Good day ladies and gentlemen, and welcome to the electroCore's Third Quarter Earnings Conference Call and Webcast. Currently at this time all participants are in a listen only mode; later we’ll conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] Also as a reminder, this conference call is being recorded. At this time, I’d like to turn the call over to your host, Greg Chodaczek with the Gilmartin Group. Please go ahead, sir.

Thank you, operator, and thank you all for participating in today's call. Joining me are Frank Amato, Chief Executive Officer; J.P. Errico, Chief Science and Strategy Officer; and Glenn Vraniak, Chief Financial Officer. Earlier today electroCore released plans and results for the quarter ending September 30, 2018. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements including, without limitation, our examination of operating trends and our future financial expectations are based upon the company's current estimates and various assumptions. These statements involve material risks 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 of description of the risk and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission. ElectroCore disclaims any intention or obligation, except as required by law, to update or revise any financial projects or forward-looking statements, whether because of new information, future events or otherwise. The conference call contains time-sensitive information that is accurate only as of the live broadcast today, November 13, 2018. And with that, I'll turn the call over to Frank.

Thank you, Greg. Good afternoon, and thank you all for joining us today. We've made significant progress on multiple fronts over the past three months, which was our first full quarter as a public company. And I look forward to giving you an update on our commercial progress, specifically the launch of our gammaCore therapy here in the United States. After that update, I'll turn the call over to Glenn Vraniak, our Chief Financial Officer, to discuss our third quarter financials. Following that, I will give an update on the progress of our regulatory and clinical programs and then we'll open the call up for your questions. To describe the performance of our launch to date, I'd like to talk about three key areas; sales force deployment and doctor coverage; insurance reimbursement and the progress we are making with the payers; and our overall sales strategy and performance. You may recall that we received FDA clearance for the acute treatment of pain associated with migraine headache in adults on January 29th of this year. In order to support the market, we began building out our commercial team, but we only commenced full commercialization at the beginning of the third quarter, following our June 22nd initial public offering. There have been over 11,000 prescriptions written in the United States for gammaCore this year alone. In the third quarter, we generated slightly over 4,500 prescriptions, which was an increase of 33% compared to the second quarter. This growth in prescriptions has continued apace as we booked more than 2,000 prescriptions in the month of October. In the third quarter, we also experienced strong quarter-over-quarter growth in the number of physicians prescribing gammaCore. In fact, there were nearly 1,500 unique prescribing physicians through the third quarter of 2018, which is an increase of…

Thank you, Frank. For the quarter ending September 30, 2018, we reported GAAP revenue of $150,972, a decrease of $132,267 from the third quarter of 2017. This decrease is primarily due to the contra-revenue remaining as a result of our voucher program that extended into mid-July. Under this voucher program through mid-July, we would reimburse the specialty pharmacy for patient cost of gammaCore therapy at the time of dispense. This would be the basis for recognizing contra-revenue against products sold previously to our distributor. In mid-July, we shifted to the use of a free voucher program free voucher units, thereby, eliminating the need to reimburse the pharmacy for patient cost and the need to book contra-revenue. The cost of these units dispensed under the voucher program after mid-July will then book to promotional expense. And in this way, it appears much more like a sample program. During the third quarter, approximately 95% of gammaCore prescriptions were dispensed under this promotional program. And as a result, we're proud to report that we've delivered approximately $1.7 million in sales value of gammaCore therapy to patients through this program. Additionally, our co-pay assistance program remains in effect. This is where we assist patients who had obtained commercial coverage with up to $100 of their co-pay at the time gammaCore is dispensed. The impact on the gross to net for the 3 months ending September 30 of 2018 was $14,600. We continue to believe these programs are accomplishing our objectives of providing patient therapy at no charge, demonstrating the benefits of gammaCore therapy to physicians writing prescriptions and promoting U.S. commercial payer coverage and coverage discussions as a result of patient and physician demand. The gross profit for the third quarter of 2018 was $53,905 down from $154,921 in the same period of the prior year. The total operating expenses for third quarter of 2018 were $13.6 million, which is an increase of $7.5 million compared to the same period in 2017. The increase in operating expense was driven primarily by cost related to the expansion of the company's sales and marketing functions. Operating losses for the third quarter of 2018 were $13.2 million as compared to the operating loss of $12.4 million in the third quarter of 2017. Cash, cash equivalents and short-term investments on the balance sheet were approximately $80.5 million as of September 30, 2018. And I'll now turn the call back over to Frank.

Thanks, Glenn. Over the quarter we have received a lot of feedback about our therapy. And I'd like to just take a moment to talk about a gammaCore patient in the mid-Atlantic region named Marie and how our therapy has changed her life. Marie is a young professional in her early 30s who has been suffering from frequent migraines since she was in high school. Like many of her fellow migraine auras, Marie's headaches have forced her to miss school, work, social events and family get-togethers. In fact, Marie's migraines even forced her to give up running because many of her attacks are exercised-induced. Marie had tried many different drug treatments, but between the side effects and the lack of efficacy she was getting, she wasn't getting the relief she needed to get her life back. When we introduced gammaCore to Marie's neurologist, she recognized it was a new treatment approach for patients like Marie and decided that Marie was the ideal patient to start on therapy. I'm proud to report that since starting at gammaCore, Marie hasn't had to sacrifice doing the things she loves. And to quote Marie, gammaCore allows me to get back to my life. Even when it doesn't completely eliminate the migraine, it makes the experience livable and allows her to get back to her day. Marie takes gammaCore with her wherever she goes. When she feels a migraine coming on in just a few minutes of treatment, she can carry on with her day. She's even started running again. And it's the dozens and dozens of stories like Marie that we hear from the field that put a personal touch on the successes we've experienced. Now I'd like to take a few moments to discuss our clinical and regulatory process as we look to…

[Operator Instructions] Our first question comes from Josh Schimmer from Evercore ISI. Please go ahead.

It sounds like demand for the product has grown nicely. But at least relative to where some of the numbers were set, the ability to convert patients from a prescription to a paid prescription -- a label prescription to a paid prescription is lagging a little bit. So first of all, how should we think about the fourth quarter of 2018? Is this really a year where we shouldn't be expecting much in the way of paid prescription growth? We're also six weeks to the end of 2019, so maybe you could talk a little bit about your confidence of locking in some key PBM contracts so that you are more prepared for a swift adoption in 2019. And then as we think about the dynamics that drove this quarter, if we were looking at the start of 1Q '19, when you feel like you'll be a little bit better positioned for reimbursement, what might this quarter have to look like if you had that type of access secure?

I think if we tack through the various questions here, the conversion from the gammaCore-S model to the gammaCore Sapphire model in the middle of October really positioned us to start to provide therapy for patients on a one or two month basis depending upon whether they were still appealing their insurer for either being denied access or they were waiting to hear back from the insurance company as to whether they were going to reimburse the product. We think there'll be additional revenue and access with the payers through the PA or the prior auth process through the fourth quarter. We're starting to see that already. I don't have any numbers to report at this point in time, but we're starting to see conversion there, especially since it's been three weeks since we've converted the market over to the Sapphire product. With respect to our confidence with the PBMs, two weeks ago, I was out meeting with the folks at OptumRx. We're awaiting their contract proposal. We discussed the tenets of the contracts, so we're going back and forth with them. The ball is in their court. We're waiting get their contract back on what we discussed. We've already negotiated with ESI back in the latter part of the summer, an agreement, a PBM agreement that would, I believe, be honored by ESI. We'll learn more here when we hear back from the organization regarding their compendia. They get their codes or our unique identifier code from First Databank. First Databank has two databases. They have the Prizm system, which is where they put all the medical devices and the MedKnowledge system where they put all of the pharmaceutical products. Since our code is like an NDC number, and ESI is a PBM, they only contract for that MedKnowledge…

Our next question comes from Charles Duncan from Cantor Fitzgerald. Please go ahead.

Congrats on good first quarter of progress being a public company and as well the recent NICE publication and gammaCore Sapphire launch. Had a few questions though, and I know that some people want to talk all about reimbursement, but it seems to me that, and not being Pollyannish here, but it seems to me that, first, you got to get interest by prescribers. And so I appreciate the information that you provided, Frank, on that in terms of what you're seeing in the market. But I'm wondering beyond unique prescribers, could you give us some color on how many prescribers are using -- are prescribing more deeply within their practice? And are they writing refill prescriptions for patients? So are they seeing satisfied patients? Is that reinforcing prescribing behavior? And are they seeing patients come back for more?

Yes. So we, probably in the quarter, on average, and this is over a three month period, looking at the various different months, had somewhere around 75 physicians who were writing pretty consistently five or more prescriptions, on some cases significantly more than that on a monthly basis for the product. And we're also seeing patients come back that are having success like Marie that I mentioned earlier. She's an actual patient they have in the mid-Atlantic area that wrote one of the many, many e-mails that we get back into the organization about how helpful the product has been. So we're seeing a lot of traction with a number of neurologists who believe that this product should be available for their patient population. They're writing letters. We've sent probably, at this point, three dozen letters into the payers across the United States supporting the use of our product for major academic centers and major headache centers in some of the large metropolitan areas to support the use. And we feel very confident that the feedback we're getting about the therapy is one that will be refilled and used pretty broadly across the marketplace.

And then this may be hard to answer with over 2,000 scripts in October. But I guess I'm wondering what you're seeing in terms of market dynamics with the recent CGRP monoclonal antibody launches. What kind of patients are being prescribed gammaCore? And are you seeing patients use gammaCore on top of CGRP therapy? Or is CGRP therapy really taking a bite out of the demand for gammaCore?

Yes, so I think early on when the CGRPs especially the first one was launched in the market back in May, we saw a bit of a flattening for that first month because there were a lot of patients that were waiting upon the CGRPs that were being warehoused in the marketplace by these practices. And when the product was launched, patients were flooding into the practices waiting to get their product to be started on prevention. Many of the patients, as you know, who get up into secondary care are the type of patients who have frequent episodic migraine or chronic migraines and will be using both a prevention and an acute therapy. And the physicians have, across the market, told us that they'll be using -- at the society meetings and in some of our market research, they have indicated clearly that they'll be using together both gammaCore and the CGRPs as a way to prevent the headaches from occurring and then gammaCore for acute use. So that's -- we fully expect the product to be used in that regard and someday when we have a migraine prevention indication, we fully expect that will be the type of product -- the only product that will be our value differentiation in the marketplace will be -- where we can be used both preventively or in a prophylactic manner like a CGRP and then also for breakthrough pain that occurs throughout the month. So we see an opportunity for us to be a potential step-through therapy or the type of product from a value standpoint, both in cost and value to the patient who have the therapy on board to treat every single headache they might have throughout the month as well as try to prevent some of the headaches from occurring as an option in the marketplace. So feedback's been great from the doctors thus far.

And then my final question regarding some of the clinical study efforts. I myself am really intrigued with the adolescent use of the technology. And I'm wondering -- I know it's early days with the ATOM study, but I'm wondering if you could give us a sense of timing of data from that study or any feedback on whether or not you're going to be able to provide enrollment numbers and then other clinical data over the course of 2019 that we could anticipate.

Sure. I think the first thing we anticipate is -- sometime in the early part of 2019 is a potential prevention indication for cluster headache. That will come from our PREVA study, and we will be the first and only FDA-approved product for the prevention of cluster headache. So we'll have an opportunity for our field force to talk to the clinicians out there about using the therapy in the way we intended it from the beginning, which is to use it every day to prevent your headaches from occurring, twice a day, 2 minutes in the morning, 2 minutes at night and then again when you have breakthrough pain. With respect to the adolescent data, we're going to look to enroll about 200 patients in that study. It will be an acute use study, so we would expect that it will be a short study with respect to the amount of time a patient will be on the therapy before we can collect the data. And that data across 200 patients, we'll probably take about a year to collect the data. So I think by the end of 2019, we should be able to complete that trial, assuming that we get the type of patient interest in the marketplace. I mean these adolescents. They are not necessarily the type of patients that you would see in neurology practices as adults who have chronic migraine, et cetera. So we're going to work through identifying the patients and getting them into the trial as appropriate. As far as additional data sets, we'll have some pilot studies that will potentially read out both in some of the grant studies that have been given to various different academic centers looking at our therapy across a variety of areas from both DoD and DARPA. And there'll be some pilot studies in rheumatology that we may see data in. But as far as our pivotal trials go, the PREMIUM II study and the ATOM study, I wouldn't expect to see those results until the latter part of 2019 or in the case of PREMIUM, because it's a prevention study, sometime in 2020.

Our next question comes from Dave Turkaly from JMP Securities.

Just to follow up on that last one quickly. The PREMIUM II, I think you have mentioned that you may be able to get label expansion for prevention of migraine possibly in 2019. Is that still the case? I know the PREMIUM II study may take longer, but is it possible that you're going to use some -- a subset of that? And could that label expansion still come in that time frame?

I think it's possible, David. We have taken a position with the FDA to work with them first through cluster headache acute use through the ACT studies, which we got back, as you know-- back in the middle part of 2017. And then we went through FDA with our acute use of migraine with the PRESTO study which took the FDA 76 days to approve. We got that in the early part of this year. Once we have confirmation or clearance by FDA for cluster headache prevention, then we'll bring our prevention data sets down to the FDA, and we'll discuss what we have. And like in the past, they have instructed us as to whether they think we have a sufficient amount of information for them to consider. And it's been a pretty open dialogue, and we've greatly appreciated the FDA's willingness to meet and kind of guide us in that regard. So it is possible. We do have multiple data sets. We have the EVENT study, which was published in Neurology back in 2015. It was a pilot study in prevention. And we also have the PREMIUM 1 study and a variety of other pilot studies that have been published as well. So we'll collect all that information and bring it back to FDA and see what their perspective is.

Then on the PBM front, I get the 35 million you have now, and it sounds like -- you mentioned ESI and OptumRx. I was wondering if you could just remind us, maybe more specifically, between Optum and Express Scripts, where they stand in total covered lives? And then, I think you mentioned the regional folks as well, the press release highlights 90 million additional lives. I imagine -- I'm assuming that's on top of the 35 million you have today. But if you could break any of those out, that would be helpful.

Sure. So with OptumRx, they have 30 million lives that are aggregated amongst a bunch of different, smaller payers, from health spending account to our high deductible patient types, if you will, as well as employers that they've aggregated in those 30 million. That is the group of patients that we'll be negotiating for next with Optum. We will not, at this point in time, be negotiating with Optum for United lives. We'll be discussing their lives directly with United. With regard to ESI, it's 34 million lives that they currently manage, and it would be in agreement that would allow us to discuss that agreement amongst the various different payers that they work with within their network. So all told, the 90 million encompasses the current 35 million we have and then the 2 additional data sets of 30 million and 35 million or 34 million in the case of ESI.

And then, I think you had mentioned, in addition to adolescents, being an important potential subset of patients, pregnant women and a study that you brought in on that. So I just want to confirm any update there. And I imagine that, given the amount of folks that are impacted by this that are women in that kind age group, that having some data on that population may be important looking ahead.

Yes, so that's predominantly a study that will be run in Italy with many of the sites that participated in our PRESTO study. That study is currently enrolling patients. It's a post-marketing study. We're not going to look for "a label" with that information. It will be presented and then published data set, along with what we're calling the REAL study as an acronym REAL, which will be the use of our product both preventatively and acutely in a study where most regulatory groups want us to break out the two different patient populations and either run an acute study or a prevention study, but not use the therapy in combination. Since we have CE Mark over in Europe for both, we're going to run a data set and then publish that as well. That will likely be in several hundred patients, so that may take another year or more to publish or to get the date on that. And since it's post-marketing, it's really up to the investigators to enroll those patients. We're not putting a full support behind that because that's not one of the programs that we're trying to develop for regulatory or payer approval, so to speak.

Our last question comes from Sean Lavin from BTIG. Please go ahead.

It's Marie on for Sean tonight. I wanted to start and see if I could understand a little better what's happening with patients after they've tried the gammaCore sample program. For those patients who are seeing success with it, how many of them, I guess what percentage or any color you can give us on who's going through the prior authorization process, who's going through the appeals? And if you have any insight into how long that PA process is taking? And should we expect to see more of that next quarter?

Sure, Marie. So with the advent of the gammaCore Sapphire being fully launched in the market on October 15, it's given us the opportunity to provide an RFID card to patients for up to 60 days of a trial or a sample basically free therapy as they navigate through their payer appeal and denial process. We are expecting to have more traction with that program here as we move forward into the fourth quarter because more and more patients are working through getting prescribed the product transitioning onto the RFID card and then working through their payers. It's really an opportunity for them to stay on the therapy and get relief and fight for themselves as well as having their providers provide written letters and prior authorizations that they have to fill out in order to submit back into the payers. So that's kind of our thought process there. It's really around creating demand and demonstrating that there are successful patients who are on the therapy. Whenever we have meetings with payers or the PBMs, they ask us to aggregate all the different payers -- excuse me, all the different patients within their network who have been prescribed the therapy over the past quarter or two quarters or from the beginning of the year. And that's a great way for us to establish with them the number of people out there within their network that are getting benefit or are trying our therapy and willing to stay on the therapy through that time period.

Okay. And then, it sounds like you'll have more covered lives as we enter 2019. What are your early thoughts on a strategy of how to target patients covered by these payers? Obviously, they're national providers, so -- national payers, so what's I guess the game plan for kind of targeting the properly covered patients?

Sure. For our approach, we've been really focused on the patients who are seen by the neurologists, the headache treating neurologists in the United States, which at this point there are about 6,500 that we are targeting. Those folks see somewhere in the neighborhood of about 5 million patients on an annual basis. There's about 3 million or so that have migraine that are dissatisfied with current treatments. That's the data that was collected by various different patient advocacy groups and information that's been published over and over again over the past 10 years in the marketplace. And the dissatisfaction for many of these patients is with Triptan therapy. So they've typically failed one or more Triptan therapies. And they're looking for other options as they go to see their neurologists. Clearly, some of these patients are given preventative therapies like Botox and Topiramate and now with the advent of CGRPs, they'll be prescribed those as well. But they still have breakthrough headaches. I mean most of these prevention products are covering somewhere between 20% to 30%, maybe 40% of their headaches, if they're lucky. There are some super responders that we've heard about. We've had the same thing with our therapies and our prevention studies as well where folks are having 80% or more of their headaches that are being prevented. But suffice it to say, those are the patients that we're targeting and have a pretty hyper focus on, if you will, in the marketplace. We're not going out to primary care physicians at this time. We're not adding in additional pain specialists or OB-GYNs until we clear the pathway with more payer coverage so that we don't burden the physicians in prescribing our product and getting frustrated on having to fill out prior auth and so forth. In many of the neurologists that are seeing headache patients and only headache patients, we use our hub specialty pharmacy network as a way to help support them with the prior auth process and getting letters of medical necessity written, and so forth. So we are taking a very strategic and hyper focus in the marketplace to support our customers and to make sure we get the right patients on therapy who, ultimately, are the ones that are looking for alternative medications and therapies in order to help with the burden that they're suffering.

This concludes our Q&A session. At this time, I'd like to turn the call over to Frank Amato for closing remarks.

I want to say thank you to everyone for taking the time out to get on the call today and hear about our third quarter results. We're very excited about the prospect of gammaCore Sapphire in the U.S. market and look forward to getting with everyone in the next quarter and reporting our results for the remainder of the year. So thank you for your time today, everyone.

Thank you, ladies and gentlemen, for attending today's conference. This concludes the program. You may all disconnect. Good day.