Thank you, operator, and good morning, everyone. Joining me from Cipher is, Nadine Jutlah, Interim CFO.

On today's call, I will make a few opening remarks before Nadine reviews financial results in more detail, after which we will open the call for your questions. Please note that all amounts are in U.S.

dollars. We continue to keep the commentary – we will keep the commentary on the financial results to a minimum given we pre-released revenue and earnings.

We will spend some time on the updated strategic priorities that we are now introducing in today’s results. At a high level, we are pleased with Q2 results that Q2 results continue to show early evidence of our commitment to increasing profitability.

Total operating expenses decreased by 15% and the company reduced its debt by $2 million. Cipher has a long history of generating cash flow and earnings supported by the licensing portfolio and we intend to return to those roots.

Absorica prescriptions have shown some signs of stabilization and licensing revenue for Absorica is up modestly from levels seen in Q1 2019. We continue to look for new geographic markets for Absorica to enhance this franchise.

Epuris had prescription market share of over 38% in Canada for the three months ended June 30, 2019, compared to 33% for the three months ended June 30, 2018. As previously announced, the Board of Directors appointed a special committee to review and evaluate the strategic direction of the company and consider various alternatives to maximize shareholder value.

With today’s announcement, we established several new strategic priorities, most significantly, the company plans to target strategic distribution partnerships for the Canadian commercial assets. This direction will see the company return to its roots as a cost-conscious financially prudent operator focused on building a portfolio of royalties in novel therapies.

Cipher has historically had a successful – had success in bringing late-stage assets through the regulatory approval process and commercializing them with the right partners. We intend to focus on this model going forward.

The reason for the shift is because of the cost structure to develop and maintain an internal sales force across multiple therapeutic areas that’s capital-intensive and not optimal for a company of Cipher’s size. Partnering our Canadian commercial assets will help improve profitability and cash flow and right-size the cost structure of the organization ensuring a self-funding business model.

Our Global Licensing business currently has three products developed, approved and out-licensed. Our Global Licensing business generates seven distinct royalty streams with average royalty rates of approximately 10%.

The company will transition its six Canadian marketed products, which are currently marketed directly through our internal sales force to an alternative distribution model. Shifting to a partnership model will eliminate future milestone payments and commercial investments as these costs will be borne by our partners.

The template for our partnership model will be to generate upfront payments which will recover pre-commercial investments across these products and also generate royalties. With this structure, we will reduce operating expenses and increase profitability.

The company intends to use the cash generated from these royalties to pay down debt and focus on near-term development opportunities. Cipher has assembled its attractive portfolio of assets beyond the current marketed products and we are committed to moving our products, our current pipeline of products through the regulatory approval process.

We will partner these assets once they receive regulatory approvals. In addition, Cipher will continue to work with our technology partner, Galephar, to bring new exciting products to market with a focus on U.S.

and international markets. We look forward to providing you with updates on the status of our partnership initiatives as we transition to commercial portfolio.

I will now turn the call over to Nadine to review the financial results. Nadine?

Thank you, Craig. Good morning and thank you for joining us.

I will now provide a financial overview of our second quarter results. Total net revenue for the quarter was $5.6 million, compared to $7 million for the prior year comparative period.

The main impact year-over-year was lower licensing revenue of $3.5 million, compared to $5.2 million in the comparative period. Licensing revenue from Absorica declined to $2.9 million in the second quarter, compared to $4.5 million in Q2 2018.

Licensing revenue from Lipofen and the AG remained relatively unchanged at $0.5 million. Products revenue increased by 21% to $2.1 million for the current quarter, compared to $1.7 million in the comparative period.

The growth was led by Epuris, which recorded revenue of $1.9 million, up from $1.5 million in Q2 2018. Total operating expenses, which primarily includes COGS, R&D, and SG&A, decreased by 15% in the second quarter to $3.5 million from $4.1 million in the prior year comparative period.

Included in operating expenses in the current quarter are $0.7 million in restructuring cost. The decrease quarter-over-quarter is largely due from acquisition and transaction cost incurred in Q2 2018.

Overall, we finished the quarter with net income from continuing operations of $1.4 million, compared to $1.9 million in the comparative period. Adjusted EBITDA decreased slightly to $3 million in the quarter, compared to $3.2 million in Q2 2018.

The company had $9.3 million in cash at June 30, 2019, compared to $7.9 million at March 31, 2019. During the quarter, the company generated $3.3 million from operating activities and used approximately $2.2 million to service its credit facility.

The remaining balance in our credit facility was $13.6 million at June 30, 2019. I will now turn the call back over to Craig for his closing remarks.

Thanks, Nadine. We look forward to reporting on our progress throughout the balance of 2019 as we execute on the priorities that we have discussed today.

At this point in time, I would like to turn it over to the operator for questions. Thank you.

Good morning, Craig and Nadine. Just actually wondering if you could just give us a bit more color on SG&A runrate?

Yes, I think I’ll take that one. So, in terms of our OpEx runrate, adjusting for restructuring cost in Q2, the OpEx runrate approximates so, we would expect for the rest of the year.

Sorry, what was that? I didn’t catch the very end.

If you adjust for the restructuring cost that were incurred in Q2, then that runrate will approximate what we expect for the remainder of the year.

Okay, okay. And just in terms of, if you do end up in-licensing from Galephar’s products, the pivotal trials would likely be required – get them approved, just wondering if you could give us a rough range of what you are looking for in terms of R&D expenses [Indiscernible]

Andre, Craig Mull here. I think it’s going to be difficult to estimate at this point in time, because we are in the midst of selecting the products that we will be investing in.

But we will provide updates as we move through that process.

And that would be the strategy then. So, you would - would you still expect to be cash flow positive then, in light of some of those products?

Yes, we intend to be cash flow positive if the investment that we are looking at is beyond our means, we would be looking for other royalty partners to join in on the project.

Okay. And in terms of the debt, is it safe to assume that all debt would be paid off next?

So, it is due or which should be paid in full by November 2020. So, between now and then, we will have our debt paid off.

Okay.

Andre, just to add to that, we are expecting to accelerate the repayment of that loan, as well.

Okay. That’s great.

And that’s all for me. Thank you.

Hi, good morning. Thanks for taking my questions.

Firstly, has there been a review of peak sales estimates for the pipeline products? Or do you stand by the estimates that were given towards the end of last year?

Sorry, just to clarify the question you are asking for revenue estimates for the pipeline products?

Yes, that’s right, yes.

So, we don’t have any at this time because those would be included in the assets that we are looking for distribution partners on.

So, I am trying to – just trying to understand if the estimates that were given at the end of last year, when there was a review, are they still achievable? Or are we still reviewing those estimates now?

They are still under review or they are currently under review.

Got it. Secondly, I wanted to check if you could talk about any potential options for corporate development that are on the table if any?

Just - sorry, would you clarify that, as well, please?

Sorry, I was looking to hear from you if there are any corporate development options, just asset divestment and et cetera that are on the table if any?

Well, we’ve – we are looking at a number of products from Galephar and we have first right of refusal on four products that we’ve got serious interest in, one in particular. We intend to build a stronger collaboration with Galephar.

We’ve got a long history with the company. They’ve got lots of resources and they’ve got a substantial number of projects in the pipeline that we hope to have access to as we build a stronger relationship with them.

Got it. Thank you.

That’s very helpful.

Yes, thanks very much and good morning, Craig. Just wanted to kind of follow-up on your Absorica strategy going forward.

I mean, as you know, you have submitted your supply agreement with Sun earlier last year and you know our expectations would be for Sun and then eventually you - when you get the NDA back to kind of buildout new isotretinoin formulations to monetize the Absorica brand. Just wonder if there are any specific details that you could share either from Sun or from yourself on what sort of novel isotretinoin products you might be considering?

And over what timeframe you might launch next-generation Absorica formulations? That’s it for me.

Thanks.

Well, we do have a life product lifeline extension with Sun. So we expect that we will continue to have a royalty stream through Sun for that particular product as formulated.

We are constantly looking for reformulations of that product that would extend the life of that product for us. And when we say extended we would be looking for modifications of products to – and someway make it a better product through reduction of side-effects, for example.

At this point in time, we are not in a position that we can disclose any of that information that is certainly something that is on our front burner.

Okay. That’s all right.

Thanks.

Yes. Well, thank you very much everybody for attending the call.

We expect to be communicating a lot more frequently with the market and to let them know what, how we are doing with our progress with our new plan and I appreciate your interest. And have a good day.

Thank you.