Nuvo Pharmaceuticals Inc.

Thank you. Good morning everyone.

Thank you for joining our call today. On the call with me this morning from Nuvo Pharmaceuticals is, Kelly Demerino, Nuvo's Interim Chief Financial Officer; and Tina Loucaides, Nuvo's Vice President, Secretary & General Counsel.

This morning's call makes reference to a presentation on our website that should be viewed concurrently. If you have not downloaded this presentation, I would invite you to do so now by visiting www.nuvopharmaceuticals.com, and scrolling down to the bottom of the page, you can then click on the link.

Before we begin, I would like to remind everyone that some of the statements made during this presentation may be considered forward looking. The company cautions investors, that result of future operations may differ from those anticipated.

We urge you to review the cautionary statements and other information contained in the company's filing on SEDAR, including our annual information form for fiscal 2019, which identifies certain factors that could cause actual results to differ materially from those projected in any forward-looking statements made during this call. Copies of the annual information form and other filings are available online.

The agenda for today's discussion is as follows; I will provide an overview of the company's investment highlights. Kelly will discuss the financial results for the third quarter and year-to-date, which were announced earlier today, as well as provide a cash and capital structure update.

I will then present a business update. Our business continues to grow organically through the efforts of our commercial sales and marketing team.

And with the introduction of new products like Suvexx and two new formats of NeoVisc in Canada. Nuvo contains to generate strong year-to-date revenue and profit returns including cash provided by operating activities of $17 million.

This cash flow is not only allowing us to manage our low interest debt facility, but also allows us to fund additional business development opportunities which will build out our pipeline in the short term and enhance the value of our business long-term. The third quarter was an interesting one for the Nuvo business.

We continue to grapple with the ever changing and unpredictable impact of the COVID-19 pandemic, and have been forced to make dramatic changes in our approach to business as a result. A good example of this was our commercial launch of Suvexx in September.

Previously, it was unheard of to launch a new medicine virtually. But this year, we were forced to do just this.

And fortunately, we're able to draw from the learnings gleaned from our own internal switch to our virtual workplace earlier in the year. All-in-all, I remained pleased with our year-to-date progress and look forward to seeing the results of our virtual Suvexx launch.

Kelly will now take you through our financial results for the third quarter and year-to-date.

Thanks, Jesse. Today's presentation includes reference to certain financial measures that don't have a standardized meaning under IFRS.

These measures include adjusted total revenue, and adjusted EBITDA. Nuvo believes that shareholders, investment analysts and other readers find such measures helpful in understanding Nuvo’s financial performance.

For description of how Nuvo defines these non-IFRS financial measures, as well as the reconciliation of these measures, please refer to slides 24 and 25 of this presentation, which will be posted on the Nuvo website, as well as new both management's discussion and analysis files on SEDAR. So adjusted total revenue was $16.7 million and $53.6 million for the three and nine months ended September 30, 2020 compared to $18.9 million and $55.1 million for the comparative three and nine month periods.

The $2.2 million decrease in adjusted total revenue in the current quarter was due to a decrease of $1.6 million of revenue in a licensing and royalty business segment, combined with a decrease of $0.4 million of revenue in the production and service business segment, and a $0.1 million decrease in revenue from the commercial business segments. The commercial business segment revenue had continued organic growth of its key promoted products, Blexten and Cambia.

The possibility of future supply disruptions resulted in forward buying, linked to the COVID-19 pandemic, which increased revenue in the three months ended March 31 2020 and reduced revenue in the three months ended June 30 2020 and stabilized in the three months ended September 30 2020 as the pandemic progressed and buying patterns returned to normal. The COVID-19 pandemic may impact the timing of revenue in future quarters, and the company will continue to monitor the market dynamics accordingly.

For the three months ended September 30 2020, the licensing and royalty business segment revenue decreased, primarily due to a reduction in U.S. and rest of world net sales of Vimovo.

The reduction in the U.S. net sales of Vimovo was due to the launch of the generic version of Vimovo in March 2020, which resulted in the Company no longer receiving a guaranteed minimum quarterly royalty of $1.9 million U.S.

from Horizon Therapeutics. The Company now receives a royalty of 10% based on U.S.

net sales of Vimovo. The production and service business segment revenue decreased as a result of a decrease in the company's Pennsaid product sales.

Adjusted EBITDA was $6.6 million and $22.2 million for the three and nine months ended September 30 2020, compared to $7.8 million and $18.7 million for the three and nine months ended September 30 2019. The decrease in the current quarter was primarily due to the decrease in gross profit of $2.4 million, which is net of revenue recognized on recognition of contract assets, and built the customers for existing contract assets and inventory step up expenses, partially offset by a decrease in general and administrative expenses net of amortization.

This decline in gross profit was due to a decrease in adjusted total revenue, partially offset by an increase in gross margin percentage on product sales, due to the receipt of the Canada emergency wage subsidy, as well as changes in product mix. Gross profit on total revenue was $10.2 million, or 61% and $39.1 million or 69% for the three and nine months ended September 30 2020 compared to a gross profit of $11.3 million or 60% and $30 million or 60% for the three and nine months ended September 30 2019.

The decrease in gross profit for the current three months was primarily due to a decrease in licensed revenue, partially offset by an increase in gross margin on product sales. The increase in gross profit for the current nine month period was primarily due to an increase in licensed revenue and gross margin on product sales.

As at September 30 2020, the Company had cash on hand of $21.1 million. In January 2020, the company repaid the outstanding balance of the bridge loan, a component of the Deerfield Financing, which carried a coupon interest rate of 12.5%.

The company's remaining loans, the U.S. $52.3 million amortization loan, and the U.S.

$52.5 million convertible loan each carry a coupon interest rate of 3.5%. Nuvo will make regular repayments toward this amortization loan in 2020 in accordance with the Deerfield Financing agreement and associated amendments.

Since January 1 2020 the company has repaid U.S. $14 million of debt.

In our financial statements, we're required to report our amortization and convertible loan values as well as the interest payable in accordance with IFRS standards. This next slide provides a reconciliation between the IFRS accounting value under the amortized cost method of outstanding debt compared to the actual cash value of the debt.

As at September 30, 2020 the cash value which represents the remaining principal payments of the amortization loan and convertible loan, with $66 million and $70 million respectively of $49.5 million and $52.5 million in U.S. dollars.

Since November 2019, we’ve repaid 25% of the original combined value of the U.S. $6 million bridge loan, which is now entirely repaid.

And the U.S. $60 million amortization loan.

The U.S. 52.5 million convertible loans remain outstanding and is not pre-payable.

As of September 30, 2020 year-to-date, the company has repaid the outstanding balance of the bridge loan in the amount of $4.5 million and paid $14.2 million towards the amortization loan, or $3.5 million and $10.5million in U.S. dollars respectively.

As at November 6 2020, the company had 11.4 million shares outstanding. Attached to the company's amortization loan are 25.6 million warrants issued to Deerfield at a CAD3.53 strike price.

The company's convertible loan may be converted into common shares of the company at Deerfield’s option at a U.S. $2.70 per share conversion.

Nuvo’s shares closed the day on November 6 at $0.86 a share. The Company's amortization and convertible loans mature and outstanding warrants expire on December 31, 2024.

Jesse will now continue with our business update.

Thanks Kelly. Our growth strategy is driven by five key elements.

First, we're focused on the continued organic growth of our existing products and targeted in licensing or acquisition of accretive growth oriented products, which leverage our in-house commercial, scientific and manufacturing infrastructure. Second, we plan to further expand our Canadian business with the commercial launch of new products like, Suvexx, which will be launched in September.

Third, our scientific affairs team is continually working with our partners and regulators to move our pipeline forward with the registration of new products worldwide. Fourth, our manufacturing facility in Varennes, Québec has developed and will continue to refine processes, to enhance the quality and efficiency of our manufacturing operations.

And finally, we hold 113 patents globally, and has five patent applications pending. We continued to develop a strong patent portfolio to protect our products.

Suvexx, is our prescription medication indicated for the acute treatment of migraine attacks with or without aura in adults. We launched this innovative and clinically differentiated treatment for acute migraine, in the approximately $130 million Canadian acute migraine treatment market in September of this year.

As mentioned earlier, we were forced into a virtual launch this year as a result of the COVID pandemic. The impact of this virtual launch is obviously difficult to predict, as a virtual launch has never really been contemplated before this year.

Most companies are of course dealing with this reality now. To date, the Suvexx launch has been very well received, with positive feedback from physicians and patients who now have access to this medicine.

Our experience from virtual sales rep activities for both Blexten and Cambia, which have been in place since March are certainly making our virtual Suvexx launch much easier to manage. We continue to advance our product pipeline towards commercialization.

We filed Blexten pediatric registration dossier with Health Canada in June of this year, and this dossier was accepted for review during the third quarter with an anticipated regulatory decision by the middle of next year. Blexten pediatric is anticipated to be indicated for the treatment of seasonal allergic rhinitis and chronic spontaneous urticaria in children, and will help to further strengthen our relationships with allergists, dermatologists and primary care physicians who treat allergy and urticaria patients.

NeoVisc is an injectable viscosupplement used to replenish the synovial fluid in the joints of patients with osteoarthritis. Our commercial team received Health Canada approval, for our new presentations of NeoVisc during the third quarter of 2020, and anticipate launching these new line extensions later this year or early in the following year.

The line extensions include a low volume single injection presentation, called NeoVisc One and a new triple injection presentation called NeoVisc+. Our key growth assets, Blexten and Cambia have continued to perform as expected during the third quarter, in spite of COVID-19 impacts.

Blexten's third quarter performance reflects the traditional seasonal growth in the oral antihistamine market, primarily associated with pollen and other environmental allergens during the warmer months. Blexten demonstrated continued year-over-year growth of total prescriptions or TRX, and TRX market share during the quarter.

Blexten Q3 and year-to-date 2020 TRX increased 30% and 37% over the same periods in 2019. Blexten Q3, 2020 TRX market share increased to 16.4% compared to 13.9% for the comparable period in 2019.

Blexten continues to capture the market share of our number one competitor cetirizine, also known as Reactine. Our sales force is doing a great job expanding the prescriber base for Blexten, and we expect on-going year-over-year growth and market share gains in the prescription antihistamine market in the quarters to come.

Blexten will enjoy market exclusivity in Canada through October, 2024. Our second key growth product, Cambia is an innovative prescription treatment for acute migraine.

Cambia, which is the only prescription NSAID approved in Canada to treat acute migraine, acts fast and begins to work in as little as 15 minutes. Cambia Q2 and year-to-date 2020 TRX increased 13% and 18% over the comparative periods in 2019.

Cambia Q3, 2020 market share increased to 4.8% compared to 4.4% in the comparable quarter in 2019. We anticipate continued prescription growth of Cambia, consistent with these historical trends.

Cambia will also benefit from patent protection in Canada through mid-2026. Turning to our International business, pre-launch activities for Pennsaid 2% in Switzerland are currently underway and we anticipate the commercial launch in early 2021.

I'm also pleased to announce that results which is branded as Resultz in Germany has now launched in this important European market. The launch is an early days now, but we are encouraged by the significant effort put into the commercial launch effort by our partner Heumann, which includes a social media presence, e-commerce platform and a full online infrastructure to provide parents with the information they need to use results and to treat their children's head lice infestation.

Nuvo will of course earn royalty revenue from both of these partnerships. These commercial launches are also anticipated to have a positive impact on our production and service business segment.

Our manufacturing facility in Varennes, Québec, has already produced and shipped the finished Pennsaid 2% product for Switzerland, and is also prepared to manufacture results finished product for the U.S. market in the future.

Manufacturing for our results business in Europe is handled by our European based contract manufacturing partner. Nuvo earns revenue on the supply of finished product to our partners for both Pennsaid 2% and results.

We've achieved a large number of milestones so far this year, many of which we've discussed already today and in previous conference calls this year. While our businesses had to adjust the way we operate in order to deal with the COVID pandemic, this adjustment has not slowed us down from completing the value creating activities we set out to accomplish at the beginning of the year.

In addition, we are hard at work bringing new products and opportunities to our pipeline to targeted business and commercial development opportunities. That ends our formal remarks.

We are now pleased to answer questions that you may have with respect to the company, our financial results, and our operations. Thank you.

Good morning, Jesse and Kelly. Horizon sales of Pennsaid 2%, were up 20% year-over-year in third quarter.

Do you know why it was? Did it translate into higher revenues for Nuvo?

And is this level of sales expected to be sustained?

Well, so, one of the disconnects between our business and Horizon's commercial business is that -- its really the timing of when they place orders for finished products. But there's a gap between the production of product and when they actually sell to patients and wholesalers.

So, typically, depending on how much inventory they have on hand you can see a gap. And so the prescription trends or the net sales trends aren't necessarily going to translate immediately into sales revenue for us.

So this is sort of how things have been historically. And Horizon's public disclosure is helpful in terms of showing the trends of their business.

And as you've indicated, Pennsaid 2%, seems to have stabilized enough, and in fact, its growing from a Horizon standpoint, but it doesn't immediately correlate into sales and manufacturing or production of finished product for them.

Is it increases in prescription volumes or is it price increases or a bit of both?

If you look at the prescription trends. If you look at your Bloomberg Terminal, you can see some of that information.

It looks like Pennsaid prescriptions have basically stabilized this year. So, we know that Horizon generally implements price increases.

That's their strategy. It's for them to manage.

But from my perspective that business, they seem to have stabilized it.

Okay. On to the next topic.

You talked about differentiation of Suvexx. I'm wondering if you can elaborate on that.

In particular, it doesn't seem like polypills have gained much traction in recent years. I'm wondering if there's a reason why this one will?

Well, I think if you look into the migraine market, certainly there have not been polypills or fixed dose combination treatments made available. And so, this would be sort of a first in that regard.

Secondly, if you look at just the wealth of clinical data that we have, not only are we showing fantastic efficacy and safety results in the standard migraine endpoints of pain freedom at two hours, and sustained pain freedom for 24 hours, reduction and use of rescue medicine. And those are all the typical ones that that triptan would be measured against.

And we're, of course, measured against those same primary endpoints. But we've also -- and we've got in many cases better results, or at least comparable results to a number of the products that are on the market.

But where we really excel is when you start looking at the results that we have in triptan non-responders. So patients who have previously tried a migraine treatment, but they failed, or they weren't tolerant of that medication.

And that's upwards of 30% to 40% of migraines in Canada that fit into that categories. That's a big part of the market.

And so, we've got Phase III clinical data showing that Suvexx is efficacious and safe in those patients. And you don't have many other treatments that have that strong data.

And that's the kind of clinical data that's resonating with the physicians that we're speaking with. And it's giving them another treatment option for their patients.

So -- and then I guess the other thing to add to this is when you look at why would a polypill or fixed dose combination be perhaps more successful in the migraine space versus the cardiovascular arena, which is where you would have historically seen a lot of fixed dose combinations. And it's really probably comes down to the treatment guidelines, where a combination of a triptan and an NSAID is written in black and white in the treatment guidelines as a second-line treatment option for patients that are inadequately treated on a monotherapy regimen.

And given the fact that the price point of our product is effectively the same as comparable brand named single ingredient, triptan products. There's no disincentive to prescribe our product, because the patient isn't going to be out of pocket any more than they would if they were taking a regular branded triptan.

So I think there are a lot of variables at play here that kind of changed the playing field for us. And obviously, we're receiving very strong feedback and support from the neurology and migraine KOLs.

And a lot of positive feedback from primary care physicians who are treating migraine on a day-to-day basis. And think that this may be a bit of a different situation than what you've seen historically.

Okay. Third question, then I'll get back in queue.

What's happening with the results in the U.S.? We had thought maybe beyond the market for the lice season this year.

What should we anticipate next year, hopefully?

Sure. So, yes, certainly COVID slowed things down from a partnering standpoint early this year.

But what we'd indicated back in the summertime is that the expectation was we would have a partner in place before the end of this year. We're still targeting that.

That's, still the expectation, as it stands now, and that we would be on the market for next year's life season, which I think, assuming that the world not necessarily goes back to normal, but with the advent of the potential for vaccines, and perhaps, people to feel free about moving back to more normal day-to-day situations, and children going back to school and going to summer camp and things like that. Next year should be an interesting year for the head lice market.

I think it's safe to say that this year, would have been a challenging year to launch a head lice treatment. And so, as much as we would have liked to have been out this year, next year should be an interesting one for us.

Okay. Thanks.

I'll get back in queue.

Okay. Thanks, Dave.

Okay. I guess I should have just stayed on the line.

The pediatric market for Blexten. How big is that relative to the current market that you're in for Blexten?

Sure. So, the pediatric market for any pharmaceutical treatment in Canada is generally relatively small.

And then, the antihistamine market, it's around 10% to 15% of the overall antihistamine market. So it's not necessarily the value of that pediatric population that's interesting for us.

Its the fact that we will have a Blexten label that is much broader and much more comprehensive and really results -- and the physician when they're making a decision as to whether they prescribe Blexten or if they prescribe one of our competitors that there are no reasons for them not to prescribe Blexten. They can use it for all of their patients.

Whether they're pediatric patients. Whether they're adult patients, senior citizens.

This one treatment will cover them all. And they don't have to choose between different options.

And so it's more of a, what we like to call it a halo effect, because it just simplifies the prescribing decision for the physician more so than Blexten's clinical and safety profile already do.

Will it be in a pediatric specific package? Or is it just in addition to the product label if you're under a certain age take one pill, and if you're over a certain age take two or?

Yes. So we -- as we've mentioned before, we've got two new pediatric formats that will be -- that we're seeking approval for.

So, one is an orally disintegrating tablet, in a 10 milligram format. And then the other, which is half the dose of the adult version.

And then there's also an oral solution version. So we'll have two different pediatric formats that would be available to patients.

Okay. On NevoVisc, the line extensions, do you expect to increase your market share, or is this just to protect your current market share?

This is definitely intended to increase market share, for sure. There's a -- having the diversity, having the two different versions, the triple dose, and the single dose really allows us to appeal through a broader subsection of patients.

So similar to the Blexten with the adult and the pediatric by having a triple dose and a single dose, you expand the number of patients that you can target there. They're more options for the physician when they're deciding how they want to go about treating the patients.

And then the other point is the new single injection product that we're bringing out that four milliliters is -- it's two milliliters less than our previous NevoVisc product, which was the six milliliter product. And so it doesn't seem like a lot of volume.

But when you're injecting this stuff into that cavity in the knee, the synovial cavity. It doesn't hurt, because there are no pain receptors there or nerve endings, but you feel pressure as that injected fluid starts to fill up that cavity and then ultimately provides that sort of cushioning that the patient is looking for.

And so, four ml versus six ml is quite a big difference and it's much more comfortable for the patient. It reduces the injection time for the physician and it's just a more efficient product to administer.

So, we think we'll be well-positioned with this product once it's available in the market hopefully later this year.

Okay. And last question.

So, you're doing really well with Blexten and Cambia, despite COVID. Do you think there's any sort of drag on the sales of those two products because of the pandemic?

And once we work our way out of the pandemic, should there be an uptick in sales of those products? Or are they doing as well as they could whether pandemic was here or not?

It's a really good question, David. And one thing that we do know, is that physicians -- conversations that we've been having with physicians since the pandemic started, is that, they do have patients -- they do have access to patients.

They're definitely seeing existing patients and refilling prescriptions. But there is certainly a backlog of patients that aren't getting in to see their physician.

And whether that is they're not comfortable going to the doctor's office or their physician has not yet sort of engaged in telemedicine, telehealth or some kind of online or virtual consultation, that's causing a backlog in the number of patients that are actually getting to see their doctor and receiving treatment. So, I think, as the world returns to a more normal state, hopefully, mid to late next year, and people -- or even, in the early part of next year, if people simply just get more comfortable going about their lives in the midst of the pandemic, maybe we'll start to see some of that backlog go away.

But that's the feedback we're getting from physicians at this point.

Okay. Thanks.

That's was it for me.

Okay. Thanks, Dave.

Okay. Well, thank you very much everyone for participating and listening today.

Appreciate your support. And as always, if you do have questions that we weren't able to address today, please feel free to reach out through our Investor Relations site on the website, and we'd be happy to address your comments through that medium.

So thank you very much. Enjoy the rest of your day.

Bye.