Host: Hello and welcome to the Life Sciences Investor Forum. On behalf of OTC Markets and our co-host, Zacks Small Cap Research, we are very pleased you have joined us. The next presentation is from Aspire Biopharma Holdings. Their session will be moderated by David Bautz, Senior Equity Analyst with Zacks Small Cap Research. At this point, I am very pleased to welcome Stephen Quesenberry, General Counsel and Director of Product Development of Aspire Biopharma Holdings, which trades on NASDAQ under the symbol ASBP. Welcome, Stephen.
Stephen Quesenberry: Hello there.
David Bautz: Hey, Stephen. Thanks for joining us today. Looking forward to getting into this discussion.
SQ: Yeah, me too.
DB: All right, so for those investors who are new to the story, why don’t you tell us a little bit about Aspire’s core technology and the problems that it was designed to solve?
SQ: Great. Our core technology is a sublingual, under-the-tongue delivery system that works with a variety of drugs and supplements. It was created over about a 10-year period. We have further developed since we acquired it in 2021. We have about 11 different substances patent-pending. What it does, we use generic drugs, so we don’t have to go through the FDA system to prove whether a drug works or not. It simply delivers them faster and better. Our first product is a high-dose aspirin that we chose because aspirin has an anticoagulant effect. We did a clinical trial last summer comparing the National Institutes of Health’s recommended dose of chewing two aspirin tablets, 182 milligrams, versus our sublingual powdered aspirin. And our aspirin was approximately five times faster in the blood. It was having its anticoagulant effect in less than two minutes. So we’ve started to use the same delivery system on some other products that we have in the pipeline, as well as in a supplement that we have on the market right now.
SQ: The benefit of it is that it avoids whatever you take, instead of swallowing and then going to the gastric system, where any drug, any substance is digested, it is absorbed through the buccal tissues in your mouth, under your tongue, and goes directly into the bloodstream. So you get avoidance of digestion, and you get a very speedy rate of getting the drug circulating in the blood.
DB: Okay. So, to follow up on that, where do you think the platform has its greatest advantage? You mentioned the speed of onset and bioavailability. Is it convenience or something else, perhaps?
SQ: Well, on the drug side, it’s definitely the speed to the bloodstream. You look at some of the things we’re working on right now, like Alprazolam, which is Xanax. If you take a Xanax pill, you’re looking at 20 to 30 minutes before you feel anything. With our delivery system, you’re going to feel the effects of that in 30 seconds to a minute. So it’s a huge, huge, like, a giant leap in the speed of getting drugs into your system. And the other, for other drugs, like Clopidogrel, for example, which is sold as Plavix, is a daily drug. You take 75 milligrams, and it irritates gastric tissues. So if you can take your Clopidogrel with our delivery system, it avoids being digested, it avoids the gastric system, and it can take away that side effect completely. So we look at generic drugs, and they have to be the right ones. They have to be small molecule. They have to meet certain requirements of pH and pKa. And then we say, would this be better for people if it could be delivered faster, or is it important for this drug to avoid the gastric system? So we look at those two things, and they may apply to both on a drug; it may just be one or the other criterion.
DB: Okay. So, as a follow-up to that, how is the company prioritizing the different indications and product candidates? Because, as you mentioned, there are a lot of things that can be applied to this. So, how is the company kind of prioritizing things in development?
SQ: We chose aspirin as our first product to sort of take all the way, because it’s the most researched drug in history. It’s over 120 years old. Its anticoagulant effects are very, very well documented. We won’t have to prove that with the FDA. So that’s used by millions of people. They’re told if they’re feeling the effects of a heart attack, to chew up two aspirin and swallow them. And it does work. It stops your blood from coagulating, and it prevents further blockage from happening. So given the size of that market and the familiarity that cardiologists and even just on-the-street consumers have, we made that our first product. It does take time, as with any drug, to develop it, to do the clinical trials and whatnot. So our next one, which we’ve already started on, is Alprazolam, which is Xanax. And we chose that because it’s a widely used drug by people all over the world daily. And the speed of action is a huge thing with Xanax. Like if you’re undergoing a medical procedure, I, for example, have a real claustrophobia, terrible claustrophobia.
SQ: I had an MRI not long ago, and I was prescribed one Xanax pill, the first one in my life. And they told me to take it half an hour before my MRI. Well, they got me in early before it had kicked in, and I went in the MRI, and I had a massive panic attack in the MRI machine. If I would have had the powder form, which works in 30 seconds or a minute, it would have had a totally different outcome. So, Xanax is a hugely popular drug. We just look at the market. We look at whether the speed or the avoidance of the gastric system, or both, as in the case of aspirin, is there, and then we move forward. And, as I said, we have 11 patented drugs and supplements right now. We’re already on the market with our caffeine supplements. We have a plan laid out for how we’re going to go about these. We’ll probably work on Ondansetron early next year. That’s Zofran. It’s an anti-nausea drug. Again, you take the pill, and it takes half an hour. If you use our powder, you’re going to feel the effects in 30 seconds. So it’s just a huge leap forward, and it’s convenient. Some people can’t even swallow pills. This is just a little tiny amount of powder you pour onto your tongue, and then you feel the effects. It just disappears.
DB: So, how should investors be thinking about the company, balancing kind of keeping things internal versus potential partnering opportunities? I mean, do you see Aspire as a product company or kind of as a platform company where you’re going to look to license stuff out?
SQ: Our plan right now is just going to be to take drugs to a certain place and then license them. We’ve already had many people reaching out for licenses. But we do an initial trial on whatever drug, because that’s relatively quick and relatively inexpensive. It needs minimal FDA approval. They just approve your trial protocols. So I think it’s to take our patent, develop the formulas, do an initial clinical trial, and then when it’s provable, we will license them out. And then we have a number of drugs and supplements that don’t need FDA approval. We’re on the market right now with BUZZ BOMB™, our caffeine supplement. We’re about to come out with a melatonin supplement, which is also not FDA. So we’re kind of just moving forward that way. We will be a licensing company. We will probably continue to make BUZZ BOMB™ and maybe the melatonin too.
DB: Talking about partnerships, if you did enter into a partnership, what would a successful partnership structure look like for Aspire?
SQ: It would be an initial licensing fee and then royalties, kind of the standard in the industry. I mean, even a drug like aspirin to get to the trials as they’re doing, costs millions of dollars. And if we had the right licensing fee plus a royalty, I think that’s what we would be. We’d just be gathering royalties. Have to get the right partners, you know.
DB: Looking ahead, say next 12 months or so, what are the most important clinical or regulatory milestones that investors should be watching out for?
SQ: We’re going to be filing our IND to do our big final clinical trial on aspirin probably in August. I think we will do our final clinical trial, the big one, which the FDA has already given us guidance in a letter, probably in Q4 of this year. We expect to file our 505(b)(2) maybe in January, as soon as we get those results and the final report. And that would be literally, probably, they’ve already kind of hinted that we might be able to get fast-tracked on it because of its life-saving capabilities with heart attacks. So that could be marketable next year. Other drugs like Alprazolam, we are doing an initial trial in Q4, and then we’ll get those results probably again early next year, and that would be a licensing candidate. We’ll continue to market BUZZ BOMB™, which is doing great. And probably every three to six months, we will go forward with a new drug product, have a clinical trial, and do the development.
DB: As you’re looking around at the kind of alternative delivery technology market, if you will, how crowded is this space becoming?
SQ: It is not at all crowded. Every once in a while, you’ll see something. I read something the other day about an epinephrine that was with a tab, like a tab you put under your tongue, and it kind of caught my eye. If you go to the FDA Orange Book, it lists all six different delivery mechanisms, whether it’s topical, suppository, capsule, tablet, spray, whatever. We look at that. There is absolutely nothing for sublingual anti-nausea, for Alprazolam, for Clopidogrel, for aspirin, for Mexiletine. That’s why we’re in this. We are trendsetters. And we hold the patents to this mechanism, too. So, there are no other sublingual drugs among these drugs.
DB: Could you talk a little bit about the IP that surrounds the platform? How hard would it be for someone to replicate what you guys are doing?
SQ: Well, we have Michael Shuster, who was actually the IP Attorney of the Year in 2024 at the Goodwin firm, as our IP lawyer. He’s the best there is. He’s filed all our patents. We have a number of them. Obviously, any patent can be challenged, and people also steal patent technology, but we feel really good about our patents. There is nothing like this in the market. I’m not a scientist. I’m a lawyer and not a scientist, but we feel really good about our IP, and we’ve hired the best we can. We’ve done a lot of supportive testing, too, to beef up those patents. We hired Charles River Labs, which is probably one of the best developmental labs in the world for drugs, in Edinburgh, Scotland. They did a bunch of testing on our aspirin that has really helped solidify our aspirin patent. So, we feel good about it.
DB: All right, good things. So, beyond the pharmaceuticals, of course, you guys have a commercialized product with BUZZ BOMB™, so let’s talk about that for a little bit. I know you guys had news this week about entering the market on Amazon, so maybe you can talk a little bit about how important that is for the company’s strategy.
SQ: Yeah, so we really started selling BUZZ BOMB™ on January 15th of this year. When the investors get to the package on slide 14, they can see some of our packaging. We have been going to trade shows, races, and a variety of things all over the country. It’s been amazing. We’re already on our second order of product. We just have a new product coming out next week, which is a lemon drop flavor, which I’m pretty excited about. We have some really good influencers who are working for us, and we expect really big things. We’ll be at the San Francisco Marathon for anyone who’s out there. We’re going to be at the New York Marathon Expo if you’re out there for that. We were at the Boston Marathon. It’s really been amazing how it’s been going. It’s a unique product in that market.
DB: So was BUZZ BOMB™ primarily intended as a revenue opportunity or do you see it more as a proof of concept for your delivery technology, or maybe both?
SQ: It’s a revenue producer. The concept was proved with aspirin in that clinical trial. And by the way, in the investor deck on slides 12 and 13, you can see the actual clinical trial results. So we know our platform works. BUZZ BOMB™ is just hitting a sector of the market that is eager for better, faster, cleaner caffeine. And yeah, it’s just a revenue producer, and we intend to make it huge, and it’s going great.
DB: So what has the launch of BUZZ BOMB™ taught the company about anything operationally or commercially? What have you learned so far from this early launch?
SQ: You know, that’s a great question. I would say this. When we started, we kind of cast a wide net. We thought, man, it’s kind of a pre-workout, it can be for lifestyle people, professionals, stay-at-home… We had all these different people whom we thought would benefit from the product. What we found is that the initial adopters of the product are runners, bicyclists, hikers, hunters, people who need convenient, light caffeine in a very specific amount. We sponsor an ultramarathoner named Ashley Paulson who just set the world record for a women’s ultramarathon. She beat the old record by 17 minutes. She used our product every hour. She’s a great spokesperson. So now I think what we’re doing, we find ourselves focusing a lot. There have been articles about it in Runner’s World, on the US Track & Field site. That sector, for example, I live here in Utah, there’s a runner store in Orem called Runner’s Corner. We can’t give them enough. So the runners seem to have found us and also the bicyclists. Going on Amazon was a big thing that we just got on there. Our website is still our main point of sale, plus when we go to these marathons and these running events. We’re probably going to be at like 20 running events through the summer where we have a big presence. I was just in Houston, Texas, last weekend, and we had a really great time at a race. I think right now it’s kind of fitness athletes. And when we have that really solid there, we’re going to keep branching out into other areas. You can’t advertise to every market in the world. You start with a few, you own them, and then you move on. And that’s kind of what we’re going to do. And that’s a huge market, by the way, runners and bicyclists.
DB: So at this point, how is the company thinking about balancing the consumer health opportunity versus the pharmaceutical development?
SQ: BUZZ BOMB™ is a wholly owned subsidiary. It has its own people, its own marketing people, its own manufacturing, and all that. It’s run completely independently, although it’s wholly owned by Aspire. The drug part is in Aspire Biopharma Inc. It’s another wholly owned subsidiary, and the two halves are pretty separate. That’s going to be more of a licensing entity, licensing and development. It’s more of a money eater, you might say, at this point, right? Because we’re just spending money on development, clinical trials, all that kind of stuff. While BUZZ BOMB™ is a very early-stage retail company that’s actually selling and has its product down cold. So they’re both wholly owned subsidiaries. They do happen to use the same sublingual delivery technology, but other than that, they’re kind of on different tracks. One is a money maker, and one is a money eater. But you’d expect that in an early-stage pharmaceutical company, right?
DB: Yeah, exactly. So, as an early-stage company, obviously, financing decisions are really important. How has the company been thinking about building a durable, long-term financial model?
SQ: Well, there are kind of two things going on there. BUZZ BOMB™ has just been doing really well, and it will definitely fund some of the drug side activities in a short while. But we also have recently entered into an agreement to acquire another subsidiary, DCS, and they are cash positive, which is what we need, with approximately $20 million in EBITDA per year. So that’s the other part to give us more operating capital. And that’s done without any stock dilution. It’s purely a debt transaction that we’re in the middle of. You can read about it in the press releases.
DB: So that represents a good segue into DCS. Maybe you can help us understand the strategic rationale behind this transaction?
SQ: Well, it’s probably twofold. Being a public company, you always have opportunities that come up. And if you look at Aspire Biopharma Holdings, BUZZ BOMB™ is a wholly owned subsidiary; Aspire Biopharma, which holds all our IP and is doing the drug stuff, is a wholly owned subsidiary. We have a need for cash right now to fund. I mean, a clinical trial with 50 people, that’s going to cost you a couple of million dollars, even with a drug as simple as aspirin. So, you need money to fund those things. We did have this opportunity. DCS is a small part of a very large auto conglomerate that they want to spin off. It’s cash positive with $20 million in EBITDA. It’s just an opportunity that came to us. We feel very fortunate. We like the people there. And the bottom line is it will generate cash, which is important for all parts of our company. Plus, it’s just a great business. I mean, it’ll only benefit shareholders. $20 million a year in EBITDA is great. It has a value of $200 million. It’s a great company; we’ve been really impressed with their people, too.
DB: So how long has Aspire been looking at these types of strategic acquisitions?
SQ: I wouldn’t say that we’ve been looking. I’d say that kind of just came our way. It was very fortuitous that we were able to link up with them, and we had some common needs. They wanted to be in a public company, and we just like their business. We like the cash flow, and we like what they do. It’s really a solid, solid, very niche business. I have learned more than I have in my whole life about emergency brake cables and actuators than I ever knew in my whole life, as I’ve learned a lot about DCS. Good company, good people. The more good people get on your bus, the better.
DB: Yeah, exactly. So, is DCS basically a cash flow-generating asset that is then going to be used to support the pharmaceutical development?
SQ: Yeah, I think for right now, we’re all in the same company. They will be wholly owned by Aspire, and all of BUZZ BOMB™’s revenues funnel up to Aspire right now. So again, we haven’t closed yet. We’re just working towards that. You can read the announcements. But it’ll just be another wholly owned and profitable subsidiary for Aspire, and it will help the whole as well. At least right now, that’s what it looks like. I’m not an officer director, but…
DB: So would you say this is potentially going to reduce your dependence on a traditional capital raise model for the company?
SQ: Yes, 100%. And this is 100% debt-financed. So, it is not diluting any shares. It is really a good acquisition for us. That’s the beauty of it, too. It gives us what we need without diluting shareholders.
DB: And then, as far as running DCS from day to day, so how is that going to impact management?
SQ: Well, let me give you an example. BUZZ BOMB™ has its own management. It has its own marketing people. It’s a completely separate little box. And DCS will be the same way. It’ll have its own management. A lot of the current people who are running it will continue to run it. We’ll just have different owners. So it will stay in its own little box. It’ll be a wholly owned subsidiary.
DB: Okay. Do you plan on adding any type of industrial manufacturing expertise to the board?
SQ: I don’t know the answer to that. We have a lot of really good directors, and there have been some changes, and I’m sure there will be more. I just couldn’t answer that for you. It makes sense if that happens. Yeah, but I don’t know. And again, BUZZ BOMB™ doesn’t own manufacturing facilities. We use third-party manufacturers, and all our drug products are manufactured by third-party manufacturers. So we don’t own factories and whatnot.
DB: Got it. So, what do you think it is right now that investors need to understand most about Aspire, where you stand today, and where you’re headed over the next 12 to 18 months?
SQ: I think with this DCS transaction, we’re going to be much more cash-positive and have the money we need to really feed that drug side, as we have some expenses coming up. We have a large clinical trial, and we have a small clinical trial on Alprazolam. I anticipate we’re going to have one with Ondansetron, probably in the second quarter of next year. These all cost a lot of money just to get ready for them, to do the formulating. There’s a lot behind it. You don’t just take aspirin and throw it in a package. There are other ingredients that cause it to be absorbed sublingually, such as our patented technology. And it even goes down to the size of the molecules and how they mix together. We’ve hired Microsize, who does micronization. So there’s just a lot of money that goes into creating a drug that’s safe and effective. The clinical trials with the aspirin were just off the charts. And I encourage you to look at those in the press releases or look at slides 13 and 14. So we have a really amazing, groundbreaking product, but we need to get it over the finish line. BUZZ BOMB™, I think, will be cash-neutral very soon. It’s doing great. It just seems like it’s a nice mix of companies that are all going to work together on the financial side to make the whole thing quite successful and really good.
DB: What about the company’s diversified strategy right now? Why do you think that can, say, create more value than if you were to remain a pure-play small pharma company?
SQ: Yeah, that’s a great point and something that I’ve been in when the directors have talked about that. I mean, it’s always great to diversify, right? It’s the basic rule of investing. DCS is a very strong company in automobiles, and their stuff works for EV vehicles as well. So they’ve just been around for, I think, over 30 years. And it’s nice to be in that sector of auto technology. It’s nice to be in supplement sales. It’s nice to be in drugs. And so, yeah, we are very diverse, and that gives us the ability, if something were to not go as fast or as well, we have other avenues of revenue and stability.
DB: All right. So if we were going to have this conversation, say, again in a year from now, what is Aspire going to look like?
SQ: It’s hard to predict the future. I would like to think that our acquisition of DCS is smoothly flowing, that we have the right board that can manage all that. I expect BUZZ BOMB™ to be really, really going great in a year. Our aspirin product should be close to being on the market. Alprazolam should be lining up for its big clinical trial. Ondansetron should have had its initial clinical trial, and probably Clopidogrel as well. We also have an ED product, it’s Vardenafil, which is currently sold as Levitra. There are a lot of fake sublingual ED medications out there that are not FDA-approved. We would have the only officially approved FDA ED medication if we do our Vardenafil product. So we’re looking at that for next year as well. I mean, can you imagine, you put it under your tongue, and it takes action in 30 seconds or a minute? That would be quite the thing. But that’s a very crowded market, so that’s down the road. So hopefully we’ve started on some of those, and they’re moving down the pipeline. As we’ve been doing for the last year or two, we’ve been very steadily moving everything down the pipeline. And if you look at buzzbombcaffeine.com, if you look at the website, just think that that started January 15th, and you look at the comments on there, you look at the social media on it, it’s pretty amazing how far we’ve come in five months.
DB: Yeah, absolutely. All right, Stephen, thank you so much for joining us today. I really appreciate this overview.
SQ: Yes, it’s been my pleasure.
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