BioDelivery Sciences International, Inc.

Greetings. Welcome to the Biodelivery Sciences Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Terry Coelho, Executive Vice President and Chief Financial Officer. You may begin.

Thank you, and good morning, everyone. Welcome to our third quarter 2021 earnings conference call. Leading the call today is Jeff Bailey, Chief Executive Officer. We are joined by Scott Plescia, President and Chief Commercial Officer. Following our prepared remarks, we will conduct a question and answer session. Earlier today, Biodelivery Sciences issued a press release announcing its financial results for the third quarter of 2021. A copy of the release can be found on the investor relations page of the company's website. Before we begin, I would like to remind everyone that certain statements may be made during this call, which may contain forward-looking statements. Such forward-looking statements are based upon current expectations, and there can be no assurances that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release and our annual, quarterly, and other reports filed with the SEC. These forward-looking statements are based on information available to BDSI today, November 3, 2021, and the company assumes no obligation to update statements as circumstances change. An audio recording and a presentation that accompanies our prepared remarks and broadcast replay for today's conference call will also be available online in the investor section of the company's website. With that, I'd like to turn the call over to Jeff Bailey, our CEO. Jeff?

Thank you very much, Terry, and welcome, everyone, to our company's third quarter 2021 earnings call. It gives me great pleasure to speak to you again today, following closely after our recent Elixir Investor Day. I hope that we were able to convey our excitement about our new neurology vertical, as well as our overall outlook for the future of BDSI. Before we delve into the details of our earnings call, I want to thank Terry Quaglio for her dedication and service to our company as CFO over the past three years, and wish her well in her next role. She leaves behind a strong balance sheet and a well-managed financial organization. At the same time, we are pleased to welcome John Golubeski as our new CFO, a former colleague who served as CFO at three of my prior companies and who brings over 30 years of financial and operational expertise to BDSI. John and I are well calibrated to each other, and we are fortunate to have him on the team. The three main takeaways I want to cover with you today Number one, strong business growth. Our business continued to reach new highs in the third quarter, with product net sales growing 7.5% year-over-year, including Belbuca TRX volume growing close to 8% year-over-year. I am particularly proud of this growth, despite the unexpected and unfortunate situation with Alvagen, which was described in an 8K which we submitted to the SEC on September 21, 2021. More on that to follow. We're incredibly proud of our nimble team who sprang into action immediately to stem losses to our business. We are just now beginning to see a rebound in Dalbuca prescriptions as a result. We provided guidance on September 21st of an estimated total company net sales range of $38 to $42 million for the quarter in connection with the Alvagen situation. I am confident that the quarter's performance would have been even stronger, but for the issue with Alvagen. Despite these unexpected headwinds, Belbuca reached an all-time high TRX market share in the third quarter of 4.9%, complemented by an all-time high in unique Belbuca prescribers of 8,639, which is an increase of 11% year-over-year. We are really seeing this broadening of the base of prescribers of Belbuca as such an important driver for continued future growth. We're also seeing signals of stabilization in the long-acting opioid market, And Scott will walk you through what we're seeing that gives us this optimism. Number two, as far as takeaways go, operational strategic efficiency. We've been prudently managing our expenses in the quarter and continue to generate healthy operating cash flow. In the third quarter, we generated $11.1 million in EBITDA with an attractive 27% EBITDA margin and GAAP EPS of $0.07, ahead of market consensus of $0.05. This resulted in generating approximately $7 million in operating cash flow, which enables us to continue to invest in the future growth of our business and to maximize shareholder value. This quarter, we repaid $20 million in debt, thereby saving $4.4 million in future interest expense payments. We also made a $6 million upfront payment to Dr. Reddy's for Elixib, and we ended the quarter with approximately $101 million in cash. Additionally, we strengthened our supply chain by moving to a new logistics distribution partner, and we expanded from one to two distribution centers for our products in order to de-risk our business by reducing the reliance on a single location. This is an important move to support our continued growth. Moreover, we have started to invest behind the Elixir launch while also keeping our finger on the pulse with respect to other business development opportunities and remain opportunistic about identifying additional neurology products if they are a good fit with our existing portfolio. The final key takeaway, Elixit provides product diversity and is a third growth driver with an estimated peak year revenue in the range of $350 to $400 million. We are incredibly excited for the future of BDSI. We are poised for the growth of an established paying franchise and are anticipating strong momentum with the addition of Elixit to our neurology franchise. a logical adjacency to our current product portfolio in pain. The Elixip acquisition diversifies our portfolio beyond pain by establishing a dedicated neurology sales force and allowing us to leverage our current infrastructure to manage the addition of Elixip in a very efficient way. It's also important to note that we have a strong team that has significant launch experience, including experience in neurology and migraine. We've been energized by the positive feedback from clinicians, and the opportunity to get further integrated into the neurology community. We held a successful key opinion leader advisory board meeting in Chicago last month and heard their thoughts about the clinical profile, Elixib's place in the market, and the potential to prescribe Elixib as the only ready-to-use oral solution for migraine approved by the FDA. This has only increased our enthusiasm about Elixib that we'll be launching in the first quarter of 2022. I also wanted to mention to you that we were pleased that Elixib was nominated for the prestigious Pre-Galien Award, which recognizes innovation to improve human condition in the best pharmaceutical product category. On the legal front, we remain confident in the validity and strength of Delbuca's intellectual property. We can neither predict the decision the court will reach regarding the P4 or patent litigation, nor the timing of the court's decision, and are not able to comment further regarding the ongoing litigation. Separately, I wanted to call your attention to an eighth case submitted to the SEC on September 21st, 2021. BDSI disclosed that it had filed a motion for order to show cause in the United States District Court, the District of Delaware, why Albigen should not be held in contempt for violating the court's order of June 28th, 2021. The court ordered Albigen not to launch its generic product until it could reach a final decision on the merits in the pending P4 case. We contend that Alvagen violated the order in or about August 2021 by, among other things, offering its generic product for sale through five compendia price reporting services. As alleged in the motion, after Alvagen's product launch, certain payers began declining insurance coverage for Belbuca and directing use of Alvagen's a generic substitute, and or making it more difficult for patients to obtain insurance coverage for Delbuca. Albigen withdrew its compendia product listings on or about September 9, 2021. The company's motion to hold Albigen in contempt for launching its generic product remains pending before the court. With that, I'll turn the call over to Scott to provide more details of our performance during the third quarter. Scott?