electroCore, Inc.

Greetings and welcome to ElectroCorps' third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rich Cockrell. Thank you, Rich. You may begin.

Thank you all for participating in the Electric Core Earnings Call. Joining me today are Dan Goldberger, Chief Executive Officer, Brian Posner, Chief Financial Officer, and Dr. Peter Stotz, Chief Medical Officer. Earlier today, the company released results for the third quarter ended September 30th, 2021. You can find a copy of the press release on the company's website. Before we begin, I'd like to remind you that during the call, management will be making forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements mentioned during this call that are not historical fact should be deemed as forward-looking statements. All forward-looking statements include, without limitation, the examination of operating trends in the company's future financial expectations are based upon current estimates and various assumptions. These statements involve material risk and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list that describes the risk and uncertainties associated with the company's business, please see the company's filings with the Securities Exchange Commission. ElectroCorps disclaims any intention or obligations except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information that is accurate only as of this live broadcast today, November 4th, 2021. And with that, I'll turn the call over to Dan. Go ahead, Dan.

Thank you, Rich. Hello, everybody, and thank you for joining us today. I'm excited to report that Q3 2021 revenue was a record $1.5 million. Gross margins have expanded to more than 75%, and net cash used in operations decreased to $3.4 million for the third quarter of 2021. For the third quarter of 2021, total revenue of $1.5 million increased approximately 38% from $1.1 million in the third quarter of 2020. Revenue from our government channel increased 46% to $946,000 for the quarter ended September 30, 2021, as compared to $646,000 in the third quarter of 2020. In our VA DOD channel, a total of 96 VA and DOD military treatment facilities have purchased Gamma Corps products through September 30, 2021, as compared to 67 through the third quarter of 2020. Note that there are approximately 1,300 VA healthcare facilities and 475 military hospitals and medical clinics, so we still have plenty of growth ahead of us. Revenue from direct channels outside the United States increased 33% to $371,000 in the third quarter of 2021, as compared to $278,000 during the third quarter of 2020. We look forward to continued revenue growth in the United Kingdom as the MedTech funding mandate continues to roll out in spite of pandemic headwinds. Turning to our commercial headache channels in the United States, pharmacy benefit managers, including CVS Caremark and Express Scripts, provide GammaCore therapy to patients that have a high-end benefit design that does not differentiate between drugs and devices. These patients are subject to a copay of between $25 and $75 per month depending on their specific benefit plan. Our unique Level 2 Healthcare Common Procedure Coding Systems, or HCPCS code, K1020 Noninvasive Vagus Nerve Stimulator, became effective April 1, 2021. This is an important milestone in our efforts to obtain reliable insurance coverage for gamma-core therapy. Previously, all of our prescriptions were coded as miscellaneous. which made for an easy initial coverage denial for an insurance company. On August 4, 2021, we announced the release of an article entitled Gamma-Core for Cluster Headaches in the journal Pharmaco-Economics, highlighting the cost savings of Gamma-Core's non-invasive vagus nerve stimulation therapy platform for patients with cluster headaches. The paper validated that Gamma-Core both reduces the frequency and severity of cluster headaches and provides 450 British pounds per patient cost dominance and cost savings in the first year of therapy versus standard of care alone. Subsequent to the end of the quarter on October 2021, we announced the publication of a peer-reviewed paper entitled Non-Invasive Vagus Nerve Stimulation for Treatment of Cluster Headache, a Retrospective Review of Prescribing in England in the British Journal of Healthcare Management. The study is one of the largest clinical audits of patients with cluster headaches and highlights that of the 655 patients who started on GammaCore, 46.3% of patients were prescribed at least one refill and 30.9% were prescribed two or more refills. These real-world results suggest a durable benefit for patients utilizing GammaCore's non-invasive vagus nerve stimulation for cluster headache in England. These two publications add to our growing bibliography of positive healthcare economics evidence, which is very powerful in our conversations with private insurance companies in the United States and distributor prospects around the world. Armed with our unique code and recent publications, we are ramping up discussions with insurers. We've engaged a policy reporter to help us negotiate with an initial group of 30 regional and national benefit providers. I marked Blue Cross Blue Shield was our first positive benefit determination, and we're now negotiating their fee schedule. We subsequently want our second positive benefit determination from Blue Cross Blue Shield of North Dakota. While we work towards broader insurance coverage, note that more and more Americans have high deductible insurance plans, which means that patients are likely to be faced with a cash pay obligation even when coverage is available. To fill that gap, we've been aggressively testing several cash pay business models and direct-to-consumer promotions. Net revenue from the U.S. commercial headache channel was $158,000 for the third quarter of 2021, as compared to $112,000 in the third quarter of 2020. Approximately $124,000 of our U.S. commercial revenue in the third quarter came from cash pay programs, specialty pharmacy, and direct from ElectroCorps. and the balance was paid by insurers through the pharmacy benefit managers. Going forward, our U.S. sales function is focused on the following revenue growth initiatives. First, going deeper into our 96 existing VA hospital customers, leveraging our VA hospital success to open new VA hospital customers, and recruiting additional commercial prescribers to our cash pay business models while we work towards broader commercial insurance coverage. We've grown our U.S. sales function in recent months through a combination of our inside customer experience team, territory business managers, and sales agents in the field. I look forward to reporting accelerating growth in our U.S. channels as our team becomes more productive in coming months. As the number of commercial prescribers offering our cash pay alternatives increases, we will also evaluate direct-to-consumer marketing investments to drive revenue growth in future quarters. At this point, I'm going to ask our Chief Medical Officer, Dr. Peter Stotz, to provide an update on our various research and clinical initiatives. Peter?