Good afternoon, ladies and gentlemen and welcome to Strongbridge Biopharma’s Plc Corporate Update and Q3 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. LATER we'll conduct a question-and-answer session. Instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to hand the conference over to your host, Ms. Lindsay Rocco. Ma'am, please go ahead.

Thank you and good afternoon, everyone. We are pleased that you could join us today for Strongbridge Biopharma’s third quarter 2020 earnings and corporate update conference call. Joining me from Strongbridge this afternoon are John Johnson, Chief Executive Officer; Scott Wilhoit, Chief Commercial Officer, Rob Lutz, Chief Financial Officer, Dr. Fred Cohen, Chief Medical Officer and Rich Kollender, Chief Operating Officer. Before we begin, I would like to remind you that during this call, the company will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements. Reference to these risks and uncertainties are made in today’s press release and disclosed in detail in the company’s periodic and current event filings with the US Securities and Exchange Commission. I’ll now turn the call over to John Johnson.

Thanks, Lindsay and thank you for joining us today. Strongbridge has made significant progress this year and I am proud of the team's performance especially given the challenges presented by the ongoing global COVID-19 pandemic. I will start by addressing KEVEYIS, which has continued to show strong growth in the third quarter and exceptional year-over-year growth. KEVEYIS achieved net product sales of $8.1 million for the third quarter in 2020 representing a 42% increase from $5.7 million in net revenue for the third quarter of 2019. As a result of this growth, the company remains on track to meet full year 2020 KEVEYIS revenue guidance of $28 million to $29 million. I would like to recognize the KEVEYIS team led by Scott Wilhoit our Chief Commercial Officer for driving this growth and for the team's unwavering commitment to meeting the many unmet needs of the primary periodic paralysis community that we serve. Moving to our clinical development program for RECORLEV, an Endogenous Cushing Syndrome, in early September, we announced positive and highly statistically significant topline results from the phase 3 logics study, which met its primary and key secondary endpoints. Additionally, RECORLEV was generally well-tolerated with a safety and tolerability profile comparable to the profile observed in the Phase 3 SONICS study. These results coupled with the positive results from our phase 3 SONICS study will support a new drug application in the US, which we remain on track to submit to the Food and Drug Administration in the first quarter of 2021. If approved, following a projected 10-month PDUFA review cycle, the launch of RECORLEV is anticipated in the first quarter of 2022. This would represent a major step forward in our mission to help address the needs of the estimated 8,000 Cushing syndrome patients in the US who are not treated with prescription therapy, many of whom are not well controlled with current therapies. We look forward to leveraging our rare disease commercialization expertise and infrastructure to bring RECORLEV to the Cushing's community. Before I turn the call over to Scott, who will discuss these efforts in more detail, I would like to briefly comment on the successful completion of our recent $25 million equity raise, which included participation from existing shareholders as well as new healthcare-focused institutional investors. The capital from this equity financing combined with our other existing financial resources, provides us with the ability to appropriately invest in prelaunch activity and if approved, the launch of RECORLEV. Following the completion of the recent equity offering, we are pleased to have increased our cash position and extended our runway to fund operations into and potentially beyond the first quarter of 2023. Rob will provide additional details later on in the call. With that, I will turn the call over to Scott.

Thank you, John. Good afternoon, everyone and thanks for joining us. As John mentioned, we continue to be pleased with KEVEYIS performance in third quarter and thus far in 2020. Early in the second quarter, we quickly developed a comprehensive COVID-19 mitigation plan. The core elements of the plan consisted of maintaining growing our base of patients and generating new referrals by creating new and innovative ways to interact with healthcare providers. We believe that our rapid response and continued execution contributed to both the continued flow of referrals and new patient starts for KEVEYIS and improvement in both conversion and retention rates. We continue vigorous prosecution of intellectual property that we've developed for KEVEYIS, which includes more than a dozen patent applications. We believe the claims in the application based on drug and drug interactions that promote the safe prescribed in KEVEYIS, which are recognized by FDA and included in the FDA KEVEYIS label last November are allowable and if issued will be eligible for Orange Book Listing. We are working closely multiple intellectual property law firms on many fronts, including Expedited Prosecution and Appeals processes when possible and we'll provide updates on key developments regarding these and other related activities. I want to this opportunity to recognize the efforts of this KEVEYIS commercial team who continue to focus on serving the needs of the primary periodic paralysis patients and the physicians who treat them, especially during these unprecedented times. Moving on to RECORLEV, we're very pleased with the positive and highly statistically significant Base 3 LOGICS results announced in September. The results are consistent with SONICS we believe they collectively provide the data required for FDA approval. If approved, we believe RECORLEV can achieve $250 million to $350 million in PC revenue. The peak sales estimate is based…

Thank you, Scott. Our press release contains details of our financial results for the third quarter of 2020. Rather than read through all of those details, my comment today will focus on some key financial results. We ended the quarter with approximately $82 million in cash, inclusive of $23.1 million in net cash received from the equity offering announced on September 16 and $4.8 million in net cash received from completing at aftermarket or ATM sale to an established healthcare dedicated investor at $3.50 per share earlier in the quarter. Although operating cash flow will vary from quarter-to-quarter due to timing and working capital changes, we are pleased to announce, we only use $6 million in operating cash this quarter. This positive trend resulted from continued growth in KEVEYIS revenue as well a 28% reduction in SG&A in the third quarter of 2020 compared to 2019 and a 10% reduction in R&D spend for the same period. With the positive results from the phase 3 LOGICS Study of RECORLEV in hand, we now have the ability to draw an additional $10 million from our lenders in the fourth quarter of 2020 under the terms of the existing debt facility. Assuming we draw that $10 million tranche as well as the final $10 million tranche following potential RECORLEV FDA approval and lender consent, we believe we can fund operations into and potentially beyond the first quarter of 2023. Importantly, we expect that more than one year's worth of cash at the expected time of the potential RECORLEV FDA approval, which allows us the flexibilities to reach that milestone before needing to make decisions on if, when and how to access additional capital. And operator, with that, we are ready for questions.

[Operator instructions] Your first question comes from the line of Annabel Samimy from Stifel. Your line is open.

Thanks for taking my question and congratulations on a good quarter for KEVEYIS. I just had a couple quick questions, I guess one of them on RECORLEV, are we -- have all of the data, is there any extension data or available data that we should be expecting from RECORLEV all from the LOGICS trial and any rollover patients from any of these other trial. And additionally, separately when you think about market entry and what that competitive landscape is going to look like, obviously you have good familiarity with Ketoconazole as a product, so that helps with the message to physicians that we have seen some new entrants in the marketplace, specifically RECORLEV product and we expect it could be an interesting first-line option. So how do you think the landscape will play out given some changing competitive dynamics and where does RECORLEV fit into that?

Thanks Annabel, Fred one of you address the date fees and then I'll go ahead and answer the fee surround entry along with some help from Scott.

So thus far we see top line results from the end of the randomized phase of logics. We'll present a full picture of those data and we're planning to do it at the Endocrine Society if our abstract is accepted and we all know that till the end of the year, but if we calculate different reason, we would do it around that timeframe at another scientific venue. And then, the full study which includes the restoration phase will follow that presumably sometime next year, towards the end of next year. So that's sort of the timeframe we have for representing data.

Thanks Fred and as it excuse me, market entry Annabel, the research that Scott mentioned previously did include ISTURISA in that research along with other potential new entrants. So we looked at that and the peak sales estimate that Scott reference at that end and we have a pretty good view of how physicians are going to think about that basket of products assuming relaunch in the timeframe that I outlined. Scott, is there anything you want to add to that?

I guess I'd just add the fair landscape piece which is an important part, we did the same with payers right. We laid out the PPP for RECORLEV as well as you know some of the current products that are on the market both labeled an off label and ask them about coverage and so forth because reimbursement and the pathway to reimbursement is so important. I think it's important to mention that we think that A, they view the profile of PPP for RECORLEV favorably and then secondly, we believe based on their response is there is a pathway for reimbursement. So I think those two things combined competitive profile that John just mentioned and the pathway for reimbursement, we feel really good about entering the market with RECORLEV and how it may be received.

I was going to say, as we continue to do research and talk to physicians, I think you'll see them begin to think in the front-line more about different patient types and directing certain patient types to one particular therapy. We're not going to go into depth on that now, but we have a lot of work as you can imagine that's ongoing. We're in full launch prep mode, but we feel very confident in the peak rate adjustments that we provided earlier.

Okay. So just as a follow-up on thermostat, you’ve given us -- did I hear correctly 75% had not yet used ketoconazole and 40% of those were reluctant to ketoconazole. Did I hear that correctly?

Scott, you want to clarify that.

Yeah sure. So I think what we found in our research was that 75% have either don't use it or reluctant. Of that 75%, 40% have essentially discontinued their use and 35% use it on a limited basis. So the 40% and 35% make up the 75% but I think the important point there is that is that, it was primarily for safety reasons and they're looking for a new option that's FDA approved as a broader label and has more utility than Keto.

And that's also your plan right, target.

Yes certainly they indicate, I have it Scott. So certainly they indicated that they would be very interested in using RECORLEV and a group of those physicians will be key targets at launch. We continue to refine that but we know that there's a subset inside of that group that will be very, very hard targets, a very high likelihood of prescribing RECORLEV. And I did make one I was reading to my script earlier, I got ahead of myself a little bit, there are 8,000 patients treated till date out of which approximately 40% our research indicates are not well-controlled. So that group of patients will certainly be a key target for us and the physicians within whose officers they are.

Your next question comes from the line of Mr. Chris Howerton from Jefferies. Your line is open.

Thanks so much for taking the questions and congratulations on a strong quarter for KEVEYIS certainly. So maybe just few questions for me, I think one just perhaps a easy clarification, for the cash runway expectations that you provided for us Rob, does that include hiring any additional sales reps or does that kind of predict that you use just the existing sales forces that's detailing KEVEYIS? The second question was I think in the script described some of the lifecycle management work that you're doing there in terms of patents for KEVEYIS. Any more color that we can have on kind of the nature and timing of that potential IP would be very much of interest to me. And then the last one just curious to hear Fred's stats on what -- is there going to be a challenge to educate endocrinologist with respect to the safety profile of RECORLEV relative to ketoconazole and if so or if not, how do you see highlighting that differentiation particularly on the safety side given the recent discussion you just had with Annabel?

So Rob why don’t you take the first question, Rich, the second and Fred, then you can close with the question and thanks for the questions Chris.

Good question on the nature of the assumptions we made for cash runway and we have indeed included additional reps in the forecast at this point. We're obviously doing more work to refine exactly what size the team will be and how we'll coordinate and combine between KEVEYIS and RECORLEV, but for sake of assumptions for now, we have assumed additional incremental reps in the forecast.

Hi Chris, it's Rich. Thanks for your question. So in terms of timing, it is difficult to give exact timing, but we would expect to have some more information midyear into the second half of next year specifically on outcomes here. We are working diligently on many fronts, have a couple of IP law firms working with us right now and we're taking advantage of all methods to continue moving into here straightforward including appeals processes were those make sense and continue to feel encouraged by and confident in the IP estate. So that's where I'd stand at this point in time. So in terms of education, it's still early days as we prepare for launch and we're still thinking through the various educational programs and materials and so and so forth, but at this point we think we have the data at hand that we're going to have at launch that's going to make an impact in terms of the key decisions right, the key kind of data that doctors outweigh benefit. And as you know there will no hassle we have to had clinical comparison. So what we're talking about is sort of indirect comparisons to other drugs that they have used, but the important point I think in all of this we talked about before is that RECORLEV is very much a new drug, right. It's not ketoconazole, it's not considered ketoconazole from a regulatory perspective and its backed up an evidence base that -- by any measures is of much greater quality and served in the evidence-based reporting use of ketoconazole. I heard of course is that in the United States that translates directly into an approved product whose labeling will reflect the evidence based supporting its usual Cushing's Syndrome which is of course diametrically opposed…

Okay, so basically your perspective then is it's going to be viewed as a separate therapeutic and there should necessarily be any inference drawn based upon the safety profile of ketoconazole and the monitoring that you're doing based upon your clinical study design is very much routine and shouldn’t raise any specters of safety for RECORLEV?

It shouldn’t be anything uniquely special to RECORLEV. It certainly shouldn’t look anything like the kinds of monitoring requirements are currently in levoketo label which talked about weekly monitoring and it's a shorter course of therapy for a fungal infection, entirely different than usage in the chronic condition like Cushing's Syndrome and of course there is all the other reads that go along for why the drug is not like levoketoconazole? I don’t know if you want to go into all that again today, but there is pharmacological action now for why we levoketoconazole is a preferable therapy and obviously that does contribute to both.

Okay, well no, that's very clear. Thank you, Fred. I appreciate it.

Your next question comes from the line of Justin Kim from Oppenheimer. Your line is open.

As you think about the establish critical profile for RECORLEV, have you had any additional thoughts on how you see clinical features of the drug having differentiated uptick for particular segments of the market? I know you mentioned key [ph] and I presume referring to maybe side effects such as endometriosis associated with other competitive agents, but just wonder any thoughts there in terms of sub-populations that might have a differentiated benefit and therefore are stronger rationale for using the drug?

Scott, do you want to talk little about what we learn both through research as well as some of our discussions post research?

Sure good question and I think you hit on a couple to the key wins. The first thing I'd say is any chance that there is more work for us to do in terms of some of the targeting work with physicians and the segmentation and the messaging that would apply to various segments, but I think importantly when you look at Keto and the discussions that Fred just had, I think we have done starting from segmentation wherein Keto and clearly that is a go to slide because of what we said. There is a number of physicians who have decided in large part based on the safety profile that of the data that they're looking for alternative options in the profile that we tested as I mentioned tested very, very well and feel that, that unmet need in particular. So not only the ones that have decided to move away, but also those that really have limited its use in their practice and that's a significant cohort. So that will be clearly a target. We also know post research have been talking about the importance of this product for women and that's the largest segment right up with 75% of the population are women. So that will be a focus because if you know some of the products that are available from a treatment perspective have adverse events that may be particularly troublesome to women, in particular the organic effects whether that's happening in unwanted hair growth and those types of things, which impact compliance and a number of things. So we think that that is a very good opportunity. More work on that as we think about segmentation, but those are two that come to mind and they are very important ones that will be more aware and targeting our segmentation work and the factor that into our targeting at launch.

Okay. Got it, great. And then maybe for Fred, if you could just walk you through some of the stuff we might anticipate ahead of an NDA submission, Just wondering what sort of feedback might be relayed back to the investor community beyond let's say a filing acceptance and some commentary around that potential outcome?

Sure so, as we indicated at the last call, we are still anticipating our first quarter submission and we probably will not be releasing any updates before then in terms of data or anything of that nature or anything from a regulatory perspective as we prepare for the submission. Now once the submission goes in, its reviewed for filing and the FDA takes roughly two months to do that and then I'm sure we will now announce once it's accepted. In terms of Advisory Committee, we don’t anticipate having an Advisory Committee just given the precedent for other drugs in the category for example Esterase once recently approved with [indiscernible]. That being said, we are preparing as if there could be one and so in the event the FDA decides that they would like to have more, we would certainly be fully prepared for that.

Okay. Got it and maybe just a final question, with respect to KEVEYIS as we think about the guidance and maybe next year, just wondering any thoughts in terms of whether there is room for growth in terms penetrating the market further and any thoughts with respect to the?

Sure we certainly will expect growth going into next year and as I had said, I guess little over a month ago at this point, we do expect assuming continued runway for KEVEYIS that it will be north of $50 million annually at peak. How far north will put a finer point on that downstream, but short answer is yes. We do expect continued growth and I personally was really pleased with this quarter. 42% of year-over-year, quarter-over-quarter is really strong in my book given this market and given the pandemic and the challenges with accessing physicians and really hats off to Scott and his team.

[Operator instructions] Your next question comes from the line of Jonathan Wolleben from JMP Securities. Your line is open.

Thanks for taking the question and congrats on the progress. Just a couple on RECORLEV for me, I am wondering can you remind us where the manufactured facilities are for RECORLEV?

Rich, you want to take that?

There is a process obviously as you would imagine, but the two primary manufacturers are US-based. So their contact -- and they hand off between the drugs substance and drug product.

And based on your market research, have you got any sense on duration of therapy? How long patients are staying on a particular medication before maybe switching or adding on a secondary medication?

Scott, you want to address that?

I think our specific research I think first of all, we found that there's a lot of switching that goes on. So they're in the qualitative portion of this with physicians indicated that durability is an issue and there's a lot of combination therapy as well. We did not in any of our questions ask about specific length of therapy or specific durability with any of the -- any of the compounds in this set of work. That is something that we're going to do very near term as we accelerate our launch preparatory activities and there's a number of ways to get after that and we've got a number of different work expansion space that will give us some insights on that in the relatively near term.

And just the last thing for me, you guys are speaking about the label and what's your secondary data might be on their beyond just the ketoconazole control. Is there expectation that you're going to get any of the quality of life on specific data on there, that's something that may be better used as supportive in a publication? Any details on your expectations for data will be helpful?

So I prefer not to speculate about the label at this point having gotten any feedback from the FDA whatsoever. So what I'll say is that we will attempt to have as some label as possible given the data that we've collected. Certainly when we have data from key studies where data are heading in the same direction in a convincing way, I think will have a good argument for including those data in the labeling, but beyond that Jonathan I am not just not prepared to speculate on specific endpoints at this time.

[Operator Instructions] That brings us to the end of our Q&A session today. I'll now turn the call over back to Mr. John Johnson.

In closing Strongbridge has made significant strides towards its mission of serving the unmet needs of rare disease patient populations. We are pleased with the growth of KEVEYIS on a quarter-over-quarter basis and we are eager to advance RECORLEV to market, so that we can make a meaningful improvement in the lives of patients with Cushing's Syndrome. We look forward to continuing the momentum from this quarter and executing upon our strategic priorities as we work to advance Strongbridge's transformation into a multi-product commercial stage biopharmaceutical company with a portfolio of differentiated product that address the unmet needs of patients with rare neuromuscular and rare endocrine diseases. Finally I'd like to thank our employees at Strongbridge for continuing to drive forward on these critical efforts. While 2020 has been a difficult year for many of us, I'm incredibly pleased with the state of our business and the progress that we are making and we will continue to make going forward. Thank you for joining today's call and for your continued support.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day. You may disconnect.