Greetings, ladies and gentlemen and welcome to the electroCore's Fourth Quarter 2020 Earnings Conference Call. 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. As a reminder, this conference call is being recorded. At this time, I'd like to turn the call over to your host, Hans Vitzthum, of LifeSci Advisors. Please go ahead. Sir.

Thank you, operator. And thank you all for participating in today's call. Joining me are Dan Goldberger, Chief Executive Officer; and Brian Posner, Chief Financial Officer and Dr. Peter Staats, electroCore's Chief Medical Officer. Earlier today, electroCore released results for the quarter ended December 31, 2020. 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 differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks 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 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 the live broadcast today, March 11, 2021. And with that, I'll turn the call over to Dan.

Thank you, Hans. Hello, everybody, and thank you for joining us today. Full-year 2020 revenue was $3.5 million, the upper end of our previously provided guidance range of $3.3 million to $3.5 million. Furthermore, net cash used for the full-year decreased 55% to $20.2 million for the full-year 2020 from $44.5 million for the full year 2019. Brian will cover the financials in detail, but I want to begin with a few highlights. For the full-year year 2020, total revenue of $3.5 million increased approximately 46% as compared to $2.4 million for the full-year 2019. We're pleased that the aggressive restructuring activities in 2019 and 2020 drove growth across our key revenue generating channels in spite of COVID-19 pandemic headwinds. During the fourth quarter of 2020 2,647, total paid months of therapy were utilized across our three revenue generating channels, resulting in net sales of $928,000. The sequential decline from 2881 paid months of therapy in the third quarter of 2020, largely due to the third wave of COVID. The Federal Supply Schedule or FSS, which encompasses the VA, DoD and other government and military agencies continues to be our most important revenue channel. During the fourth quarter of 2020, 71 Department of Veterans Affairs and Department of Defense Military Treatment Facilities purchased gammaCore products, as compared to 68 during the third quarter of 2020, and 54 during the fourth quarter of 2019. Also, during the fourth quarter of 2020, the company shipped approximately 1232 paid months of therapy pursuant to VA and DoD originating prescriptions compared to 1571 paid months of therapy during the third quarter of 2020 and 829 during the fourth quarter of 2019. Fourth quarter sales and paid months of therapy to VA and DoD facilities continue to be impacted by the ongoing COVID-19 pandemic, which…

Thanks, Dan. You will recall, that gammaCore Sapphire CV is currently being evaluated in two investigator initiated clinical trials or IITs in hospitalized COVID patients. One in Valencia Spain, and the other in Pittsburg Pennsylvania. These studies known as SAVIOR 1 and SAVIOR 2 respectively are measure the safety and efficacy of gammaCore Sapphire CV plus standard of care versus standard of care alone in patients hospitalized with COVID-19 across a broad range of clinical and laboratory endpoints. SAVIOR 1 enrollment completed at a 110 subjects and our SAVIOR 2 trial which aims to enroll 60 hospitalized COVID-19 patients is ongoing. We look forward to seeing pulmonary data for SAVIOR 1 later this year. In December of 2020, we announced that gammaCore have been selected by the National Institute of Drug Abus for a NIDA sponsored randomized control study in opioid use disorders. The study will assess the ability of nVNS to decrease opioid cravings in subjects with history of opioid use disorder, who are stable on that occasion, as well as examine the possible mechanisms that might facilitated this clinical effect. The study is being run by Douglas Bremner, our leading Researcher in this field, who you may recall, is also leading a VA sponsored study at gammaCore in PTSD. Just a few weeks ago, we announced that full enrollment have been achieved in the TR-VENUS Study which is evaluating the utility of nVNS for the acute treatment of stroke. TR-VENUS is a Phase 2 double blind randomized, sham-controlled multi-center clinical trial, conducted at nine major centers across Turkey, supported by the Turkish Neurological Society and partially funded through an unrestricted research grant from electroCore. There is a strong scientific hypothesis supporting this study, as preclinical evidence suggest that vagus nerve stimulation can provide a measurable improvement outcome after…

Thanks, Peter. For the quarter ended December 31, 2020 electroCore reported net sales of $928,000 as compared to net sales of $1,081,000 in the third quarter. The sequential decrease in revenue was due to the ongoing effect of COVID-19, particularly in our VA and DoD channels. Revenue for the quarter ended December 31, 2019 was $675,000. Paid months of therapy ship to the VA and DoD declined 22% sequentially to 1232 in the fourth quarter of 2020 from 1571 in the third quarter. Revenue from the VA and DoD also declined sequentially to $509,000 in the fourth quarter 2020 from $646,000 in the third quarter. Revenue from the VA and DoD was 378,000 during the fourth quarter of 2019. Paid months of therapy shipped outside the U.S. increased 12% to 1143 in the fourth quarter of 2020 from 1020 in the third quarter. Revenue from outside the U.S. increased sequentially to $311,000 in the fourth quarter of 2020 from $278,000 in the third quarter. O-U.S. revenue was $293,000 during the fourth quarter of 2019. Net revenue from the commercial channel was $54,000 for the fourth quarter of 2020 as compared to $112,000 for third quarter. Gross profit for the fourth quarter of 2020 was $109,000, inclusive of an increase of $434,000 in inventory reserves as compared to $284,000 for the fourth quarter of 2019. Gross margin for the fourth quarter, excluding the increase in inventory reserves was 59% compared to 42% in the fourth quarter of 2019. Total operating expenses for the fourth quarter 2020 were approximately $6.4 million as compared to $8.9 million for the comparable period in 2019. SG&A expenses declined approximately 26% to $5.4 million in the fourth quarter of 2020 from approximately $7.3 million for the comparable period in 2019. Research and development expenses decreased by…

Thank you, Brian. We are pleased with our performance during the quarter and the year, as we achieved several important milestones related to commercialization of our headache indications and ongoing clinical work. I also want to point out, that we believe we are in a very healthy financial position with proforma cash of $29.5 million on the balance sheet as of December 31, 2020 including the subsequent $6.9 million raise mentioned earlier and substantial success in reducing our burn rate. As the pandemic recedes, I am excited about the prospects of returning to sequential revenue growth in our VA DoD headache market, and achieving accelerated growth in our UK subsidiary, as the MedTech Funding Mandate takes effects later this year. Our unique HCPCS code will become effective in April 2021. And I'm optimistic that the regional max and other national and regional payers will become increasingly receptive to reimbursement of nVNS therapy as we go through 2021. We've recently announced three new international distributors and I look forward to continued expansion of that channel throughout the year. Longer term, label expansions beyond cluster and migraine supported by the exciting ongoing clinical developments that Dr. Staats discussed, could dramatically increase the total addressable market for nVNS therapy. Finally, I want to again recognize our dedicated staff for working steadfastly through the pandemic disruptions. And to thank the healthcare professionals that prescribed gammaCore and their patients for their loyal support of gammaCore therapy. At this point, we'll ask the operator to open the line for questions.

Thank you. Ladies and gentlemen, we'll now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Ryan Zimmerman with BTIG. Please proceed with your question.

Great, thank you. And good afternoon, everyone. And, Brian, appreciate the guidance for the first quarter, it's helpful. Maybe Dan, for you, you guys have, you recognized a little bit of sales in the commercial channel this quarter. I'm just wondering if you could kind of give us some flavor on the tenor of the conversations in the commercial channel. It's poised to be a good opportunity for you going forward kind of, where are they at today and how would you characterize kind of the requirements you have, given the coding updates you've gotten and kind of where you're at? So, let's maybe start there and then and then I can turn to one other question.

Yeah, so Thanks, Ryan. We've said previously, we have - on the commercial side, we have roughly 12 million covered lives through CVS and through Express Scripts. And those patients are paying $25 up to as much as $75 per month as a copay. So, there is an out-of-pocket component to that. The challenge is that that's not critical mass, we really need to get to a much larger number of covered lives in order to make the e-commercial channel an efficient call point. The new, the hicks picks code that goes live in April is a huge step forward. Right now, all of our prescriptions get coded to miscellaneous, once we have a unique code that sets the stage for us to negotiate with the regional max about Medicare coverage. But even more importantly, it streamlines the process for the national and regional private insurers to do the same, to establish unique coverage, to add us to more and more of the benefit plan. So, all that work is going to be kicking off really in earnest in April once the code goes live, and we can run test scripts, and we can have specific conversations with different insurance companies around their benefit plans. So, a lot of work yet to do over the course of 2021. Look for additional announcements about coverage decisions as we go through this year. But the revenue list is really going to come in 2022 as we can take advantage of those coverage [ph] Willington back half of the year.

Okay. I appreciate that color Dan. Helpful. And then on the O-U.S. side, the NHS continues to be a solid area for you as a commercial channel, but you now have added Australia, Canada, some Eastern European countries, as far East as Kazakhstan. So, I think there's some sales minimums associated with those agreements and just want to understand how to think about that incrementally relative to say the NHS and can we see a much broader and diverse I guess, revenue contribution internationally this year as we move through the year and maybe as COVID subsides?

Yes, you're absolutely right. Ian Strickland is our General Manager of our UK business and he's got the broad scope to build up our business around the world. Using our success in the UK under a national health care system as a template, we're becoming more and more attractive to stocking distributors around the world. And to your point, not only to those are agreements have some obligations for sales, but they also come with some upfront commitments to buy product from us at a fair transfer price to be used in launching. So, you'll definitely see a revenue lift not so much in the current quarter, but as we roll through the year and you're also going to see additional distributor announcements as we go through 2021.

Okay, thanks for taking the questions guys.

Thank you. Our next question comes from the line of David Turkaly with JMP Securities. Please proceed with your question.

Yes, hi. This is actually Danny on for Dave. Thanks for taking the questions. My first one, so you guys have taken steps to mitigate spending in 2020 and I appreciate the color as far as guidance for the first quarter. But I was just curious how should we think about operating expenses and cash burn for 2021, you mentioned should as more normalized outreach once COVID subside, so are there any costs that will comeback online post COVID, that we should be keeping in mind or any other color that would be really helpful. Thanks.

Brian, do you want to take that one?

Yeah, sure, Dan. Yeah, basically, I think the way you look at it, we've done a significant reduction in costs over '19 and 2020. I think we're going to make targeted investments where it makes sense in sales and marketing. We have made some additional investments in the government channels that we announced late in 2020. And the cash burn going forward is going to be largely dependent on our revenue growth. And as I've said in the past, we have a lot of inventory. We just reported our $5.7 million of inventory on our balance sheet. But the good news is, after all that use of cash to acquire that inventory, that will be a source of cash as we sell it. So that'll be where cash is more favorable than GAAP results as we start ramping up revenue going forward in 2021 and beyond.

Great, then I had one follow up, in the past, you had talked about the benefits that came of course, to bring to an adolescent audience and given avoid systemic impacts of pharmaceuticals. So, could you give us any color on how significant of a market this could be if you look at it here in the short term as well as in the mid and long term? And what next steps in this indication, what could those look like? Would it be, marketing, campaign, patient outreach? Anything along those lines would be great. Thanks.

Yeah, thank you for noticing. It's been a long time coming, and you're absolutely right, getting the label extension to adolescent is a significant business opportunity for the company over the long haul. Step one is for us to because it's brand new, step one is for us to educate the prescribers, primarily headache specialists. But as you know, adolescent migraine is managed by more than just the neurology headache specialist. So, we have a substantial awareness opportunity ahead of us working with our small but nimble direct sales force, but really trying to leverage that with the awareness campaigns through social media and other media outlets. So, for this year, it's going to be building awareness. There are some headache specialists that we've been in contact with who specialize in adolescents, so we expect to be able to talk about to brag about some early clinical successes in the adolescent population anecdotally. So, again, not a whole lot of lift in 2021, but really setting the stage for a substantial increase in our total addressable market in 2022.

Great. Thank you, guys.

Our next question comes from the line of Sean Kang with H.C. Wainwright. Please proceed with your question.

Hi, thank you for taking my question. Regarding ex-U.S. distributorship. Do you have any ongoing additional discussions for additional distributors in the ex-U.S. region?

Yes, absolutely. And you can look forward to a few more announcements later in 2021 as we successfully conclude or launch some additional international distributors.

I see. And I am not sure if you already mentioned, but regarding study data. Do you expect to see or relate any data from the stroke study by Turkish Neurological Society?

Yes, so the enrolment concluded one of the endpoints is reading CT scans and that's going to take some time, but we should be able to we should see topline results from that trial in the second half of 2021.

Second half 2021, okay. Sounds good. Thank you.

Thank you. Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.

Thank you, Yeah, just a follow up on the commercial payer. Well, I know the new code, just taking some of that strategy [technical difficulty].

So, the line was a little stacky, but I think you are asking for timing of additional commercial payer announcements. And the 12 million covered lives that we have today are on, are skew towards that very high end what you would consider platinum benefit claims. There are several payers that have signals their intention to cover once the code goes live through their medical benefit pathways and so we'll have to run those test scripts in April to validate all of that. So, you may see some announcements as early as May or June through those benefit claims that have previously signaled that they are going to cover the therapy. But that would be an upside. The heavy lifting is going to be negotiations with the regional max which never go quickly and various national healthcare plans to see what we can do to gammaCore therapy covered on a wider range of the benefit claims.

So, on the regional max just to clarify little further. There's about 20 of them if I recall.

No, four. There's only four.

The regional ones, right. Okay. So, these four regionals, if you cover the full regionals is that as deep as you need to go or is there negotiations that have to go on within each regional map or is the regional that you need.

Our understanding is that, the four regional max would cover Medicare throughout the United States. Now, the doubles in the details, right. Are we going to be satisfied with the limitations that they're going to try and put on the therapy, so it's really too early to tell how much of the Medicare population we're going to have access to at a price that we're comfortable with?

Okay. And then if we look next, I know stroke is one indication. Is that what you would think is next in line and then if you could maybe if you or Peter could talk about sort of the pipeline where you believe gammaCore could be used in addition to migraines and stroke?

So, let me take the first half of that and I'll hand it over to Peter. Actually, first of all, adolescence is a very big deal for us and we're thrilled that we were able to make that announcement here few weeks ago. I think you're next going to see us look for label expansions into secondary headache, so things like post traumatic headache. From there, as Peter mentioned, there is work going on in other neurological conditions like traumatic brain injury and ultimately CSD. I think you'll see us moving in terms of commercialization moving in those directions first. Peter, do you want to talk about the pipeline in more generally in longer term?

Sure. Look, I think one of the great advantages of this therapy is that it's an almost untapped therapy. That's also one of the disadvantages that we have. And we've seated studies - initial studies in a variety of areas. Some of the areas that I personally am most excited about is PTSD. And this is an area of great unmet medical need without much competition and our military folks and others, desperately need a therapy here. Dan just mentioned, post traumatic headache and that's kind of feeds into CTE and other broad areas of interest for us, that is starting to get seated. Opioid use disorder I mentioned, Doug Bremner is doing some work there. And there's a lot of signals that should work. But one of the really very exciting things is, again, we're going to follow the data is our first TR-VENUS, our first stroke study. And when we see the data on, can we modify the course of the disease? Can we decrease the size of an infarct? I think that's going to also help direct our path. It's not all a foregone conclusion of which way we're going to go. It's really going to take the data from the numerous IITs that are ongoing. And then really double down and invest in the right areas. But the good news is, we have a lot of different opportunities, with a lot of data coming in, over the coming months of the year.

Okay, thank you. That's very helpful. I'll jump back in the queue. Thanks.

Thank you. [Operator Instructions] Our next question comes from line of John Vandermosten with Zacks SCR. Please proceed with your questions.

Good afternoon, everyone. And congratulations on distribution agreements and improvement in penetration at NHS. I want to ask about any possible further expansion in the British Isles, I guess, Northern Ireland, perhaps is that is that something you can expand into? I'm not sure how the NHS works. But that seems like maybe another area you could go into? Is that possible?

Yeah, absolutely. Here, you'll see Wales, you'll see Ireland. And you'll also see some other European entities in coming months.

Okay, great. And will the distribution be with a partner for Western Europe? Because I feel like that's kind of the next place you're going to go? Or will you run it through the current, the same channel as it goes to NHS?

In the UK, we have a small direct organization, it's been very successful working with NHS to gain robust coverage that we have. But we really don't have the resources to go direct in any of the large European countries. So right now, we're leaning towards more traditional stopping distributors, leveraging what we've learned, leveraging the healthcare economics, healthcare economic data that came in an ICE publication last year. And there's going to be some new data coming out in the form of post market surveillance of our large cohort of UK patients, that's going to be very compelling for [Indiscernible]

Okay. And also, you mentioned a bit about the distribution agreements, Canada, Australia, Eastern Europe. Should we see contributions from all of these areas before the end of the year?

Yes, absolutely.

Okay. And then, moving on to the studies, you mentioned a bit about this, just want to extend a little bit. So, if we see some success and some of the VA studies or the stroke or opioid abuse. Do you anticipate getting external money to fund those? Because it seems like there's a lot of external interest? Or do you think that's going to have to be something that's funded internally?

We'll - we assess the business case for each opportunity to extend the label separately, some of them like post-traumatic headache, secondary headache, those are initiatives that we believe we can find ourselves and fit very, very nicely into our existing channels. There is like acute treatment of stroke we'll have a more involved development process may or may not require pivotal trial and so we may look for commercialization partner for something like acute treatment of stroke. And so, what I would like to convey is that we have this pipeline of [Indiscernible] platform therapy as Pete mentioned and so we have this great wealth of opportunities ahead of us and but given limited resources we have [Indiscernible].

Great. Alright, thank you, Dan.

Ladies and gentlemen, at this time there are no further question. I would like to turn the conference back to Dan Goldberger, for closing comments.

Thank you, operator and thank you to all of you that spent the time to dial-in. We've had a very challenging 2020, between restructuring our business and a mid-pandemic. We're really very, very fortunate to have the support of the investment community of our employees and most importantly of our prescribing physicians and patients. And so, thank you all and hope to see you all again in a few months, for our first quarter call. Bye-bye.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.