Aquestive Therapeutics, Inc. (AQST) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter Aquestive Therapeutics Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Faith Pomeroy-Ward, Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to today's call. On today's call, I'm joined by Dan Barber, President and Chief Executive Officer; and Ernie Toth, Chief Financial Officer, who are going to provide an overview of the company's reported financial results for the second quarter ended June 30, 2026, and a progress update on the company's key 2026 objectives, followed by a Q&A session. During the Q&A session, the team will be joined by Dr. Matt Greenhawt, Chief Medical Officer; Melina Cioffi, Senior Vice President, Regulatory Affairs; Sherry Korczynski, Chief Commercial Officer; and Dr. Matthew Davis, Chief Development Officer. As a reminder, the company's remarks today correspond with the earnings release that was issued after market close yesterday. In addition, a recording of today's call and related supplemental materials will be made available on Aquestive's website within the Investors section shortly following the conclusion of this call. To remind you, the Aquestive team will be discussing some non-GAAP financial measures this morning as part of its review of second quarter 2026 results. A description of these measures, along with a reconciliation to GAAP, can be found in the earnings release issued yesterday, which is posted on the Investors section of Aquestive's website. During the call, the company will be making forward-looking statements. We remind you of the company's safe harbor language as outlined in yesterday's earnings release as well as the risks and uncertainties affecting the company as described in the Risk Factors section and in other sections included in the company's annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 4, 2026. As with any pharmaceutical company with product candidates under development and products being commercialized, there are significant risks and uncertainties with respect to the company's business and the development, regulatory approval and commercialization of its products and other matters related to operations. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as of the date made. Actual results may differ materially from these statements. All forward-looking statements attributable to Aquestive or any person acting on its behalf are expressly qualified in their entirety by this cautionary statement and the cautionary statements contained in the earnings release issued yesterday. The company assumes no obligation to update its forward-looking statements after the date of this conference call, whether as a result of new information, future events or otherwise, except as required under applicable law. Now I would like to turn the call over to Dan.

Thanks, Faith, and good morning, everyone. I am excited to share today that not only have we completed the necessary studies for Anaphylm resubmission, but that we remain on track to resubmit before the end of this quarter. This is less than 8 months from when we received a complete response letter from the FDA. Our resubmission will include the results from our most recent human factors validation study. As a reminder, this study provides information on how participants interacted with our improved packaging and instructions for use. In the complete response letter received earlier this year, the FDA indicated participants experienced difficulty opening our pouch and incorrectly administered the film too many times. I am pleased to say that after updating our packaging, labeling and instructions for use, our most recent human factors validation study showed statistically speaking, a major reduction in both categories. Under the previous packaging, we had 26 individuals indicate difficulty opening our packaging, and we had 6 individuals tear the film. This time, we had only 1 participant show difficulty and no one tore the film. In the previous study, 20 participants placed the film incorrectly on top of their tongue or on the roof of their mouth. This time, we had only 2 participants misplaced the dose during administration. This data is further supported by our latest pharmacokinetic or PK study. In this study, we saw no statistical difference between clinician-administered and self-administered drug product. Keep in mind, subjects who self-administered were given our revised packaging and instructions for use and had no coaching by clinical staff during the administration. We also had an encouraging result when the film was purposely misplaced by clinicians on top of the subject's tongue. This data was requested by the FDA to further understand what might happen if the film is misadministered. We saw rapid and meaningful changes in blood pressure and heart rate. The changes from baseline were higher than manual IM during the critical first 15 minutes and in line with what we have seen from EpiPen in our other studies. This means that in the evaluated misadministration scenario, pharmacodynamic responses compared favorably to manual IM administration. Even on PK, while we saw lower levels as expected compared to on-label sublingual administration, we still reached meaningful Cmax levels. This is a very encouraging outcome for the program. As we approach our planned resubmission for Anaphylm, it is a good time to review the compelling opportunity that exists for Anaphylm here in the U.S. While the epinephrine rescue market is largely generic, the need for improved clinical and carrying offerings in this category is significant. And we believe these needs could support conversion to a branded product over time, if approved. As a large PBM publicly wrote earlier in the year about Anaphylm, this advancement stands out because emergency treatment is a category where ease of use and readiness really matter. That need starts with patients, caregivers and healthcare providers. Our interactions with the allergy community indicate there is a widespread desire among patients and caregivers for an epinephrine that is oral, works quickly, is easy to use, easy to carry and durable. Many years of research and data tell us patients still do not carry or use their epinephrine. The data also shows that medical devices such as auto-injectors are often not where you need it, when you need it, when anaphylaxis occurs. We believe the conversion from auto-injectors starts with the allergists, and we can accomplish this efficiently. Our focus at launch will be on the allergy community, which will allow us to keep our cash burn down as we prepare for a potential launch, if approved. We believe that allergists convert their prescriptions to the first and only noninvasive orally delivered epinephrine product for the treatment of type 1 allergic reactions, including anaphylaxis, if approved by the FDA, the rest of the market could follow over time. Clearly, the desire for better products in this space is strong among patients, caregivers and healthcare providers. This brings us to payer coverage. The first point I want to be clear on today is that we believe clinical differentiation matters to payers. Let me repeat that. Clinical differentiation matters. This goes beyond just offering a no-needle solution. In our case, the benefits from an oral medication are significant. Not only do we believe we are easier to carry than auto-injectors, our product has shown in our studies meaningful clinical differentiation from the auto-injector on time to maximum concentration or Tmax and on change from baseline blood pressure following administration. Our data demonstrates this, and we believe payers may find this meaningful. This, along with the ease of carry and use aspects of Anaphylm are important. We have a great clinical story to share, and we have already heard from multiple counterparts at various payer groups about the difficulties their individual family members face with auto-injectors. Payer coverage is also a function of product pricing. This is the single most important decision any brand will make at launch. We are actively building our pricing strategy. And for now, we'll keep this confidential. What I will say is that based on the ongoing volume in this market, we continue to believe the market opportunity for epinephrine branded products exceeds $1 billion a year and could potentially reach $2 billion a year over time. This is driven not just by payer dynamics, but also by prescription volumes. The epinephrine rescue market has been growing for years even without significant promotional activities. Over the last few years, the market has grown annually by around 6%, and this holds true for 2026 year-to-date. Given the large gap between prescriptions and prevalence, the continued expansion of allergy diagnoses and new product offerings, we believe this growth rate could continue for the foreseeable future. So from my perspective, the compelling opportunity in this category remains intact. We have an expanding and growing market dominated by outdated technology. We believe our product provides meaningful clinical differentiation that could support payer adoption, all while being efficient in our allergist-focused launch strategy, if approved. Now let's talk about medical affairs and our commercial launch preparations. Our Chief Medical Officer, Dr. Matt Greenhawt and his team continue to interact with allergists on a daily basis and continue to attend all key allergy conferences. In fact, I believe awareness of Anaphylm within the allergy community is now quite high. Matt recently told me that during a major allergy conference, it was difficult to find physicians who are unfamiliar with Anaphylm. That is a testament to the team's consistent engagement with allergists over the last several years. Interaction after interaction, the team continues to share the excitement for Anaphylm to be potentially approved. Our commercial team has launch preparations fully underway. As previously shared, the team has made excellent progress preparing for launch. Sales leadership has put plans in motion to bring on our regional sales directors and training. Marketing is driving all promotional materials and programs to be launch-ready in a manner consistent with applicable pre-approval requirements, and we are building out our commercial analytics capabilities. Simply put, we have the right experienced leadership in place and remain on track to hit the ground running as soon as possible, if approved by the FDA. Now let's turn to AQST-108. I must admit, I was surprised after our May earnings call by how much interest we received in our atopic dermatitis program. One of the most common reactions was, "I've never thought about epinephrine for atopic dermatitis," along with questions on how we believe the science works. We have included extra slides in our supplemental materials to further elucidate the science. Simply put, a localized topical epinephrine application may have the potential to provide a meaningful treatment approach in atopic dermatitis and could potentially support a dosing profile that does not require daily administration. This could allow us to position AQST-108 with low-cost, less effective generics and significantly higher-priced biologics. We will have more to say on this program after we have completed the resubmission of Anaphylm. Now let's turn to our partnering and base business activities. We continue to engage in active partnering processes for Libervant in the U.S. and Anaphylm outside of the U.S., and we expect to have more to say as those processes progress. Our base business as well remains cash flowing on a consistent basis. After interacting with Indivior, we also believe that there is no near-term impact to our base business based on the proposed Indivior-Supernus merger. We continue to manage our cash carefully. As a reminder, we continue to expect $75 million in launch funds from RTW following FDA approval as well as $20 million from Oaktree. This, along with the potential cash that could be generated from our out-licensing activities if completed on acceptable terms, means we believe we are positioned to support an effective launch of Anaphylm, assuming FDA approval, satisfaction of applicable funding conditions and execution of our planned commercial strategy. In conclusion, the epinephrine market remains a healthy and growing market that is well positioned for potential conversion from auto-injectors. We are on track to resubmit our NDA in Q3. Our cash position is expected to support a potential launch, and we will have more to say on AQST-108 later in the year. With that, I will turn the call over to Ernie.

Thank you, Dan, and good morning, everyone. By now, you will have seen our second quarter 2026 financial results in the earnings release issued last evening and detailed in our Form 10-Q filing. As we typically do, we will address most of the detailed discussion regarding the quarter during Q&A, and I will focus my remarks on the financial performance, operating spend and liquidity. During the second quarter, our primary financial focus remains supporting the Anaphylm resubmission process while maintaining a strong balance sheet and financial flexibility. During the quarter, we also completed our refinancing with Oaktree, establishing a new $150 million debt facility that lowers our cost of capital, extends our interest-only period and enhances our financial flexibility as we prepare for a potential Anaphylm launch, if approved by the FDA. As Dan discussed, we successfully completed the human factors validation study and PK study for Anaphylm and results support resubmission of the NDA in the third quarter of 2026. We are also continuing to manage the business with a disciplined approach to capital allocation. Our commercial team is advancing launch preparations in a manner consistent with applicable pre-approval requirements, while our medical affairs team continues to engage with the allergy community. At the same time, we remain focused on carefully managing cash as we move towards resubmission and prepare for a potential launch, if approved. Now let me walk through the second quarter results. Total revenues increased to $13.8 million in the second quarter 2026 from $10 million in the second quarter 2025. The 38% increase was primarily driven by increases in manufacture and supply revenue and increases in license and royalty revenue. Manufacture and supply revenue increased to $11.9 million in the second quarter 2026 from $9.6 million in the second quarter of 2025, primarily due to increases in Suboxone revenues, partially offset by lower Ondif revenues. License and royalty revenue increased to $1.3 million in the second quarter 2026 from $0.8 million in the second quarter 2025, primarily due to royalty revenue from Zevra. Total revenues increased to $28.3 million for the 6 months ended June 30, 2026, from $18.7 million for the 6 months ended June 30, 2025. The 51% increase was primarily driven by increases in license and royalty revenues and increases in manufacture and supply revenue. Manufacturing and supply revenue increased to $20.7 million for the 6 months ended June 30, 2026, from $16.8 million for the 6 months ended June 30, 2025, primarily due to increases in Suboxone revenues, partially offset by lower Ondif revenues. License and royalty revenue increased to $6.7 million for the 6 months ended June 30, 2026, from $1.6 million for the 6 months ended June 30, 2025, primarily due to royalty revenue from Zevra. Research and development expenses decreased to $4 million in the second quarter of 2026 from $4.1 million in the second quarter of 2025. The decrease in research and development expenses was primarily due to lower development and manufacturing costs associated with the Anaphylm program, partially offset by increases in preclinical costs. Research and development expenses decreased to $8.2 million for the 6 months ended June 30, 2026, from $9.5 million for the 6 months ended June 30, 2025. The decrease in research and development expenses was primarily due to a decrease in the clinical trial costs and product research expenses associated with the Anaphylm program and decreases in share-based compensation, partially offset by increase in personnel costs. Selling, general and administrative expenses increased to $14.1 million in the second quarter of 2026 from $12.7 million in the second quarter of 2025. The increase primarily represents higher legal fees of approximately $2.1 million, higher severance costs of approximately $1.4 million, which includes acceleration of share-based compensation, higher personnel costs of approximately $0.9 million and higher share-based compensation expenses of approximately $0.3 million as well as other expenses, partially offset by lower commercial spending of approximately $2.6 million and lower regulatory and licensing fees of approximately $1.2 million. Selling, general and administrative expenses decreased to $25 million for the 6 months ended June 30, 2026, from $31.8 million for the 6 months ended June 30, 2025. The decrease primarily represents lower commercial spending of approximately $4.5 million, the one-time Anaphylm PDUFA fee of $4.3 million in the prior year period, lower legal fees of approximately $1.3 million, lower regulatory and licensing fees of approximately $1.9 million, partially offset by higher severance costs of approximately $2 million, which includes acceleration of share-based compensation, higher personnel costs of approximately $1.4 million and higher share-based compensation expenses of approximately $1.8 million as well as other expenses. In the second quarter of 2026, the company recognized a one-time loss on extinguishment of debt of $11.7 million, which represents the difference between the carrying value of the 13.5% notes as of May 12, 2026, and the total payoff amount of the 13.5% notes. Aquestive's net loss for the second quarter of 2026 was $22.9 million or $0.18 for both basic and diluted loss per share compared to the net loss in the second quarter of 2025 of $13.5 million or $0.14 for both basic and diluted loss per share. Excluding the impact of the onetime recognition of the loss and extinguishment on the company's 13.5% notes, the net loss in the second quarter of 2026 was $11.2 million. Aquestive's net loss for the 6 months ended June 30, 2026, was $30.9 million or $0.25 for both basic and diluted loss per share compared to the net loss for the 6 months ended June 30, 2025, of $36.5 million or $0.37 for both basic and diluted loss per share. Excluding the impact of the one-time recognition of the loss on extinguishment on the company's 13.5% notes, the net loss for the 6 months ended June 30, 2026, was $19.2 million. Non-GAAP adjusted EBITDA loss was $5.2 million in the second quarter of 2026 compared to a non-GAAP adjusted EBITDA loss of $9.3 million in the second quarter of 2025. Non-GAAP adjusted EBITDA loss was $7 million for the 6 months ended June 30, 2026, compared to a non-GAAP adjusted EBITDA loss of $27 million for the 6 months ended June 30, 2025. Turning to the balance sheet. We ended the second quarter of 2026 with $98.5 million in cash and cash equivalents. Combined with the flexibility provided by our Oaktree facility and the expected availability of $75 million in launch funding from RTW and $20 million from Oaktree following FDA approval of Anaphylm, we believe we are well positioned to support our planned commercial strategy and launch preparation. As Dan noted, we also continue to engage in active partnering processes for Libervant in the U.S. and Anaphylm outside of the U.S., and we expect to have more to say as those processes progress.?Our base business also remains cash flowing on a consistent basis.? We are maintaining our full year 2026 financial guidance.?For 2026, the company expects to have total revenue of $46 million to $50 million and non-GAAP adjusted EBITDA loss of $35 million to $30 million. In summary, the second quarter reflects continued financial discipline and execution across the business.?We delivered year-over-year revenue growth, improved non-GAAP adjusted EBITDA performance, ended the quarter with a strong cash position, and remain focused on funding the key priorities that Dan outlined today.?Those priorities including completing the Anaphylm resubmission in Q3, preparing for a potential launch if approved by the FDA, advancing AQST-108, and continuing to evaluate partnering opportunities.? With that, I will now turn the line back to the operator to open the line for questions.

[Operator Instructions] The first question will come from Roanna Ruiz with Leerink Partners.?

A couple questions from me.?One, could you help frame how the recent PK and human factors study data potentially increases your conviction in the resubmission being very comprehensive??Can you give us updated thoughts on whether you think the FDA may use a shorter or accelerated timeframe to review the resubmission?

Sure.?Good morning, Roanna.?I will give you my thought on the PK human factors overview, and then I will ask Matt to give a little bit more color.?We know from the original review that the FDA's clinical team was bought into and signed off on the approval of our product.?So we know from a clinical perspective that there's conviction on the FDA side from at least the interactions we've had in the back and forth and what we've seen from documentation.?We know that the CRL was limited to the things that not only we shared with you, but also to that idea that the packaging was difficult to open and our instructions weren't clear for administration.?When we look at the data that we just generated, we believe we have very convincingly and thoroughly answered the open questions the FDA put out. As you heard in the prepared remarks, on the human factors side, we think the results are very clean, and on the PK side, when self-administered, we saw no difference from clinician-administered.?Even when we look at this off-label arm that the FDA asked us to produce, we see some really interesting pharmacodynamic data.?Before I answer the timeframe question you had, I will just ask Matt to give his thoughts on the pharmacodynamic data.

In looking at the results, the one theme that I keep coming back to is just how reassuring it was to look up the results that we got.?I think, as Dan said, when you look at the repeat of the self-administration and the healthcare provider, we got exactly what we were expecting, and it is in range with what we have seen before.?So it is nice to see the reinforcement and replication of that data.?Then you look at the off-target, the top of tongue.?Those were really great data to see that there is with that, in a way that we do not intend the product to be used, that you are still getting a very clinically meaningful increase in your heart rate and blood pressure. I think, in my opinion as a clinician, when I am prescribing a drug to a family, to a parent, they want reassurance that this is going to work.?I think we are able to look at these data and in a way that we see a response, which in a way that you would not want the drug to be taken, you are still going to get a response.?I think that is among the more reassuring things that you can counsel a family when they are making a decision on what product they would prefer to be prescribed.?So, very pleased with the results.

Going to your second question on the timeframe, our guidance to everyone remains the same.?If the classification system at the FDA would tend to say this is a 6-month review, so our guidance is this will be a 6-month review.?However, we are already engaged with the FDA on the fact that our application is coming their way.?We do think this is a very thin package compared to the 10-month review they have already done and the conclusions that they have reached.?We will be pressing them in a supportive way, not in an aggressive way, that this is an opportunity to move faster.?So whether they take that opportunity or not is up to them, and the standard time would be 6 months.

Yes.?That's helpful.?And a quick follow-up.?Thinking ahead, how would physicians typically interpret the HF and PK data on top of the existing data you've already produced, and how are you thinking about leveraging this information with the field force, detailing docs, things like that, assuming Anaphylm is eventually approved?

Yes.?I'll give it to Matt in a second again to give you his thoughts on how a physician might think about this data.?But let me be clear with the data that we've generated.?We have a great clinical story, and you heard me say that in prepared comments.?So not only in the payer world, where we think there's an ability to position the product in an important way from a clinical perspective, but also with Matt's team, the MSLs, and of course with Sherry and all her efforts and her marketing team and sales team.?We will absolutely be showing all of the great data we have, including the data we just generated.?But I'll let Matt give his thoughts.

Yes.?I think Dan said it well.?On the medical affairs side, we're very excited to get out to the next conference to be able to start sharing these details with the allergy community, and in our visits to physician offices.?How we would look at these data, this is just building more of just rounding out the story of an already sort of very nice tale.?We've got great data.?We have a product that in our studies shows a very strong magnitude of effect, and that magnitude of effect occurs very early, within a couple of minutes.?Comparatively in our studies, we've consistently seen that the magnitude of that effect exceeds that we're comparing it to.?You sort of synthesize what we just released. We were able to show that even with the top of tongue, again, probably we really would prefer you not take it this way, but if you do, even in the setting of low resulting PK, the resulting PD is overlapping with the same magnitude of change that we saw when we used EpiPen in our pivotal study.? That to me, just sort of at this point is, I don't want to say, icing on the cake, but it's a really nice feature to be able to have to counsel your patients.?And again, if you're looking at the totality of our data, we have a consistent picture of rapid onset of the drug reaching high levels, and these are very clinically meaningful levels.?So, combine this now with human factors data that shows that clearly we've improved on sort of previous performance.?Again, reassurance. That is the one word, and it is nice to have these data, to see it over and over again in a number of different studies with the PK and PD data consistency.?It is a nice thing to have to be able to counsel your patients.

Thank you.?The next question is going to come from Kristen Kluska with Cantor.?

Congrats on these data you announced earlier in the week.?A few questions from me.?The first one, we have often talked about the product profile differences that will be important for payer discussions, but in your prepared remarks, you mentioned some of the clinical differentiation factors.?Curious if there are certain endpoints over others that you think are going to carry the most weight and how that portrays with the data that you have seen from Anaphylm so far.?And then I wanted to ask for the Cmax data for the top of the tongue, the inaccurate usage, whether the FDA in advance of this had set a bar for what they were looking for.?I know in literature they talk about this 100 picograms per milliliter being important, but is there a timeframe associated with when they would want to see that??

Sure.? Let me go in reverse order.?On the Cmax question.?As we all know, the FDA is reticent to ever give you bright lines of what you need or don't need.?But we know from our correspondence over several years that there's 2 threshold marks that they have pointed to, both in written communication with us and in meetings.?And the first one is this idea of getting over 50 picograms per milliliter, which we clearly do, on the top of tongue.?The second is this idea of clearing 100 picograms per milliliter, which we also do.?So we think from a PK perspective, and I'll hand it over to Matt in a second, and obviously as a practicing physician, I think you'll hear him say PK is not really where practicing physicians focus. But from an FDA perspective, where PK can be more important, I think we have, at least from the bars they have talked about in the past, we have what we need from, again, an off-label, or off-use, I should say, because the label's obviously in progress, an off-use administration.? Matt, I think this is your lucky day.?It's coming back your way.?I will let Matt talk about the clinical differentiation he sees, but I think it's worth pointing out again, I think one of the learnings we have in watching this market develop is positioning a product as simply no needle is not the path to success.?The path to success is highlighting the important clinical differentiation that you have.?Then, of course, all of the important features like use and carry come along with that. But I'll let Matt talk about the specific clinical differentiation [ item C ], things that are meaningful.

Yes, I think differentiation is the word, and if you look at our data, and I'll highlight, going back to our published pivotal trial, the 301 study, the differentiation is very evident when you look at the magnitude of effect that our drug reaches versus what the comparator drugs reach in that study.?The magnitude of change is, you can see it very clearly.?It is greater.?But more importantly, it's happening faster, much faster.?And that makes a huge difference.? In my clinical experience, and I'll disclose, I'm also a patient.?I have venom allergy.?I get stung.?Hopefully, I try not to get stung, but I get stung,?I don't want something that's going to take a long time to kick in.?I want that effect very rapidly, and I want a maximal effect. I don't sort of want a gradual increase in sort of marginal peaks of how much my blood pressure and heart rate are going to respond.?And that's what we see with our data, a rapid response in high levels.?And when you're giving epinephrine to a patient, you got a very small window in which you're watching to see, is this going to work??What do I have to do next??It's sometimes 5 to 10 minutes.? So, you look at where the time to these onsets hit, it's within that window.?We feel, not only is the change clinically meaningful, but it's happening in a timeframe that fits when we have to make a decision.?Are we going to say that the patient's going to be okay in that when we're watching them, or are we going to have to escalate care? So to us, we believe that our properties are absolutely differentiating in that respect.?And again, my [ career ] giving out doses of epinephrine, time is precious and you really don't want to mess around with that.

The next question's going to come from David Amsellem with Piper Sandler.?Your line is open.

Hi, this is [indiscernible] for David.? First, regarding 108, any learnings from the recently completed study in androgenic alopecia that gives you confidence that the effects of 108 are relevant to atopic derm and a broader slate of dermatological conditions??That's number 1.?Number 2, also on 108, can you speak to the rationale behind pursuing atopic derm first, and how this decision plays into your broader strategy with respect to the AdrenaVerse platform??Thank you.

Sure.?Thank you for giving a little bit of airtime to 108.?Obviously, we are incredibly excited about Anaphylm and where we are and what we are doing.?But we do believe AdrenaVerse has broader use, and 108 is the first place we are putting that to work.?Starting with the rationale on atopic derm, that is pretty straightforward.?It is a well-worn path in the dermatology space that atopic derm is a good entry point and a good first initial indication for expanding into broader indications.?While we think alopecia areata is still an important indication and one that is out there for us, we want to get that first proof point through the gates.? We have obviously been a little hampered by just the ability to focus on 108 while also bringing Anaphylm forward, and clearly, our resources are focused on Anaphylm. But to the extent that we have been able to move 108 forward, and we plan on doing that as we go forward, we do think that the science is there in a compelling way.? I will turn it over to Matthew Davis to just give you his thoughts quickly and remind everyone why we feel good from a scientific perspective.

We are incredibly excited.?In our human trials of 108, we saw TSLP suppression.?We saw CCL3 and CCL4 suppression.?When you think of atopic derm, the number 1 symptom that you want to alleviate is itch.?Itch is not just a histaminic mast cell phenomenon.?When it comes to atopic derm, it is actually an IL-31 phenomenon, TSLP phenomenon, and mast cell.?When we looked at our preclinical program, we saw an NF-KB modulation, and that is a direct correlation with IL-31.?So if you throw together the 3 main causes of itch for atopic dermatitis, we believe that topical 108 is going to hit those areas that cause itch, and we believe that it could have a meaningful benefit.?So I am very excited.

More to come as time goes on.?But appreciate the questions on 108.

Thank you.?The next question will come from Mazi Alimohamed with Oppenheimer.?

Just really 2 for us.?One, going back to the human factor study.?Maybe on the root cause of the failure.?It seems like there was 1 open failure and 2 misplacements.?Maybe any color you can add on what the root cause analysis concluded for each, and what residual risk justification goes into the submission.?Then a second one, following up on 108.?It felt also to us that this does actually seem to be quite an opportunity in atopic derm.?One of the things that we were thinking through, though, was maybe more about dosing and long-term use, and maybe any color you could add about rebound erythema or tachyphylaxis with chronic dosing with epinephrine products in this disease.