Thank you, operator, and good morning, everyone. Joining me today is Scott Langille, Cipher’s CFO.

On today’s call, I will be making opening remarks before passing the call over to Scott to review financial results in detail. Following our prepared remarks, we will open the call for your questions.

Note that all amounts are in U.S. dollars unless otherwise stated.

The COVID-19 pandemic continued to impact the economy during the third quarter of 2020. Cipher is navigating through this environment while executing on business improvements and cost reductions.

Cipher demonstrated strong profitability during the third quarter and sequential growth in revenue, despite market conditions that have not fully normalized. Our focus continues to be on driving profitability, strengthening the balance sheet and looking for the right opportunities for growth.

Epuris continued to perform well in the quarter with revenues at $1.8 million compared to $1.9 million in the third quarter of 2019. Epuris finished the quarter with a 41% market share in the Canadian market, up from 40% in the comparative period.

We are extremely pleased with the performance of Epuris and the stability of the revenue and cash flow during this challenging period. Licensing revenue from Absorica in the U.S.

was $2.3 million, up from $1.8 million in the second quarter of 2020, but a decrease of $3 million compared to Q3 2019. Absorica’s market share for the three months ended September 30, 2020 was approximately 6% compared to approximately 8% for the three months ended September 30, 2019, according to Symphony.

Market share including Sun’s Absorica LD was approximately 7%. Earlier this year, Sun Pharmaceutical Industries, Cipher’s marketing partner for Absorica, launched Absorica LD capsules in the U.S.

for the management of severe nodular acne in patients 12 years of age and older. In addition to the benefits of Absorica LD will bring to the patient population, the launch triggered an extension of our agreement with Sun Pharmaceuticals, providing us with two additional years of royalties on Sun’s isotretinoin product portfolio.

As previously communicated, the royalty rate on Absorica LD will be identical to the royalty on Absorica until December 2021. The extension allows for a reduced royalty rate in subsequent years.

On January 13, 2020, the company received a notice of termination from Bausch Health for alleged breach of contract in respect of its licensing agreement for Trulance. The company is currently in arbitration to resolve the matters contained within.

Third quarter results show sequential growth in revenue and strong year-over-year growth in earnings. Excluding an impairment charge, total operating costs decreased 18% in the third quarter over last year.

This optimized cost structure result in an EBITDA increasing to $2.7 million or 55% of net revenue compared to a loss of $0.4 million last year. Net income increased to $1.6 million during the third quarter compared to a loss of $2.1 million in the prior year, and EPS increased to US$0.06 or CAD0.08 compared to a loss of US$0.08 in the prior period.

We also continue to work with our development partner, Galephar, on a number of interesting projects, including Alitretinoin, a drug for severe hand eczema for the U.S. market.

Cipher and Galephar are working closely and expect to receive feedback on recent submissions to the FDA. Cipher continues to evaluate the market potential for this product.

In our tattoo program, the U.S. patent office issued a Notice of Allowance for the U.S.

patent application covering Tattoo dermal compositions. We have received encouraging results from the proof of concept studies and identified a lead candidate compound.

Planning is currently underway for the next focused animal study that will incorporate test parameters that will potentially broaden and reinforce the existing IP portfolio. Our development partner, Moberg, has developed a proprietary formulation that can deliver high concentrations of active drug to the nail that competing products on the market have difficulty in matching.

To-date, Moberg has conducted two North American Phase 3 studies. In these studies, the overall cure rates were lower than competing products at 4.5%.

However, in contrast to the competing products, the mycological cure rate was 50% in less than 24 weeks while the competing products were quite longer to reach this rate. Moberg is considering conducting additional trials to address the complete cure rate by shortening the treatment period.

I will now turn the call over to Scott for financial review of our third quarter results.

Thanks, Craig. Revenue in the third quarter was $4.9 million, up sequentially from $4.7 million [Audio Gap] for three months ended September 20 – September 30, 2020 compared to $3.9 million for three months ended September 30, 2019.

Licensing revenue from Absorica in the U.S. was $2.3 million, up sequentially from $1.8 million in Q2 2020, but down when compared to $2.9 million for the three months ended September 30, 2019.

Absorica ended the quarter with a 6% market share compared to 8% for the three months ended September 30, 2019 according to Symphony. Market share including Sun’s Absorica LD was approximately 7%.

Licensing revenue from Lipofen and the authorized generic of Lipofen was $0.6 million for Q3 2020, compared to $0.8 million for the three months ending September 30, 2019. Licensing revenue from the extended-release tramadol ConZip and Durela was $0.4 million for the three months ended September 30, 2020 compared to revenue of $0.22 million for the prior year.

Product revenue was $2 million for Q3 2020, compared to $2.2 million in 2019. Product revenue from Epuris was $1.8 million for the three months ended September 30, 2020 compared to $1.9 for the three months ended September 30, 2019.

Epuris had a prescription market share of approximately 41% in Canada for the three months ended June 30, 2020, compared to 40% for the three months ended September 30, 2019. Total operating expenses decreased by 61% in the third quarter over last year.

The decrease was primarily driven by a decrease in impairment of intangibles and restructuring costs excluding an impairment charge total operating cost decreased by 18%. SG&A expense was $1.6 million for Q3 2020, an increase of $0.4 million compared to the prior year.

The increase in SG&A was primarily driven by an increase in costs related to legal and consulting spend. Net income was $1.6 million or $0.06 per basic and diluted share in Q3 2020 compared to a loss of $2.1 million or a loss of $0.08 per basic and diluted share in Q3 2019.

EBITDA in the quarter increased to $2.7 million or 55% of net revenue compared to a loss of $0.4 million in the prior year. Adjusted EBITDA for Q3 2020 was $2.8 million or 58% of net revenue compared to $3.7 million in Q3 2019.

The company used a $1.8 million in cash from operating activities during the quarter, as of September 30, 2020, the company had cash of $4.7 million and a $1.7 million drawn on a credit facility that the company’s credit facility has been paid off as of October of 2020. I will now turn the call back to Craig for closing remarks.

Cipher’s business and operations have demonstrated resilience as the COVID-19 pandemic continues to impact the world with the profitable business in a reduced cost structure, we feel that we are in an excellent position to start ramping up strategic promotional efforts to drive market share in our core brands and looking for the right opportunity to return Cipher to growth. We’ll now open the call to questions.

Operator?

Hi, good morning. Thanks for taking my questions.

Firstly, could you – is there any progress in terms of taking advantage of tax losses?

Yes, we’ve made a significant progress. We are in serious discussions, including drafting of agreements with a partner that will co-promote our hospital products.

And with that, we believe that we will be able to access the Cardiome losses as we are conducting an active business any area that Cardiome had participated in, and we expect to be able to utilize those losses as soon as the end of 2020.

Okay. And, I think I had more color on the working capital changes if occur in the quarter?

Scott, I’ll turn it over to you.

Specifically, in terms of working capital, we had a year-to-date, we had a reduction in accounts receivable or usages in receivables and an increase in payables, but that was really driving the working capital change, but the increase in receivables, it – we actually had a fairly large sum from one of the licensed partners that came in just shortly after the quarter ended. So, that really drove the increase or use in working capital and then it’ll reverse itself in Q4.

Got it. Thank you.

Yes. Thanks operator, and a good morning, Craig.

So obviously, Absorica is always the product is your – in your quarterly financials. And I was just struck by the difference in prescription market share in Canada versus the U.S.

and I know the most of that is pricing strategy, but was just wondering whether or not in any consultation with Sun that there might be a re-exploration of pricing as a way to drive market share here in the near-term. And then sort of secondarily to that, I think we’re all obviously focused on timelines when Allergan can launch its own generic Absorica, which I believe is next month, any update on that would be helpful.

And then I have a follow-up.

Okay. So the launch of a generic is something that we are watching very closely.

We’re trying to get as much information that we can about any potential launch of generic of Absorica. We have not seen it.

There has been no entries in [indiscernible]. We have talked to them about different pricing strategies.

We’re preparing in the event of a launch of a generic to be able to come out with an authorized generic and maintain a significant share of that market. So this is a day-to-day thing and we’re certainly in communication with Sun and we’re also doing our own reconnaissance on any potential launch of the generic.

Okay. That’s helpful.

Thanks. And then, just on pipeline, I mean, you were pretty transparent about your partnered DTR001 program which is great to hear that program is being resurrected in ongoing Trulance dispute resolution and obviously on the Moberg, nail fungus drug, you didn’t mention the psoriasis drug that Can-Fite Biopharma is developing and I see that they had some mildly positive news on permission to go-forward with interim analysis on a Phase 3 psoriasis program.

Just, I mean any update on the status of that program and your sense on timelines to when Phase 3 could conclude and when potential regulatory milestones could be forthcoming there? And I’ll leave it there.

Thanks.

Yes. We’re working at to set up times to get a better idea of where Can-Fite is with their process and their overall schedule.

I think that we could do more work in that area than we have done. The product sounds like – shows some potential of positive results, but we want to get more detailed from Can-Fite with regards to the specifics of the results and what plans are and schedule for moving the product towards approval.

And those discussions are ongoing.

Great. Thanks, Craig.

Thanks, Doug.

Good morning, all. Thanks for taking my question.

Can you please identify in terms of the timelines for the Trulance arbitration? And also can you please tell us in terms of the goalpost in terms of the next one year, please?

Thank you.

Sorry. I missed that second question.

The second question was trying to understand in terms of the timelines of where we should see the company in the next 12 months. We obviously are reducing expenses which seems very good, but equally the revenue from other products is going down.

So I want to understand what the goalposts are for the company for the next 12 months?

Okay. Let me start with the second question first.

The Canadian business – the Canadian commercial business continues to grow. Yes, we are having declines in the Absorica, royalty payments related to price competition primarily, which we are planning as a – the game plan there would be once the generic is launched, that we work – we will launch our own generic with Sun.

And we believe that coming under the Absorica name will allow the product to maintain significant market share. What the game plan is for the next two years or over even in the next 12 months is to continue to watch our costs and our cost structure, but to start focusing on the development of some of our different programs, including the Tattoo program.

The Moberg, nail fungus program and then thirdly a number of different potential projects with Galephar, the first and foremost being Alitretinoin, which is the hand eczema product. Your second question with regard to Bausch in the arbitration that we’re having with them, we are going through the process.

We expect that the arbitrator will make a decision no later than the end of January of 2021 and unless the matter is settled between the parties before that.

Thank you.

Hi, good morning, Craig and all. I’m wondering with respect to the normal course issuer bid, you indicated that 30,000 shares I think were purchased in the period August 12 to September 30, August 12, being the initial effective date of that.

What was the average price of purchase of those shares?

I’m not sure Peter about the exact price, but as you probably are aware that Cipher is not able to purchase stock at anything greater than the last traded price.

Right. No, I’m aware of that.

I guess if you looked in the range for those days, I don’t know the average price.

Okay. That’s fine for that.

It was 30,000 shares. Are you able to give us an indication of how many additional shares have been purchased in the next basically 45 or so days, i.e., between October 1 and yesterday?

Well, Peter, we were under a blackout for a good part of that. We are restricted from buying.

I can tell you what our intentions are going forward. We expect to be an active buyer of our stock, subject to the regulatory requirements that we have to abide by.

So we had an active – the stock is as you no doubt can see it’s very thinly traded. We would like to buy as much stock as we can.

Right. Okay.

Fair enough. And then one follow-up, if I could with just back to the Trulance arbitration, I appreciate that there’s confidentiality provisions and you’ve got to abide by those, I know that well obviously, but the question is, has the formal part of the arbitration concluded such that it is now in the arbitrators hands to decide or is there still more additional arbitration hours that need to be had?

I would say that it is in the arbitrator’s hands at this point, although I’m sure that there could be further discussion amongst the parties, but I would say that it is in the arbitrator’s hands at this point.

Okay. Fair enough.

And I think we can all appreciate that the pandemic has certainly slowed all legal processes, arbitrations included and drawn them out from what they would otherwise be. And I’d expect that would have been the case in the Trulance situation as well.

Correct.

Okay. Thank you, Craig.

Thanks Peter.

Thank you for joining us today. We look forward to reporting on our progress throughout the balance of 2020 as we execute on the priorities discussed today.

Thank you.