Cipher Pharmaceuticals Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Cypher Pharmaceuticals quarterly conference call for the company's Q2 2024 results. At this time, all participants are in a listen-only mode. Following today's presentation, instructions will be given for the question and answer session. If anyone needs assistance at any time during the call, you may press the star followed by the zero on your push-button phone. As a reminder, this conference is being recorded today, Friday, August 9, 2024. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provisions of the Canadian Provincial Security Law. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are implied when making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that could cause results to vary, please refer to the risks identified in the company's annual information form and other filings with Canadian regulatory authorities. Exempt as required by Canadian securities laws, The company does not undertake to update any forward-looking statements. Such statements speak only as one of the date made. I would now like to turn the call over to Mr. Craig Mull, interim chief executive officer of the company. Please go ahead, Mr. Mull.

Good morning, everyone, and thank you for joining us today. Before I begin, I would like to remind everyone that all figures discussed on today's call are based in U.S. dollars. unless otherwise specified. I will keep my commentary brief on our Q2 results given it was another quarter of consistent and predictable revenue, earnings, and cash flow from our legacy business in the U.S. and Canada. Our Chief Financial Officer, Brian Jacobs, will walk you through the financial results in a few moments. And I would like to spend the majority of my time on our recent acquisition of the Netroba business in the U.S. and our strategy moving forward, which is an exciting phase of Cypher's growth. Our recent quarters, and quite frankly, over the past number of years, we have been transparent that we have been looking for an accretive acquisitions, but would be patient in our approach. We have turned over many stones in the process and evaluated a significant number of opportunities. And I'm confident when I say today that we have found exactly what we were looking for. On Monday, July 29th, Cypher Pharmaceuticals announced the acquisition of Nootroba. It's authorized generic spinosad and it's US-based commercial infrastructure headquartered in Carmel, Indiana. This acquisition excites us for many reasons. With respect to Nootroba, this product truly fills an unmet need of patients given it is highly effective, it's a highly effective treatment for head lice and scabies. Existing products in the market, such as permethrin, are no longer effective due to the resistance profile developed by lice and parasites over time. The resistance is not just a concern locally in North America, but an issue worldwide. which represents an area that we believe will unlock significant growth and revenue streams down the line. Specifically in the US, Nootrobius product indication was expanded to scabies in 2021 and carries an FDA exclusivity period until 2033. The scabies market in the US is larger than the head lice market, and the healthcare guidance provided to patients suffering from scabies recommends that all household members use the product, and it is the only scabies product on the market with a complete cure offered to patients suffering from scabies. For these reasons, we believe the sales volumes and upside potential for the product in the U.S. alone is significant. Natroba currently has approximately 22% of the anti-parasitic market in the U.S., and Permithrin has 75% according to Acuvia market data. The former owners of the Natroba business, being Parapro, believe in the growth profile we have just described, which is why they took back $9.5 million of Cypher common shares as a portion of the total $89.5 million we paid for the Natroba business. In addition to further organic growth in the United States, we will be taking Natroba Global. We are already engaged in discussions to outline license Natroba to select European and Asian countries, as well as have plans to bring the product to Canada, leveraging our Canadian direct sales platform. Natroba will fit well with our dermatology product portfolio in Canada, including Epirus, the market leader for the treatment of severe acne, and our near-term pipeline product, MOB015, for the treatment of nail fungus. We have developed relationships in dermatology in Canada, and we believe that it would be a natural fit for Natroba. Lastly, Cypher now has an established profitable North American sales and distribution platform which we plan to further build out by acquiring unique complementary products. There are opportunities to cross-pollinate our existing portfolio of products as well as in licensing new products that fit well into our expertise in dermatology and infectious disease. In order to finance our future growth plans, we obtained a revolving credit facility with the National Bank of Canada. which was only partially drawn down upon this acquisition. We see Natroba as only one step in our future growth, and we remain active in discussions to acquire complementary products, as I have described above. In the interest of time, I will leave the rest of the discussion around the transaction with Natroba to the question and answer portion of the call, as I know there is a lot to unpack. One last One last thing before I pass the call over to Brian is to touch on our near-term pipeline product, MOB015. It's remarkable success this year in Sweden. We now have real use case evidence that supports our previously discussed enthusiasm for this product as the sales data coming out of Sweden after its February launch is meaningful. Shortly after the product was launched, product launch under the brand name Teclara, MOB015 has become the market leading nail fungus treatment in Sweden, taking 30% of the market by way of value and 31% of the market in units. Additionally, and what has always been a large part of our growth thesis in Canada, is that the overall market in Sweden has grown 52% compared to the same period as last year. We attribute the success to the fact that current male fungus treatments are ineffective and highly tedious to administer. And MOB 015 addresses these issues. We believe significant brand recognition will continue to develop as it was announced in May that MOB 015 had received national approvals in 13 additional European countries. Cypher owns the rights to MOB 015 for the Canadian market. and the first sales of the products are expected in the second half of 2026. The data out of Sweden solidifies our view that we will rapidly capture most of the $92 million market, which represents the current market size in Canadian dollars. To wrap up my commentary, I will briefly summarize the main items. Cypher's legacy business continues to generate predictable cash flow, contributing to the bottom line, and has built a strong foundation for the company to build upon. The company has now entered into a new phase of substantial growth, kicked off by the acquisition of Netroba and a U.S. sales and distribution platform, which we plan to leverage and scale. Furthermore, we are one quarter closer to further clinical data results from MOB015 in January 2025. An already highly effective nail fungus treatment, which we believe will quickly become the market leader in Canada, as it has in Sweden. Lastly, with a strong balance sheet with low leverage, available financing, and in viable market position, Cypher will opportunistically seek to further expand our business. I thank you for your time this morning and will pass the call over to our CFO, Brian Jacobs, for an overview of our financial results. Post quarter end, I've asked Brian to take on a new role as president to oversee the transition and integration of the Natroba into our existing Cypher business. I'm confident in Brian's leadership abilities and that he will continue with the track record he has demonstrated in his role as CFO.

Brian, please go ahead.