Quoin Pharmaceuticals, Ltd.

Good morning and welcome to the Coin Pharmaceuticals Limited second quarter financial results and business update call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the start key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I'd now like to turn the conference over to Gordon Dunn. Please go ahead.

Thank you and good morning. We appreciate you joining us on today's conference call. With me on the call today are Dr. Michael Morrow, CEO, and Denise Carter, COO. We're pleased to provide an update on Coin's operational progress and to discuss our Q2 2022 financial results and recent capital raise. Please note that a press release regarding our operational update and financial results is now available on our website. Today's call will begin with Michael and Denise providing a corporate, clinical, and operational update, following which I will review our Q2 2022 financial results. To close, I will hand the call back to Michael for further comments, and after those, we'll be pleased to answer any questions. Before we begin, I'd like to remind everyone that statements made during this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially from the information expressed or implied by these forward-looking statements. For more information regarding such risks and uncertainties, please see the risk factors outlined in the company's filings with the SEC. Any forward-looking statements are made only as of today, and we disclaim any obligation to update these forward-looking statements other than as required by law. Please see the forward-looking statements section in our release issued this morning for more information. It's now my pleasure to turn the call over to our CEO, Michael Myers.

Thank you, Gordon, and good morning, everyone. I am pleased that you are joining us on this call today. As this is our first call since going public at the end of October of last year, we will provide an operational update on our progress since then. I'm very proud to say that we have made tremendous progress on multiple fronts since going public. I would now like to take a few moments to highlight some of our key achievements, and then Denise and I will provide a more detailed overview. First, I'm very pleased to say that our lead asset, QRX003 for Nettleton Syndrome, is now in clinical testing under an open IND. This is a major step forward for COIN as we strive to develop an effective treatment for this devastating disease. We have also made considerable progress in Europe. Earlier this year, we submitted a comprehensive briefing document to the European Medicines Agency, or EMA, and received very constructive scientific advice from the agency, which will allow us to coordinate the simultaneous development of QRX003 as a single program for both the U.S. and EU, which are territories where we intend to self-commercialize our products. Outside of those core US and EU territories, since going public last year, we have now established a global network of eight commercialization partnerships that span 60 different countries. In addition, to expand our pipeline of innovative products, we have in-licensed two additional rare disease assets. And earlier this month, we successfully closed a heavily oversubscribed and twice-upsized capital raise, which will provide sufficient runway for us into 2024 beyond several key inflection points for the company. Turning now to the clinical update, as a reminder, Nethicine Syndrome, or NS, is a devastating, rare, and sometimes fatal genetic disease that currently has no approved treatment or cure. It is estimated to affect between 2,000 and 4,000 people here in the United States and a similar number in Europe. NS is caused by a mutation of the Spink-5 gene. This gene calls for the production of a specific protein called L-E-K-T-I, or lecti, which in turn regulates the activity of serine proteases in the skin, which are called calocrines, that are responsible for skin shedding. As a result of the mutation of the SPINK5 gene, for people with NS, there is no lectin protein produced, which results in hyperactivity of the calocrines that causes excess skin shedding and leads to the highly porous and ineffective skin barrier that NS patients have. This in turn renders NS patients highly susceptible to severe allergies, severe infections, skin cancer, pruritus, and many other problems. When QRX003 is applied to the skin, the active ingredient, which is a broad-spectrum serine protease inhibitor, is anticipated to penetrate into the skin and subsequently perform the function of the misinlected protein by down-regulating the hyperactivity of the skin chalocrines, leading to the formation of a more normally functioning skin barrier. In addition, the delivery technology in QRX003 provides an effective barrier protection over the skin while simultaneously moisturizing it, a feature which we believe is unique to this particular delivery system. The ongoing clinical trial itself is a randomized, double-blinded, placebo-controlled study which will assess two different doses of QRX003 topical lotion versus a placebo lotion in nephritin patients. The test materials will be applied once daily over a 12-week period to predesignated areas of the patient's body. A number of different endpoints will be assessed in the study including an investigator's global assessment, or IGA, a patient global assessment, and pruritus, among others. The FDA has indicated to us that a total of approximately 20 nitrogen patients tested with QRX003 at the commercial dose may be sufficient for approval. The FDA has also informed us that QRX003 potentially qualifies for one or more expedited approval pathways. And furthermore, QRX003 potentially qualifies for rare pediatric drug designation, and regulatory approval could result in the company receiving a freely tradable priority review voucher with an estimated non-dilutive cash value to coin of approximately $100 million or so upon its sale. As I mentioned earlier, we have made significant progress regarding the development of QRX003 for NS in Europe. On July 28th, we announced that the receipt of a highly constructive and comprehensive scientific advice from the EMA in response to a briefing submission we had filed earlier this year. This advice now enables us to coordinate the development of QRX003 into a single program that could potentially lead to approval in both the U.S. and EU at approximately the same time. While traditionally small biotechs tend to focus on the U.S. market only initially, we believe this forward-looking strategy of equally prioritizing both the U.S. and EU biotechs development will ultimately lead to a more efficient and streamlined rollout of QRX003 once it is approved. Denise will provide more color on our commercialization strategy later in the call. As a result of the rapid progress that has been made with the development of QRX003, Coyne is now positioned to potentially deliver the first approved treatment for Nesophen syndrome. On a personal note, I want to say how moved we have been by the level of outreach we have received from the Nesitin community and the overall global interest there is in this product. I recently received an email from a foreigner in India whose newborn has been diagnosed with NS and must be kept in a humidity chamber to prevent her from dying of dehydration. The same family had tragically lost another child to NS just a couple of years ago. Another father, this time from England, contacted me about his son who has NS and is so sick that he has to be fed by a tube in his stomach. A parent from Germany told me of the amount of pain his own daughter is in as a result of her NS. And just last week, here in the U.S., I spoke with the mother of a boy who has NS and learned of their struggles as they tried to live with this devastating disease. We also frequently receive inquiries from physicians who are treating NS patients and looking to see if those patients could be enrolled in our ongoing clinical study because they are so desperately in need of a treatment. The advocacy groups and foundations have told us that they are carefully monitoring our progress with the product so they can share updates with their communities. And lastly, patients themselves have reached out to us to see if they could enroll in the study irrespective of how far and how often they would have to travel to participate. In my 35 years of developing pharmaceutical products, I can honestly tell you I have never experienced such eagerness, anticipation, and emotional involvement for treatment. and each and every one of those individual contacts touch us personally and serve to reinforce our commitment to developing this product as efficiently as possible so that we may be in a position, if approved, to offer a potentially effective treatment option to a vastly underserved community of patients who currently have none available to them. In addition to NS, We also plan to evaluate QRX003 in a number of ichthyosis-related disorders, including peeling skin syndrome, haemoplantar, keratoderma, and SAM syndrome. We are targeting generating some initial clinical data for these additional indications within the next 12 to 18 months or so. Note that there are currently no approved treatments or cures for each of these indications, and there is very limited or no ongoing clinical development by other companies, rendering them very attractive opportunities for coin to pursue. In keeping with our goal of expanding our product pipeline, we also announced the in-licensing of two additional rare disease assets from Queensland University of Technology, or QUT, in Australia. One is a biologic for the treatment of Nessus syndrome, and the other is a treatment for scleroderma. Both products are preclinical with active research programs currently ongoing and the potential to move into clinical testing as early as next year. For both assets, Hoyne paid no upfront fees, nor are there any ongoing clinical regulatory nor any sales-related milestones. In both cases, COIN will pay QUT the mid-single-digit royalty on all sales once the products have been approved. Furthermore, all of the initial research and clinical testing will be performed in Australia, allowing COIN to take advantage of significant financial incentives afforded by conducting these activities there, including a rebate of 43.5% of all research expenditure. We are frequently asked the question as to why we are developing a second treatment for Nettleton syndrome, and if it somehow reflects a lack of conviction about the efficacy of our lead product, QRX003. Nothing could be further from the truth. We believe this second Nettleton asset, which is at a far earlier stage of development than QRX003, could potentially be used in combination with 03 thereby providing an even greater treatment option for patients. We are also very excited by the potential of the second asset, which we recently enlicensed from QUT. This product is being developed as a potential treatment for scleroderma, a rare and sometimes fatal autoimmune disease. Scleroderma is caused by the overproduction of collagen leading to a hardening of the skin and connective tissue. We're very impressed by the strength of the underlying science behind this product. Proof of concept has already been established in a robust mouse model, and studies are currently underway to select a candidate for initial clinical testing, which, as mentioned earlier, could begin as early as next year. While these are earlier stage programs, We believe their in-licensing underscores this management team's commitment to COIN becoming a premier global rare disease company. We will continue to look for additional opportunities to expand our pipeline, both in rare skin and other indications. Denise will now provide an update on our planned commercialization strategy for our products. Denise?