the film sublingually two minutes after consuming a peanut butter sandwich and (2) swallowing the film whole immediately with water. Part 3 study results demonstrated consistent Tmax of 12 minutes with sublingual administration of Anaphylm epinephrine oral film, after consuming a peanut butter sandwich. Part 3 study also showed positive results with an unexpectedly high level of gastrointestinal absorption after swallowing Anaphylm whole immediately with water that was distinct from the sublingually absorbed profile.

In September 2022, we reported positive topline results from the EPIPHAST II trial for Anaphylm. The EPIPHAST II trial was designed to compare single doses of Anaphylm to EpiPen 0.3mg and epinephrine IM 0.3mg, as well as repeat doses of Anaphylm to repeat doses of epinephrine IM 0.3mg. Results from the single dose administration showed Anaphylm achieved a significantly faster Tmax (12 minutes), compared to both EpiPen (22.5 minutes) and epinephrine IM 0.3mg (45 minutes). Anaphylm repeat dosing provided significantly higher drug plasma concentrations, with a Tmax of 8 minutes after administration, and extensive absorption was observed. The mean Cmax of Anaphylm was 465 pg/mL after one dose and 2,958 pg/mL after two doses. In comparison, the epinephrine IM 0.3mg Cmax was 489 pg/mL after one dose and 911 pg/mL after two doses. The single dose of EpiPen resulted in a Cmax of 869 pg/mL. Changes in systolic blood pressure and heart rate were similar after a single dose of Anaphylm when compared to a

31

Table of Content

single dose of EpiPen. This data, along with the data from the completed EPIPHAST study, was the basis for our second End-of-Phase 2 (EoP2) meeting with the FDA. We received a positive written feedback from the FDA after our initial EoP2 meeting request to discuss Chemistry, Manufacturing, and Controls (CMC) for Anaphylm, which we believe indicates that our approach to characterizing attributes of Anaphylm appears reasonable in the context of a potential future filing.

In late December 2022, we received the final minutes from the EoP2 meeting with the FDA which provided clarity as to the FDA’s expectations regarding key program areas. In March 2023, we obtained further clarification from the FDA indicating that the Company should submit its pivotal study protocol for review once it selects its reference listed drugs (RLDs). We have completed additional studies to identify the appropriate auto-injector RLDs and continue to work on the optimal administration parameters.

In May 2023, we reported positive results from the latest clinical studies evaluating PK and PD performance of Anaphylm. The time to maximum blood concentration (median Tmax) for Anaphylm was 10 minutes with a range of 5-20 minutes. Early drug exposure at 10 minutes for Anaphylm was similar to epinephrine manual injection and over 4 times higher than epinephrine manual injector. PD effects were observed as early as 2 minutes for both Anaphylm and the auto-injectors.

On July 27, 2023 we released topline data from the latest clinical crossover pilot trial, Study AQ109103 (the “103 study”), for Anaphylm. This crossover clinical trial in healthy human subjects was designed with the finalized dosing instructions expected for use in the Company’s upcoming pivotal clinical trial.

The 103 study demonstrated that Anaphylm, using the expected finalized dosing administration instructions, delivers epinephrine systemically as effectively as either commercially available autoinjectors or the manual intramuscular (IM) injection. Administration of Anaphylm 12mg resulted in a geometric mean maximum epinephrine concentration (Cmax) of 457 pg/mL and a median time to maximum concentration (Tmax) of 15 minutes after administration. The partial Area Under the Curve measurement, or pAUC, was bracketed between previously generated manual 0.3mg IM injection and epinephrine 0.3mg autoinjector data at all time points between 10 and 60 minutes, post-dosing. Importantly, Anaphylm 12mg met the standards of bracketing in the 103 study for all the critical parameters that the Company anticipates measuring in the pivotal PK study, including Cmax and pAUC during the critical early time periods, while remaining similar to autoinjectors for Tmax. The 103 study also included crossover arms of Anaphylm 12mg with alternate dosing instructions as well as Anaphylm 14mg with the finalized dosing instructions. In all cases in the 103 study, the product was considered safe and well-tolerated with no serious adverse events.

The Company recently received comments from the FDA on its pivotal Phase 3 PK clinical study protocol for Anaphylm submitted by the Company. In its comments, the FDA indicated that the Company’s proposed endpoints, sample size, and statistical analysis are reasonable. As anticipated, the FDA also reminded the Company that PK sustainability post-dosing (30 – 60 minutes) is an important factor and recommended using repeat-dose data to support PK sustainability. The Company has incorporated the FDA’s feedback into its upcoming studies and remains on track to start the pivotal PK study in Q4 2023.

In April 2023, the FDA conditionally accepted the proprietary name Anaphylm (pronounced “ana-PHYLM”) as the proposed brand name for Anaphylm. Final approval of the Anaphylm proprietary name is conditioned on FDA approval of Anaphylm, if any.

•AQST-108 (sublingual film) – AQST-108 is composed of the prodrug dipivefrin which is enzymatically cleaved into epinephrine after administration. Dipivefrin is currently available outside of the U.S. for ophthalmic indications. A sublingual film formulation delivering systemic epinephrine has been developed by Aquestive for the treatment of conditions other than anaphylaxis. Based on topline results of a prior Phase 1 PK trial in 28 healthy adult volunteers conducted by Aquestive, AQST-108 was generally well-tolerated, with systemic adverse events observed that are consistent with the known adverse events profile for epinephrine. Additional indications and delivery methods are currently being explored under our AQST-108 epinephrine prodrug platform, which we have branded as Adrenaverse. The Company has completed an initial formulation of a topical product using the Adrenaverse platform and plans on testing this formulation in humans in the coming months. Based on preclinical data, the Company has seen rapid absorption of epinephrine across porcine tissue. Although epinephrine is a vasoconstrictor and does not penetrate well through the skin, the Company believes that the Adrenaverse platform may allow for topical absorption, thereby creating the potential treatment for a variety of dermatological condition. Upon completion of the preclinical and feasibility work relating to this program, the Company expects to request a pre-IND meeting for Adrenaverse with the FDA and plans to disclose the indication and path forward for development, once we have received feedback from the FDA.

32

Table of Content

Proprietary CNS Product Candidate

We believe the application of our proprietary PharmFilm® technology is particularly valuable and relevant to patients suffering from certain CNS disorders to meet patients' unmet medical needs and to solve patients' therapeutic problems. We believe there remains a significant opportunity to develop additional products in the CNS market. Additionally, our know-how and proprietary position have broad application beyond CNS, and we plan to explore the applications of PharmFilm in other disease areas. Our most advanced asset within our proprietary CNS portfolio, focused in epilepsy, is as follows:

•Libervant™ – a buccally, or inside of the cheek, administered soluble film formulation of diazepam is our most advanced proprietary investigational product candidate. Aquestive developed Libervant as an alternative to device-dependent rescue therapies currently available to patients with refractory epilepsy, which are a rectal gel and nasal sprays. In August 2022, the FDA granted tentative approval for Libervant 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. The FDA has concluded that Libervant has met all required quality, safety, and efficacy standards for approval. Due to an existing FDA regulatory grant of orphan drug market exclusivity for Valtoco®, a diazepam nasal spray product sold by another company for use in patients 12 years of age and older, the FDA has determined that Libervant is not yet eligible for marketing in the United States. As a result of this determination, the FDA cannot give final approval for Libervant until the expiration or inapplicability of the orphan drug market exclusivity, including, for example, by a reversal of the FDA’s decision and determination that Libervant is “clinically superior” to Valtoco. However, overcoming the orphan drug marketing exclusivity determination is difficult to establish, with limited precedent, and there can be no assurance that the FDA will agree with our position seeking to overcome such market exclusivity and approve Libervant for U.S. market access earlier than January 2027, the scheduled date for expiration of orphan drug market exclusivity. Further, there can be no assurance that another company will not obtain other FDA market exclusivity that blocks U.S. market access for Libervant.

In June 2023, we filed a New Drug Application ("NDA") for Libervant 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 between two and five years of age. The FDA accepted the filing for review and assigned a PDUFA goal date of April 28, 2024. Diastat® (diazepam) rectal gel is the only treatment currently available to this age group of patients for this indication. There is no assurance that, if the pediatric NDA for Libervant is approved by the FDA, it will overcome the orphan drug exclusivity granted by the FDA for Valtoco and be granted U.S. market access for this patient age group. See “Licensed Commercial Products and Product Candidates and Other Products – Libervant” for a discussion of the licensing arrangement for this product candidate.

Licensed Commercial Products, Product Candidates and Other Products

Our portfolio also includes other products and product candidates that we have licensed, or will seek to license, or for which we have licensed our intellectual property for commercialization. In the years ended December 31, 2022 and 2021, our licensed product portfolio generated $40.0 million and $42.3 million in revenue to Aquestive, respectively. Those products include:

•Suboxone® – a sublingual film formulation of buprenorphine and naloxone, respectively an opioid agonist and antagonist, that is marketed in the United States and internationally for the treatment of opioid dependence. Suboxone was launched by our licensee, Indivior Inc., or Indivior, in 2010. Suboxone is the most prescribed branded product in its category and was the first sublingual film product for the treatment of opioid dependence. We are the sole and exclusive supplier and manufacturer of Suboxone and have produced over 2.5 billion doses of Suboxone since its launch in 2010. As of September 30, 2023, Suboxone branded products retain approximately 31% film market share as generic film-based products have penetrated this market. We have filed patent infringement lawsuits against certain companies relating to generic film-based products for buprenorphine-naloxone. More details regarding these lawsuits are described in the unaudited financial statements, Note 19, Contingencies, contained herein.

•Exservan® – an oral film formulation of riluzole, has been developed by the Company for the treatment of amyotrophic lateral sclerosis (ALS). We believe that Exservan can bring meaningful assistance to patients who are diagnosed with ALS and face difficulties swallowing traditional forms of medication. Exservan was approved by the FDA on November 22, 2019. During the fourth quarter of 2019, we announced the grant of a license to Zambon S.p.A. ("Zambon") for the development and commercialization of Exservan in the European Union ("EU") for the treatment of ALS. Zambon is a multinational pharmaceutical company with a focus on the CNS therapeutic area. Under the terms of the license agreement with Zambon, an upfront payment was paid to Aquestive for the development and commercialization rights of Exservan in the EU, and Aquestive will be paid development and sales milestone

33

Table of Content

payments and low double-digit royalties on net sales of the product in the EU. Zambon is responsible for the regulatory approval and marketing of Exservan in the countries where Zambon seeks to market the product, and Aquestive is responsible for the development and manufacture of the product. During the second quarter of 2023, Aquestive received a $0.5 million milestone payment in connection with the first commercial sale in the first country in the licensed territory for Exservan pursuant to the terms of the license agreement with Zambon.

In January 2021, we announced that the Company granted an exclusive license to Mitsubishi Tanabe Pharma Holdings America, Inc. ("MTHA") for the commercialization in the United States of Exservan. MTHA is a multinational pharmaceutical company with a focus on patients with ALS. The product was launched by MTHA in June 2021. Under the terms of the MTHA license agreement, Aquestive is the exclusive manufacturer and supplier of Exservan for MTHA in the United States. Exservan may potentially fulfill a critical need for ALS patients, given it can be administered safely and easily, twice daily, without water.

In March 2022, we announced the grant of an exclusive license to Haisco Pharmaceutical Group Co., Ltd. ("Haisco") for Haisco to develop and commercialize Exservan for the treatment of ALS in China. Haisco is a China-based public pharmaceutical company. Haisco will lead the regulatory and commercialization activities for Exservan in China. Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China. Under the terms of license agreement with Haisco, as amended, Aquestive received a $7.0 million upfront payment in September 2022, and will receive regulatory milestone payments, double-digit royalties on net sales of Exservan in China, and earn manufacturing revenue upon the sale of Exservan in China.

•KYNMOBI®– a sublingual film formulation of apomorphine, which is a dopamine agonist, was developed to treat episodic off-periods in Parkinson’s disease. We licensed our intellectual property to Cynapsus Therapeutics, Inc., a company that was acquired by Sunovion Pharmaceuticals Inc., or Sunovion, for the commercialization of KYNMOBI under an Agreement dated April 1, 2016, as amended (the "Sunovion License Agreement"). KYNMOBI was approved by the FDA on May 21, 2020 and commercially launched by Sunovion in September 2020. On November 3, 2020, we entered into a Purchase and Sale Agreement (the "Monetization Agreement") with MAM Pangolin Royalty, LLC, an affiliate of Marathon Asset Management ("Marathon"). Under the terms of the Monetization Agreement, we sold all of our contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion's apomorphine product, KYNMOBI.

•Zuplenz® – an oral soluble film formulation of ondansetron, a 5-HT antagonist, was developed for the treatment of nausea and vomiting associated with chemotherapy and post-operative recovery. Ondansetron is available as branded and generic products as intravenous injections, intramuscular injections, orally dissolving tablets, oral solution tablets, and film. We licensed commercial rights for Zuplenz to Hypera in Brazil (which Hypera markets as Ondif). Hypera received approval to market Zuplenz in Brazil from the Brazilian regulatory authority (ANVISA) on February 21, 2022. We licensed commercial rights for Zuplenz to Fortovia Therapeutics Inc. (previously Midatech Pharma PLC, "Fortovia") in the United States, Canada, and China. Fortovia launched Zuplenz in the United States in 2015. We had been the sole and exclusive manufacturer of Zuplenz for Fortovia. On August 31, 2020 Fortovia filed a Chapter 11 bankruptcy proceeding in the Bankruptcy Court for the Eastern District of North Carolina. On January 29, 2021, the Bankruptcy Court approved an agreement pursuant to which the license and supply agreement between Aquestive and Fortovia was terminated, and all rights to commercialize Zuplenz returned to us, effective January 30, 2021.

•Azstarys™ – an FDA-approved, once-daily product for the treatment of attention deficit hyperactivity disorder (ADHD) in patients age six years or older. AZSTARYS consists of serdexmethylphenidate, a prodrug of d-methylphenidate (d-MPH), co-formulated with immediate release d-MPH. In March 2012, the Company entered into an agreement with Zevra Therapeutics, Inc. (formerly KemPharm, Inc.) (“Zevra”), to terminate a Collaboration and License Agreement entered into by the Company and Zevra in April 2011. Under this termination arrangement, the Company has the right to participate in any and all value that Zevra may derive from the commercialization or any other monetization of KP-415 and KP-484 compounds or their derivatives. Among these monetization transactions are those related to any business combinations involving Zevra and collaborations, royalty arrangements, or other transactions from which Zevra may realize value from these compounds, including the product Azstarys. On March 2, 2021, Zevra announced FDA approval of Azstarys for the treatment of ADHD.

•Libervant™ - The Company entered into a License and Supply Agreement with Atnahs Pharma UK Limited, a company registered in England and Wales (“Pharmanovia”), effective as of September 26, 2022 (the “Pharmanovia Agreement”), pursuant to which the Company granted Pharmanovia an exclusive license to certain of the Company’s intellectual property to develop and commercialize Libervant for the treatment of prolonged or acute, convulsive seizures in all ages in certain countries of the European Union, the United Kingdom, Switzerland, Norway and the Middle East and North Africa (the “Territory”) during the term of the Pharmanovia Agreement. Under the Pharmanovia Agreement, Pharmanovia will lead the regulatory and commercialization activities for Libervant in the Territory and the Company will serve as the exclusive sole manufacturer and supplier of Libervant in the Territory.

34

Table of Content

The Company received $3.5 million upon agreement execution. Effective March 27, 2023, the Company amended the Pharmanovia Agreement to expand the scope of the licensed territory for Libervant to cover the rest of the world, excluding the U.S., Canada and China. Pharmanovia will be responsible for seeking appropriate regulatory approval in the expanded territories. Pursuant to the terms of the Pharmanovia Amendment, the Company received a non-refundable payment of $2.0 million from Pharmanovia on execution of the Pharmanovia Amendment.

•Sympazan® – an oral soluble film formulation of clobazam used for the treatment of seizures associated with a rare, intractable form of epilepsy known as Lennox-Gastaut syndrome, or LGS, in patients aged two years of age or older, was approved by the FDA on November 1, 2018. We commercially launched Sympazan in December 2018. On October 26, 2022, the Company entered into a License Agreement with Otter Pharmaceuticals, LLC, a subsidiary of Assertio Holdings, Inc. (“Assertio”), a specialty pharmaceutical company offering differentiated products to patients, pursuant to which the Company granted an exclusive, worldwide license of its intellectual property for Sympazan to Assertio during the term of that agreement for an upfront payment of $9.0 million. Additionally, the Company subsequently received a $6.0 million milestone payment upon its receipt of a notice of allowance from the United States Patent and Trademark Office of its patent application U.S. Serial No. 16/561,573, and payment of the related allowance fee. The Company is the exclusive sole manufacturer and supplier of Sympazan for Assertio and will receive manufacturing fees from Assertio for the product through the expiration of such supply agreement.

Business Update Regarding COVID-19

The extent to which COVID-19 impacts our business, operations, clinical trials, regulatory approval process, capital, financial and monetization markets, financial results and financial condition, and those of our suppliers, distributors, customers and other third parties necessary to our business including those involved in the regulatory approval process, will depend on future developments, which are highly uncertain and cannot be predicted with certainty or clarity, including the duration and continuing severity of the outbreak, resurgence of the outbreak, continued or additional government actions to contain COVID-19, efficacy of vaccines, and new information that will emerge concerning the short-term and long-term impact of COVID-19.

To date, we have been able to continue to manufacture and supply our products and currently do not anticipate any significant interruption in supply, although we continue to monitor this situation closely and there is no assurance that disruptions or delay will not occur as a result of COVID-19. We are also monitoring demand for our products, which could be negatively impacted during the COVID-19 pandemic, as well as the financial condition of our customers and licensees.

Critical Accounting Policies and Use of Estimates

There have been no material changes to our critical accounting policies and use of estimates as previously disclosed in our 2022 Annual Report on Form 10-K.

JOBS Act and Smaller Reporting Company

We are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act ("JOBS Act"), and a “smaller reporting company”, as defined in Rule 405 under the Securities Act of 1933, as amended. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO (which is December 31, 2023), (b) in which we have total annual gross revenues of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We also qualify as a “smaller reporting company”, meaning we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a "smaller reporting company" which allows us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and certain reduced financial disclosures in our periodic reports. In addition, we are eligible to remain a smaller reporting company, for so long as we have a public float (based on our Common Stock equity) of less than $250 million measured as of the last business day of our most recently completed second fiscal quarter or a public float (based on our Common Stock equity) of less than $700 million as of such date and annual revenues of less than $100 million during the most recently completed fiscal year. We cannot predict if investors will find our Common Stock less attractive because we may rely on these exemptions. If some investors find our Common Stock less

35

Table of Content

attractive as a result of these disclosure exemptions, there may be a less active trading market for our Common Stock and our stock price may be more volatile.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. As an emerging growth company, we have elected to take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards and, as a result, we expect to comply with new or revised accounting standards not later than the relevant dates on which adoption of such standards is required for public emerging growth companies.

Financial Operations Overview

Revenues

Our revenues to date have been earned from our manufactured products made to order for licensees, as well as revenue from our self-developed, recently outlicensed proprietary product, Sympazan. Revenues are also earned from our product development services provided under contracts with customers, and from the licensing of our intellectual property. These activities generate revenues in four primary categories: manufacture and supply revenue, co-development and research fees, license and royalty revenue, and proprietary product sales, net.

Manufacture and Supply Revenue

We manufacture based on receipt of purchase orders from our licensees, and our licensees have an obligation to accept these orders once quality assurance validates the quality of the manufactured product with agreed upon technical specifications. With the exception of our license of Exservan, our licensees are responsible for all other aspects of commercialization of these products, and we have no role, either direct or indirect, in our customers' commercialization activities, including those related to marketing, pricing, sales, payor access and regulatory operations. With regard to our license of Exservan to MTHA and Haisco, we continue to hold the NDA for that product and, as such, are responsible for certain regulatory obligations relating to the sale of the product so long as we are the holder of the NDA for the product.

We expect future manufacture and supply revenue from licensed products to be based on volume demand for existing licensed products, and for manufacturing and supply rights under license and supply agreements for existing or new agreements for successful product development collaborations.

Co-development and Research Fees

We work with our licensees to co-develop pharmaceutical products. In this regard, we earn fees through performance of specific tasks, activities, or completion of stages of development defined within a contractual arrangement with the relevant licensee. The nature and extent of these performance obligations, broadly referred to as milestones or deliverables, are usually dependent on the scope and structure of the project as contracted, as well as the complexity of the product and the specific regulatory approval path necessary for that product.

License and Royalty Revenue

We realize revenue from licenses of our intellectual property. For licenses that do not require further development or other ongoing activities by us, our licensee has acquired the right to use the licensed intellectual property for self-development of their product candidate, for manufacturing, commercialization or other specified purposes, upon the effective transfer of those rights, and related revenues are generally recorded at a point in time, subject to contingencies or constraints, if any. For licenses that may provide substantial value only in conjunction with other performance obligations to be provided by us, such as development services or the manufacture of specific products, revenues are generally recorded over the term of the license agreement. We also earn royalties based on our licensees' sales of products that use our intellectual property that are marketed and sold in the countries where we have patented technology rights. Royalty revenue related to the sale of future revenue is described further in this section under Critical Accounting Policies and Use of Estimates.

Proprietary Product Sales, Net

We commercialized our first proprietary CNS product, Sympazan, in December 2018. Revenues from sales of proprietary product are recorded net of prompt payment discounts, wholesaler service fees, returns allowances, rebates and co-pay support redemptions, each of which are described in more detail below. These reserves are based on estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale. We include these estimated amounts in connection with the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. The calculation of some of these items requires management to make estimates based on sales data, historical return data, contracts and other related information that may become known in the future. The adequacy of these provisions is reviewed on a quarterly basis. In October 2022, we entered into a License Agreement (the “Assertio Agreement”) with Otter Pharmaceuticals, LLC, a subsidiary of Assertio

36

Table of Content

Holdings, Inc. (“Assertio”), a specialty pharmaceutical company offering differentiated products to patients, pursuant to which the Company granted an exclusive, worldwide license of its intellectual property for Sympazan to Assertio during the term of that agreement. We are the exclusive sole manufacturer and supplier of Sympazan for Assertio and began recognizing Manufacture and Supply Revenue subsequent to the Assertio Agreement.

Costs and Expenses

Our costs and expenses are primarily the result of the following activities: generation of manufacture and supply revenues; development of our pipeline of proprietary product candidates; and selling, general and administrative expenses, including pre-launch and post-launch commercialization efforts, intellectual property procurement, protection, prosecution and litigation expenses, corporate management functions, medical and clinical affairs administration; public company costs, share-based compensation expenses and interest on our corporate borrowings. We primarily record our costs and expenses in the following categories:

Manufacture and Supply Costs and Expenses

Manufacture and supply costs and expenses are primarily incurred from the manufacture of our commercialized licensed pharmaceutical products, including raw materials, direct labor and overhead costs principally in our Portage, Indiana facilities. Our material costs include the costs of raw materials used in the production of our proprietary dissolving film and primary packaging materials. Direct labor costs consist of payroll costs (including taxes and benefits) of employees engaged in production activities. Overhead costs principally consist of indirect payroll, facilities rent, utilities and depreciation for leasehold improvements and production machinery and equipment. These costs can increase, or decrease, based on the costs of materials, purchased at market prices, and the amount of direct labor required to produce a product, along with the allocation of fixed overhead, which is dependent on production volume.

Our manufacture and supply costs and expenses are impacted by our customers’ supply requirements. Costs of production reflect the costs of raw materials that are purchased at market prices and production efficiency (measured by the cost of a salable unit). These costs can increase or decrease based on the amount of direct labor and materials required to produce a product and the allocation of fixed overhead, which is dependent on the levels of production.

We expect to continue to seek to rationalize and manage costs to prepare for a potential decline in Suboxone volumes as the generics in that market continue to take market share, offset by anticipated manufacturing revenue of our proprietary and licensed products including Sympazan, subsequent to the Assertio Agreement in October 2022. In addition to our proprietary products coming online, we may add licensee products which may need additional resources to manufacture. If such growth should occur for higher volume product opportunities, we would incur increased costs associated with hiring additional personnel to support the increased manufacturing and supply costs arising from higher manufactured volumes from proprietary and licensed products.

Research and Development Expenses

Since our inception, we have focused significant resources on our research and development activities. Research and development expenses primarily consist of:

•employee-related expenses, including compensation, benefits, share-based compensation and travel expense;

•external research and development expenses incurred under arrangements with third parties, such as contract research organizations, investigational sites and consultants;

•the cost of acquiring, developing and manufacturing clinical study materials; and

•costs associated with preclinical and clinical activities and regulatory operations.

We expect our research and development expenses to continue to be significant over the next several years as we continue to develop existing product candidates such as Anaphylm, AQST-108 and others, and we identify and develop or acquire additional product candidates and technologies. We may hire or engage additional skilled colleagues or third parties to perform these activities, conduct clinical trials and ultimately seek regulatory approvals for any product candidate that successfully completes those clinical trials.

Selling, General and Administrative Expenses

Selling, General and Administrative expenses consist primarily of salaries, benefits, share-based compensation, other related costs for executive, finance, and operational personnel. Other costs include facility and related costs not otherwise included in research and development expenses such as: professional fees for patent-related and other legal expenses, consulting, tax and accounting services; insurance; market research; advisory board and key opinion leaders; depreciation; and general corporate expenses, inclusive of IT systems related costs.

37

Table of Content

A significant portion of selling, general and administrative expenses related to the sale and marketing of our proprietary product, Sympazan prior to its outlicensing under the Assertio Agreement in October 2022. Subsequently, we have significantly reduced expenses related to the marketing and sales of Sympazan. Until Libervant receives FDA approval for U.S. market access, which cannot be assured, we do not plan to increase the size and resources dedicated to our commercial organization.

Our general and administrative costs include costs related to accounting, audit, legal regulatory, and tax-related services required to maintain compliance with exchange listing and SEC regulations, director and officer insurance costs, and investor and public relations costs. We continue to incur significant costs in seeking to protect our intellectual property rights, including significant litigation costs in connection with seeking to enforce our rights concerning third parties’ at-risk launch of generic products.

We will continue to manage business costs to prepare for a potential future decline in Suboxone revenue, the manufacturing costs related to Sympazan and other external factors affecting our business, as we continue to focus on our core business:

•Continuing the development of Anaphylm and AQST-108 along the 505(b)(2) pathway; and

•Seeking to obtain the approval and subsequent launch of Libervant, subject to approval by the FDA for U.S. market access, which cannot be assured.

Interest Expense

Interest expense consists of interest costs on our 12.5% Notes at a fixed rate of 12.5%, payable quarterly, amortization of loan costs and the debt discount as well as interest expense related to the finance lease. The 12.5% Notes are discussed in Note 13, 12.5% Senior Secured Notes and Loans Payable, to our condensed consolidated financial statements. See Liquidity and Capital Resources below for further detail on our 12.5% Notes. 

Royalties and Interest Expense related to the Sale of Future Revenue

On November 3, 2020, we entered into the Monetization Agreement with MAM Pangolin Royalty, LLC, an affiliate of Marathon. Under the terms of the Monetization Agreement, we sold to Marathon all of our contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion's apomorphine product, KYNMOBI, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, which received approval from the FDA on May 21, 2020. In exchange for the sale of these rights, we received an upfront payment from Marathon of $40,000 and an additional payment of $10,000 through the achievement of the first milestone. We have received an aggregate amount of $50,000 through September 30, 2023 under the Monetization Agreement.

Under the Monetization Agreement, additional aggregate contingent payments of up to $75,000 may be due to us upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $125,000. Based on the current public forecast by Sunovion of estimated KYNMOBI sales as of September 30, 2023, the Company likely will not receive any of the additional contingent payments under the Monetization Agreement. As a result, the Company discontinued recording interest expense related to the sale of future revenue.

During the second quarter of 2020, under the Sunovion License Agreement, we recognized $8,000 of royalty revenue and corresponding royalty receivable, related to the eight $1,000 annual minimum guaranteed royalty that is due. In connection with the Monetization Agreement, we performed an assessment under ASC 860, Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded that the receivable was not transferred. See Note 15, Sale of Future Revenue, to our condensed consolidated financial statements for further detail.

Interest and other income (expense), net

Interest income and other income (expense), net consists of earnings derived from an interest-bearing account and other miscellaneous income and expense items. The interest-bearing account has no minimum amount to be maintained in the account nor any fixed length of period for which interest is earned.

38

Table of Content

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2023 and 2022

Revenues:

The following table sets forth our revenue data for the periods indicated.

	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(In thousands, except %)	2023		2022		$		%		2023		2022		$		%
Manufacture and supply revenue	$	11,409	$	8,411	$	2,998	36	%	$	32,807	$	27,456	$	5,351	19	%
License and royalty revenue	1,103		376		727		193	%	3,503		1,434		2,069		144	%
Co-development and research fees	490		395		95		24	%	1,067		1,039		28		3	%
Proprietary product sales, net	—		2,281		(2,281)		N/A		—		7,069		(7,069)		N/A
Total revenues	$	13,002	$	11,463	$	1,539	13	%	$	37,377	$	36,998	$	379	1	%

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

For the three months ended September 30, 2023, total revenues increased 13% compared to the same period in the prior year. Increases in manufacture and supply revenue, license and royalty revenue, and co-development and research fees more than offset the absence of proprietary product sales during the 2023 period as a consequence of the outlicensing agreement with Assertio in October 2022.

Manufacture and supply revenue increased approximately 36% or $2,998 for the three months ended September 30, 2023 compared to the same period in the prior year. This increase was due to higher Suboxone and Sympazan manufacturing revenue which was offset by lower Zuplenz (marketed as Ondif) revenues.

License and royalty revenue increased 193% or $727 for the three months ended September 30, 2023 compared to the same period in the prior year. This increase was primarily due to higher royalty and license revenues from Suboxone and Sympazan.

Co-development and research fees increased 24% or $95 for the three months ended September 30, 2023 compared to the same period in the prior year. The increase was driven by the timing of the achievement of research and development performance obligations which are expected to fluctuate from among reporting periods.

There were no proprietary product sales, net for the three months ended September 30, 2023 subsequent to the outlicensing agreement with Assertio in October 2022. The Company recognized $2,281 of proprietary product sales for the same period in the prior year.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

For the nine months ended September 30, 2023, total revenues increased 1% or $379 compared to the same period in the prior year. The increase was primarily due to higher manufacture and supply revenue, license and royalty revenue, offset by the absence of proprietary product sales during the 2023 period as a consequence of the outlicensing agreement with Assertio in October 2022.

Manufacture and supply revenue increased approximately 19% or $5,351 for the nine months ended September 30, 2023 compared to the same period in the prior year. This increase was mostly due to increased Zuplenz (marketed as Ondif) and Sympazan manufacturing revenue as well as higher Suboxone revenues.

License and royalty revenue increased 144% or $2,069 for the nine months ended September 30, 2023 compared to the same period in the prior year. This increase was due to higher milestone license revenue for Azstarys and higher royalty and license revenues from Sympazan and Suboxone.

Co-development and research fees increased 3% or $28 for the nine months ended September 30, 2023 compared to the same period in the prior year. The increase was driven by the timing of the achievement of research and development performance obligations which are expected to fluctuate among reporting periods.

Proprietary product sales, net was not recognized for the nine months ended September 30, 2023 subsequent to the outlicensing agreement for Sympazan with Assertio in October 2022. The Company recognized $7,069 of proprietary product sales for the same period in the prior year.

39

Table of Content

Expenses and Other:

	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(In thousands, except %)	2023		2022		$		%		2023		2022		$		%
Manufacture and supply	$	4,798	$	4,625	$	173	4	%	$	16,152	$	14,081	$	2,071	15	%
Research and development	3,196		3,232		(36)		(1)	%	10,216		13,203		(2,987)		(23)	%
Selling, general and administrative	7,385		12,459		(5,074)		(41)	%	22,200		41,067		(18,867)		(46)	%
Interest expense	1,256		1,649		(393)		(24)	%	4,064		4,902		(838)		17	%
Interest expense related to the sale of future revenue, net	56		2,039		(1,983)		(97)	%	163		5,837		(5,674)		97	%
Interest and other (income) expense, net	(1,514)		(5)		(1,509)		(30,180)	%	(16,156)		(34)		(16,122)		N/A
Loss on extinguishment of debt	—		—		—		N/A		(353)		—		(353)		—	%

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Manufacture and supply costs and expenses increased 4% or $173 for the three months ended September 30, 2023 compared to the same period in the prior year. The increase was due to slightly higher costs related to raw material and production.

Research and development expenses decreased 1% or $36 for the three months ended September 30, 2023 compared to the same period in the prior year. Research and development expenses are driven primarily by the timing of clinical trial and other product development activities associated with our pipeline.

Selling, general and administrative expenses decreased 41% or $5,074 for the three months ended September 30, 2023 as compared to the same period in the prior year. The decrease primarily reflects lower selling costs of $2,246 due to the reduction in our commercial organization subsequent to the outlicensing of Sympazan in October 2022, lower legal and other administrative costs in the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Interest expense decreased 24% or $393 for the three months ended September 30, 2023 compared to the same period in the prior year. The decrease was driven mostly by the lower principal amount of debt outstanding in the 2023 period subsequent to the cumulative principal payments of $12,548 made during of 2023.

Interest expense related to the sale of future revenue, net was $56 and $2,039 for the three months ended September 30, 2023 and September 30, 2022, respectively. These amounts are due to the accounting associated with the sale of future revenue related to KYNMOBI royalties sold to Marathon on November 3, 2020 and do not represent or imply a monetary obligation or cash outflow at any time during the life of the transaction. Based on the current forecast by Sunovion of estimated KYNMOBI sales as of September 30, 2023, the Company likely will not receive any of the additional contingent payments under the Monetization Agreement. As a result, the Company discontinued recording interest expense related to the sale of future revenue in the fourth quarter of 2022, which led to a decrease in 2023. See Note 15, Sale of Future Revenue for details.

Interest and other (income) expense, net was $(1,514) for the three months ended September 30, 2023, as compared to interest and other (income) expense, net of $(5) compared to the three months ended September 30, 2022. The increase was primarily related to the receipt of the Employee Retention Tax Credit (“ERTC”) refund in the three months ended September 30, 2023.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Manufacture and supply costs and expenses increased 15% or $2,071 for the nine months ended September 30, 2023 compared to the same period in the prior year. The increase was due to higher costs related to raw material, wages and production.

Research and development expenses decreased 23% or $2,987 for the nine months ended September 30, 2023 compared to the same period in the prior year. Research and development expenses are driven primarily by the timing of clinical trial and other product development activities associated with our pipeline.

Selling, general and administrative expenses decreased 46% or $18,867 for the nine months ended September 30, 2023 as compared to the same period in the prior year. The decrease primarily reflects lower selling costs of $7,107 due to the reduction in our commercial organization subsequent to the outlicensing of Sympazan in October 2022, the absence of

40

Table of Content

severance costs of $2,336 due to the departure of our former CEO, lower stock compensation expense of $1,770 and lower legal costs and other administrative costs in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Interest expense decreased 17% or $838 for the nine months ended September 30, 2023 as compared to the same period in the prior year. The decrease was driven mostly by a lower principal amount of debt outstanding in 2023 subsequent to the $12,548 of principal repayment in the first half of 2023.

Interest expense related to the sale of future revenue, net was $163 and $5,837 for the nine months ended September 30, 2023 and September 30, 2022, respectively. These amounts are due to the accounting associated with the sale of future revenue related to KYNMOBI royalties sold to Marathon on November 3, 2020 and do not represent or imply a monetary obligation or cash outflow at any time during the life of the transaction. Based on the current forecast by Sunovion of estimated KYNMOBI sales as of September 30, 2023, the Company likely will not receive any of the additional contingent payments under the Monetization Agreement. As a result, the Company discontinued recording interest expense related to the sale of future revenue in the fourth quarter of 2022, which led to a decrease in 2023. See Note 15, Sale of Future Revenue for details.

Interest and other (income) expense, net was $(16,156) for the nine months ended September 30, 2023, as compared to interest and other (income) expense, net of $(34) for the nine months ended September 30, 2022. The change primarily reflects other income of $6,000 related to the Amendment 11 to the Indivior Commercial Exploitation Agreement, and $8,500 patent litigation settlement with BioDelivery Sciences International, Inc. recognized in the first quarter of 2023 in addition to the receipt of the ERTC.

Liquidity and Capital Resources

Sources of Liquidity

We had $24,917 in cash and cash equivalents as of September 30, 2023. While the Company’s ability to execute its business objectives and achieve profitability over the longer term cannot be assured, the Company’s on-going business, existing cash and equivalents, expense management activities, including, but not limited to potentially ceasing nearly all R&D activities, as well as access to the equity capital markets, including through the ATM facility and under the Lincoln Park Purchase Agreement, and refinancing the 12.5% Notes with the issuance of the Company's 13.5% Senior Secured Notes on November 1, 2023, provide near term liquidity for the Company to fund its operating needs, including making the interest payments on the 13.5% Notes, for at least the next twelve months as the Company continues to execute its business strategy.

On November 3, 2020, we entered into the Monetization Agreement with MAM Pangolin Royalty, LLC, an affiliate of Marathon. Under the terms of the Monetization Agreement, we sold all of our contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion's apomorphine product, KYNMOBI®. KYNMOBI, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, received approval from the FDA on May 21, 2020. In exchange for the sale of these rights, we received an upfront payment of $40,000 and an additional payment of $10,000 through the achievement of the first milestone. We have received an aggregate amount of $50,000 through September 30, 2023 under the Monetization Agreement.

Under the Monetization Agreement, additional aggregate contingent payments of up to $75,000 may be due to us upon the achievement of worldwide royalty and other commercial targets within a timeframe, which could result in total potential proceeds of $125,000. Based on the current public forecast by Sunovion of estimated KYNMOBI sales as of September 30, 2023, the Company likely will not receive any of the additional aggregate contingent payments under the Monetization agreement.

With the upfront proceeds of the Marathon monetization, we repaid $22,500 of the 12.5% Notes, and issued $4,000 of new 12.5% Notes in lieu of paying a prepayment premium on the early repayment of the 12.5% Notes, reducing the aggregate principal balance of 12.5% Notes outstanding to $51,500. In addition, as of the closing of this transaction, we issued to the holders of the 12.5% Notes warrants to purchase 143,000 shares of our Common Stock.

On October 7, 2021, the Company entered into the Fourth Supplemental Indenture, pursuant to which the amortization schedule for the 12.5% Notes was amended to provide for the date of the first amortization payment to be extended to March 30, 2023. The Fourth Supplemental Indenture did not change the maturity date of the 12.5% Notes or the interest payment obligation due under the 12.5 Notes. In connection with the Fourth Supplemental Indenture, the Company entered into a Consent Fee Letter with the holders of the 12.5% Notes, pursuant to which the Company agreed to pay the holders of the 12.5% Notes an additional cash payment of $2,700 in the aggregate, payable in four quarterly payments beginning May 15, 2022. These payments have been made by September 30, 2023.

During the first quarter of 2023, the Company redeemed $5,647 of its outstanding 12.5% Notes. The Company also paid $353 in prepayment premium as result of the early retirement of debt which was reflected as a loss on extinguishment of

41

Table of Content

debt in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as of September 30, 2023. The prepayments along with the scheduled principal repayments during 2023 reduced the net balance of the 12.5% Notes outstanding in the aggregate to $38,975 as of September 30, 2023.

In 2019, we established an “At-The-Market” ("ATM") facility and currently have a prospectus supplement registering the offer and sale of up to $35,000 of shares of Common Stock pursuant under the ATM facility (net of what has been sold pursuant thereto). Since inception to September 30, 2023, we sold 13,526,697 shares which generated net cash proceeds of approximately $44,979, net of commissions and other transaction costs of $2,476. For the nine months ended September 30, 2023, we sold 3,184,740 shares which provided net proceeds of approximately $5,274, net of commissions and other transaction costs of $392. This ATM facility has approximately $27,750 available at September 30, 2023.

On April 12, 2022, we entered into the Lincoln Park Purchase Agreement, which provides that, upon the terms and subject to the conditions and limitations under the Lincoln Park Purchase Agreement, we have the right, but not the obligation, to sell to Lincoln Park up to $40,000 worth of shares of our Common Stock from time to time over the 36-month term of the Lincoln Park Purchase Agreement. The Lincoln Park Purchase Agreement contains an ownership limitation such that we will not issue, and Lincoln Park will not purchase, shares of Common Stock if it would result in their beneficial ownership exceeding 9.99%. Lincoln Park has covenanted under the Lincoln Park Purchase Agreement not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of our Common Stock. In 2022, the Company sold 1,600,000 shares in addition to 236,491 commitment shares, which provided proceeds of approximately $1,987 in connection with the Lincoln Park Purchase Agreement. The Company did not sell shares in connection with the Lincoln Park Purchase Agreement in the nine months ended September 30, 2023.

On June 6, 2022, we entered into securities purchase agreements ("Securities Purchase Agreements") with certain purchasers. The Securities Purchase Agreements provide for the sale and issuance by us of an aggregate of: (i) 4,850,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to 4,000,000 shares of Common Stock and (iii) Common Stock warrants to purchase up to 8,850,000 shares of Common Stock. We received net proceeds of approximately $7,796, after deducting placement agent fees and expenses and estimated offering expenses payable by us. The pre-funded warrants were fully exercised in 2022. On June 14, 2023, 3,689,452 Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised with proceeds of approximately $3,542.

On August 1, 2023, the Company entered into the Letter Agreement with the Exercising Holder of 5,000,000 of the remaining Common Stock Warrants. Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the Exercising Holder would exercise all of its Existing Warrants for shares of Common Stock underlying the Existing Warrants at $0.96 per share of Common Stock, the current exercise price of the Existing Warrants. Under the Letter Agreement, in consideration of the Exercising Holder exercising the Existing Warrants, the Company issued to the Exercising Holder new warrants to purchase up to an aggregate of 2,750,000 shares of Common Stock (the “New Warrants”). The New Warrants are exercisable after February 2, 2024, expire on February 2, 2029 and are issuance only for cash, subject to exception if the shares of Common Stock underlying the New Warrants are not registered in accordance with the terms of the Letter Agreement, in which case the New Warrants may be may also be exercised, in whole or in part, at such time by means of a "cashless exercise". The New Warrants have an exercise price of $2.60 per share. On August 2, 2023, 5,000,000 of the Existing Warrants were exercised pursuant to the Securities Purchase Agreement with the Exercising Holder, with the Company receiving gross proceeds therefrom of $4,800.

In total, 8,689,452 Common Stock warrants issued pursuant to the Securities Purchase Agreements with proceeds of approximately $8,342 were exercised during the nine months ended September 30, 2023.

Cash Flows

Nine Months Ended September 30, 2023 and 2022

	Nine Months Ended September 30,
(in thousands)		2023		2022
Net cash used for by operating activities		$	(1,438)	$	(18,235)
Net cash used for investing activities		(979)		(2,498)
Net cash provided by financing activities		61		11,358
Net decrease in cash and cash equivalents		(2,356)		(9,375)

Net Cash (Used for) Operating Activities

Net cash used for operating activities for the nine months ended September 30, 2023 decreased by $16,797 compared to the same period in the prior year. The decrease was primarily related to the change in net income of $42,299, partially offset

42

Table of Content

by changes in deferred revenue of $8,070, interest expense related to the sale of future revenue of $5,683, trade and other receivables of $4,434, and in accounts payable of $2,710 as compared with the nine months ended September 30, 2022.

Net Cash (Used for) Investing Activities

Net cash used for investing activities for the nine months ended September 30, 2023 decreased by $1,519 compared to the same period in the prior year. The use of cash in 2023 was related to capital expenditures.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2023 decreased by $11,297 compared to the same period in the prior year. The decrease was primarily due to partial debt redemption and premium paid to retire debt, scheduled principal repayments, and lower proceeds from issuance of common stocks and warrants, partially offset by higher ATM proceeds as compared with the nine months ended September 30, 2022.

Funding Requirements

The Company’s on-going business, existing cash and equivalents, expense management activities as well as access to the equity capital markets, including through our ATM facility and under the Lincoln Park Purchase Agreement, potentially provide near term funding opportunities for the Company. We can provide no assurance that any of these sources of funding, either individually or in combination, will be available on reasonable terms, if at all, or sufficient to fund our business objectives. In addition, we may be required to utilize available financial resources sooner than expected. We have based our expectation on assumptions that could change or prove to be inaccurate, due to unrelated factors including factors arising in the capital markets, asset monetization markets, regulatory approval process, including the full approval of Libervant by the FDA for U.S. market access, and regulatory oversight and other factors. Key factors and assumptions inherent in our planned continued operations and anticipated growth include, without limitation, those related to the following:

•continued ability of our customers to pay, in a timely manner, for presently contracted and future anticipated orders for our manufactured products, including effects of generics and other competitive pressures as currently envisioned;

•continued ability of our customers to pay, in a timely manner, for presently contracted and future anticipated orders for provided co-development and feasibility services, as well as regulatory support services for licensed products, such as Exservan;

•access to debt or equity markets if, and at the time, needed for any necessary future funding;

•continuing review and appropriate adjustment of our cost structure consistent with our anticipated revenues and funding;

•continued ability to successfully develop Anaphylm and other product candidates in development;

•continued growth and market penetration of Sympazan, including anticipated patient and physician acceptance and our licensee's ability to obtain adequate price and payment support from government agencies and other private medical insurers;

•effective commercialization within anticipated cost levels and expected ramp-up timeframes of our product candidate Libervant, if approved for U.S. market access by the FDA;

•infrastructure and administrative costs at expected levels to support operations as an FDA and highly regulated public company;

•a manageable level of costs for ongoing efforts to protect our intellectual property rights, including litigation costs in connection with seeking to enforce our rights concerning third parties' "at-risk" launch of generic products, and other litigation matters in which we are involved;

•continued compliance with all covenants under our 13.5% Senior Secured Notes, including our ability to comply with our debt service obligations as required thereunder;

•absence of significant unforeseen cash requirements;

•our ability to access funding through the Company’s ATM facility and under the Lincoln Park Purchase Agreement; and

•the effects of the COVID-19 pandemic on our operations, operations of our key suppliers and third-party clinical and other service providers, our colleagues and contractors and debt equity and other capital market.

We expect to continue to manage business costs to appropriately reflect the anticipated general decline in Suboxone revenue, the unlikelihood of any proceeds from the KYNMOBI Monetization Agreement, and other external resources or

43

Table of Content

factors affecting our business including, if available, net proceeds or future equity financing, other future access to the capital markets or other potential available sources of liquidity, as well as the uncertainties associated with the coronavirus or any other pandemic. In doing so, we plan to continue to focus on the core drivers of value for our stockholders, including, more importantly, continued investments in our ongoing product development activities in support Anaphylm, Libervant and AQST-108. Until profitability is achieved, if at all, additional capital and/or other financing or funding will be required, which could be material, to further advance the development and commercialization of Libervant, Anaphylm and AQST-108, if approved by the FDA for U.S. market access, and to meet our other cash requirements, including debt service, specifically our outstanding debt. We plan to conservatively manage our pre-launch spending as to both timing and level relating to our product candidates in light of the current status of the FDA approval process for our product candidates. In this regard and in light of our out-license of Sympazan, we significantly reduced our cost of commercialization in 2023 compared to 2022. Even as such, we expect to incur losses and negative cash flows for the foreseeable future and, therefore, we expect to be dependent upon external financing and funding to achieve our operating plan.

The sufficiency of our short-term and longer-term liquidity is directly impacted by our level of operating revenues and our ability to achieve our operating plan for revenues, costs of development of our product candidates, regulatory approval in the time period planned for our product candidates and our ability to monetize other royalty streams or other licensed rights or assets within planned timeframes, and there can be no assurance that we will be successful in any monetization transaction. Our operating revenues have fluctuated in the past and can be expected to fluctuate in the future. We expect to incur significant operating losses and negative operating cash flows for the foreseeable future, and we have a significant level of debt on which we have substantial ongoing debt repayment and debt service obligations and have principal repayments related to our 13.5% Senior Secured Notes due through the debt maturity date, which is further discussed in Note 13, 12.5% Senior Secured Notes and Loans Payable and Note 20, Subsequent Events to our Condensed Consolidated Financial Statements. A substantial portion of our current and past revenues has been dependent upon our licensing, manufacturing and sales with one customer, Indivior, which is expected to continue, and it could take significantly longer than planned to achieve anticipated levels of cash flows to help fund our operations and cash needs.

To the extent that we raise additional funds by issuance of equity securities, our stockholders would experience further dilution and the terms of these securities could include liquidation or other preferences (if and to the extent permitted under the Indenture) that would adversely affect our stockholders’ rights. Our ability to secure additional equity financing is and could be significantly impacted by numerous factors including our operating performance and prospects, positive or negative developments in the regulatory approval process for our products candidates, including for Anaphylm and regulatory approval by the FDA for Libervant for U.S. market access, and there can be no assurance that we will receive such approvals and/or approval of Libervant for U.S. market access prior to the expiration in January 2027 of the orphan drug market exclusivity granted by the FDA to an FDA approved nasal spray of another company, our existing level of debt which is secured by substantially all of our assets and associated debt repayment schedule, restriction under the Indenture relating to the 13.5% Senior Secured Notes, and general financial market conditions, and there can be no assurance that we will continue to be successful in raising capital or that any such needed financing will be available on favorable or acceptable terms, if at all. Additionally, while the potential economic impact brought on by and the duration of the coronavirus pandemic is difficult to assess or predict, the significant impact of the coronavirus pandemic on the global financial markets, and on our own stock trading price, may reduce our ability to access additional capital, which would negatively impact our short-term and longer-term liquidity.

If adequate funds are not available for our short-term or longer-term liquidity needs and cash requirements as and when needed, we would be required to engage in expense management activities such as reducing staff, delaying, significantly scaling back, or even discontinuing some or all of our current or planned research and development programs and clinical and other product development activities, and otherwise significantly reducing our other spending and adjusting our operating plan, and we would need to seek to take other steps intended to improve our liquidity. We also may be required to evaluate additional licensing opportunities, if any become available, of our proprietary product candidate programs that we currently plan to self-commercialize or explore other potential liquidity opportunities or other alternatives or options or strategic alternatives, such asset sales, although we cannot assure that any of these actions would be available or available on reasonable terms.

Off-Balance Sheet Arrangements

During the period presented, we did not have any material off-balance sheet arrangements, nor do we have any relationships with unconsolidated entities or financial partnerships, such as entries often referred to as structured finance or special purpose entities.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K promulgated by the SEC under the U.S. Securities Act of 1933, as amended, we are not required to provide the information required by this Item 3.

Item 4.    Controls and Procedures

44

Table of Content

Management’s Evaluation of our Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including to our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As of September 30, 2023, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(b) and 13a-15(e) under the Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of September 30, 2023, our disclosure controls and procedures were effective at a reasonable assurance level.

Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act), identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

45

Table of Content

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the County of Somerset, State of New Jersey.

		Aquestive Therapeutics, Inc. (REGISTRANT)
Date:	November 6, 2023	/s/ Daniel Barber
		Daniel Barber
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:	November 6, 2023	/s/ A. Ernest Toth, Jr.
		A. Ernest Toth, Jr.
		Chief Financial Officer
		(Principal Financial Officer)

PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

For more information on Legal Proceedings, see Part I Item I. Financial Statements (Unaudited), Note 19, Contingencies.

Item 1A.    Risk Factors

You should carefully review and consider the information regarding certain risks and uncertainties facing the Company that could have a material adverse effect on the Company’s business prospects, financial condition, results of operations, liquidity and available capital resources set forth in Part I, Item 1A of the Company’s 2022 Annual Report on Form 10-K.

We will need substantial additional capital to fund our operations, which may not be available on acceptable terms, if at all.

The Company’s cash requirements for 2023 and beyond include expenses related to continuing development and clinical evaluation of its products, manufacture and supply costs, costs of regulatory filings, patent prosecution expenses and litigation expenses, expenses related to commercialization of our products, as well as costs to comply with the requirements of being a public company operating in a highly regulated industry. As of September 30, 2023, we had $24.9 million of cash and cash equivalents.

In 2019, we established the ATM facility, under which, from time to time, we may offer and sell shares of our Common Stock. The ATM facility has approximately $27,750 worth of shares of Common Stock available at September 30, 2023. In April 2022, we entered into a Purchase Agreement with Lincoln Park, under which, from time to time, we may cause Lincoln Park to purchase shares of our Common Stock.

On November 3, 2020, we entered into the Monetization Agreement. Under the terms of the Monetization Agreement, we sold all of our contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion's apomorphine product, KYNMOBI. KYNMOBI, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, received approval from the FDA on May 21, 2020. We have received an aggregate amount of $50.0 million through September 30, 2023 under the Monetization Agreement.

Under the Monetization Agreement, additional aggregate contingent payments of up to $75.0 million may be due to us upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $125.0 million. Based on the current forecast of estimated KYNMOBI sales as of September 30, 2023, the Company likely will not receive any of the additional aggregate contingent payments under the Monetization Agreement.

With the upfront proceeds of the monetization, we repaid $22.5 million of the 12.5% Notes and issued $4.0 million of new 12.5% Notes in lieu of paying a prepayment premium on the early repayment of the 12.5% Notes, reducing the aggregate principal balance of 12.5% Notes outstanding to $51.5 million. In addition, as of the closing of this monetization transaction, we issued to the holders of the 12.5% Notes warrants to purchase 143,000 shares of our Common Stock.

46

Table of Content

On October 7, 2021, we entered into the Fourth Supplemental Indenture in connection with the 12.5% Notes. Pursuant to the Fourth Supplemental Indenture, the amortization schedule for the 12.5% Notes has been amended to provide for the date of the first amortization payment to be extended to March 30, 2023. The Fourth Supplemental Indenture did not change the maturity date of June 30, 2025 or the interest payment obligation due under the 12.5% Notes.

During the first quarter of 2023, the Company redeemed $5,647 of its outstanding 12.5% Notes. The Company also paid $353 in prepayment premium as result of the early retirement of debt which was reflected as a loss on extinguishment of debt. The prepayments along with the scheduled principal repayments during 2023 reduced the net balance of the 12.5% Notes outstanding in the aggregate to $38,975 as of September 30, 2023.

On November 1, 2023, the Company issued (the “Offering”) $45,000 aggregate principal amount of its 13.5% Senior Secured Notes due November 1, 2028 (the “13.5% Notes”). A portion of the net proceeds from the Offering were used to redeem all of the outstanding 12.5% Notes and to pay expenses relating to the Offering, with the balance of the proceeds to be used for general corporate purposes. The Offering reduces the Company’s principal and interest payments by approximately $28 million through the period ending June of 2025. Interest on the 13.5% Notes accrues at a rate of 13.5% per annum and is payable quarterly in arrears on March 30, June 30, September 30 and December 30 of each year (each, a “Payment Date”) commencing on December 30, 2023. On each Payment Date commencing on June 30, 2026, the Company will also pay an installment of principal of the 13.5% Notes pursuant to a fixed amortization schedule, along with a portion of an Exit Fee determined as of the applicable date of prepayment, payment, acceleration, repurchase or redemption, as the case may be.

If adequate funds are not available for our liquidity needs and cash requirements as and when needed from the sources referred to above or otherwise, or at all, we would be required to engage in expense management activities such as reducing staff, delaying, significantly scaling back, or even discontinuing some or all of our current or planned research and development programs and clinical and other product development activities, or reducing our future commercialization efforts and otherwise significantly reducing our other spending and adjusting our operating plan, and we would need to seek to take other steps intended to improve our liquidity. We also may be required to evaluate additional licensing opportunities, if any become available, of our proprietary product candidate programs that we currently plan to self-commercialize or explore other potential liquidity opportunities or other alternatives or options or strategic alternatives, including asset sales, although we cannot assure that any of these actions would be available or available on reasonable terms. If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that would likely result in our stockholders losing most if not all of their investment in the Company.

Item 2.    Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

None.

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

During the quarter ended September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

Item 6.    Exhibits

The exhibits listed below are filed or furnished as part of this report.

47

Table of Content

Number	Description
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a), as amended, under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a), as amended, under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (formatted as Inline XBRL document and contained in exhibit 101)

* Filed herewith.

+ Pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated by the SEC, certain portions of this exhibit have been omitted. The Company hereby agrees to furnish supplementally to the SEC, upon its request, an unredacted copy of this exhibit.

48

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer of Aquestive Therapeutics, Inc.

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Daniel Barber, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Aquestive Therapeutics, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, consolidated results of operations and consolidated cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2023

/s/ Daniel Barber

Daniel Barber

President and Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial and Accounting Officer of Aquestive Therapeutics, Inc.

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, A. Ernest Toth, Jr, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Aquestive Therapeutics, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, consolidated results of operations and consolidated cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2023

/s/ A. ERNEST TOTH, JR.

A.Ernest Toth, Jr.

Chief Financial Officer
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), I, Daniel Barber, President and Chief Executive Officer of Aquestive Therapeutics, Inc. (the “Company”), hereby certify that, to the best of my knowledge:

1.The Company’s Quarterly Report on Form 10-Q for the period-ended September 30, 2023, to which this Certification is attached as Exhibit 32.1 (the “Quarterly Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

2.The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Quarterly Report and the results of operations of the Company for the period covered by the Quarterly Report.

Date: November 6, 2023

/s/ Daniel Barber

Daniel Barber

President and Chief Executive Officer
(Principal Executive Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Aquestive Therapeutics, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Quarterly Report), irrespective of any general incorporation language contained in such filing.

EX-32.2

Exhibit 32.2

Certification of Principal Financial and Accounting Officer

Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), I, A. Ernest Toth, Jr., Chief Financial Officer of Aquestive Therapeutics, Inc. (the “Company”), hereby certify that, to the best of my knowledge:

1.The Company’s Quarterly Report on Form 10-Q for the period-ended September 30, 2023, to which this Certification is attached as Exhibit 32.2 (the “Quarterly Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

2.The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Quarterly Report and the results of operations of the Company for the period covered by the Quarterly Report.

Date: November 6, 2023

/s/ A. ERNEST TOTH, JR

A.Ernest Toth, Jr.

Chief Financial Officer
(Principal Financial Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Aquestive Therapeutics, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Quarterly Report), irrespective of any general incorporation language contained in such filing.

XML

Cover - shares	9 Months Ended
	Sep. 30, 2023	Nov. 03, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-38599
Entity Registrant Name	Aquestive Therapeutics, Inc.
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	30 Technology Drive
Entity Address, City or Town	Warren
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07059
Entity Tax Identification Number	82-3827296
City Area Code	908
Local Phone Number	941-1900
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	AQST
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		66,767,283
Entity Central Index Key	0001398733
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 24,917	$ 27,273
Trade and other receivables, net	8,550	4,704
Inventories, net	7,079	5,780
Prepaid expenses and other current assets	1,911	2,131
Total current assets	42,457	39,888
Property and equipment, net	4,551	4,085
Right-of-use assets, net	5,669	5,211
Intangible assets, net	1,317	1,435
Other non-current assets	5,454	6,451
Total assets	59,448	57,070
Current liabilities:
Accounts payable	9,994	9,946
Accrued expenses	5,468	7,967
Lease liabilities, current	367	255
Deferred revenue, current	2,637	1,513
Liability related to the sale of future revenue, current	985	1,147
Loans payable, current	4,606	18,700
Total current liabilities	24,057	39,528
Loans payable, net	34,555	33,448
Liability related to the sale of future revenue, net	63,511	64,112
Lease liabilities	5,509	5,085
Deferred revenue	32,732	31,417
Other non-current liabilities	2,011	2,034
Total liabilities	162,375	175,624
Contingencies (Note 19)
Stockholders’ deficit:
Common stock, $0.001 par value. Authorized 250,000,000 shares; 66,740,765 and 54,827,734 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	67	55
Additional paid-in capital	207,972	192,598
Accumulated deficit	(310,966)	(311,207)
Total stockholders’ deficit	(102,927)	(118,554)
Total liabilities and stockholders’ deficit	$ 59,448	$ 57,070
Common stock, shares outstanding (in shares)	66,740,765	54,827,734
Common stock, shares issued (in shares)	66,740,765	54,827,734

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Stockholders’ deficit:
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	250,000,000	250,000,000
Common stock, shares issued (in shares)	66,740,765	54,827,734
Common stock, shares outstanding (in shares)	66,740,765	54,827,734

XML

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenues	$ 13,002,000	$ 11,463,000	$ 37,377,000	$ 36,998,000
Costs and expenses:
Manufacture and supply	4,798,000	4,625,000	16,152,000	14,081,000
Research and development	3,196,000	3,232,000	10,216,000	13,203,000
Selling, general and administrative	7,385,000	12,459,000	22,200,000	41,067,000
Total costs and expenses	15,379,000	20,316,000	48,568,000	68,351,000
Loss from operations	(2,377,000)	(8,853,000)	(11,191,000)	(31,353,000)
Other income/ (expenses):
Interest expense	(1,256,000)	(1,649,000)	(4,064,000)	(4,902,000)
Interest expense related to the sale of future revenue, net	(56,000)	(2,039,000)	(163,000)	(5,837,000)
Interest and other income (expense), net	1,514,000	5,000	16,156,000	34,000
Loss on extinguishment of debt	0	0	(353,000)	0
Net income (loss) before income taxes	(2,175,000)	(12,536,000)	385,000	(42,058,000)
Income taxes	(140,000)	0	144,000	0
Net income (loss)	(2,035,000)	(12,536,000)	241,000	(42,058,000)
Comprehensive income (loss)	$ (2,035,000)	$ (12,536,000)	$ 241,000	$ (42,058,000)
Earnings (loss) per share attributable to common stockholders:
Basic (in dollars per share)	$ (0.03)	$ (0.23)	$ 0	$ (0.90)
Diluted (in dollars per share)	$ (0.03)	$ (0.23)	$ 0	$ (0.90)
Weighted average common shares outstanding:
Basic (in shares)	64,678,761	53,424,922	59,252,768	46,828,218
Diluted (in shares)	64,678,761	53,424,922	61,513,736	46,828,218

XML

Condensed Consolidated Statements of Changes in Stockholders' Deficit - USD ($) $ in Thousands	Total	Public equity	Private equity	Warrant exercises	Common Stock	Common Stock Public equity	Common Stock Private equity	Common Stock Warrant exercises	Additional Paid-in Capital	Additional Paid-in Capital Public equity	Additional Paid-in Capital Private equity	Additional Paid-in Capital Warrant exercises	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2021					41,228,736
Beginning balance at Dec. 31, 2021	$ (82,134)				$ 41				$ 174,621				$ (256,796)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued (in shares)						391,652
Common stock issued, value		$ 1,360								$ 1,360
Costs of common stock issued under public equity offering		(62)								(62)
Share-based compensation expense	913								913
Other	0								1				(1)
Net income (loss)	(13,220)												(13,220)
Ending balance (in shares) at Mar. 31, 2022					41,620,388
Ending balance at Mar. 31, 2022	(93,143)				$ 41				176,833				(270,017)
Beginning balance (in shares) at Dec. 31, 2021					41,228,736
Beginning balance at Dec. 31, 2021	(82,134)				$ 41				174,621				(256,796)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(42,058)
Ending balance (in shares) at Sep. 30, 2022					53,852,126
Ending balance at Sep. 30, 2022	(107,819)				$ 54				190,982				(298,855)
Beginning balance (in shares) at Mar. 31, 2022					41,620,388
Beginning balance at Mar. 31, 2022	(93,143)				$ 41				176,833				(270,017)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Fair value of warrants issued		5,874							5,874
Common stock issued (in shares)						1,013,226	6,686,491	4,000,000
Common stock issued, value		1,252	$ 4,629	$ 0		$ 1	$ 7	$ 4		1,251	$ 4,622	$ (4)
Costs of common stock issued under public equity offering		(77)	$ (824)							(77)	$ (824)
Shares issued under employee stock purchase plan (in shares)					23,884
Shares issued under employee stock purchase plan	15								15
Share-based compensation expense	2,219								2,219
Other	0								(1)				1
Net income (loss)	(16,302)												(16,302)
Ending balance (in shares) at Jun. 30, 2022					53,343,989
Ending balance at Jun. 30, 2022	(96,357)				$ 53				189,908				(286,318)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued (in shares)						501,472
Common stock issued, value		642				$ 1				641
Costs of common stock issued under public equity offering		(98)								(98)
Share-based compensation expense	535								535
Vested restricted stock units (in shares)					6,665
Vested restricted stock units	(3)								(3)
Other	(2)								(1)				(1)
Net income (loss)	(12,536)												(12,536)
Ending balance (in shares) at Sep. 30, 2022					53,852,126
Ending balance at Sep. 30, 2022	(107,819)				$ 54				190,982				(298,855)
Beginning balance (in shares) at Dec. 31, 2022					54,827,734
Beginning balance at Dec. 31, 2022	(118,554)				$ 55				192,598				(311,207)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued (in shares)						1,078,622
Common stock issued, value		993				$ 1				992
Costs of common stock issued under public equity offering		(77)								(77)
Share-based compensation expense	344								344
Vested restricted stock units (in shares)					16,005
Vested restricted stock units	(8)								(8)
Other	(1)								(1)
Net income (loss)	8,068												8,068
Ending balance (in shares) at Mar. 31, 2023					55,922,361
Ending balance at Mar. 31, 2023	(109,235)				$ 56				193,848				(303,139)
Beginning balance (in shares) at Dec. 31, 2022					54,827,734
Beginning balance at Dec. 31, 2022	(118,554)				$ 55				192,598				(311,207)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	241
Ending balance (in shares) at Sep. 30, 2023					66,740,765
Ending balance at Sep. 30, 2023	(102,927)				$ 67				207,972				(310,966)
Beginning balance (in shares) at Mar. 31, 2023					55,922,361
Beginning balance at Mar. 31, 2023	(109,235)				$ 56				193,848				(303,139)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued (in shares)						1,981,937		3,689,452
Common stock issued, value		4,409		3,542		$ 2		$ 4		4,407		3,538
Costs of common stock issued under public equity offering		(235)								(235)
Shares issued under employee stock purchase plan (in shares)					18,699
Shares issued under employee stock purchase plan	31								31
Share-based compensation expense	631								631
Vested restricted stock units (in shares)					3,510
Vested restricted stock units	(3)								(3)
Other	1								1
Net income (loss)	(5,792)												(5,792)
Ending balance (in shares) at Jun. 30, 2023					61,615,959
Ending balance at Jun. 30, 2023	(106,651)				$ 62				202,218				(308,931)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued (in shares)						124,181		5,000,000
Common stock issued, value		264		$ 4,800				$ 5		264		$ 4,795
Costs of common stock issued under public equity offering		$ (80)								$ (80)
Share-based compensation expense	774								774
Options exercises (in shares)					625
Options Exercised	1								1
Net income (loss)	(2,035)												(2,035)
Ending balance (in shares) at Sep. 30, 2023					66,740,765
Ending balance at Sep. 30, 2023	$ (102,927)				$ 67				$ 207,972				$ (310,966)

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating activities:
Net income (loss)	$ 241	$ (42,058)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation, amortization, and impairment	878	1,990
Share-based compensation	1,749	3,667
Amortization of debt issuance costs and discounts	174	157
Interest expense related to the sale of future revenue, net	0	5,683
Other, net	(239)	60
Changes in operating assets and liabilities:
Trade and other receivables, net	(3,177)	1,257
Inventories, net	(1,299)	(2,687)
Prepaid expenses and other assets	1,217	2,111
Accounts payable	48	2,758
Accrued expenses and other liabilities	(3,469)	(2,357)
Deferred revenue	2,439	10,509
Loans payable	0	(675)
Net cash used for operating activities	(1,438)	(18,235)
Investing activities:
Capital expenditures	(979)	(998)
Additions to intangible assets	0	(1,500)
Net cash used for investing activities	(979)	(2,498)
Financing activities:
Proceeds from common stock issued under public equity offering, net	5,274	3,017
Proceeds from common stock issued under private equity offering, net	0	3,805
Proceeds from issuance and exercise of warrants	8,342	5,874
Proceeds from shares issued under employee stock purchase plan	31	15
Repayment of debt principal including lease liabilities	(12,548)	0
Premium paid to retire debt	(1,027)	(1,350)
Payments for taxes on share-based compensation	(11)	(3)
Net cash provided by financing activities	61	11,358
Net (decrease) increase in cash and cash equivalents	(2,356)	(9,375)
Cash and cash equivalents:
Cash and cash equivalents at beginning of period	27,273	28,024
Cash and cash equivalents at end of period	24,917	18,649
Supplemental disclosures of cash flow information:
Cash payments for interest	$ 2,827	$ 4,828

XML

Company Overview and Basis of Presentation

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Company Overview and Basis of Presentation

Company Overview and Basis of Presentation

(A) Company Overview

Aquestive Therapeutics, Inc. (together with its subsidiary, “we”, “Aquestive” or the “Company”) is a pharmaceutical company advancing medicines to solve patients' problems with current standards of care and provide transformative products to improve their lives. The Company is developing pharmaceutical products that deliver complex molecules through alternative administrations to invasive and inconvenient standard of care therapies. The Company has five licensed commercialized products which are marketed by its licensees in the U.S. and around the world. The Company 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. The Company is advancing a product pipeline for the treatment of severe allergic reactions, including anaphylaxis. The Company has also developed a product pipeline focused on treating diseases of the central nervous system, or CNS. The Company’s production facilities are located in Portage, Indiana, and its corporate headquarters and primary research laboratory facilities are based in Warren, New Jersey.

(B) Equity Transactions

Equity Offering of Common Stock

On September 11, 2019, the Company established an “At-The-Market” ("ATM") facility pursuant to which the Company may offer up to $25,000 worth of shares of common stock, par value $0.001 per share, of the Company (the "Common Stock"). On November 20, 2020, the Company began utilizing the ATM facility. On March 26, 2021, the Company filed a prospectus supplement to offer up to an additional $50,000 worth of shares of Common Stock under the ATM (the “2021 Prospectus”). The 2019 registration statement covering the shares under the ATM expired under its terms on September 17, 2022. On September 7, 2022, the Company filed a prospectus supplement to register the offer and sale of up to $35,000 worth of shares of Common Stock pursuant to the Amended Equity Distribution Agreement with Piper Sandler Companies (successor to Piper Jaffray & Co.) under a shelf registration statement on Form S-3 (“Registration Statement No. 333-254775” or “the 2021 Registration Statement”), that was declared effective by the Securities and Exchange Commission (“SEC”) on April 5, 2021. The Company discontinued using the 2021 Prospectus upon the filing of the prospectus supplement on September 7, 2022.

For the nine months ended September 30, 2023, the Company sold 3,184,740 shares of Common Stock under the ATM which provided net proceeds of approximately $5,274 after deducting commissions and other transaction costs of $392. This ATM facility has approximately $27,750 worth of shares of Common Stock available at September 30, 2023. For the nine months ended September 30, 2022, the Company sold 1,906,350 shares which provided net proceeds of approximately $3,017 after deducting commissions and other transaction costs of $237.

On April 12, 2022, the Company entered into a purchase agreement (the "Lincoln Park Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), which provides that, upon the terms and subject to the conditions and limitations set forth in the Lincoln Park Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park up to $40,000 worth of shares of Common Stock from time to time over the 36-month term of the Lincoln Park Purchase Agreement. The Lincoln Park Purchase Agreement contains an ownership limitation such that the Company will not issue, and Lincoln Park will not purchase, shares of Common Stock if it would result in Lincoln Park's beneficial ownership exceeding 9.99% of the Company’s then outstanding Common Stock. Lincoln Park has covenanted under the Lincoln Park Purchase Agreement not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s Common Stock. In 2022, the Company sold 1,600,000 shares, in addition to 236,491 commitment shares, which provided proceeds of approximately $1,987 in connection with the Lincoln Park Purchase Agreement. The Company did not sell shares in connection with the Lincoln Park Purchase Agreement in the nine months ended September 30, 2023.

On June 6, 2022, the Company entered into securities purchase agreements (the "Securities Purchase Agreements") with certain purchasers named therein. The Securities Purchase Agreements provided for the sale and issuance by the Company of an aggregate of: (i) 4,850,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to 4,000,000 shares of Common Stock and (iii) Common Stock warrants (the "Common Stock Warrants") to purchase up to 8,850,000 shares of Common Stock. The Company received net proceeds of approximately $7,796, after deducting placement agent fees and expenses and estimated offering expenses payable by the Company. The Company used the net proceeds from the offering for general corporate purposes. The pre-funded warrants were fully exercised in 2022. On June 14, 2023, warrants to purchase

3,689,452 shares of Common Stock issued pursuant to the Securities Purchase Agreements were exercised with proceeds paid to the Company thereon of approximately $3,542.

On August 1, 2023, the Company entered into an Inducement Offer to Exercise Common Stock Purchase Warrants (the “Letter Agreement”) with the holder (the “Exercising Holder”) of the remaining warrants to purchase 5,000,000 shares of Common Stock (the “Existing Warrants”) under the Securities Purchase Agreements. Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the Exercising Holder would exercise all of its Existing Warrants for shares of Common Stock underlying the Existing Warrants at $0.96 per share of Common Stock, the current exercise price of the Existing Warrants. Under the Letter Agreement, in consideration of the Exercising Holder exercising the Existing Warrants, the Company issued to the Exercising Holder new warrants to purchase up to an aggregate of 2,750,000 shares of Common Stock (the “New Warrants”). The New Warrants are exercisable after February 2, 2024, expire on February 2, 2029 and are issuable only for cash, subject to exception if the shares of Common Stock underlying the New Warrants are not registered in accordance with the terms of the Letter Agreement, in which case the New Warrants may also be exercised, in whole or in part, at such time by means of a “cashless exercise”. The New Warrants have an exercise price of $2.60 per share. On August 2, 2023, 5,000,000 of the Existing Warrants were exercised pursuant to the Securities Purchase Agreements with the Exercising Holder, with the Company receiving gross proceeds therefrom of $4,800. In total, warrants to exercise 8,689,452 shares of Common Stock issued pursuant to the Securities Purchase Agreements, with proceeds of approximately $8,342 paid to the Company thereon, were exercised during the nine months ended September 30, 2023.

(C) Nasdaq Stock Market Notifications

On December 30, 2022, the Company received a notice from the Nasdaq Stock Market (“Nasdaq”) that the Company was not in compliance with Nasdaq’s Listing Rule 5450(a)(1), as the minimum bid price of the Company’s Common Stock had been below $1.00 per share for 30 consecutive business days (the “Minimum Bid Price Requirement”). The notification of noncompliance had no immediate effect on the listing or trading of the Company’s Common Stock on The Nasdaq Global Market. The Company had 180 calendar days, or until June 28, 2023, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the minimum bid price of the Company’s Common Stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-calendar day grace period. On April 13, 2023, the Company received a notice from Nasdaq informing the Company that it had regained compliance with Nasdaq’s Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Market, as the minimum bid price of the Company’s Common Stock had met or exceeded $1.00 per share for a minimum of ten consecutive business days during this 180-day calendar period.

(D) Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and with Article 10 of Regulation S-X for interim financial reporting. In compliance with those rules, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2023 (the “2022 Annual Report on Form 10-K”). As included herein, the Condensed Consolidated Balance Sheet as of December 31, 2022 is derived from the audited consolidated financial statements as of that date. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results of interim periods have been included. The accompanying financial statements reflect certain reclassifications from previously issued financial statements to conform to the current presentation. The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited condensed consolidated financial statements.

Any reference in these notes to applicable guidance refers to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(A) Recent Accounting Pronouncements

As an emerging growth company, the Company has elected to take advantage of the extended transition period afforded by the Jumpstart Our Business Startups Act for the implementation of new or revised accounting standards and, as a result, the Company will comply with new or revised accounting standards no later than the relevant dates on which adoption of such standards is required for emerging growth companies. The Company believes that the impact of recently issued accounting

standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Recent Accounting Pronouncements Adopted as of September 30, 2023:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), amending existing guidance on the accounting for credit losses on financial instruments within its scope. The guidance provides for use of a forward-looking expected loss model for estimating credit losses, replacing the incurred loss model that is based on past events and current conditions. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The Company adopted the new guidance on January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The accounting standard update was issued to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The Company adopted the new guidance on January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405-50) Disclosure of Supplier Finance Program Obligations, to increase the transparency of supplier finance programs regarding the use of such programs by the buyer party (that is, the disclosing entity) and the programs’ effects on an entity’s working capital, liquidity, and cash flows. ASU 2022-04 is effective for all entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The requirement on rollforward information is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Adopted as of September 30, 2023:

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This Accounting Standards Update was issued to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. Among other provisions, the amendments in this ASU significantly change the guidance on the issuer’s accounting for convertible instruments and the guidance on the derivative scope exception for contracts in an entity’s own equity such that fewer conversion features will require separate recognition, and fewer freestanding instruments, like warrants, will require liability treatment. More specifically, the ASU reduces the number of models that may be used to account for convertible instruments from five to three, amends diluted EPS calculations for convertible instruments, modifies the requirements for a contract that may be settled in an entity’s own shares to be classified in equity and requires expanded disclosures intended to increase transparency. These amendments will be effective for the Company beginning January 1, 2024, with early adoption of the amendments permitted. The Company is currently evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements but does not expect to have a material impact on the Company’s consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This Accounting Standards Update was issued to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, and to introduce new disclosure requirements for such equity securities. These amendments will be effective for the Company beginning January 1, 2024, with early adoption of the amendments permitted. The Company is currently evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements but does not expect to have a material impact on the Company’s consolidated financial statements.

XML

Risks and Uncertainties

9 Months Ended

Sep. 30, 2023

Risks and Uncertainties [Abstract]

Risks and Uncertainties

Risks and Uncertainties

The Company assesses liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company’s cash requirements for 2023 and beyond include expenses related to continuing development and clinical evaluation of its products, manufacture and supply costs, costs of regulatory filings, patent prosecution expenses and litigation expenses, expenses related to commercialization of its products, as well as costs to comply with the requirements of being a public company operating in a highly regulated industry. As of September 30, 2023, the Company had $24,917 of cash and cash equivalents.

The Company has experienced a history of net losses in prior periods. The Company’s accumulated deficits totaled $(310,966) as of September 30, 2023. The net losses and accumulated deficits were partially offset by gross margins from

license fees, milestone and royalty payments from commercial licensees and co-development parties. The Company’s funding requirements have been met by its cash and cash equivalents, as well as its existing equity and debt offerings, including the 12.5% Senior Secured Notes (as hereinafter defined).

The Company began utilizing its ATM facility in November 2020. Since inception to September 30, 2023, the Company sold 13,526,697 shares of Common Stock which generated net cash proceeds of approximately $44,979, net of commissions and other transaction costs of $2,476. For the nine months ended September 30, 2023, the Company sold 3,184,740 shares of Common Stock which provided net proceeds of approximately $5,274, net of commissions and other transaction costs of $392. This ATM facility has approximately $27,750 worth of shares of Common Stock available at September 30, 2023.

While the Company’s ability to execute its business objectives and achieve profitability over the longer term cannot be assured, the Company’s on-going business, existing cash, expense management activities, including, but not limited to potentially ceasing nearly all R&D activities, refinancing the 12.5% Senior Secured Notes, as well as access to the equity capital markets, including through its ATM facility and under the Lincoln Park Purchase Agreement, provide near term liquidity for the Company to fund its operating needs, including making the interest payments on the 13.5% Senior Secured Notes, for at least the next twelve months as it continues to execute its business strategy. See Note 13, 12.5% Senior Secured Notes and Loans Payable and Note 20, Subsequent Events for details.

XML

Revenues and Trade Receivables, Net

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue and Trade Receivables, Net

Revenues and Trade Receivables, Net

The Company’s revenues include (i) sales of manufactured products pursuant to contracts with commercialization licensees, (ii) license and royalty revenues, and (iii) co-development and research fees generally in the form of milestone payments. The Company recognizes revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this core principle, a five-step model is applied that includes (1) identifying the contract with a customer, (2) identifying the performance obligation in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing when, or as, an entity satisfies a performance obligation.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the current revenue recognition standard. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. At contract inception, the Company assesses the goods promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a distinct good. When identifying performance obligations, the Company considers all goods or services promised in a contract regardless of whether explicitly stated in the contract or implied by customary business practice. The Company’s performance obligations consist mainly of transferring goods and services identified in the contracts, purchase orders or invoices.

Manufacture and supply revenue – this revenue is derived from products manufactured exclusively for specific customers according to their strictly-defined specifications, subject only to specified quality control inspections. Accordingly, at the point in time when quality control requirements are satisfied, revenue net of related discounts is recorded.

Proprietary product sales, net - this net revenue is recognized when product is shipped and title passes to the customer, typically at time of delivery. At the time of sale, estimates for various revenue allowances are recorded based on historical trends and judgmental estimates. For sales of Sympazan (prior to its outlicensing by the Company to Otter Pharmaceuticals, LLC in October 2022), returns allowances and prompt pay discounts are estimated based on contract terms and historical return rates, if available, and these estimates are recorded as a reduction of receivables. Similarly determined estimates are recorded relating to wholesaler service fees, co-pay support redemptions, Medicare, Medicaid and other rebates, and these estimates are reflected as a component of accrued liabilities. Once all related variable considerations are resolved and uncertainties as to collectable amounts are eliminated, estimates are adjusted to actual allowance amounts. Provisions for these estimated amounts are reviewed and adjusted on no less than a quarterly basis.

License and Royalty Revenue – license revenues are determined based on an assessment of whether the license is distinct from any other performance obligations that may be included in the underlying licensing arrangement. If the customer is able to benefit from the license without provision of any other performance obligations by the Company and the license is thereby viewed as a distinct or functional license, the Company then determines whether the customer has acquired a right to use the license or a right to access the license. For functional licenses that do not require further development or other ongoing activities by the Company, the customer is viewed as acquiring the right to use the license as, and when, transferred and revenues are generally recorded at a point in time, subject to contingencies or constraints. For symbolic licenses providing substantial value only in conjunction with other performance obligations to be provided by the Company, revenues are generally recorded over the term of the license agreement. Such other obligations provided by the Company generally include

manufactured products, additional development services or other deliverables that are contracted to be provided during the license term. Payments received in excess of amounts ratably or otherwise earned are deferred and recognized over the term of the license or as contingencies or other performance obligations are met.

Royalty revenue is estimated and recognized when sales under supply agreements with commercial licensees are recorded, absent any contractual constraints or collectability uncertainties.

Co-development and Research Fees – co-development and research fees are earned through performance of specific tasks, activities or completion of stages of development defined within a contractual development or feasibility study agreement with a customer. The nature of these performance obligations, broadly referred to as milestones or deliverables, are usually dependent on the scope and structure of the project as contracted, as well as the complexity of the product and the specific regulatory approval path necessary for that product. Accordingly, the duration of the Company’s research and development projects may range from several months to approximately three years. Although each contractual arrangement is unique, common milestones included in these arrangements include those for the performance of efficacy and other tests, reports of findings, formulation of initial prototypes, production of stability clinical and/or scale-up batches, and stability testing of those batches. Additional milestones may be established and linked to clinical results of the product submission and/or approval of the product by the FDA and the commercial launch of the product.

Revenue recognition arising from milestone payments is dependent upon the facts and circumstances surrounding the milestone payments. Milestone payments based on a non-sales metric such as a development-based milestone (e.g., an NDA filing or obtaining regulatory approval) represent variable consideration and are included in the transaction price subject to any constraints. If the milestone payments relate to future development, the timing of recognition depends upon historical experience and the significance a third party has on the outcome. For milestone payments to be received upon the achievement of a sales threshold, the revenue from the milestone payments is recognized at the later of when the actual sales are incurred or the performance obligation to which the sales relate to has been satisfied.

Contract Assets - in certain situations, customer contractual payment terms provide for invoicing in arrears. Accordingly, some, or all performance obligations may be completely satisfied before the customer may be invoiced under such agreements. In these situations, billing occurs after revenue recognition, which results in a contract asset supported by the estimated value of the completed portion of the performance obligation. These contract assets are reflected as a component of other receivables within Trade and other receivables within the Condensed Consolidated Balance Sheet. As of September 30, 2023, and December 31, 2022, such contract assets were $1,744 and $2,139, respectively, consisting primarily of products and services provided under specific contracts to customers for which earnings processes have been met prior to shipment of goods or full delivery of completed services, as well as estimated receivables from contracts with 3rd parties.

Contract Liabilities - in certain situations, customer contractual payment terms are structured to permit invoicing in advance of delivery of a good or service. In such instances, the customer’s cash payment may be received before satisfaction of some, or any, performance obligations that are specified. In these situations, billing occurs in advance of revenue recognition, which results in contract liabilities. These contract liabilities are reflected as deferred revenue within the Condensed Consolidated Balance Sheet. As remaining performance obligations are satisfied, an appropriate portion of the deferred revenue balance is credited to earnings. As of September 30, 2023 and December 31, 2022, such contract liabilities were $35,369 and $32,930, respectively.

The Company’s revenues were comprised of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Manufacture and supply revenue	$	11,409	$	8,411	$	32,807	$	27,456
License and royalty revenue	1,103		376		3,503		1,434
Co-development and research fees	490		395		1,067		1,039
Proprietary product sales, net	—		2,281		—		7,069
Total revenues	$	13,002	$	11,463	$	37,377	$	36,998

Disaggregation of Revenue

The following table provides disaggregated net revenue by geographic area:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	9,894	$	9,078	$	25,372	$	31,416
Ex-United States	3,108		2,385		12,005		5,582
Total revenues	$	13,002	$	11,463	$	37,377	$	36,998

Ex-United States revenues are derived primarily from Hypera Pharma (“Hypera”) and Indivior Inc. (“Indivior”) for product manufactured for markets outside of the United States.

Trade and other receivables, net consist of the following:

	September 30, 2023		December 31, 2022
Trade receivables	$	6,846	$	3,274
Contract and other receivables	1,744		2,139
Less: allowance for doubtful accounts	(40)		(40)
Less: sales-related allowances	—		(669)
Trade and other receivables, net	$	8,550	$	4,704

The following table presents the changes in the allowance for doubtful accounts:

	September 30, 2023		December 31, 2022
Allowance for doubtful accounts at beginning of the period	$	40	$	40
Additions charged to expense	—		—
Write-downs charged against the allowance	—		—
Allowance for doubtful accounts at end of the period	$	40	$	40

Sales-Related Allowances and Accruals

Revenues from sales of products are recorded net of prompt payment discounts, wholesaler service fees, returns allowances, rebates and co-pay support redemptions. These reserves are based on estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale. The Company includes these estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. The calculation of some of these items requires management to make estimates based on sales data, historical return data, contracts and other related information that may become known in the future. The adequacy of these provisions is reviewed on a quarterly basis.

The following table provides a summary of activity with respect to sales-related allowances and accruals for the nine months ended September 30, 2023:

	Total Sales-Related Allowances
Balance at December 31, 2022	$	669
Provision	—
Payments / credits	(87)
Reclassifications	$	(582)
Balance at September 30, 2023	$	—

Total reductions of gross product sales from sales-related allowances and accruals were $0 for the nine months ended September 30, 2023 due to the outlicensing of Sympazan. Accruals for returns allowances and prompt pay discounts are reflected as a direct reduction of trade receivables and accruals for wholesaler service fees, co-pay support redemptions and

rebates as current liabilities. The accrued balances relative to these provisions included in Trade and other receivables, net and Accounts payable and accrued expenses were $0 and $659, respectively, as of September 30, 2023, and $669 and $1,012, respectively, as of December 31, 2022.

Concentration of Major Customers

Customers are considered major customers when net revenue exceeds 10% of total revenue for the period or outstanding receivable balances exceed 10% of total receivables. For the nine months ended September 30, 2023, Indivior represented approximately 79% of total revenue. As of September 30, 2023, Indivior and Assertio Holdings, Inc. (“Assertio”) represented 71% and 10%, respectively, of outstanding receivables. For the nine months ended September 30, 2022, Indivior represented approximately 75% of total revenue. As of December 31, 2022, Indivior and Cardinal Health represented 60% and 12%, respectively, of total trade and other receivables.

XML

Material Agreements

9 Months Ended

Sep. 30, 2023

Material Agreements [Abstract]

Material Agreements

Material Agreements

Commercial Exploitation Agreement with Indivior

In August 2008, the Company entered into a Commercial Exploitation Agreement with Reckitt Benckiser Pharmaceuticals, Inc. (with subsequent amendments collectively, the “Indivior License Agreement”). Reckitt Benckiser Pharmaceuticals, Inc. was later succeeded to in interest by Indivior Inc. Pursuant to the Indivior License Agreement, the Company agreed to manufacture and supply Indivior’s requirements for Suboxone®, a sublingual film formulation, both inside and outside the United States on an exclusive basis.

Under the terms of the Indivior License Agreement, the Company is required to manufacture Suboxone in accordance with current Good Manufacturing Practice standards and according to the specifications and processes set forth in the related quality agreements the Company entered into with Indivior. Additionally, the Company is required to obtain Active Pharmaceutical Ingredients (“API”) for the manufacture of Suboxone directly from Indivior. The Indivior License Agreement specifies a minimum annual threshold quantity of Suboxone that the Company is obligated to fill and requires Indivior to provide the Company with a forecast of its requirements at various specified times throughout the year. The Indivior License Agreement provides for payment by Indivior of an agreed upon purchase price per unit until January 1, 2025 and, thereafter, that is subject to annual adjustment based on changes in an agreed upon price index. In addition to the purchase price for the Suboxone supplied, Indivior is required to make certain single digit percentage royalty payments tied to net sales value (as provided for in the Indivior License Agreement) outside of the U.S., subject to annual maximum amounts and limited to the life of the related patents.

The Indivior License Agreement contains customary contractual termination provisions, including with respect to a filing for bankruptcy or corporate dissolution, an invalidation of the intellectual property surrounding Suboxone, and commission of a material breach of the Indivior License Agreement by either party. Additionally, Indivior may terminate the Indivior License Agreement if the FDA or other applicable regulatory authority declares the Company’s manufacturing site to no longer be suitable for the manufacture of Suboxone or Suboxone is no longer suitable to be manufactured due to health or safety reasons. The initial term of the Indivior License Agreement was seven years from the commencement date. Thereafter, the Indivior License Agreement automatically renewed for successive one year periods.

Effective as of March 2, 2023, the Company and Indivior entered into Amendment No. 11 to the Indivior License Agreement (the “Indivior Amendment”). The Indivior Amendment was entered into for the primary purpose of amending the Agreement as follows: (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 covered under the Indivior License Agreement; and (ii) agreeing to transfer pricing and payment terms for supplied product under the Indivior License Agreement.

Supplemental Agreement with Indivior

On September 24, 2017, the Company entered into an agreement with Indivior, or the Indivior Supplemental Agreement. Pursuant to the Indivior Supplemental Agreement, the Company conveyed to Indivior all existing and future rights in the settlement of various ongoing patent enforcement legal actions and disputes related to the Suboxone product. The Company also conveyed to Indivior the right to sublicense manufacturing and marketing capabilities to enable an Indivior licensed generic buprenorphine product to be produced and sold by parties unrelated to Indivior or Aquestive. Under the Indivior Supplemental Agreement, the Company was entitled to receive certain payments from Indivior commencing on the date of the Indivior Supplemental Agreement through January 1, 2023. Once paid, all payments made under the Indivior Supplemental Agreement are non-refundable. Through February 20, 2019, the at-risk launch date of the competing generic products of Dr. Reddy’s Labs and Alvogen, the Company received an aggregate of $40,750 from Indivior under the Indivior Supplemental Agreement. Further payments under the Indivior Supplemental Agreement were suspended until adjudication of

related patent infringement litigation is finalized. No further payments are due to the Company under the Indivior Supplemental Agreement. See Note 19, Contingencies for details.

All payments made by Indivior to the Company pursuant to the Indivior Supplemental Agreement were in addition to, and not in place of, any amounts owed by Indivior to the Company pursuant to the Indivior License Agreement.

License Agreement with Sunovion Pharmaceuticals, Inc.

On April 1, 2016, the Company entered into a license agreement with Cynapsus Therapeutics Inc. (which was later succeeded to in interest by Sunovion Pharmaceuticals, Inc.), referred to as the Sunovion License Agreement, pursuant to which Sunovion obtained an exclusive, worldwide license (with the right to sub-license) to certain intellectual property, including existing and future patents and patent applications, covering all oral films containing apomorphine for the treatment of off episodes in Parkinson’s disease patients. Sunovion used this intellectual property to develop its apomorphine product KYNMOBI®, which was approved by the FDA on May 21, 2020. This approval triggered Sunovion’s obligation to remit a payment of $4,000 due on the earlier of: (a) the first day of product availability at a pharmacy in the United States; or (b) within six months of FDA approval of the product. This amount was received as of September 30, 2020 and was included in License and royalty revenues for the twelve months ended December 31, 2020.

Effective March 16, 2020, the Company entered into a first amendment (the “First Amendment”) to the Sunovion License Agreement. The Amendment was entered into for the primary purpose of amending the Sunovion License Agreement as follows: (i) including the United Kingdom and any other country currently in the European Union (EU) which later withdraws as a member country in the EU for purpose of determining the satisfaction of the condition triggering the obligation to pay the third milestone due under the Sunovion License Agreement, (ii) extending the date after which Sunovion has the right to terminate the Sunovion License Agreement for convenience from December 31, 2024 to March 31, 2028, (iii) modifying the effective inception date of the first minimum annual royalty due from Sunovion to the Company form January 1, 2020 to April 1, 2020, and (iv) modifying the termination provision to reflect the Company’s waiver of the right to terminate the Sunovion License Agreement in the event that KYNMOBI was not commercialized by January 1, 2020. This Sunovion License Agreement will continue until terminated by Sunovion in accordance with the termination provisions of the Amendment to the Sunovion License Agreement. The Sunovion License Agreement continues (on a country-by-country basis) until the expiration of all applicable licensed patents unless earlier terminated under the termination provisions contained therein. Upon termination of the Sunovion License Agreement, all rights to intellectual property granted to Sunovion to develop and commercialize apomorphine-based products will revert to the Company.

On October 23, 2020, the Company amended the Sunovion License Agreement to clarify the parties” agreement with respect to certain provisions in the Sunovion License Agreement, specifically the date after which Sunovion has the right to terminate the Sunovion License Agreement and the rights and obligations of the parties regarding the prosecution and maintenance of the Company’s patents covered under the Sunovion License Agreement.

In consideration of the rights granted to Sunovion under the Sunovion License Agreement, the Company received aggregate payments totaling $22,000 to date. In addition to the upfront payment of $5,000, the Company has also earned an aggregate of $17,000 in connection with specified regulatory and development milestones in the United States and Europe (the “Initial Milestone Payments”), all of which have been received to date. With the Monetization Agreement (defined below) entered into on November 3, 2020 relating to KYNMOBI as described in the paragraph below, the Company is no longer entitled to receive any payments under the Sunovion License Agreement.

Purchase and Sale Agreement with an affiliate of Marathon Asset Management

On November 3, 2020, the Company entered into a Purchase and Sale Agreement (the “Monetization Agreement”) with MAM Pangolin Royalty, LLC, an affiliate of Marathon Asset Management (“Marathon”). Under the terms of the Monetization Agreement, we sold to Marathon all of our contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion’s apomorphine product, KYNMOBI. In exchange for the sale of these rights, we received an upfront payment from Marathon of $40,000 and an additional payment of $10,000 through the achievement of the first milestone. We have received an aggregate amount of $50,000 through September 30, 2023 under the Monetization Agreement.

Under the Monetization Agreement, additional contingent payments of up to $75,000 may be due to us upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $125,000. Based on the current public forecast by Sunovion of estimated KYNMOBI sales as of September 30, 2023, the Company likely will not receive any of the additional contingent payments under the Monetization Agreement. See Note 15, Sale of Future Revenue for further details on the accounting for the Monetization Agreement.

Agreement to Terminate CLA with Zevra Therapeutics, Inc. (formerly KemPharm, Inc.)

In March 2012, the Company entered into an agreement with Zevra Therapeutics Inc. (formerly KemPharm, Inc.) (“Zevra”) to terminate a Collaboration and License Agreement entered into by the Company and Zevra in April 2011. Under this termination arrangement, the Company has the right to participate in any and all value that Zevra may derive from the commercialization or any other monetization of Zevra’s KP-415 and KP-484 compounds or their derivatives. Among these monetization transactions are those related to any business combinations involving Zevra and collaborations, royalty arrangements, or other transactions from which Zevra may realize value from these compounds or their derivatives.

Licensing and Supply Agreement with Haisco for Exservan™ (Riluzole Oral Film) for ALS Treatment in China

The Company entered into a License, Development and Supply Agreement with Haisco, a Chinese limited company listed on the Shenzhen Stock Exchange, effective as of March 3, 2022 (the “Haisco Agreement”), pursuant to which Aquestive granted Haisco an exclusive license to develop and commercialize Exservan™ (riluzole oral film) for the treatment of amyotrophic lateral sclerosis, or ALS (“Exservan”), in China. Under the terms of the Haisco Agreement, Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China. Under the Haisco Agreement, as amended, the Company received a $7,000 upfront cash payment in September 2022, and will receive regulatory milestone payments and double-digit royalties on net sales of Exservan in China and earn manufacturing revenue upon the sale of Exservan in China.

Compensatory Arrangements of Certain Officers

On May 17, 2022, the Company announced that Keith J. Kendall, former President and Chief Executive Officer of the Company, was leaving the Company and the Company’s Board of Directors, effective May 17, 2022. In connection with his departure, Mr. Kendall and the Company entered into a Separation Agreement, including a Consulting Agreement (collectively, the “Separation Agreement”), dated as of May 17, 2022. Pursuant to the Separation Agreement, Mr. Kendall’s employment with the Company ceased effective as of May 17, 2022 (the “Termination Date”). Under the Separation Agreement, Mr. Kendall received the following principal severance benefits, contingent upon Mr. Kendall’s compliance with a customary release of claims entered into at the time: (i) a cash payment consisting of the sum of any previously unpaid base salary through the Termination Date and any accrued and unused vacation time for the 2022 calendar year; (ii) a cash payment consisting of his pro-rata portion of his target bonus in the amount of $280; (iii) a cash payment in the amount of $150, representing 90 days of his base pay in lieu of the required notice period under Mr. Kendall’s employment agreement; (iv) severance payments consisting of (a) a cash payment of $263, which represents an acceleration of the first three installments of Mr. Kendall’s 18 months severance which he is entitled to under his employment agreement; (b) monthly severance payments of $53 per month for the first through the seventh months following the Termination Date; (c) $70 paid for the eighth month after the Termination Date; and (d) monthly severance payments of $88 for the ninth through eighteenth months following the Termination Date; (v) accelerated vesting of unvested outstanding equity awards, with options remaining exercisable for the duration of the stated term of each award; and (vi) continuing coverage under the Company’s group health and life insurance plans at the same levels and on the same terms and conditions as are provided to similarly-situated executives, for a period of 18 months. Under the terms of the Separation Agreement, Mr. Kendall served as a consultant to the Company, on an as-needed basis, providing transition services, strategic planning, financial planning, merger and acquisition advice and consultation, for a period of time from the Separation Date to December 31, 2022. For these services, Mr. Kendall received a consulting fee of $10 per month.

Licensing and Supply Agreement with Atnahs Pharma UK Limited

The Company entered into a License and Supply Agreement with Atnahs Pharma UK Limited, a company registered in England and Wales (“Pharmanovia”), effective as of September 26, 2022 (the “Pharmanovia Agreement”), pursuant to which the Company granted Pharmanovia an exclusive license to certain of the Company’s intellectual property to develop and commercialize Libervant™ (diazepam) Buccal Film for the treatment of prolonged or acute, convulsive seizures in all ages in certain countries of the European Union, the United Kingdom, Switzerland, Norway and the Middle East and North Africa (the “Territory”) during the term of the Pharmanovia Agreement. Under the Pharmanovia Agreement, Pharmanovia will lead the regulatory and commercialization activities for Libervant in the Territory and the Company will serve as the exclusive sole manufacturer and supplier of Libervant in the Territory. Pursuant to the Pharmanovia Agreement, the Company received $3,500 upon agreement execution and, upon the occurrence of certain conditions set forth in the Pharmanovia Agreement, will receive additional milestone payments and profit shares, as well as manufacturing fees and royalty fees through the expiration of the Pharmanovia Agreement. Effective March 27, 2023, the Company amended the Pharmanovia Agreement (the “Pharmanovia Amendment”) to expand the scope of territory for the license of Libervant to cover the rest of the world, excluding the U.S., Canada and China. Under the Pharmanovia Amendment, Pharmanovia will be responsible for seeking applicable regulatory approval in the expanded territories, which includes Latin America, Africa and Asia Pacific. Pursuant to the terms of the Pharmanovia Amendment, the Company received a non-refundable payment of $2,000 from Pharmanovia in connection with the execution of the Pharmanovia Amendment.

Licensing Agreement with Assertio Holdings, Inc.

Effective as of October 26, 2022, the Company entered into a License Agreement with Otter Pharmaceuticals, LLC, a subsidiary of Assertio to license Sympazan® (clobazam) oral film for the adjunctive treatment of seizures associated with Lennox‐Gastaut syndrome in patients aged two years of age and older (the “Assertio Agreement”). Under the terms of the Assertio Agreement, the Company granted to Assertio an exclusive, worldwide license of its intellectual property for Sympazan during the term of the Assertio License Agreement for an upfront payment of $9,000. In addition, Aquestive received a $6,000 milestone payment subsequent to Aquestive’s receipt of a notice of allowance from the United States Patent and Trademark Office (PTO) of the Company’s patent application U.S. Serial No. 16/561,573, and payment by the Company of the related allowance fee. The Company received the notice of allowance from the PTO and paid the related allowance fee on October 27, 2022. Further, under the Assertio Agreement, the Company will receive royalties from Assertio for the sale of the product through the expiration of the Assertio Agreement. The Company also entered into a long-term supply agreement with Assertio for Sympazan pursuant to which the Company is the exclusive sole worldwide manufacturer and supplier of the product and will receive manufacturing fees from Assertio for the product through the expiration of such supply agreement.

XML

Financial Instruments – Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Financial Instruments – Fair Value Measurements

Financial Instruments – Fair Value Measurements

Certain assets and liabilities are reported on a recurring basis at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•Level 1 — Observable quoted prices in active markets for identical assets or liabilities.

•Level 2 — Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

•Level 3 — Unobservable inputs that are supported by little or no market activity, such as pricing models, discounted cash flow methodologies and similar techniques.

The carrying amounts reported in the balance sheets for trade and other receivables, prepaid and other current assets, accounts payable and accrued expenses, and deferred revenue approximate their fair values based on the short-term maturity of these assets and liabilities.

The Company granted warrants to certain noteholders in connection with its debt repayment and debt refinancing during 2020 and 2019, respectively. Those warrants were valued based on Level 3 inputs and their fair value was based primarily on an independent third-party appraisal prepared as of the grant date consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation. See Note 14, Warrants for further information on these warrants.

The Company’s 12.5% Senior Secured Notes contain a repurchase offer or put option which gives holders of the option the right, but not the obligation, to require the Company to redeem the 12.5% Notes up to a capped portion of milestone payments resulting from the Monetization Agreement. This put option was valued based on Level 3 inputs and its fair value was based primarily on an independent third-party appraisal consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants Accounting and Valuation Guide. See Note 13, 12.5% Senior Secured Notes and Loans Payable for further discussion.

In June 2022, the Company issued pre-funded warrants to purchase up to 4,000,000 shares of Common Stock and Common Stock Warrants to purchase up to 8,850,000 shares of Common Stock in connection with its Securities Purchase Agreements with certain purchasers. Those warrants were valued based on Level 3 inputs and their fair value was based primarily on an independent third-party appraisal prepared as of the grant date consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide. See Note 14, Warrants for further information on these warrants.

On August 1, 2023, the Company entered into the Letter Agreement with the Exercising Holder of the remaining warrants to purchase 5,000,000 of the shares of Common Stock. Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the Exercising Holder would exercise all of its Existing Warrants for shares of Common Stock underlying the Existing Warrants at $0.96 per share of Common Stock, the current exercise price of the Existing Warrants. Under the Letter Agreement, in consideration of the Exercising Holder exercising the Existing Warrants, the Company issued to the Exercising Holder new warrants to purchase up to an aggregate of 2,750,000 shares of Common Stock (the “New

Warrants”). Those warrants were valued based on Level 3 inputs and their fair value was based primarily on an independent third-party appraisal prepared as of the grant date consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide. See Note 14, Warrants for further information on these warrants.

XML

Inventories, Net

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Inventories, Net

Inventories, Net

The components of Inventory, net are as follows:

	September 30, 2023		December 31, 2022
Raw material	$	1,902	$	1,899
Packaging material	3,427		2,914
Finished goods	1,750		967
Total inventory, net	$	7,079	$	5,780

XML

Property and Equipment, Net

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and Equipment, Net

	Useful Lives	September 30, 2023		December 31, 2022
Machinery	3-15 years	$	20,176	$	19,810
Furniture and fixtures	3-15 years	769		769
Leasehold improvements	(a)	21,386		21,375
Computer, network equipment and software	3-7 years	2,627		2,627
Construction in progress		2,305		1,467
		47,263		46,048
Less: accumulated depreciation and amortization		(42,712)		(41,963)
Total property and equipment, net		$	4,551	$	4,085

(a)Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives.

Total depreciation, amortization, and impairment related to property and equipment was $218 and $557 for the three months ended September 30, 2023 and 2022, respectively. For the respective nine month periods, these expenses totaled $760 and $1,926

XML

Right-of-Use Assets and Lease Obligations

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Right-of-Use Assets and Lease Obligations

Right-of-Use Assets and Lease Obligations

The Company leases all realty used at its production and warehouse facilities, corporate headquarters, commercialization operations center and research and laboratory facilities. None of these three leases include the characteristics specified in ASC 842, Leases, which require classification as financing leases and, accordingly, these leases are accounted for as operating leases. These leases, as amended, provide remaining terms between 4.5 and 10.0 years, including renewal options expected to be exercised to extend the lease periods.

During the nine months ended September 30, 2023, the Company recognized a lease supporting its manufacturing facilities as a finance lease. Commitments under finance leases are not significant, and are included in Property and equipment, net, Loans payable, current and Loans payable, net on the consolidated balance sheet.

The Company does not recognize a right-to use asset and lease liability for short-term leases, which have terms of 12 months or less on its consolidated balance sheet. For longer-term lease arrangements that are recognized on the Company’s consolidated balance sheet, the right-of-use asset and lease liability is initially measured at the commencement date based upon the present value of the lease payments due under the lease. These payments represent the combination of the fixed lease and fixed non-lease components that are due under the arrangement. The costs associated with the Company’s short-term leases, as well as variable costs relating to the Company’s lease arrangements, are not material to the Company’s financial results.

The implicit interest rates of the Company’s lease arrangements are generally not readily determinable and as such, the Company applies an incremental borrowing rate, which is established based upon the information available at the lease commencement date, to determine the present value of lease payments due under an arrangement. Measurement of the operating lease liability reflects a range of an estimated discount rate of 14.8% to 15.6% applied to minimum lease payments, including expected renewals, based on the incremental borrowing rate experienced in the Company’s collateralized debt refinancing.

The Company’s lease costs are recorded in manufacture and supply, research and development and selling, general and administrative expenses in its Consolidated Statements of Operations and Comprehensive Income (Loss). For the three and nine

months ended September 30, 2023, total operating lease expenses totaled $438 and $1,308, respectively, including variable lease expenses such as common area maintenance and operating costs of $109 and $338, respectively. For the three and nine months ended September 30, 2022, total operating lease expenses totaled $424 and $1,267, respectively, including variable lease expenses such as common area maintenance and operating costs of $110 and $333, respectively.

Maturities of the Company’s operating lease liabilities are as follows:

Remainder of 2023	$	303
2024	1,230
2025	1,266
2026	1,300
2027 and thereafter	6,318
Total future lease payments	10,417
Less: imputed interest	(4,541)
Total operating lease liabilities	$	5,876

XML

Intangible Assets, Net

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, Net

Intangible Assets, Net

The following table provides the components of identifiable intangible assets, all of which are finite lived:

	September 30, 2023		December 31, 2022
Purchased intangible	$	3,858	$	3,858
Purchased patent	509		509
	4,367		4,367
Less: accumulated amortization	(3,050)		(2,932)
Intangible assets, net	1,317		1,435

Amortization expense was $39 and $39 for each of the three-month periods ended September 30, 2023 and 2022. For the corresponding nine-month periods, these expenses totaled $117 and $64, respectively. During the remaining life of the purchased intangible assets, estimated amortization expense is $39 for the remainder of 2023 and $156 in 2024, respectively.

XML

Other Non-current Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Other Non-current Assets

Other Non-current Assets

The following table provides the components of other non-current assets:

	September 30, 2023		December 31, 2022
Royalty receivable	4,000		5,000
Other	1,454		1,451
Total other non-current assets	$	5,454	$	6,451

During the second quarter of 2020, under the Sunovion License Agreement, the Company recognized $8,000 of royalty revenue and corresponding royalty receivable, related to the eight $1,000 annual minimum guaranteed royalty payments that are due to the Company. In connection with the Monetization Agreement, the Company performed an assessment under ASC 860, Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded it was not transferred. Royalty receivable consists of five annual minimum payments due from Sunovion, the last of which is due in March 2028. The current portion of the royalty receivable is included in Trade and other receivables, net. See Note 15, Sale of Future Revenue for further details on how this receivable relates to the Monetization Agreement transaction.

XML

Accrued Expenses

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Accrued Expenses

Accrued Expenses

Accrued expenses consisted of the following:

	September 30, 2023		December 31, 2022
Accrued compensation	$	2,831	$	6,389
Real estate and personal property taxes	377		322
Accrued distribution expenses and sales returns provision	659		1,012
Other	1,601		244
Total accrued expenses	$	5,468	$	7,967

XML

12.5% Senior Secured Notes and Loans Payable

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

12.5% Senior Secured Notes and Loans Payable

12.5% Senior Secured Notes and Loans Payable

On July 15, 2019, the Company completed a private placement of up to $100,000 aggregate principal of its 12.5% Senior Secured Notes due 2025 (the “12.5% Notes” or “12.5% Senior Secured Notes”) and issued warrants for 2,000,000 shares of Common Stock (the “Warrants”), at $0.001 par value per share.

Upon closing of the indenture for the 12.5% Notes (the “Base Indenture”), the Company issued $70,000 of the 12.5% Notes (the “Initial Notes”) along with the Warrants and rights of first offer (the “First Offer Rights”) to the noteholders participating in this transaction. Issuance of the Initial Notes and Warrants provided net proceeds of $66,082.

On November 3, 2020, the Company entered into the First Supplemental Indenture (the “First Supplemental Indenture” and, together with all other subsequent supplemental indentures and the Base Indenture, collectively, the “Indenture”) by and among the Company and U.S. Bank National Association, as Trustee (the “Trustee”) and Collateral Agent thereunder to the Base Indenture, by and between the Company and the Trustee. Under the Second Supplemental Indenture, the Company repaid $22,500 of its $70,000 outstanding 12.5% Notes from the upfront proceeds received under the Monetization Agreement. Further, the Company entered into an additional Purchase Agreement with its lenders whereby the Company issued in aggregate $4,000 of additional 12.5% Notes (the “Additional Notes”) in lieu of paying a prepayment premium to two lenders on the early repayment of the 12.5% Notes discussed above. The result of these two transactions reduced the net balance of the Company’s 12.5% Notes outstanding in the aggregate to $51,500 at December 31, 2020. The $4,000 principal issuance would be repaid proportionally over the same maturities as the other 12.5% Notes. The Company also paid one of its lenders a $2,250 premium as result of the early retirement of debt.

The Company accounted for the $22,500 debt repayment as a debt modification of the 12.5% Notes. The fees paid to lenders inclusive of (i) a $2,250 early premium prepayment and (ii) $4,000 issuance of Additional Notes in lieu of paying a prepayment penalty were recorded as additional debt discount, amortized over the remaining life of the 12.5% Notes using the effective interest method. Loan origination costs of $220 associated with the Additional Notes were expensed as incurred. Existing deferred discounts and loan origination fees on the 12.5% Notes are amortized as an adjustment of interest expense over the remaining term of modified debt using the effective interest method.

The First Supplemental Indenture contains a provision whereby, as the Company receives any cash proceeds from the Monetization Agreement, each noteholder has the right to require the Company to redeem all or any part of such noteholder's outstanding 12.5% Notes at a repurchase price in cash equal to 112.5% of the principal amount, plus accrued and unpaid interest. This repurchase offer is capped at 30% of the cash proceeds received by the Company as the contingent milestones are attained, if any, up through June 30, 2025. A valuation study was performed by an independent third party appraiser and updated as of September 30, 2023. Based on the valuation study, the put option is valued at $0.00 and has been recorded in Other non-current liabilities. The embedded put option is deemed to be a derivative under ASC 815, Derivatives and Hedging, which requires the recording of the embedded put option at fair value and subject to remeasurement at each reporting period. In addition, as of the closing of this transaction, the Company issued to the holders of the 12.5% Notes warrants to purchase 143,000 shares of its Common Stock.

On August 6, 2021, pursuant to the Third Supplemental Indenture, the holders of the 12.5% Notes extended to June 30, 2022 from December 31, 2021, the Company’s ability to access, at the Company’s option, $30,000 of the 12.5% Notes re-openers under the Indenture. Under the Third Supplemental Indenture, the first $10,000 of 12.5% Notes re-openers represented a commitment of such amount by current holders of the 12.5% Notes, at the option of the Company, contingent upon FDA approval of the Company’s product candidate Libervant (the "First Additional Securities"). In addition, under the Third Supplemental Indenture, a second $20,000 12.5% Notes re-opener represented a right, at the Company’s option, to market to current holders of the Company’s 12.5% Notes, and or other noteholders, additional 12.5% Notes up to such amount, contingent upon FDA approval of Libervant for U.S. market access (the "Second Additional Securities"). Under the Third Supplemental Indenture, the Company agreed that, if and to the extent that the Company accessed these re-openers, it would

grant to the noteholders warrants to purchase up to 714,000 shares of Common Stock, with the strike price calculated based on the 30-day volume weighted average closing price of the Common Stock at the warrant grant date.

On October 7, 2021, the Company entered into the Fourth Supplemental Indenture, pursuant to which the amortization schedule for the 12.5% Notes was amended to provide for the date of the first amortization payment to be extended from September 30, 2021 to March 30, 2023. The Fourth Supplemental Indenture did not change the maturity date of the 12.5% Notes or the interest payment obligation due under the 12.5% Notes. In connection with the Fourth Supplemental Indenture, the Company entered into a Consent Fee Letter with the holders of the 12.5% Notes (the “Consent Fee Letter”), pursuant to which the Company agreed to pay the holders of the 12.5% Notes an additional cash payment ("Consent Fee") of $2,700 in the aggregate, payable in four quarterly payments beginning May 15, 2022. Additionally, the Company recognized a loss on the extinguishment of debt of $13,822 for fees and expenses related to the Fourth Supplemental Indenture during the fourth quarter of 2021. As of September 30, 2023, the Company paid its $2,700 Consent Fee payment to the holders of the 12.5% Notes in full.

On May 13, 2022, pursuant to the Fifth Supplemental Indenture, the holders of the 12.5% Notes further extended to March 31, 2023 from June 30, 2022, the Company’s ability to access, at the Company’s option, $30,000 of 12.5% Notes re-openers under the Indenture, subject to the full approval of Libervant by the FDA for market access in the United States. Because FDA approval for U.S. market access was not obtained by March 31, 2023, the Company’s option to access the re-openers expired on such date.

The 12.5% Notes provide a stated fixed interest rate of 12.5%, payable quarterly in arrears, with the final quarterly principal repayment of the 12.5% Notes due at maturity on June 30, 2025. As of September 30, 2023, the Company recorded its principal payment obligations as Loans payable, current and Loans payable, net on its Condensed Consolidated Balance Sheet.

The Company may elect, at its option, to redeem the 12.5% Notes at any time at premiums that range from 101.56% of outstanding principal if prepayment occurs on or after the fifth anniversary of the issue date of the Initial Notes to 112.50% if payment occurs during the third year after the issuance of the 12.5% Notes. The Indenture also includes change of control provisions under which the Company may be required to redeem the 12.5% Notes at 101% of the remaining principal plus accrued interest at the election of the noteholders.

During the first quarter of 2023, the Company redeemed $5,647 of its outstanding 12.5% Notes. The Company also paid $353 in prepayment premium as result of the early retirement of debt which was reflected as a loss on extinguishment of debt. The prepayments along with the scheduled principal repayments made during 2023 reduced the net balance of the 12.5% Notes outstanding in the aggregate to $38,975 as of September 30, 2023. In accordance with the third quarter invoice, the third quarter principal and interest payments of $4,585 and $1,218, respectively, were made on October 2, 2023.

The Company capitalizes legal and other third-party costs incurred in connection with obtaining debt as deferred debt issuance costs and applies the unamortized portion as a reduction of the outstanding face amount of the related loan. Similarly, the Company amortizes debt discounts, such as those represented by warrants issued to its lenders, and offsets those as a direct reduction of its outstanding debt. Amortization expense arising from deferred debt issuance costs and debt discounts related to the 12.5% Notes for the three and nine months ended September 30, 2023 were $3 and $11, respectively, while comparative amortization expense for the three and nine months ended September 30, 2022 were $4 and $12, respectively. Unamortized deferred debt issuance costs and deferred debt discounts totaled $16 and $27 as of September 30, 2023 and December 31, 2022, respectively.

Collateral for the loan under the 12.5% Notes consists of a first priority lien on substantially all property and assets, including intellectual property of the Company. This secured obligation provides payment rights that are senior to all existing and future subordinated indebtedness of the Company and provides the holders of the 12.5% Notes with perfected security interests in substantially all of the Company’s assets.

A debt maturity table prior to the refinancing of the Company's debt on November 1, 2023 and described in Note 20, Subsequent Events is presented below:

Remainder of 2023	$	9,171
2024	19,487
2025	10,317
Total	$	38,975

In line with the debt refinancing as discussed in Note 20, Subsequent Events and in accordance with ASC 470, Debt, the amounts for the Loans payable, current and Loans payable, net have been adjusted such that Loans payable, current reflects the current portion of the principal payment on the 12.5% Senior Secured notes due and paid on October 2, 2023 in the amount of $4,585, paid out of working capital, and the Loans payable, net of $34,390 represents the amount that has been repaid from

the net proceeds of the Company's offering of its new 13.5% Senior Secured Notes due 2028 (the “13.5% Notes”) refinancing transaction.

A revised debt maturity table subsequent to the debt refinancing on November 1, 2023 is presented below.

Remainder of 2023	$	—
2024	—
2025	—
2026	9,540
2027	14,535
2028	20,925
Total	$	45,000

XML

Warrants

9 Months Ended

Sep. 30, 2023

Warrants and Rights Note Disclosure [Abstract]

Warrants

Warrants

Warrants Issued to 12.5% Senior Secured Noteholders

Warrants that were issued in conjunction with the Initial Notes (the “Initial Warrants”) and Additional Notes (the “Additional Warrants”) expire on June 30, 2025 and entitled the noteholders to purchase up to 2,143,000 shares of Common Stock and included specified registration rights. Management estimated the fair value of the Initial Warrants to be $6,800 and the Additional Warrants to be $735, each based on an assessment by an independent third-party appraiser. The fair value of the respective warrants was treated as a debt discount, amortizable over the term of the respective warrants, with the unamortized 12.5% Notes portion applied to reduce the aggregate principal amount of the 12.5% Notes in the Company’s unaudited Condensed Consolidated Balance Sheet. Additionally, since the Initial Warrants and Additional Warrants issued do not provide warrant redemption or put rights within the control of the holders that could require the Company to make a payment of cash or other assets to satisfy the obligations under the warrants, except in the case of a “cash change in control”, the fair value attributed to the warrants is presented in Additional Paid-in Capital in the Company’s unaudited Condensed Consolidated Balance Sheet. There were no warrants exercised as it relates to the Initial Warrants and the Additional Warrants during the nine months ended September 30, 2023 or 2022, respectively.

Warrants Issued Under Securities Purchase Agreements

In June 2022, the Company issued pre-funded warrants and Common Stock warrants to certain purchasers in connection with the Securities Purchase Agreements. The pre-funded warrants entitled purchasers to purchase up to 4,000,000 shares of Common Stock and were exercised in full during the year ended December 31, 2022. The Common Stock warrants expire on June 8, 2027 and entitled the purchasers to purchase up to 8,850,000 shares of Common Stock at a price ranging from $0.96 to $1.09 per share. Management estimated the fair value of the pre-funded warrants and Common Stock warrants to be $5,874 based on an assessment by an independent third-party appraiser. The fair value of the pre-funded and Common Stock warrants is treated as equity and presented in Additional Paid-in Capital in the Company’s unaudited Condensed Consolidated Balance Sheet. On June 14, 2023, 3,689,452 Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised with proceeds of approximately $3,542.

On August 1, 2023, the Company entered into the Letter Agreement with the Exercising Holder of 5,000,000 of the remaining Common Stock Warrants. Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the Exercising Holder would exercise all of its Existing Warrants for shares of Common Stock underlying the Existing Warrants at $0.96 per share of Common Stock, the current exercise price of the Existing Warrants. Under the Letter Agreement, in consideration of the Exercising Holder exercising the Existing Warrants, the Company issued to the Exercising Holder new warrants to purchase up to an aggregate of 2,750,000 shares of Common Stock (the “New Warrants”). The New Warrants are exercisable after February 2, 2024, expire on February 2, 2029 and are issuance only for cash, subject to exception if the shares of Common Stock underlying the New Warrants are not registered in accordance with the terms of the Letter Agreement, in which case the New Warrants may also be exercised, in whole or in part, at such time by means of a "cashless exercise". The New Warrants have an exercise price of $2.60 per share. On August 2, 2023, 5,000,000 of the Existing Warrants were exercised pursuant to the Securities Purchase Agreement with the Exercising Holder, with the Company receiving gross proceeds therefrom of $4,800. In total, 8,689,452 Common Stock warrants issued pursuant to the Securities Purchase Agreements with proceeds of approximately $8,342 were exercised during the nine months ended September 30, 2023.

In addition to the warrants to purchase 2,750,000 shares of Common Stock described above, there remain outstanding warrants to purchase 160,548 shares of Common Stock of $1.09 of the original warrants to purchase 8,850,000 shares of Common Stock issued in connection with the Securities Purchase Agreements. Lastly, there are warrants to purchase 1,714,429

shares of Common Stock outstanding related to the original issuance of the 12.5% Notes prior to the debt refinancing described above in this Note 14.

XML

Sale of Future Revenue

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Sale of Future Revenue

Sale of Future Revenue

On November 3, 2020, the Company entered into the Monetization Agreement with Marathon. Under the terms of the Monetization Agreement, the Company sold all of its contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion's apomorphine product, KYNMOBI, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, which received approval from the FDA on May 21, 2020. In exchange for the sale of these rights, the Company received an upfront payment of $40,000 and an additional payment of $10,000 through the achievement of the first milestone. The Company has received an aggregate amount of $50,000 through September 30, 2023 under the Monetization Agreement.

Under the Monetization Agreement, additional contingent payments of up to $75,000 may be due to the Company upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $125,000.

The Company recorded the upfront proceeds of $40,000 and subsequent first milestone of $10,000, reduced by $2,909 of transaction costs, as a liability related to the sale of future revenue that will be amortized using the effective interest method over the life of the Monetization Agreement. As future contingent payments are received, they will increase the balance of the liability related to the sale of future revenue. Although the Company sold all of its rights to receive royalties and milestones, as a result of ongoing obligations related to the generation of these royalties, the Company will account for these royalties as revenue. Its ongoing obligations include the maintenance and defense of the intellectual property and to provide assistance to Marathon in executing a new license agreement for KYNMOBI in the event Sunovion terminates the Sunovion License Agreement in one or more jurisdictions of the licensed territory under the Sunovion License Agreement. The accounting liabilities, as adjusted over time, resulting from this transaction and any non-cash interest expenses associated with those liabilities do not and will not represent any obligation to pay or any potential future use of cash.

During the second quarter of 2020, under the Sunovion License Agreement, the Company recognized $8,000 of royalty revenue and corresponding royalty receivable, related to the $1,000 annual minimum guaranteed royalty that is due. In connection with the Monetization Agreement, the Company performed an assessment under ASC 860, Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded that the receivable was not transferred.

As royalties are remitted to Marathon from Sunovion, the collection of the royalty receivable and balance of the liability related to the sale of future revenue will be effectively repaid over the life of the agreement. In order to determine the amortization of the liability related to the sale of future revenue, the Company is required to estimate the total amount of future royalty and milestone payments to Marathon over the life of the Monetization Agreement and contingent milestone payments from Marathon to the Company. The sum of future royalty payments less the $50,000 in proceeds received and future contingent payments has been recorded as interest expense over the life of the Monetization Agreement. At execution, the estimate of this total interest expense resulted in an effective annual interest rate of approximately 24.9%. This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the life of the Monetization Agreement. The Company will periodically assess the estimated royalty and milestone payments to Marathon from Sunovion and contingent milestone payments from Marathon to the Company. To the extent the amount or timing of such payments is materially different from the original estimates, an adjustment will be recorded prospectively to increase or decrease interest expense. There are a number of factors that could materially affect the amount and timing of royalty and milestone payments to Marathon from Sunovion and, correspondingly, the amount of interest expense recorded by the Company, most of which are not under the Company’s control. Such factors include, but are not limited to, changing standards of care, the initiation of competing products, manufacturing or other delays, generic competition, intellectual property matters, adverse events that result in government health authority imposed restrictions on the use of products, significant changes in foreign exchange rates as the royalties remitted to Marathon are made in U.S. dollars (USD) while a portion of the underlying sales of KYNMOBI will be made in currencies other than USD, and other events or circumstances that are not currently foreseen. Changes to any of these factors could result in increases or decreases in both royalty revenue and interest expense related to the sale of future revenue. Based on the current public forecast by Sunovion of estimated KYNMOBI sales as of September 30, 2023, the Company likely will not receive any of the additional contingent payments under the Monetization Agreement. As a result, the Company discontinued recording interest expense related to the sale of future revenue.

The following table shows the activity of the liability related to the sale of future revenue for the nine months ended September 30, 2023:

Liability related to the sale of future revenue, net at December 31, 2022	$	65,259
Royalties related to the sale of future revenue	(926)
Amortization of issuance costs	163
Interest expense related to the sale of future revenue	—
Liability related to the sale of future revenue, net (includes current portion of $985)	$	64,496

XML

Net Earnings (Loss) Per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Net Earnings (Loss) Per Share

Net Earnings (Loss) Per Share

Basic net earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares.

The following table reconciles the basic to diluted weighted average shares outstanding for the nine months ended September 30, 2023. Diluted EPS is adjusted by the effect of dilutive securities, including options and awards under the Company’s equity compensation plans, warrants and the Employee Stock Purchase Plan ("ESPP"). The treasury method was used to calculate the dilutive shares. The anti-dilutive options, awards and warrants for the nine months ended September 30, 2023 are included in the footnotes below. As a result of the Company’s net loss incurred for the three months ended September 30, 2023 and the three and nine months ended September 30, 2022, all potentially dilutive instruments outstanding would have anti-dilutive effects on per-share calculations. Therefore, basic and diluted net loss per share were the same for the three months ended September 30, 2023 and the three and nine months ended September 30, 2022 as reflected below.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	(2,035)	$	(12,536)	$	241	$	(42,058)
Denominator:
Weighted-average number of common shares – basic	64,678,761		53,424,922		59,252,768		46,828,218
Effect of dilutive stock options (a)	—		—		57,471		—
Effect of restricted stock units (b)	—		—		654,682		—
Effect of warrants (c)	—		—		1,547,751		—
Effect of Employee Stock Purchase Plan	—		—		1,064		—
Weighted-average number of common shares – diluted	64,678,761		53,424,922		61,513,736		46,828,218
Earnings per share attributable to common stockholders:
Earnings (Loss) per common share – basic	$	(0.03)	$	(0.23)	$	—	$	(0.90)
Earnings (Loss) per common share – diluted	$	(0.03)	$	(0.23)	$	—	$	(0.90)

(a)For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, outstanding stock options of 5,912,647, 5,967,492, 5,339,130 and 5,967,492 shares of Common Stock, respectively, were anti-dilutive and excluded from the computation of diluted EPS.

(b)For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, outstanding restricted stock units of 3,280,313, 168,050, 605,650 and 168,050 shares of Common Stock, respectively were anti-dilutive and excluded from the computation of diluted EPS.

(c)For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, outstanding warrants of 4,464,429, 10,564,429, 4,464,429 and 10,564,429 shares of Common Stock, respectively, were anti-dilutive and excluded from the computation of diluted EPS.

XML

Share-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

Share-Based Compensation

The Company recognized share-based compensation in its unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) during 2023 and 2022 as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Manufacture and supply	$	59	$	66	$	155	$	159
Research and development	105		75		277		406
Selling, general and administrative	610		394		1,334		3,104
Total share-based compensation expenses	$	774	$	535	$	1,766	$	3,669
Share-based compensation from:
Restricted stock units	$	312	$	58	$	532	$	97
Stock options	462		477		1,217		3,570
Employee stock purchase plan (ESPP)	—		—		17		2
Total share-based compensation expenses	$	774	$	535	$	1,766	$	3,669

Share-Based Compensation Equity Awards

The following tables provide information about the Company’s restricted stock unit and stock option activity during the nine month period ended September 30, 2023:

Restricted Stock Unit Awards (RSUs) - Time-based:	Number of Units	Weighted Average Grant Date Fair Value
	(in thousands)
Unvested as of December 31, 2022	162	$	2.38
Granted	1,874	$	0.91
Vested	(31)	$	2.33
Forfeited	(57)	$	2.03
Unvested as of September 30, 2023	1,948	$	0.97
Vested and expected to vest as of September 30, 2023	1,788	$	0.97

Restricted Stock Unit Awards (RSUs) - Performance-based:	Number of Units	Weighted Average Grant Date Fair Value
	(in thousands)
Unvested as of December 31, 2022	—	$	—
Granted	1,332	2.03
Vested	—	—
Forfeited	—	—
Unvested as of September 30, 2023	1,332	$	2.03
Vested and expected to vest as of September 30, 2023	1,166	$	2.03

2022 Inducement Equity Incentive Plan

In accordance with Nasdaq Listing Rule 5635(c)(4), the Company adopted the 2022 Equity Inducement Plan approved by the Compensation Committee of the Board of Directors of the Company effective as of July 29, 2022. There were 150,000 awards granted and outstanding under this Plan as of September 30, 2023 and included in the time-based restricted stock units granted in the table above.

As of September 30, 2023, $1,243 and $2,320 of unrecognized compensation expense related to unvested time-based restricted stock units and unvested performance-based restricted stock units, respectively, are expected to be recognized over a weighted average period of 2.43 years and 2.59 years, respectively, from the date of grant.

Stock Option Awards:	Number of Options	Weighted Average Exercise Price
	(in thousands)
Outstanding as of December 31, 2022	6,028	$	5.48
Granted	150	2.02
Exercised	(1)	0.88
Forfeited/Expired	(264)	2.30
Outstanding as of September 30, 2023	5,913	$	5.54
Vested and expected to vest as of September 30, 2023	5,836	$	5.59
Exercisable as of September 30, 2023	4,437	$	6.56

The fair values of stock options granted during the nine months ended September 30, 2023 were estimated using the Black-Scholes pricing model based on the following assumptions:

Expected dividend yield	—%
Expected volatility	100%
Expected term (years)	5.5
Risk-free interest rate	4.0%

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2023 was $0.7981. During the nine months ended September 30, 2023, stock options were granted with an exercise price of $2.02 and accordingly, given the Company’s share price of $1.53 at September 30, 2023, the intrinsic value provided by certain shares granted during this period was de minimus.

As of September 30, 2023, $1,869 of unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted average period of 1.3 years from the date of grant.

XML

Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company has accounted for income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts and respective tax bases of existing assets and liabilities, as well as net operating loss carryforwards and research and development credits. Valuation allowances are provided if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. For the three and nine months ended September 30, 2023, the effective income tax rate was 6.4% and 37.4%, respectively, and the Company recorded $(140) and $144 from its pretax (loss) income of $(2,175) and $385, respectively. For the three and nine months ended September 30, 2022, the Company recorded no income tax benefit from its pretax loss of $12,536 and $42,058, respectively.

The primary factors impacting the effective tax rate for nine months ended September 30, 2023 is the anticipated full year pre-tax book loss, the expected utilization of net operating losses and research and development credits to offset current year tax liabilities, and a full valuation allowance against any associated net deferred tax assets.

XML

Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

From time to time, the Company has been and may again become involved in legal proceedings arising in the course of its business, including product liability, intellectual property, securities, civil tort, and commercial litigation, and environmental or other regulatory matters.

Patent-Related Litigation

Indivior Inc., Indivior UK Ltd., and Aquestive Therapeutics, Inc. v. Alvogen Pine Brook LLC

On September 14, 2017, Indivior initiated a lawsuit against Alvogen Pine Brook LLC (“Alvogen”) asserting infringement of the ’454 patent. On February 7, 2018, the Company and Indivior filed an Amended Complaint, adding the Company as a plaintiff and asserting infringement of the’221 patent. On April 3, 2018, the Company and Indivior initiated a

separate lawsuit against Alvogen asserting infringement of the ’305 patent. On May 29, 2018, the cases were consolidated. On February 26, 2019, the court granted the parties’ agreed stipulation to drop the ’221 patent from the case. On January 9, 2020, the court entered a stipulated order of non-infringement of the ’305 patent based on the court’s claim construction ruling, and the Company and Indivior preserved the right to appeal the claim construction ruling.

On November 21, 2019, Alvogen filed an amended answer and counterclaims asserting monopolization, attempted monopolization, and conspiracy to monopolize against the Company and Indivior under federal and New Jersey antitrust laws. The court denied the Company’s motion to dismiss Alvogen’s counterclaims on August 24, 2020. On November 2, 2020, Alvogen filed a second amended answer and counterclaims, removing its allegations of monopolization and attempted monopolization against the Company and asserting only conspiracy to monopolize against the Company. Fact discovery on Alvogen’s antitrust counterclaims concluded on January 29, 2021. Expert discovery concluded on October 8, 2021, and dispositive motions were filed by the parties on October 26, 2021. On June 26 2023, the court granted in part and denied in part plaintiff's' joint motion and denied all other parties' motions. On August 11, 2023, the Company filed a motion for reconsideration of the court’s ruling on its dispositive motion and the parties are awaiting the court’s decision on that motion for reconsideration There is no trial date set. The Company is not able to determine or predict the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or losses, if any, in this matter.

California Litigation

Neurelis, Inc. v. Aquestive Therapeutics, Inc.

On December 5, 2019, Neurelis Inc. filed a lawsuit against us in the Superior Court of California, County of San Diego alleging the following three causes of action: (1) Unfair Competition under California Business and Professional Code § 17200 (“UCL”); (2) Defamation; and (3) Malicious Prosecution. Neurelis filed a First Amended Complaint on December 9, 2019, alleging the same three causes of action. The Company filed a Motion to Strike Neurelis’s Complaint under California’s anti-SLAPP (“strategic lawsuit against public participation”) statute on January 31, 2020, which Neurelis opposed. On August 6, 2020, the Court issued an order granting in part and denying in part the Company’s anti-SLAPP motion. The parties cross-appealed the ruling to the California Court of Appeal. The appeals court held oral argument on the appeal on October 14, 2021, and issued its ruling on November 17, 2021. Under the ruling, the court struck the entirety of the malicious prosecution claim and struck portions of the UCL and defamation claims. On April 12, 2022, Neurelis filed a Second Amended Complaint in response to the Court of Appeal's decision. The Second Amended Complaint also added a cause of action for Trade Libel. On May 3, 2022, the Company filed a "demurrer" challenge to the sufficiency of the allegations of the Second Amended Complaint. Oral argument on the Company’s motion for attorney fees related to the anti-SLAPP motion and on the Second Amended Complaint and demurer challenge was held on June 17, 2022. The Court entered an order granting the Company’s motion for attorney fees, awarding $156 and ordering Neurelis to pay the fees within 60 days of June 17, 2022. The Court denied the Company’s demurrer and the parties are proceeding with discovery on the claims in the Second Amended Complaint. The plaintiff filed a motion to file a third amended complaint. The hearing on this motion is currently scheduled for November 17, 2023. No trial date has been set. The Company is not able to determine or predict the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.

Federal Securities Class Action

Deanna Lewakowski v. Aquestive Therapeutics, Inc., et al.

On March 1, 2021, a securities class action lawsuit was filed in the United States District Court for the District of New Jersey alleging that the Company and certain of its officers engaged in violations of the federal securities laws relating to public statements made by the Company regarding the FDA approval of Libervant. Following the court’s appointment of a lead plaintiff, an amended complaint was filed by the plaintiffs on June 25, 2021. Defendants filed a motion to dismiss on August 16, 2021, which became fully briefed as of November 1, 2021. On March 14, 2023, the Court entered an order granting Defendants’ motion to dismiss without prejudice and permitting plaintiffs leave to file a final, Second Amended Complaint by April 14, 2023. On April 7, 2023, the parties filed a Stipulation of Voluntary Dismissal stating that plaintiffs determined not to file an amended complaint and agreed to dismiss the action as to them with prejudice. On April 10, 2023, the Court so-ordered the stipulation and terminated the lawsuit.

Shareholder Derivative Litigation

Loreen Niewenhuis v. Keith Kendall, et al.

On December 15, 2021, a purported Aquestive shareholder instituted a derivative action captioned Loreen Niewenhuis v. Keith Kendall, et al. in the United States District Court for the District of New Jersey, purportedly on behalf of the Company, against certain current and former officers and directors of the Company. The case was designated as related to the pending federal securities class action Deanna Lewakowski v. Aquestive Therapeutics, Inc., referenced above, and accepted by the same judge presiding over the securities class action. The complaint in this matter alleges claims for breach of fiduciary duty and contribution. The factual allegations that form the basis of these claims are similar to the disclosure-related allegations asserted

in the class action. On April 4, 2022, the plaintiff filed an amended complaint asserting the same claims against the same defendants. The Company filed a motion to dismiss the amended complaint on April 25, 2022, which became fully briefed as of June 27, 2022. On April 20, 2023, the parties filed a Stipulation of Voluntary Dismissal stating that plaintiff agreed to dismiss the action as to her with prejudice. On April 21, 2023, the Court so-ordered the stipulation and terminated the lawsuit.

XML

Subsequent Events

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On November 1, 2023, the Company redeemed its 12.5% Notes due 2025 and entered into a new financing through the issuance (the "Offering") of new 13.5% Senior Secured Notes due 2028 (the “13.5% Notes”). A portion of the net proceeds of the new debt financing of $45,000 under a new Indenture by a large leading institutional investor and affiliated entities (collectively, the “Note Holders”) was used by Aquestive to repay all outstanding notes issued under the 12.5% Notes and expenses relating to the Offering, and the balance of the net proceeds is available for general corporate purposes. The 13.5% Notes are senior secured obligations of Aquestive and will mature on November 1, 2028, unless earlier redeemed or repurchased in accordance with their terms. The 13.5% Notes bear interest at a fixed rate of 13.5% per year, payable quarterly commencing on December 30, 2023. Principal on the 13.5% Notes will be repaid starting on June 30, 2026. The 13.5% Notes contain no revenue or cash covenants, and no warrants for purchase of the Company’s common stock were issued under the terms of the transaction.

In connection with the financing transaction, the Company entered into agreements (the “Royalty Agreements”) with each of the Note Holders granting the Note Holders a tiered royalty between 1.0% and 2.0% of annual worldwide net sales of Anaphylm™ (epinephrine) Sublingual Film for a period of eight years from the first sale of Anaphylm on a global basis. The Note Holders are also entitled to a tiered royalty between 1.0% to 2.0% of annual worldwide net sales of Libervant™ (diazepam) Buccal Film until the earlier of (1) the first sale of Anaphylm and (2) eight years from the first sale of Libervant.

In line with this refinancing and in accordance with ASC 470, Debt, the amounts for the Loans payable, current and Loans payable, net have been adjusted such that Loans, Payable, current reflects the current portion of the principal payment on the 12.5% Notes due and paid on October 2, 2023 in the amount of $4,585, paid out of working capital, and the Loans payable, net of $34,390 represents the amount which has been repaid as part of the Offering of 13.5% Notes.

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net income (loss)	$ (2,035)	$ (5,792)	$ 8,068	$ (12,536)	$ (16,302)	$ (13,220)	$ 241	$ (42,058)

XML

Insider Trading Arrangements	9 Months Ended
	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and with Article 10 of Regulation S-X for interim financial reporting. In compliance with those rules, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2023 (the “2022 Annual Report on Form 10-K”). As included herein, the Condensed Consolidated Balance Sheet as of December 31, 2022 is derived from the audited consolidated financial statements as of that date. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results of interim periods have been included. The accompanying financial statements reflect certain reclassifications from previously issued financial statements to conform to the current presentation. The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited condensed consolidated financial statements.

Any reference in these notes to applicable guidance refers to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Recent Accounting Pronouncements

Recent Accounting PronouncementsAs an emerging growth company, the Company has elected to take advantage of the extended transition period afforded by the Jumpstart Our Business Startups Act for the implementation of new or revised accounting standards and, as a result, the Company will comply with new or revised accounting standards no later than the relevant dates on which adoption of such standards is required for emerging growth companies. The Company believes that the impact of recently issued accounting

standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Recent Accounting Pronouncements Adopted as of September 30, 2023:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), amending existing guidance on the accounting for credit losses on financial instruments within its scope. The guidance provides for use of a forward-looking expected loss model for estimating credit losses, replacing the incurred loss model that is based on past events and current conditions. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The Company adopted the new guidance on January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The accounting standard update was issued to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The Company adopted the new guidance on January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405-50) Disclosure of Supplier Finance Program Obligations, to increase the transparency of supplier finance programs regarding the use of such programs by the buyer party (that is, the disclosing entity) and the programs’ effects on an entity’s working capital, liquidity, and cash flows. ASU 2022-04 is effective for all entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The requirement on rollforward information is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Adopted as of September 30, 2023:

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This Accounting Standards Update was issued to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. Among other provisions, the amendments in this ASU significantly change the guidance on the issuer’s accounting for convertible instruments and the guidance on the derivative scope exception for contracts in an entity’s own equity such that fewer conversion features will require separate recognition, and fewer freestanding instruments, like warrants, will require liability treatment. More specifically, the ASU reduces the number of models that may be used to account for convertible instruments from five to three, amends diluted EPS calculations for convertible instruments, modifies the requirements for a contract that may be settled in an entity’s own shares to be classified in equity and requires expanded disclosures intended to increase transparency. These amendments will be effective for the Company beginning January 1, 2024, with early adoption of the amendments permitted. The Company is currently evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements but does not expect to have a material impact on the Company’s consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This Accounting Standards Update was issued to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, and to introduce new disclosure requirements for such equity securities. These amendments will be effective for the Company beginning January 1, 2024, with early adoption of the amendments permitted. The Company is currently evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements but does not expect to have a material impact on the Company’s consolidated financial statements.

Revenue Recognition and Performance Obligations

The Company’s revenues include (i) sales of manufactured products pursuant to contracts with commercialization licensees, (ii) license and royalty revenues, and (iii) co-development and research fees generally in the form of milestone payments. The Company recognizes revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this core principle, a five-step model is applied that includes (1) identifying the contract with a customer, (2) identifying the performance obligation in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing when, or as, an entity satisfies a performance obligation.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the current revenue recognition standard. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. At contract inception, the Company assesses the goods promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a distinct good. When identifying performance obligations, the Company considers all goods or services promised in a contract regardless of whether explicitly stated in the contract or implied by customary business practice. The Company’s performance obligations consist mainly of transferring goods and services identified in the contracts, purchase orders or invoices.

Manufacture and supply revenue – this revenue is derived from products manufactured exclusively for specific customers according to their strictly-defined specifications, subject only to specified quality control inspections. Accordingly, at the point in time when quality control requirements are satisfied, revenue net of related discounts is recorded.

Proprietary product sales, net - this net revenue is recognized when product is shipped and title passes to the customer, typically at time of delivery. At the time of sale, estimates for various revenue allowances are recorded based on historical trends and judgmental estimates. For sales of Sympazan (prior to its outlicensing by the Company to Otter Pharmaceuticals, LLC in October 2022), returns allowances and prompt pay discounts are estimated based on contract terms and historical return rates, if available, and these estimates are recorded as a reduction of receivables. Similarly determined estimates are recorded relating to wholesaler service fees, co-pay support redemptions, Medicare, Medicaid and other rebates, and these estimates are reflected as a component of accrued liabilities. Once all related variable considerations are resolved and uncertainties as to collectable amounts are eliminated, estimates are adjusted to actual allowance amounts. Provisions for these estimated amounts are reviewed and adjusted on no less than a quarterly basis.

License and Royalty Revenue – license revenues are determined based on an assessment of whether the license is distinct from any other performance obligations that may be included in the underlying licensing arrangement. If the customer is able to benefit from the license without provision of any other performance obligations by the Company and the license is thereby viewed as a distinct or functional license, the Company then determines whether the customer has acquired a right to use the license or a right to access the license. For functional licenses that do not require further development or other ongoing activities by the Company, the customer is viewed as acquiring the right to use the license as, and when, transferred and revenues are generally recorded at a point in time, subject to contingencies or constraints. For symbolic licenses providing substantial value only in conjunction with other performance obligations to be provided by the Company, revenues are generally recorded over the term of the license agreement. Such other obligations provided by the Company generally include

manufactured products, additional development services or other deliverables that are contracted to be provided during the license term. Payments received in excess of amounts ratably or otherwise earned are deferred and recognized over the term of the license or as contingencies or other performance obligations are met.

Royalty revenue is estimated and recognized when sales under supply agreements with commercial licensees are recorded, absent any contractual constraints or collectability uncertainties.

Co-development and Research Fees – co-development and research fees are earned through performance of specific tasks, activities or completion of stages of development defined within a contractual development or feasibility study agreement with a customer. The nature of these performance obligations, broadly referred to as milestones or deliverables, are usually dependent on the scope and structure of the project as contracted, as well as the complexity of the product and the specific regulatory approval path necessary for that product. Accordingly, the duration of the Company’s research and development projects may range from several months to approximately three years. Although each contractual arrangement is unique, common milestones included in these arrangements include those for the performance of efficacy and other tests, reports of findings, formulation of initial prototypes, production of stability clinical and/or scale-up batches, and stability testing of those batches. Additional milestones may be established and linked to clinical results of the product submission and/or approval of the product by the FDA and the commercial launch of the product.

Revenue recognition arising from milestone payments is dependent upon the facts and circumstances surrounding the milestone payments. Milestone payments based on a non-sales metric such as a development-based milestone (e.g., an NDA filing or obtaining regulatory approval) represent variable consideration and are included in the transaction price subject to any constraints. If the milestone payments relate to future development, the timing of recognition depends upon historical experience and the significance a third party has on the outcome. For milestone payments to be received upon the achievement of a sales threshold, the revenue from the milestone payments is recognized at the later of when the actual sales are incurred or the performance obligation to which the sales relate to has been satisfied.

Contract Assets - in certain situations, customer contractual payment terms provide for invoicing in arrears. Accordingly, some, or all performance obligations may be completely satisfied before the customer may be invoiced under such agreements. In these situations, billing occurs after revenue recognition, which results in a contract asset supported by the estimated value of the completed portion of the performance obligation. These contract assets are reflected as a component of other receivables within Trade and other receivables within the Condensed Consolidated Balance Sheet. As of September 30, 2023, and December 31, 2022, such contract assets were $1,744 and $2,139, respectively, consisting primarily of products and services provided under specific contracts to customers for which earnings processes have been met prior to shipment of goods or full delivery of completed services, as well as estimated receivables from contracts with 3rd parties.

Contract Liabilities - in certain situations, customer contractual payment terms are structured to permit invoicing in advance of delivery of a good or service. In such instances, the customer’s cash payment may be received before satisfaction of some, or any, performance obligations that are specified. In these situations, billing occurs in advance of revenue recognition, which results in contract liabilities. These contract liabilities are reflected as deferred revenue within the Condensed Consolidated Balance Sheet. As remaining performance obligations are satisfied, an appropriate portion of the deferred revenue balance is credited to earnings. As of September 30, 2023 and December 31, 2022, such contract liabilities were $35,369 and $32,930, respectively.

XML

Revenues and Trade Receivables, Net (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue

The Company’s revenues were comprised of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Manufacture and supply revenue	$	11,409	$	8,411	$	32,807	$	27,456
License and royalty revenue	1,103		376		3,503		1,434
Co-development and research fees	490		395		1,067		1,039
Proprietary product sales, net	—		2,281		—		7,069
Total revenues	$	13,002	$	11,463	$	37,377	$	36,998

Disaggregation of Revenue

The following table provides disaggregated net revenue by geographic area:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	9,894	$	9,078	$	25,372	$	31,416
Ex-United States	3,108		2,385		12,005		5,582
Total revenues	$	13,002	$	11,463	$	37,377	$	36,998

Trade and Other Receivables, Net

Trade and other receivables, net consist of the following:

	September 30, 2023		December 31, 2022
Trade receivables	$	6,846	$	3,274
Contract and other receivables	1,744		2,139
Less: allowance for doubtful accounts	(40)		(40)
Less: sales-related allowances	—		(669)
Trade and other receivables, net	$	8,550	$	4,704

Changes in Allowance for Bad Debt

The following table presents the changes in the allowance for doubtful accounts:

	September 30, 2023		December 31, 2022
Allowance for doubtful accounts at beginning of the period	$	40	$	40
Additions charged to expense	—		—
Write-downs charged against the allowance	—		—
Allowance for doubtful accounts at end of the period	$	40	$	40

Sales Related Allowances and Accruals

The following table provides a summary of activity with respect to sales-related allowances and accruals for the nine months ended September 30, 2023:

	Total Sales-Related Allowances
Balance at December 31, 2022	$	669
Provision	—
Payments / credits	(87)
Reclassifications	$	(582)
Balance at September 30, 2023	$	—

XML

Inventories, Net (Tables)

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Inventory, Net

The components of Inventory, net are as follows:

	September 30, 2023		December 31, 2022
Raw material	$	1,902	$	1,899
Packaging material	3,427		2,914
Finished goods	1,750		967
Total inventory, net	$	7,079	$	5,780

XML

Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

	Useful Lives	September 30, 2023		December 31, 2022
Machinery	3-15 years	$	20,176	$	19,810
Furniture and fixtures	3-15 years	769		769
Leasehold improvements	(a)	21,386		21,375
Computer, network equipment and software	3-7 years	2,627		2,627
Construction in progress		2,305		1,467
		47,263		46,048
Less: accumulated depreciation and amortization		(42,712)		(41,963)
Total property and equipment, net		$	4,551	$	4,085

(a)Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives.

XML

Right-of-Use Assets and Lease Obligations (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Operating Lease Liabilities

Maturities of the Company’s operating lease liabilities are as follows:

Remainder of 2023	$	303
2024	1,230
2025	1,266
2026	1,300
2027 and thereafter	6,318
Total future lease payments	10,417
Less: imputed interest	(4,541)
Total operating lease liabilities	$	5,876

XML

Intangible Assets, Net (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Components of Identifiable Intangible Assets

The following table provides the components of identifiable intangible assets, all of which are finite lived:

	September 30, 2023		December 31, 2022
Purchased intangible	$	3,858	$	3,858
Purchased patent	509		509
	4,367		4,367
Less: accumulated amortization	(3,050)		(2,932)
Intangible assets, net	1,317		1,435

XML

Other Non-current Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Other Non-current Assets

The following table provides the components of other non-current assets:

	September 30, 2023		December 31, 2022
Royalty receivable	4,000		5,000
Other	1,454		1,451
Total other non-current assets	$	5,454	$	6,451

XML

Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses consisted of the following:

	September 30, 2023		December 31, 2022
Accrued compensation	$	2,831	$	6,389
Real estate and personal property taxes	377		322
Accrued distribution expenses and sales returns provision	659		1,012
Other	1,601		244
Total accrued expenses	$	5,468	$	7,967

XML

12.5% Senior Secured Notes and Loans Payable (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt Maturity

A debt maturity table prior to the refinancing of the Company's debt on November 1, 2023 and described in Note 20, Subsequent Events is presented below:

Remainder of 2023	$	9,171
2024	19,487
2025	10,317
Total	$	38,975

A revised debt maturity table subsequent to the debt refinancing on November 1, 2023 is presented below.

Remainder of 2023	$	—
2024	—
2025	—
2026	9,540
2027	14,535
2028	20,925
Total	$	45,000

XML

Sale of Future Revenue (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Royalty Obligation Activity

The following table shows the activity of the liability related to the sale of future revenue for the nine months ended September 30, 2023:

Liability related to the sale of future revenue, net at December 31, 2022	$	65,259
Royalties related to the sale of future revenue	(926)
Amortization of issuance costs	163
Interest expense related to the sale of future revenue	—
Liability related to the sale of future revenue, net (includes current portion of $985)	$	64,496

XML

Net Earnings (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Basic and Diluted Net Loss Per Share

The following table reconciles the basic to diluted weighted average shares outstanding for the nine months ended September 30, 2023. Diluted EPS is adjusted by the effect of dilutive securities, including options and awards under the Company’s equity compensation plans, warrants and the Employee Stock Purchase Plan ("ESPP"). The treasury method was used to calculate the dilutive shares. The anti-dilutive options, awards and warrants for the nine months ended September 30, 2023 are included in the footnotes below. As a result of the Company’s net loss incurred for the three months ended September 30, 2023 and the three and nine months ended September 30, 2022, all potentially dilutive instruments outstanding would have anti-dilutive effects on per-share calculations. Therefore, basic and diluted net loss per share were the same for the three months ended September 30, 2023 and the three and nine months ended September 30, 2022 as reflected below.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	(2,035)	$	(12,536)	$	241	$	(42,058)
Denominator:
Weighted-average number of common shares – basic	64,678,761		53,424,922		59,252,768		46,828,218
Effect of dilutive stock options (a)	—		—		57,471		—
Effect of restricted stock units (b)	—		—		654,682		—
Effect of warrants (c)	—		—		1,547,751		—
Effect of Employee Stock Purchase Plan	—		—		1,064		—
Weighted-average number of common shares – diluted	64,678,761		53,424,922		61,513,736		46,828,218
Earnings per share attributable to common stockholders:
Earnings (Loss) per common share – basic	$	(0.03)	$	(0.23)	$	—	$	(0.90)
Earnings (Loss) per common share – diluted	$	(0.03)	$	(0.23)	$	—	$	(0.90)

(a)For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, outstanding stock options of 5,912,647, 5,967,492, 5,339,130 and 5,967,492 shares of Common Stock, respectively, were anti-dilutive and excluded from the computation of diluted EPS.

(b)For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, outstanding restricted stock units of 3,280,313, 168,050, 605,650 and 168,050 shares of Common Stock, respectively were anti-dilutive and excluded from the computation of diluted EPS.

(c)For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, outstanding warrants of 4,464,429, 10,564,429, 4,464,429 and 10,564,429 shares of Common Stock, respectively, were anti-dilutive and excluded from the computation of diluted EPS.

XML

Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Share-based Compensation Expense

The Company recognized share-based compensation in its unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) during 2023 and 2022 as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Manufacture and supply	$	59	$	66	$	155	$	159
Research and development	105		75		277		406
Selling, general and administrative	610		394		1,334		3,104
Total share-based compensation expenses	$	774	$	535	$	1,766	$	3,669
Share-based compensation from:
Restricted stock units	$	312	$	58	$	532	$	97
Stock options	462		477		1,217		3,570
Employee stock purchase plan (ESPP)	—		—		17		2
Total share-based compensation expenses	$	774	$	535	$	1,766	$	3,669

Restricted Stock Units Awards

The following tables provide information about the Company’s restricted stock unit and stock option activity during the nine month period ended September 30, 2023:

Restricted Stock Unit Awards (RSUs) - Time-based:	Number of Units	Weighted Average Grant Date Fair Value
	(in thousands)
Unvested as of December 31, 2022	162	$	2.38
Granted	1,874	$	0.91
Vested	(31)	$	2.33
Forfeited	(57)	$	2.03
Unvested as of September 30, 2023	1,948	$	0.97
Vested and expected to vest as of September 30, 2023	1,788	$	0.97

Performance Share Activity

Restricted Stock Unit Awards (RSUs) - Performance-based:	Number of Units	Weighted Average Grant Date Fair Value
	(in thousands)
Unvested as of December 31, 2022	—	$	—
Granted	1,332	2.03
Vested	—	—
Forfeited	—	—
Unvested as of September 30, 2023	1,332	$	2.03
Vested and expected to vest as of September 30, 2023	1,166	$	2.03

Stock Option Activity

Stock Option Awards:	Number of Options	Weighted Average Exercise Price
	(in thousands)
Outstanding as of December 31, 2022	6,028	$	5.48
Granted	150	2.02
Exercised	(1)	0.88
Forfeited/Expired	(264)	2.30
Outstanding as of September 30, 2023	5,913	$	5.54
Vested and expected to vest as of September 30, 2023	5,836	$	5.59
Exercisable as of September 30, 2023	4,437	$	6.56

The fair values of stock options granted during the nine months ended September 30, 2023 were estimated using the Black-Scholes pricing model based on the following assumptions:

Expected dividend yield	—%
Expected volatility	100%
Expected term (years)	5.5
Risk-free interest rate	4.0%

XML

Company Overview and Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Thousands								1 Months Ended	9 Months Ended		12 Months Ended	34 Months Ended
	Aug. 02, 2023	Jun. 14, 2023	Sep. 07, 2022	Jun. 06, 2022	Apr. 12, 2022	Mar. 26, 2021	Sep. 11, 2019	Jun. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Sep. 30, 2023	Aug. 01, 2023	Jul. 15, 2019
Subsidiary, Sale of Stock [Line Items]
Common stock, par value (in dollars per share)									$ 0.001		$ 0.001	$ 0.001
Common stock, shares outstanding (in shares)									66,740,765		54,827,734	66,740,765
Warrants issued (in shares)														2,000,000
Warrant exercise price (in dollars per share)														$ 0.001
Common Stock Warrants
Subsidiary, Sale of Stock [Line Items]
Warrants issued to purchase common stock (in shares)		3,689,452							8,689,452
Proceeds from warrant exercises	$ 4,800	$ 3,542							$ 8,342
Warrants issued (in shares)								8,850,000
Existing Warrants
Subsidiary, Sale of Stock [Line Items]
Proceeds from warrant exercises	$ 4,800
Class of warrant or right, outstanding (in shares)													5,000,000
Warrants issued (in shares)									1,714,429			1,714,429
Warrant exercise price (in dollars per share)													$ 0.96
Stock issued during period, conversion of convertible securities (in shares)	5,000,000
New Warrants
Subsidiary, Sale of Stock [Line Items]
Warrants issued (in shares)													2,750,000
Warrant exercise price (in dollars per share)													$ 2.60
Maximum | Common Stock Warrants
Subsidiary, Sale of Stock [Line Items]
Warrant exercise price (in dollars per share)								$ 1.09
Equity distribution agreement
Subsidiary, Sale of Stock [Line Items]
Sale of stock, aggregate offering price							$ 25,000
Common stock, par value (in dollars per share)							$ 0.001
Number of shares issued in transaction (in shares)									3,184,740	1,906,350
Consideration received on sale of stock									$ 5,274	$ 3,017
Equity distribution agreement | Maximum
Subsidiary, Sale of Stock [Line Items]
Sale of stock, aggregate offering price			$ 35
At-the-market offering, amendment no. 1 | Maximum
Subsidiary, Sale of Stock [Line Items]
Sale of stock, aggregate offering price						$ 50,000
At-the-market offering
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares)												13,526,697
Consideration received on sale of stock												$ 44,979
Payments for stock issuance costs									392	$ 237		2,476
Remaining amount available for offering									$ 27,750			$ 27,750
Lincoln Park agreement
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares)									0		1,600,000
Consideration received on sale of stock											$ 1,987
Right to sell common stock, value					$ 40
Agreement term					36 months
Lincoln Park agreement | Maximum
Subsidiary, Sale of Stock [Line Items]
Subsidiary or equity method investee, cumulative percentage ownership limitation after all transactions					9.99%
Securities purchase agreement
Subsidiary, Sale of Stock [Line Items]
Common stock, shares outstanding (in shares)				4,850,000
Shares of common stock				4,000,000				4,000,000
Shares of common stock in connection with securities purchase agreements				8,850,000				8,850,000
Net proceeds				$ 7,796
Lincoln Park Agreement, Commitment Share
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares)											236,491

XML

Risks and Uncertainties (Details) - USD ($) $ in Thousands	9 Months Ended		34 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Nov. 01, 2023	Dec. 31, 2022	Jul. 15, 2019
Concentration Risk [Line Items]
Cash and cash equivalents	$ 24,917		$ 24,917		$ 27,273
Accumulated deficit	(310,966)		$ (310,966)		$ (311,207)
At-the-market offering
Concentration Risk [Line Items]
Number of shares issued in transaction (in shares)			13,526,697
Consideration received on sale of stock			$ 44,979
Payments for stock issuance costs	392	$ 237	2,476
Remaining amount available for offering	$ 27,750		$ 27,750
Equity distribution agreement
Concentration Risk [Line Items]
Number of shares issued in transaction (in shares)	3,184,740	1,906,350
Consideration received on sale of stock	$ 5,274	$ 3,017
Senior secured notes due 2025
Concentration Risk [Line Items]
Interest rate						12.50%
Senior secured notes due 2025 | Senior notes
Concentration Risk [Line Items]
Interest rate						12.50%
Thirteen Point Five, Senior Secured Notes due November 1, 2028 | Senior notes | Subsequent event
Concentration Risk [Line Items]
Interest rate				13.50%

XML

Revenues and Trade Receivables, Net - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Concentration Risk [Line Items]
Contract and other receivables	$ 1,744		$ 2,139
Contract liabilities	35,369		32,930
Accrued balances - trade and other receivables, net	0		669
Accrued distribution expenses and sales returns provision	$ 659		$ 1,012
Maximum
Concentration Risk [Line Items]
Research and development, project duration	3 years
Revenue from Contract with Customer Benchmark | Indivior | Customer concentration risk
Concentration Risk [Line Items]
Concentrations of risk	79.00%	75.00%
Receivables | Indivior | Customer concentration risk
Concentration Risk [Line Items]
Concentrations of risk	71.00%		60.00%
Receivables | Cardinal | Customer concentration risk
Concentration Risk [Line Items]
Concentrations of risk	10.00%		12.00%

XML

Revenues and Trade Receivables, Net - Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenues	$ 13,002	$ 11,463	$ 37,377	$ 36,998
Manufacture and supply revenue
Disaggregation of Revenue [Line Items]
Revenues	11,409	8,411	32,807	27,456
License and royalty revenue
Disaggregation of Revenue [Line Items]
Revenues	1,103	376	3,503	1,434
Co-development and research fees
Disaggregation of Revenue [Line Items]
Revenues	490	395	1,067	1,039
Proprietary product sales, net
Disaggregation of Revenue [Line Items]
Revenues	$ 0	$ 2,281	$ 0	$ 7,069

XML

Revenues and Trade Receivables, Net - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Geographic Areas, Revenues from External Customers [Abstract]
Revenues	$ 13,002	$ 11,463	$ 37,377	$ 36,998
United States
Geographic Areas, Revenues from External Customers [Abstract]
Revenues	9,894	9,078	25,372	31,416
Ex-United States
Geographic Areas, Revenues from External Customers [Abstract]
Revenues	$ 3,108	$ 2,385	$ 12,005	$ 5,582

XML

Revenues and Trade Receivables, Net - Trade and Other Receivables, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Trade receivables	$ 6,846	$ 3,274
Contract and other receivables	1,744	2,139
Less: allowance for doubtful accounts	(40)	(40)	$ (40)
Less: sales-related allowances	0	(669)
Trade and other receivables, net	$ 8,550	$ 4,704

XML

Revenues and Trade Receivables, Net - Changes in Allowance for Bad Debt (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for doubtful accounts at beginning of the period	$ 40	$ 40
Additions charged to expense	0	0
Write-downs charged against the allowance	0	0
Allowance for doubtful accounts at end of the period	$ 40	$ 40

XML

Revenues and Trade Receivables, Net - Summary of Activity with Sales Related Allowances and Accruals (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Accounts Receivable Allowances and Accruals [Roll Forward]
Balance at December 31. 2022	$ 669
Provision	0
Payments / credits	(87)
Reclassifications	(582)
Balance at March 31, 2023	$ 0

XML

Material Agreements (Details) $ in Thousands								2 Months Ended	3 Months Ended		9 Months Ended		17 Months Ended	35 Months Ended
	Mar. 27, 2023 USD ($)	Mar. 02, 2023	Oct. 26, 2022 USD ($)	Sep. 26, 2022 USD ($)	May 17, 2022 USD ($) installment	Nov. 03, 2020 USD ($)	Apr. 01, 2016 USD ($)	Dec. 31, 2020 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Feb. 20, 2019 USD ($)	Sep. 30, 2023 USD ($)	Mar. 03, 2022 USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Pro rata portion of target bonus					$ 280
Cash payment representing 90 days of base pay					$ 150
Days of base pay					90 days
Severance costs					$ 263
Number of installments | installment					3
Severance period					18 months
Coverage duration					18 months
Consulting fee (in dollars per month)					$ 10
Royalties related to the sale of future revenue									$ 13,002	$ 11,463	$ 37,377	$ 36,998
Assertio Holdings, Inc
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from collaborators			$ 9,000
Royalties related to the sale of future revenue			$ 6,000
First 7 Months
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Severance costs					53
Eighth Month
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Severance costs					70
Ninth through Eighteenth Month
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Severance costs					$ 88
License and royalty revenue
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Royalties related to the sale of future revenue									$ 1,103	$ 376	$ 3,503	$ 1,434
Commercial exploitation agreement with Indivior
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
License agreement term											7 years
Automatic renewal period of agreement		1 year									1 year
Supplemental agreement with Indivior
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Aggregate payment													$ 40,750
License agreement with Sunovion Pharmaceuticals, Inc.
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Aggregate payment							$ 22,000
License agreement with Sunovion Pharmaceuticals, Inc. upfront
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Aggregate payment							5,000
License agreement with Sunovion Pharmaceuticals, Inc milestones
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Aggregate payment							17,000
License agreement with Sunovion Pharmaceuticals, Inc milestones | License and royalty revenue
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Royalties related to the sale of future revenue							$ 4,000
MAM Pangolin Royalty , LLC | Monetization Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from sale of future revenue						$ 40,000		$ 10,000						$ 50,000
Proceeds from debt, contingent on additional milestones						75,000
MAM Pangolin Royalty , LLC | Maximum
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from sale of future revenue						$ 125,000
Haisco Pharmaceutical Group Co., Ltd, upfront payment
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Receivable															$ 7,000
Atnahs Pharma UK Limited, Amended Agreement | License & Supply Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from sale of future revenue	$ 2,000
License & Supply Agreement | Atnahs Pharma UK Limited
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from sale of future revenue				$ 3,500

XML

Financial Instruments – Fair Value Measurements (Details) - $ / shares		1 Months Ended
	Jun. 06, 2022	Jun. 30, 2022	Sep. 30, 2023	Aug. 01, 2023	Aug. 06, 2021	Jul. 15, 2019
Warrants [Abstract]
Warrant exercise price (in dollars per share)						$ 0.001
Warrants issued (in shares)						2,000,000
Existing Warrants
Warrants [Abstract]
Class of warrant or right, outstanding (in shares)				5,000,000
Warrant exercise price (in dollars per share)				$ 0.96
Warrants issued (in shares)			1,714,429
New Warrants
Warrants [Abstract]
Warrant exercise price (in dollars per share)				$ 2.60
Warrants issued (in shares)				2,750,000
Securities purchase agreement
Warrants [Abstract]
Shares of common stock	4,000,000	4,000,000
Shares of common stock in connection with securities purchase agreements	8,850,000	8,850,000
Senior secured notes due 2025
Warrants [Abstract]
Interest rate						12.50%
Warrants issued (in shares)					714,000

XML

Inventories, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw material	$ 1,902	$ 1,899
Packaging material	3,427	2,914
Finished goods	1,750	967
Total inventory, net	$ 7,079	$ 5,780

XML

Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 47,263	$ 46,048
Less: accumulated depreciation and amortization	(42,712)	(41,963)
Total property and equipment, net	4,551	4,085
Machinery
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 20,176	19,810
Machinery | Minimum
Property, Plant and Equipment [Line Items]
Useful Lives	3 years
Machinery | Maximum
Property, Plant and Equipment [Line Items]
Useful Lives	15 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 769	769
Furniture and fixtures | Minimum
Property, Plant and Equipment [Line Items]
Useful Lives	3 years
Furniture and fixtures | Maximum
Property, Plant and Equipment [Line Items]
Useful Lives	15 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 21,386	21,375
Computer, network equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,627	2,627
Computer, network equipment and software | Minimum
Property, Plant and Equipment [Line Items]
Useful Lives	3 years
Computer, network equipment and software | Maximum
Property, Plant and Equipment [Line Items]
Useful Lives	7 years
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,305	$ 1,467

XML

Property and Equipment, Net - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation	$ 218	$ 557	$ 760	$ 1,926

XML

Right-of-Use Assets and Lease Obligations - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) lease	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) lease	Sep. 30, 2022 USD ($)
Lessee, Lease, Description [Line Items]
Number of leases | lease	3		3
Operating lease expense	$ 438	$ 424	$ 1,308	$ 1,267
Variable lease expense	$ 109	$ 110	$ 338	$ 333
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	4 years 6 months		4 years 6 months
Estimated discount rate	14.80%		14.80%
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	10 years		10 years
Estimated discount rate	15.60%		15.60%

XML

Right-of-Use Assets and Lease Obligations - Maturities (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Leases [Abstract]
Remainder 2023	$ 303
2024	1,230
2025	1,266
2026	1,300
2027 and thereafter	6,318
Total future lease payments	10,417
Less: imputed interest	(4,541)
Total operating lease liabilities	$ 5,876

XML

Intangible Assets, Net - Components of Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets, Net [Abstract]
Intangible assets, gross	$ 4,367	$ 4,367
Less: accumulated amortization	(3,050)	(2,932)
Intangible assets, net	1,317	1,435
Purchased intangible
Finite-Lived Intangible Assets, Net [Abstract]
Intangible assets, gross	3,858	3,858
Purchased patent
Finite-Lived Intangible Assets, Net [Abstract]
Intangible assets, gross	$ 509	$ 509

XML

Intangible Assets, Net - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 39	$ 39	$ 117	$ 64
Expected amortization	39		39
Expected amortization in 2024	$ 156		$ 156

XML

Other Non-current Assets - Summary of Other Non-current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Royalty receivable	$ 4,000	$ 5,000
Other	1,454	1,451
Total other non-current assets	$ 5,454	$ 6,451

XML

Other Non-current Assets - Narrative (Details) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2023 USD ($) royalty_payment payment	Sep. 30, 2022 USD ($)	Jun. 30, 2020 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)
Acquired Finite-Lived Intangible Assets [Line Items]
Revenues	$ 13,002	$ 11,463		$ 37,377	$ 36,998
Number of guaranteed royalty payments | royalty_payment	8
License agreement with Sunovion Pharmaceuticals, Inc.
Acquired Finite-Lived Intangible Assets [Line Items]
Minimum annual royalty receivable	$ 1,000		$ 1,000	1,000
Number of annual royalty payments receivable | payment	5
Royalty
Acquired Finite-Lived Intangible Assets [Line Items]
Revenues				$ (926)
Royalty | License agreement with Sunovion Pharmaceuticals, Inc.
Acquired Finite-Lived Intangible Assets [Line Items]
Revenues			$ 8,000

XML

Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accrued compensation	$ 2,831	$ 6,389
Real estate and personal property taxes	377	322
Accrued distribution expenses and sales returns provision	659	1,012
Other	1,601	244
Total accrued expenses	$ 5,468	$ 7,967

XML

12.5% Senior Secured Notes and Loans Payable - 12.5% Senior Secured Notes (Details) - USD ($) $ / shares in Units, $ in Thousands					3 Months Ended				9 Months Ended		12 Months Ended
	Nov. 01, 2023	Oct. 02, 2023	Nov. 03, 2020	Jul. 15, 2019	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2023	Sep. 30, 2022	May 15, 2023	Dec. 31, 2022	Aug. 06, 2021	Dec. 31, 2020
12.5% Senior Secured Notes [Abstract]
Warrants issued (in shares)				2,000,000
Warrant exercise price (in dollars per share)				$ 0.001
Net proceeds from issuance of initial notes, warrants and first offer rights				$ 66,082
Long-term debt					$ 38,975				$ 38,975
Premium on early retirement of debt									2,250
Loss on extinguishment of debt					0		$ 0		(353)	$ 0
Premium paid to retire debt									1,027	1,350
Interest expense					1,256		1,649		4,064	4,902
Amortization expense, deferred debt issuance costs and debt discounts									$ 174	157
Subsequent event
12.5% Senior Secured Notes [Abstract]
Long-term debt	$ 45,000
Senior notes
12.5% Senior Secured Notes [Abstract]
Proceeds from refinancing of debt			$ 4,000
Premium on early retirement of debt			2,250
Payments for loan acquisition costs			$ 220
Maximum | MAM Pangolin Royalty , LLC
12.5% Senior Secured Notes [Abstract]
Percentage of cash proceeds									30.00%
Senior secured notes due 2025
12.5% Senior Secured Notes [Abstract]
Interest rate				12.50%
Principal amount				$ 70,000
Warrants issued (in shares)													714,000
Warrants issued to purchase common stock (in shares)			143,000
Additional borrowing capacity					30,000				$ 30,000
Redemption percentage of debt under change of control provisions									101.00%
Amortization expense, deferred debt issuance costs and debt discounts					3		$ 4		$ 11	$ 12
Unamortized deferred debt issuance cost and deferred debt discounts					16				16			$ 27
Senior secured notes due 2025 | Put option
12.5% Senior Secured Notes [Abstract]
Fair value of put option					0				$ 0
Senior secured notes due 2025 | Senior notes
12.5% Senior Secured Notes [Abstract]
Interest rate				12.50%
Repayment of debt			$ 22,500			$ 5,647
Long-term debt			$ 70,000											$ 51,500
Repurchase price percentage									112.50%
Loss on extinguishment of debt								$ 13,822
Premium paid to retire debt						$ 353			$ 2,700		$ 2,700
Senior secured notes due 2025 | Senior notes | Subsequent event
12.5% Senior Secured Notes [Abstract]
Periodic payment, principal		$ 4,585
Periodic payment, interest		$ 1,218
Debt repaid, principal	34,390
Senior secured notes due 2025 | Minimum
12.5% Senior Secured Notes [Abstract]
Elective redemption percentage of debt									101.56%
Senior secured notes due 2025 | Maximum
12.5% Senior Secured Notes [Abstract]
Principal amount				$ 100,000
Elective redemption percentage of debt									112.50%
Senior secured notes due 2025 - first additional offering
12.5% Senior Secured Notes [Abstract]
Additional borrowing capacity					$ 10,000				$ 10,000
Senior secured notes due 2025 - first additional offering | Maximum
12.5% Senior Secured Notes [Abstract]
Warrants issued (in shares)					2,143,000				2,143,000
Senior secured notes due 2025 - second additional offering
12.5% Senior Secured Notes [Abstract]
Additional borrowing capacity					$ 20,000				$ 20,000
Thirteen Point Five, Senior Secured Notes due November 1, 2028 | Subsequent event
12.5% Senior Secured Notes [Abstract]
Long-term debt	$ 45,000
Thirteen Point Five, Senior Secured Notes due November 1, 2028 | Senior notes | Subsequent event
12.5% Senior Secured Notes [Abstract]
Interest rate	13.50%

XML

12.5% Senior Secured Notes and Loans Payable - Debt Maturities (Details) - USD ($) $ in Thousands	Nov. 01, 2023	Sep. 30, 2023
Debt Instrument [Line Items]
Remainder of 2023		$ 9,171
2024		19,487
2025		10,317
Total		$ 38,975
Subsequent event
Debt Instrument [Line Items]
Remainder of 2023	$ 0
2024	0
2025	0
2026	9,540
2027	14,535
2028	20,925
Total	$ 45,000

XML

Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended	9 Months Ended
	Aug. 02, 2023	Jun. 14, 2023	Nov. 03, 2020	Jun. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Aug. 01, 2023	Aug. 06, 2021	Jul. 15, 2019
Class of Warrant or Right [Line Items]
Warrants issued (in shares)									2,000,000
Exercise of warrants (in shares)					0	0
Warrant exercise price (in dollars per share)									$ 0.001
Public equity
Class of Warrant or Right [Line Items]
Fair value of warrants issued				$ 5,874
Pre-Funded Warrants
Class of Warrant or Right [Line Items]
Warrants issued (in shares)				4,000,000
Common Stock Warrants
Class of Warrant or Right [Line Items]
Warrants issued (in shares)				8,850,000
Warrants issued to purchase common stock (in shares)		3,689,452			8,689,452
Proceeds from warrant exercises	$ 4,800	$ 3,542			$ 8,342
Existing Warrants
Class of Warrant or Right [Line Items]
Warrants issued (in shares)					1,714,429
Warrant exercise price (in dollars per share)							$ 0.96
Class of warrant or right, outstanding (in shares)							5,000,000
Stock issued during period, conversion of convertible securities (in shares)	5,000,000
Proceeds from warrant exercises	$ 4,800
New Warrants
Class of Warrant or Right [Line Items]
Warrants issued (in shares)							2,750,000
Warrant exercise price (in dollars per share)							$ 2.60
Remaining Warrants
Class of Warrant or Right [Line Items]
Warrants issued (in shares)							160,548
Warrant exercise price (in dollars per share)							$ 1.09
Minimum | Common Stock Warrants
Class of Warrant or Right [Line Items]
Warrant exercise price (in dollars per share)				$ 0.96
Maximum | Common Stock Warrants
Class of Warrant or Right [Line Items]
Warrant exercise price (in dollars per share)				$ 1.09
Senior secured notes due 2025 - first additional offering
Class of Warrant or Right [Line Items]
Fair value of warrants					$ 6,800
Fair value of warrants issued					$ 735
Senior secured notes due 2025 - first additional offering | Maximum
Class of Warrant or Right [Line Items]
Warrants issued (in shares)					2,143,000
Senior secured notes due 2025
Class of Warrant or Right [Line Items]
Interest rate									12.50%
Warrants issued (in shares)								714,000
Warrants issued to purchase common stock (in shares)			143,000

XML

Sale of Future Revenue - Narrative (Details) - USD ($) $ in Thousands		2 Months Ended	3 Months Ended			9 Months Ended		35 Months Ended
	Nov. 03, 2020	Dec. 31, 2020	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2020	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Payments for loan acquisition costs						$ 12,548	$ 0
Revenues			$ 13,002	$ 11,463		37,377	$ 36,998
Royalty
Disaggregation of Revenue [Line Items]
Revenues						(926)
MAM Pangolin Royalty , LLC | Maximum
Disaggregation of Revenue [Line Items]
Proceeds from sale of future revenue	$ 125,000
License agreement with Sunovion Pharmaceuticals, Inc.
Disaggregation of Revenue [Line Items]
Minimum annual royalty receivable			$ 1,000		$ 1,000	1,000		$ 1,000
License agreement with Sunovion Pharmaceuticals, Inc. | Royalty
Disaggregation of Revenue [Line Items]
Revenues					$ 8,000
Monetization Agreement
Disaggregation of Revenue [Line Items]
Payments for loan acquisition costs						$ 2,909
Effective annual interest rate	24.90%
Monetization Agreement | MAM Pangolin Royalty , LLC
Disaggregation of Revenue [Line Items]
Proceeds from sale of future revenue	$ 40,000	$ 10,000						$ 50,000
Proceeds from debt, contingent on additional milestones	$ 75,000

XML

Sale of Future Revenue - Royalty Obligation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Sale of Future Revenue [Roll Forward]
Liability related to the sale of future revenue, net at December 31, 2022			$ 65,259
Revenues	$ 13,002	$ 11,463	37,377	$ 36,998
Amortization of issuance costs			163
Interest expense related to the sale of future revenue			0	$ 5,683
Liability related to the sale of future revenue, net (includes current portion of $985)	64,496		64,496
Current portion	$ 985		985
Royalty
Sale of Future Revenue [Roll Forward]
Revenues			$ (926)

XML

Net Earnings (Loss) Per Share - Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net income (loss)	$ (2,035)	$ (5,792)	$ 8,068	$ (12,536)	$ (16,302)	$ (13,220)	$ 241	$ (42,058)
Weighted-average number of common shares – basic (in shares)	64,678,761			53,424,922			59,252,768	46,828,218
Effect of dilutive stock options and warrants (in shares)	0			0			1,547,751	0
Weighted-average number of common shares - diluted (in shares)	64,678,761			53,424,922			61,513,736	46,828,218
Basic (in dollars per share)	$ (0.03)			$ (0.23)			$ 0	$ (0.90)
Diluted (in dollars per share)	$ (0.03)			$ (0.23)			$ 0	$ (0.90)
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Effect of share-based payment arrangements (in shares)	0			0			57,471	0
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Effect of share-based payment arrangements (in shares)	0			0			654,682	0
Employee stock purchase plan (ESPP)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Effect of share-based payment arrangements (in shares)	0			0			1,064	0
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	5,912,647			5,967,492			5,339,130	5,967,492
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	3,280,313			168,050			605,650	168,050
Warrants on common shares outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	4,464,429			10,564,429			4,464,429	10,564,429

XML

Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation expenses [Abstract]
Share-based compensation expenses	$ 774	$ 535	$ 1,766	$ 3,669
Restricted stock units
Share-based Compensation expenses [Abstract]
Share-based compensation expenses	312	58	532	97
Stock options
Share-based Compensation expenses [Abstract]
Share-based compensation expenses	462	477	1,217	3,570
Employee stock purchase plan (ESPP)
Share-based Compensation expenses [Abstract]
Share-based compensation expenses	0	0	17	2
Manufacture and supply
Share-based Compensation expenses [Abstract]
Share-based compensation expenses	59	66	155	159
Research and development
Share-based Compensation expenses [Abstract]
Share-based compensation expenses	105	75	277	406
Selling, general and administrative
Share-based Compensation expenses [Abstract]
Share-based compensation expenses	$ 610	$ 394	$ 1,334	$ 3,104

XML

Share-Based Compensation - Restricted Stock Unit Awards (Details) - Restricted stock units shares in Thousands	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Number of Units
Unvested, at beginning of period (in shares) | shares	162
Granted (in shares) | shares	1,874
Vested (in shares) | shares	(31)
Forfeited (in shares) | shares	(57)
Unvested, at end of period (in shares) | shares	1,948
Vested and expected to vest at end of period (in shares) | shares	1,788
Weighted Average Grant Date Fair Value
Unvested, at beginning of period (in dollars per share) | $ / shares	$ 2.38
Granted (in dollars per share) | $ / shares	0.91
Vested (in dollars per share) | $ / shares	2.33
Forfeited (in dollars per share) | $ / shares	2.03
Unvested, at end of period (in dollars per share) | $ / shares	0.97
Vested and expected to vest at end of period (in dollars per share) | $ / shares	$ 0.97

XML

Share-Based Compensation - Performance Based (Details) - Performance Shares - $ / shares shares in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Number of Units
Unvested (in shares)	1,332	0
Granted (in shares)	1,332
Vested (in shares)	0
Forfeited (in shares)	0
Vested and expected to vest at end of period (in shares)	1,166
Weighted Average Grant Date Fair Value
Unvested (in dollars per share)	$ 2.03	$ 0
Granted (in dollars per share)	2.03
Vested (in dollars per share)	0
Forfeited (in dollars per share)	0
Vested and expected to vest at end of period (in dollars per share)	$ 2.03

XML

Share-Based Compensation - Stock Option Activity (Details) - Stock options - $ / shares shares in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Number of Options
Outstanding (in shares)	5,913	6,028
Granted (in shares)	150
Exercised (in shares)	(1)
Forfeited/expired (in shares)	(264)
Vested or expected to vest at end of period (in shares)	5,836
Exercisable at end of period (in shares)	4,437
Weighted Average Exercise Price
Outstanding (in dollars per share)	$ 5.54	$ 5.48
Granted (in dollars per share)	2.02
Exercised (in dollars per share)	0.88
Forfeited/expired (in dollars per share)	2.30
Vested or expected to vest at end of period (in dollars per share)	5.59
Exercisable at end of period (in dollars per share)	$ 6.56

XML

Share-Based Compensation - Valuation Assumptions for Determination of Fair Value of Options (Details) - Stock options	9 Months Ended
	Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%
Expected volatility	100.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (years)	5 years 6 months
Risk-free interest rate	4.00%

XML

Share-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share price (in dollars per share)		$ 1.53
Inducement equity, common stock options outstanding (in shares)	150,000
Inducement equity, common stock options granted (in shares)	150,000
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs of RSU awards	$ 1,243
Unrecognized compensation cost, recognition period	2 years 5 months 4 days
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs of RSU awards	$ 2,320
Unrecognized compensation cost, recognition period	2 years 7 months 2 days
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, recognition period	1 year 3 months 18 days
Weighted average grant date fair value (in dollars per share)	$ 0.7981
Granted (in dollars per share)	$ 2.02
Unrecognized compensation expense related to non-vested stock options	$ 1,869

XML

Income Taxes (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate	6.40%						37.40%
Income taxes	$ (140,000)			$ 0			$ 144,000	$ 0
Net (loss)/income before income taxes	(2,175,000)			(12,536,000)			385,000	(42,058,000)
Net income (loss)	(2,035,000)	$ (5,792,000)	$ 8,068,000	(12,536,000)	$ (16,302,000)	$ (13,220,000)	241,000	(42,058,000)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	$ (2,035,000)			$ (12,536,000)			$ 241,000	$ (42,058,000)

XML

Contingencies (Details) - Neurelis, Inc. v. Aquestive Therapeutics, Inc. $ in Thousands	May 03, 2022 USD ($)	Dec. 05, 2019 cause
Loss Contingencies [Line Items]
Number of cases pending | cause		3
Litigation settlement, amount awarded from other party | $	$ 156

XML

Subsequent Events (Details) - USD ($) $ in Thousands	Nov. 01, 2023	Sep. 30, 2023
Subsequent Event [Line Items]
Long-term debt		$ 38,975
Subsequent event
Subsequent Event [Line Items]
Long-term debt	$ 45,000
Royalty Payment Term	8 years
Subsequent event | Minimum
Subsequent Event [Line Items]
Royalty Interest Percent Interest	1.00%
Subsequent event | Maximum
Subsequent Event [Line Items]
Royalty Interest Percent Interest	2.00%
Subsequent event | Thirteen Point Five, Senior Secured Notes due November 1, 2028
Subsequent Event [Line Items]
Long-term debt	$ 45,000