Nuvo Pharmaceuticals Inc.

Jesse Ledger - President, Chief Executive Officer Mary-Jane Burkett - Vice President, Chief Financial Officer Tina Loucaides - Vice President, Secretary & General Counsel

Thank you. Good morning, everyone, and thank you for joining our call today.

On the call with me this morning from Miravo is Mary-Jane Burkett, Miravo’s Vice President and Chief Financial Officer; and Tina Loucaides, Miravo’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.miravohealthcare.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 ask you to review the cautionary statements and other information contained in the company's filing on SEDAR, including our annual information form for fiscal 2020, which identifies certain factors that could cause actual results to differ materially from those projected in any forward-looking statements made during the meeting.

Copies of the annual information form and other filings are available online. The Miravo business posts a diversified commercial product portfolio of over 20 products.

We are continuing to see organic growth of our key promoted brands through market share expansion and have also recently launched or anticipate launching in the near future, new products both in Canada, and in international markets. Our existing business is profitable and has strong continued growth potential.

Our financial results year-to-date and our strong cash position demonstrate the resiliency of our business in the face of the significant disruption that was and continues, namely the COVID-19 pandemic. Despite the challenges posed by the pandemic, we remain well positioned for growth and we continue to pay down our debt on a quarterly basis.

Our commercial business segment continues to grow organically and through the efforts of our commercial sales and our marketing team. This business segment contributed $13.6 million or 69% of total revenue for the second quarter of 2021.

Our two key promoted products, Blexten and Cambia, continue to demonstrate quarter-over-quarter prescription growth and generated $9.2 million in revenue for Q2. Suvexx and our two new formats of NeoVisc recently launched in Canada, are already capturing market share and we look forward to reporting on continued market share expansion for these products over the coming months.

Overall, our commercial segment represents 65% of our total revenue year-to-date in 2021. All of our promotional efforts remain focused on Blexten, Cambia, Suvexx and NeoVisc.

However, the remaining mature products in our commercial segment highlighted on the slide here, continue to contribute in a meaningful way to our bottom line. These mature products have either lost market exclusivity to generic competitors or are not in our core therapeutic focus areas.

During the quarter the revenue in our licensing and royalty segment was $2.5 million or 13% of our total revenue. Royalty revenue is generated from licensing of our intellectual property and related products globally under exclusive licensing agreements.

The segment has recently expanded with a new license agreement signed for Suvexx with SK Chemicals for the exclusive right to commercialize Suvexx in South Korea. I'll talk about this high profile deal in greater detail later in the presentation.

As anticipated, our royalty revenue has been negatively impacted by continued reductions in net sales of Vimovo in the United States as a result of generic competition which entered the market in 2020. Mary-Jane will provide more details on this shortly.

We do see continued growth potential for our licensing and royalty business as we remain focused on identifying new international partnering opportunities for our products in this segment. The production and services segment revenue for the second quarter was $3.6 million or 18% of total revenue.

The sources of revenue in this segment are from products manufactured by our facility in Varennes, Québec or from product contract manufactured for Miravo and supplied to Miravo distribution partners. It also includes surface revenues from testing, development and related quality assurance and quality control services.

During Q2 we signed new manufacturing and services segment revenues coming from the supply of results finished product for our U.S. Commercial Partner, Mentholatum.

We anticipate the recognition of additional Pennsaid 2% finished product supplied to our Swiss Partner Gebro in Q3 as they continue with their commercial launch activities in Switzerland. I will now turn the call over to Mary-Jane, who will take you through our financial results for the second quarter of 2021 and year-to-date.

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

These measures include adjusted total revenue, adjusted EBITDA and cash value of loans. Miravo believes that shareholders, investment analysts and other readers find such measures helpful in understanding Miravo’s financial performance and the company's outstanding loans.

For a description of how Miravo defines these non-IFRS financial measures, as well as the reconciliation of these measures, please refer to slides 28 and 30 of this presentation, which is posted on the Miravo website, as well as Miravo's management's discussion and analysis filed on SEDAR. For your reference, slide five through eight outline the products and related revenue streams that comprise each of the company's business segments, which are referenced throughout the presentation.

Adjusted total revenue was $19.9 million and $34.5 million for the three and six months ended June 30, 2021, compared to $18 million and $37 million for the three and six months ended June 30, 2020. The $1.9 million increase in adjusted total revenues for the current quarter was due to an increase of $4.3 million in the commercial business segment and an increase of $0.7 million of revenue from the production and service business segment, offset by a decrease of $3.1 million of revenues in the license and royalty business segment.

Revenue in the commercial business segment increased during the current three month period, due to a $3.4 million increase in sales of the company's promoted product, Blexten, Cambia, Suvexx and NeoVisc, as well as a $0.9 million increase in sales of the company's mature products. The increase in sales of the company's matured products during the three month period was due to a decline in mature product sales during the comparative quarter, as a result of forward buying that occurred due to COVID-19 pandemic supply concerns during the first quarter of 2020.

The production and service business segment revenue increased during the three months ended June 30, 2021, primarily due to an increase in the company's Pennsaid product sales, offset by the strengthening Canadian dollar against the U.S. dollar, which decreased the value of U.S.

denominated sales by $0.4 million compared to the three months ended June 30, 2020. For the current three month period, the $3.1 million decrease in adjusted total revenue in the license and royalty business segment was a result of $0.7 million decrease in the royalty earned on the U.S.

net sales of Vimovo, due to a competitor launching a generic version of the Vimovo in March 2020 and a $2.4 million increase – sorry, decrease milestone event that occurred in the prior year quarter. The company earned a $0.1 million and $0.8 million royalty on U.S.

net sales of Vimovo during the three and six months ended June 30, 2021, compared to $0.8 million and $3.6 million during the three and six months ended June 30, 2020. Furthermore our royalty rate on net sales of Vimovo in the U.S.

dropped to 5% from 10% during the quarter ended June 30, 2021 as market share threshold was tripped by the generic competitor. In the comparative quarter, the company received a $2.4 million or U.S.

$1.8 million milestone from Takeda Pharmaceutical Company related to the use of its Yosprala intellectual Property in Japan. Adjusted EBITDA was $7.4 million for the three months ended June 30, 2021 compared to $7.6 million for the comparative quarter.

During the three month period, a $3.4 million increase in gross profit from the company's commercial business segment, net of $0.3 million decrease in inventory step-up expenses and a $0.4 million increase in gross profit from the production and service business segment was more than offset by an increase in general and administrative expenses, as well as a decrease in contribution from the license and royalty business segment. Adjusted EBITDA was $11.7 million for the six months ended June 30, 2021, compared to $15.6 million for the six months ended June 30, 2020.

During the six months period, a $2.1 million increase in gross profit from the company's commercial business segment, net of $0.7 million decrease in inventory step up expense and a decrease in G&A expenses was more than offset by an increase in sales and marketing expenses, as well as the $5.4 million decrease in the contribution from the license and royalty business segment, primarily due to a $2.8 million decline in the U.S. Vimovo royalty and a $2.4 million milestone received from Takeda in the prior year for the use of the company's Yosprala Intellectual Property in Japan.

During the three and six months ended June 30, 2021 the company repaid $2.5 million U.S. or $5.4 million U.S.

of the amortization loan to Deerfield, reducing its cash value of loans outstanding to U.S. $93.8 million.

Since the inception of the Deerfield Financing on December 31, 2018 the company has repaid U.S. $24.7 million or 21% towards the Deerfield loan.

The company anticipates making a U.S. $2.7 million payment to Deerfield over the coming week.

As of August 5, 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, of which $10.3 million of those warrants are currently classified as flexible exercise shares.

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

Miravo’s shares closed at $1.21 on August 5. The company’s amortization and convertible loans mature and outstanding warrants expire on December 31, 2024.

As at June 30, 2021 the company had cash-on-hand a $27.3 million with an enterprise value of $104.1 million. Jesse will now continue with our business update.

Thanks Mary-Jane. Our growth strategy is driven by five components.

First, we're focused on the continued organic growth of our existing products and targeted in-licensing or acquisition of growth oriented products, which leverage the company's 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 launched in September of 2020, the two line extensions of NeoVisc launched earlier in January of this year, and the anticipated launch of Blexten Pediatric later this year or early next year, subject to Health Canada approval.

Third, our international business continues to grow through our license and distribution partnerships worldwide. We remain focused on business development activities and will continue to evaluate new and synergistic opportunities.

Fourth, we continue to leverage the free capacity of our manufacturing facility in Quebec through international partnerships, Pennsaid 2% and finally the company holds over 100 patents globally and has several patent applications pending, including new IP for a revised and approved reformulation of results. We continue to develop a strong patent portfolio to protect our products.

Our executive management team has a proven history of successfully completing merger and acquisition and business development integration activities. 20 products in our current portfolio exist because of business development activities and our current management team was involved in sourcing, closing, integrating and/or launching the products that came out to these business development transactions.

As you can see from the slide, our team has extensive experience in M&A and business integration, as well as commercial launch experience, both as part of the Miravo team and in previous roles. We also have established relationships with a variety of partners worldwide.

Partnering with global licensors, licensees and distributors is an important component of our strategy for growth, and we will continue to seek partners were the best fit for promoting our key products. Our partners are big and small, global and regional.

We know how to work effectively with these partners and we believe this helps differentiate us from any of our peers. Turning back to a commercial business, Suvexx is our prescription medicine 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 last year. According to IQVIA data, in the first 10 months of launch over 7,000 prescriptions have been written with approximately 0.6% of total prescription or TRX market share achieved to-date.

We are encouraged that approximately 80% of new prescriptions for Suvexx are coming from Healthcare providers switching patients from existing Triptan therapies. Recent market research surveyed physicians and approximately 95% have indicated that they intend to increase prescriptions of Suvexx in their practice.

Obviously launching a new brand during a pandemic is challenging, but we continue to be pleased with the results obtained thus far. NeoVisc is an injectable viscosupplement used to replenish the synovial fluid in the joints of patients with osteoarthritis.

Two new skews of NeoVis were launched in Canada in January 2021. Our orthopedics and sports medicine focused sales force is now actively promoting and selling NeoVisc across Canada.

This commercial team is making great strides with the NeoVisc commercial launch and already since January roughly 80% of private insurers are reimbursing NeoVisc One and NeoVisc+. This has doubled since the first quarter of this year.

By expanding private payer insurance coverage, more Canadians will have access to this treatment, which enhances quality of life by getting patients moving again. We remain pleased for the commercial launch of NeoVisc thus far.

We continue to advance our product pipeline towards commercialization. We filed the Blexten Pediatric registration dossier with Health Canada in June of last year and the dossier was accepted for review in October with an anticipated regulatory decision any day now.

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. Our key growth assets, Blexten and Cambia have continued to perform as expected during the second quarter, despite COVID-19 impacts.

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

Blexten Q2 and year-to-date 2021 TRX increased 26% and 25% over the same periods in 2020. Blexten Q2, 2021 TRX market share increased to 18.9% compared to 16.1% for the comparable period in 2020.

Blexten continues to capture the market share of our number one competitor cetirizine, also known as Reactine. Our sales force is doing an excellent job of 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. Turning to 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 2021 TRX increased 17% and 13% over the comparative periods in 2020.

Cambia Q2, 2021 TRX market share increased to 5.2% compared to 4.8% in the comparable quarter in 2020. Cambia will also benefit from patent protection in Canada through mid-2026.

Turning to our licensing and royalty segment, earlier in July, Miravo Ireland entered into an exclusive license and supply agreement with SK Chemicals for the right to commercialize Suvexx in the Republic of South Korea. SK Chemicals as part of the multi-billion dollar Korean Conglomerate, the SK Group, which is the third largest conglomerate in South Korea after Samsung and Hyundai.

SK Pharma’s business generated roughly $1 billion of sales in 2020 and is heavily focused on commercializing innovative neurology and migraine treatments. Miravo Ireland will receive up to €1.1 million in upfront regulatory and sales based milestone payments, as well as mid-high single digit royalties, a net sales of Suvexx in South Korea, and revenue pursuant to the supply of product.

The commercial launch is anticipated in early 2023 subject to regulatory approval. This deal is another example of executing on our plan to expand geographies for our proprietary products.

Our licensee for Pennsaid 2% in Switzerland, Gebro Pharma launched the product early in January and is receiving positive feedback from physicians and patients so far. The second shipment of finished product for Switzerland recently left our facility, which is a positive indicator of traction with Gebro’s commercial launch.

Results which is branded as [inaudible] in Germany was launched in this important European market in October of 2020. The launch continues to be slow due to the COVID-19 restrictions and the fact that children aren't interacting in groups.

This is great news for parents, but has obviously muted the launch effort so far. Miravo will earn royalty revenue from each of these partnerships.

In February 2021, Miravo Ireland entered into an exclusive license and supply agreement with The Mentholatum Company for the exclusive rate to commercialize the results formula and technology in the United States under the brand, Mentholatum Kids Head Lice Renewable Kit. The Mentholatum Company will manage all U.S.

specific crucial activities and Miravo Ireland will earn revenue from The Mentholatum Company pursuant to the supply of finished product. It is anticipated that The Mentholatum Company will launch results later this summer, manufacturing for our results business in Europe and the upcoming U.S.

launch is handled by our European based contract manufacturing partner. Miravo earns revenue on the supply of finished product to our partners for Pennsaid 2% and results.

In December of 2020 Miravo Ireland entered into an exclusive license and supply agreement for Suvexx with Orion Corporation for select EU markets, primarily in the Nordic and Baltic regions. Orion will be responsible for obtaining and maintaining the marketing authorization for Suvexx, and will also manage commercial activities for the EU markets covered under the agreement.

Miravo will earn royalties on net sales of Suvexx in the Orion territories starting in 2022 subject to regulatory approval. Miravo and our partner Orion anticipate that Suvexx will enjoy at least 10 years of market exclusivity in the Orion territories upon approval.

We continue to meet our growth strategy objectives. While our business has 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.

In addition, we are hard at work bringing new products and opportunities to our pipeline through targeted business and commercial development opportunities. A few updates to highlight here.

In May we filed a provisional patent application in the U.S. for a new and improved formulation of our head lice treatment results.

This is a formulation that was developed internally by our in-house scientific team. We will be providing further updates on this new and improved formulation as we complete final basic developmental work over the course of the next 12 months or so.

Also, we disclosed last quarter that our Pennsaid 2% file in Europe was withdrawn for commercial reasons. Effectively market conditions have changed from pricing in a competitive standpoint, such that a commercial launch in many of the targeted markets was no longer viable.

However, we are in the process for preparing a resubmission in Greece, which is one of the historical markets for original Pennsaid and look forward to a potential registration decision in this important market later in 2022. Finally, we have a number of active and late stage discussions underway for Pennsaid 2% and Suvexx in other regions of the world, and anticipate announcing new partnerships in these international markets later this year.

That ends our formal remarks. We're now pleased to answer questions that you may have with respect to the company, its financial results and its operations.

Good morning. First question I have is Blexten and Cambia, the revenues were up 46%, but the scripts were up 26% and 17% respectively.

I don't remember a drawdown in inventory in Q2 last year. In fact the revenues were higher than Q1.

So why did the revenues exceed the prescription growth by so much this year?

So Dave, if you sort of think back to where we were in Q1 of last year, we had a whole bunch of forward buying that happened in 2020 as a result of COVID and that caused a significant uptick of ex-factory sales for Blexten and other products in the commercial business in the first quarter. And then in the second quarter of last year, obviously there was a whole bunch of products in the channel, and so we didn't have the same level of ex-factory or net sales in the quarter.

Prescription trends don't really follow wholesaler buying and pharmacy buying patterns. So when you look at the prescription trends, that's a real indicator of actual patient and physician demand whereas the net sales that we report is a function of when we're shipping product into wholesalers.

So that's why you see that bit of a disconnect in the sales numbers and the prescription data.

Would you say this Q2, so 2021, was there stocking up in the channel or was this just relative strength, because last Q2 there was less ex-factory sales. In other words, is the amount you got this quarter, is that the new natural that we'll go ahead with or was there stocking up that kind of increase in this quarter sales?

Yeah, no. I think this year we're seeing more normalized purchasing patterns.

So, we're not experiencing any wholesalers stocking up or anything along those lines. This is just consistent demand.

We continue to grow the business, we continue to gain market share and wholesalers and pharmacies are increasing their purchases accordingly.

Okay, okay. Second question, you mentioned the new formulation for results.

In what way is the product going to be different from what it is right now, better I assume.

So we can’t disclose too much about that right now, just because it's early in development stages. We've got a provisional patent application that's filed, but basically it has improved performance relative to the current version that's on the market.

And once we're in a position to be able to disclose more of those details, obviously we'll be doing so, but it obviously warrants our additional effort. And the development work that needs to be done is relatively minor.

We're not talking about long and expensive Phase III clinical trials or anything like that. It's more sort of lab based work that needs to be done, so

Okay. And is the product outside of North America still the first or second prescribed product in the countries that's approved in.

So, it’s not prescribed in any markets around the world, because it's an OTC non-prescription product. But over the course of this last year, the head lice market has really changed and obviously with COVID, you don't have as many children that are having head lice infestations.

So it's not – the last year or so probably isn't a good period of time to be looking at in terms of market dynamics. I think once the world kind of comes back to normal later this fall and next year, we'll have a better assessment of where things are in that particular market.

Okay, and last question, do you have an update on the mobile litigation?

Maybe I'll let Tina address this.

Hi! Hi David!

It’s still progressing. It's still – we just finished fact stage of the discovery process and its moving to the expert phase.

Even though there is a schedule that's been set by the court, there is no – not been a trial date scheduled yet, so we're still waiting for that. So in terms of timing, the trial may be happening towards the end of this year, but more likely into 2022.

So we're waiting to see based on what’s the court scheduled, but things are still progressing.

Okay. Thank you.

That’s it for me.

Thank you, Dave.

Thank you.

Great! Thank you very much everyone.

I appreciate your attention today, and as always if you have additional questions or comments, feel free to reach out to us through the Investor Relations contact information on our website. Take Care.

Thanks.