Good morning, everyone, and thank you for joining us today. Before I begin, I would like to remind everyone that all figures discussed on today's call are expressed in USD unless otherwise specified.

Cipher's second quarter of 2026 continues to represent a highly profitable specialty pharma platform company that delivers strong shareholder returns. Cipher's combined business, led by Natroba in the U.S.

and Epuris in Canada, is robust and continues to generate strong cash flows for our shareholders. In the quarter, the U.S.-based Natroba business experienced pressure with respect to sales volumes.

However, in other aspects of the product portfolio, such as the Canadian product portfolio, we experienced growth and market share gains. Looking ahead, we believe the Canadian portfolio will continue its growth, whereby we announced a positive development related to public reimbursement coverage for Epuris with the signing of a letter of intent between Cipher and the pan-Canadian Pharmaceutical Alliance, which is expected to expand patient access to Epuris with the product's inclusion on additional federal, provincial, and territory public drug plans.

Revenue from Natroba for the second quarter of 2026 was $6.3 million, compared to $7.8 million for the same quarter in the prior year, impacted by reduced sales volumes to state Medicaid programs. Looking ahead, we are investing in and building new business verticals to expand the U.S.

business to grow commercial payer volumes, which include, first, implementing strategies to grow volumes in our direct-to-patient platform, recently launched earlier this year. Given the acute nature of Natroba's indication to treat head lice and scabies, we believe the product is consumer-focused and more susceptible to sales growth in this vertical, arguably more so than other pharmaceutical medications.

Second, making the product easier to get to patients, either through direct mail or same-day delivery partners we have established and put in place. Third, investing in programs with large retailers to have Natroba and/or Spinosad on the shelf in large retailer settings, such as most recently launched a program to have the product available at Walmart, which represents an area we see as a tremendous opportunity for growth in the future.

Epuris has demonstrated growth during the quarter, with revenue from Epuris of $4.1 million of the second quarter in 2026, an increase of $0.5 million or 14% compared to $3.6 million in the second quarter of 2025. During the second quarter of 2026, sales volumes increased 8% compared to the same period in prior year, and market share for Epuris grew by 1.3% for the first half of 2026 to 47.1% market share as of June 30, 2026, according to IQVIA market data.

Epuris continues to expand its position as the market-leading isotretinoin product in Canada. We are also optimistic that recent developments surrounding the letter of intent signed with the pCPA establishing a path for expanded public drug plan coverage across Canada will provide growth for Epuris.

Following the execution of the letter of intent with the pCPA, we have been actively collaborating with federal, provincial, and territorial drug plans to finalize product listing agreements, which we expect to be finalized over the next 30 to 60 days. Listing on these additional public drug plans provides wider access for Epuris for patients who are not covered elsewhere, and accordingly expands Cipher's addressable market for the product, as there is a subset of patients that Epuris can now reach since they did not previously have coverage for the product.

We expect our market share to grow meaningfully in time, particularly in certain key markets whereby a high proportion of their patient population has drug coverage through the public-funded drug plans as opposed to private insurance plans. The public drug plan coverage is something we have been pursuing in key markets with limited success for some time.

Therefore, the signing of the letter of intent with the pCPA is an exciting achievement for Cipher and Epuris, and truly beneficial to the Canadian patient population navigating severe nodular acne. While Cipher's total adjusted EBITDA for the second quarter of 2026 was ultimately reduced compared to the prior year and the most recent quarter, we have maintained our overall profitability with adjusted EBITDA margins of 57%, calculated as adjusted EBITDA divided by revenue.

Adjusted EBITDA margins for the second quarter of 2026 were consistent with the second quarter of 2025. Adjusted EBITDA margins for year to date, June 30, 2026, remained elevated at 59% compared to 54% for the same period in the prior year.

Our CFO, Ryan Mailling, will provide a detailed overview of our financial results following my commentary. For the remainder of my commentary, I would like to provide an update on our business development activities, which are a key area of focus for Cipher, and we continue to be very active in this area during the second quarter of 2026.

Myself, along with several members of our team, are continuing to focus a significant amount of our time on these activities. We have three distinct strategies aside from our existing business we are pursuing to drive future shareholder value and growth in our business.

Firstly, acquisition or in-licensing of complementary products. Secondly, out-licensing of Epuris and Natroba to markets outside of North America.

Lastly, company acquisitions that are of strategic value to Cipher. The first area of growth strategy is the pursuit of acquiring or in-licensing complementary products which can be directly commercialized through our existing Canadian and U.S.

commercial infrastructures. We are currently active in discussions with various parties and continue to source and explore further opportunities.

Although we continue to pursue these opportunities similar to other areas of business development, these activities do take time. The time horizons on each opportunity vary, and the opportunities may or may not come to realization in the end.

The second strategy we have undertaken is pursuing out-licensing opportunities for both Natroba and Epuris outside of North America. We have made progress in this area during and subsequent to the second quarter, particularly in pursuing opportunities to out-license Epuris to territories outside of North America.

We have seen interest from a number of parties in exploring a partnership for distributing Epuris under license in their respective territories, and we are actively in discussions with these parties and evaluating the potential opportunities for the products in these territories. Given Epuris is the leading isotretinoin product in the Canadian market, we believe Epuris could also perform strongly in other territories with similar markets to Canada and represents a further avenue of growth for Cipher.

Similarly, with respect to Natroba, we continue to believe there is a high unmet need for a highly effective product like Natroba to address head lice and scabies indications in other territories. However, product pricing in territories outside of the U.S.

varies considerably from the U.S. market, and therefore the execution of this strategy is taking time, as we believe it is important to find the right markets and out-licensing partners for Natroba to ensure commercial success of the product in territories outside of North America.

The third area of strategy for growing the business is evaluating and pursuing company acquisitions which may have strategic value for Cipher. As we have said previously, we continue to believe that Cipher would benefit from additional size and scale, both in its pursuit of the other business development strategies I mentioned, as well as its ongoing and future operations.

Accordingly, acquiring companies that could add to our size and scale as well as provide other strategic benefits continues to be an area we are placing a great deal of focus. During the second quarter, we were in advanced stages of a process for an acquisition target.

However, we ultimately determined that not continuing with the process was the right decision at this time. Cipher and therefore the deal did not materialize.

We are currently assessing other opportunities and also continue to actively source, evaluate and pursue potential acquisitions that achieve our objectives. We remain optimistic that we will achieve success in finding and executing on the right opportunity.

I will now pass the call over to our CFO, Ryan Mailling. Please go ahead, Ryan.

Thanks, Craig, and good morning, everyone. As Craig mentioned at the beginning of today's call, all amounts provided are expressed in USD unless otherwise noted.

Today, Cipher Pharmaceuticals is reporting results from the company's second quarter and year-to-date 2026, the three and six-month period ended June 30th, 2026. Total net revenue for the three and six months ended June 30th, 2026 was $12.1 million and $24.6 million respectively.

Net revenue for the second quarter of 2026 decreased by $1.3 million or 10% compared to the same quarter in 2025. Net revenue for the six months ended June 30th, 2026 decreased by $0.8 million or 3% compared to the same period in 2025.

Revenue was impacted for both second quarter and year-to-date 2026 by lower revenue from Natroba, however, it was partially offset by revenue growth from Epuris. Additionally, for the second quarter of 2026, due to reduced product shipments to Cipher's distribution partners, which are subject to variability from period to period, licensing revenue also contributed to the reduction in total net revenue during the quarter.

Although Natroba experienced sales volume pressure contributing to lower revenue during the second quarter of 2026, this was primarily the result of evolving market dynamics with respect to Medicaid programs. Our expectations for the product have not changed despite market dynamics that may emerge over time.

We expect performance of the product to improve in future quarters as the implementation of our strategy related to Natroba and its authorized generic, Spinosad, takes effect, including an expanded focus on commercial channels, which Craig discussed in his remarks. The overall business continued to remain highly profitable, despite a slight decline in margins for the second quarter of 2026.

On a year-to-date basis, margins for the ongoing business remain consistent when compared to the same period in 2025. Gross margin for the second quarter of 2026 was 80%, a decrease of 1% from 81% in the second quarter of 2025.

Gross margin during the quarter was impacted by reduced licensing revenue, as well as lower revenue from Natroba compared to the three months ended June 30th, 2025. On a year-to-date basis, gross margin increased by 2% to 81% for the six months ended June 30th, 2026, compared to 79% for the six months ended June 30th, 2025.

The increase in gross margin for the year-to-date is largely due to the non-recurring fair value adjustments to acquired inventory included in the cost of sales for the six months ended June 30th, 2025, in connection with the company's acquisition of the U.S.-based Natroba business. Excluding the impact of these fair value adjustments in the prior year, Cipher's gross margins remain consistent year-over-year at 81%.

We have also maintained our approach of continuously monitoring and evaluating our cost base. As a result of this approach, we have seen a reduction in our selling, general, and administrative expenses for both the three and six months ended June 30th, 2026.

Selling, general, and administrative expenses for the second quarter of 2026 were $3.4 million compared to $4.1 million during that same quarter in the prior year, representing a 16% reduction. For the six months ended June 30th, 2026, selling, general, and administrative expenses decreased by 30% to $6.3 million from $9 million during the same period in the prior year.

There were two main components contributing to the reduction in our selling, general, and administrative expenses. One, non-recurring costs, and secondly, operational efficiencies.

In the prior year, during the three and six months ended June 30th, 2025, we incurred non-recurring legal costs associated with the arbitration proceedings relating to defending the company's intellectual property, which were concluded in Cipher's favor. These costs amounted to $200,000 for the second quarter of 2025 and $1.2 million for the six months ended June 30th, 2025.

Costs related to this matter were negligible in the current year. There were also $0.1 million of restructuring related costs incurred in the prior year during the six months ended June 30th, 2025.

In the current year, however, there were certain non-recurring costs incurred related to professional services fees and other due diligence activities in connection with the advanced stages of pursuing an acquisition opportunity, as Craig mentioned in his remarks. We incurred $0.3 million in costs for these activities during the second quarter and year to date 2026.

When removing these non-recurring costs, selling, general, and administrative expenses on a normalized basis have declined $0.8 million for the second quarter and $1.7 million for the six months ended June 30th, compared to the same periods in prior year. This remaining decrease is primarily driven by operational efficiencies gained within the U.S.

business, including savings and employment-related costs from a rationalized employee complement and reduced selling and marketing costs. Net income for the three months ended June 30th, 2026 was $4 million or $0.15 per diluted common share, compared to $5.9 million or $0.22 per diluted common share for the same period in prior year.

The decrease in net income for the second quarter of 2026 was attributable to reduced gross profit arising from the impacts on revenue described previously, combined with an unrealized foreign exchange loss from the effects of the US dollar's appreciation relative to the Canadian dollar on the translation of certain net assets of the company denominated in Canadian dollars. Net income for the six months ended June 30th, 2026 was $10.2 million or $0.39 per diluted common share, compared to $8.5 million or $0.32 per diluted common share for the same period in the prior year.

This increase in net income for the six months ended June 30th, 2026, was contributed to by non-recurring costs incurred during the six months ended June 30th, 2026, totaling $2.1 million, including legal costs related to the arbitration, restructuring related costs, and fair value adjustments to acquired inventory. The reduced cost structure as a result of these non-recurring costs in the prior year was partially offset by lower gross profit during the six months ended June 30th, 2026.

Adjusted EBITDA for the second quarter of 2026 was $6.8 million, compared to $7.6 million for the second quarter of 2025, representing a decrease of $0.8 million, or 10%. Decrease in adjusted EBITDA was largely contributed to by the lower growth profit.

However, this was partially offset by reductions in SG&A expenses, mainly driven by the efficiencies in our cost structure. Adjusted EBITDA for the six months ended June 30th, 2026, was $14.6 million, compared to $13.8 million for the six months ended June 30th, 2025.

This represents an increase of $0.8 million, or 6%. The increase in adjusted EBITDA was primarily attributable to those reductions in selling general and administrative expenses, which I previously mentioned.

Despite facing pressure on our top line during the second quarter of 2026, Cipher continues to be highly profitable, cash generative, and remains debt-free. Cipher ended the quarter with $9.1 million in cash and generated cash flow from operations of $7.6 million during the first half of 2026.

Additionally, having fully repaid the outstanding balance on our revolving credit facility as at the end of the first quarter of 2026, we retained availability to $90 million of potential financing, comprised of a $65 million revolving credit facility, plus a $25 million accordion. This potential financing, combined with positive operating cash flows, positioned us well to continue investing in our growth strategy, which Craig had outlined in detail during his commentary.

Thanks, Ryan. Before we open the call for questions, I wanted to reiterate and leave you with a few key items from our commentary.

First, Cipher remains highly profitable with gross margins of 81% and EBITDA margins of 59% on a year-to-date basis. Second, our expectations for the U.S.

business have not changed. Despite impacts from market dynamics which may arise over time, we expect performance to improve in future quarters as our programs we are implementing related to Natroba take effect.

Third, expanded public reimbursement for Epuris is expected to drive market share growth, especially in key markets, with the additional public drug plan listing enhancing patient access to the product, which already had the position as the market-leading isotretinoin in Canada prior to the expanded coverage. Finally, we continue to remain highly active in the area of business development, including opportunities for in-licensing of products, acquisition of products or companies, and out-licensing of our existing portfolio.

We view these activities as a key growth driver for Cipher. We will now open the call for questions.

At this point, I will ask our operator to provide instructions for the questions and answer session. Operator, please go ahead.

Yeah. Good morning, gentlemen.

On for Justin this morning. A couple of questions.

Firstly, just curious on sort of the Natroba dynamics. Can you characterize what exactly is impacting the sales channel with respect to Medicaid and sort of how many patients who would be publicly covered patients are falling off, maybe due to recent regulation or legislation at the federal level, and how you expect to mitigate this via, one, through your stocking program and, two, any traction in the DTC.

Thank you.

Thanks for the question, Max. Bryan, would you like to address Max's question?

Hi, Max. Good morning.

It's Bryan Jacobs. As you know, I'm the President of the U.S.

business. Your question on Medicaid, answering what's happening in the overall Medicaid plans and covered lives is a little bit beyond what we can talk about that's widely covered in the news.

What we can say that impacts us is one of the strengths of the business is that we've always had very strong Medicaid coverage in the U.S. business.

That will continue to be a strength going forward, whether there's an increase or what we're seeing is a decrease in covered lives in Medicaid. The business will have to ebb and flow on that.

Really then to answer the question of, what are we doing about it, because we can't control legislative changes to Medicaid, we can only control what we want to do in making sure that the Natroba business continues to grow. We didn't start that just yesterday.

We've been looking at that and expanding it over the course of the last year. It took a tremendous amount of time to get a first-in-class direct-to-patient model.

We don't just have a telehealth-type service built onto our website. We have a first-in-class design so that you can get a script within an hour, and you can schedule delivery or have a script routed to your nearest pharmacy instantly so that you can pick it up.

We've been working on that for the better part of a year ahead of this quarter. In addition to that, we've had discussions with very large retail pharmacies like the one that we've talked about here.

Those conversations have been going on for the better part of a year. We're happy to announce that we closed one of them to make Natroba and Spinosad available at every single Walmart across the U.S.

So those are both initiatives to focus on commercial growth, so that we're not just ebb and flowing with changes in Medicaid that occur.

Max, you had one question at the end there as well. Second question.

No, I think Bryan did a good job. It was mostly just kind of relating what the impact of these dynamics are and how you're going to or expect to mitigate them through both the stocking or retail access and DTC.

So that adequately answered the question. My second question is just on sort of business development.

You noted in the quarter that you stepped away from a transaction. I understand that maybe details will be scarce, but any additional color on maybe what criteria moved you away from the deal?

How near-term are the rest of the pipeline opportunities?

We're under a CDA with the other party, so I'm going to not give you a lot of the details that you want, but it was a larger outfit that we thought would fit very well with Cipher's business model. It would have added significant bulk to the company.

But as many things, a combination of concerns about some products and price meant that at this point in time, at this date, that it's probably not the right deal for Cipher.

That's fine. Maybe one last question.

I noticed that in the second quarter, free cash flow is a little bit weaker. Some working capital movements with regard to contract liabilities.

I think we discussed this last quarter, but any insight on what that entails? Is that still sort of payer rebates that are causing that, and could we expect sort of free cash flow normalization for the rest of the year?

Hi, Max, it's Ryan. Yeah, I can address that.

So yeah, that is related to payer rebates. With the decline in revenues in the U.S.

business this quarter, what's happening is you're seeing the payments which trail from prior rebates that arose in prior quarters. You're seeing those payments essentially come through at a higher rate this quarter than the cash we've basically collected and parked on the balance sheet as a future liability for rebates this quarter that will be paid in a future quarter.

So that will kind of ebb and flow as we do see changes from quarter to quarter in revenues. But given the meaningful change, I guess you can say, from prior quarters, that's why you've seen this reversal this quarter.

Very helpful. Thanks so much.

Thank you, operator. Thank you everybody for joining the call today.

We appreciate it. Just before signing off, we would like to take the opportunity to again thank everybody for joining the call, and we look forward to reporting more positive quarters going forward.

Thank you very much.