Nuvo Pharmaceuticals Inc.

Great, thanks Brent. Good morning, everyone, 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 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 the presentation may be considered forward-looking.

The company cautions investors that results 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 the company's Q3 financial statements and MD&A that was filed today as well as the company's 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 of course 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 international markets. Our existing business has a proven track record and is well-positioned for continued growth.

Our financial results year-to-date and our strong cash position demonstrate the resiliency of our business in the face of the COVID-19 pandemic. Despite these challenges posed by the evolving COVID-19 pandemic, our diverse business remains well-positioned for growth and we continue to pay down our debt on a quarterly basis.

Our Commercial Business segment continues to grow organically through the efforts of our commercial sales and marketing team. This business segment contributed $11.2 million or 66% of total revenue for the third quarter of 2021.

Our three key promoted products, Blexten, Cambia and Suvexx continue to demonstrate year-over-year prescription growth, and generated $8.1 million in revenue for Q3. 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 segments highlighted on the next slide continue to contribute in a meaningful way to our bottom line.

These mature products have either lost market exclusivity to generic competitors, or not in our therapeutic core focus areas. During the quarter, the revenue in our Licensing and Royalty segment was $3.3 million, or 20% of our total revenue.

Royalty revenue is generated from licensing of our intellectual property and related products globally under exclusive licensing agreements to our partners. 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, as well as the decline in the company's results royalty due to the social impact of the COVID-19 pandemic.

We do anticipate the global results business to regain strength as the world continues to slowly reopen from the COVID-19 pandemic. 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 third quarter was $2.4 million, or 14% of our total revenue. The sources of revenue in this segment are from products manufactured by our facility in Varennes, Quebec or from product contract manufactured from Miravo and supplied to our distribution partners.

I will now turn the call over to Mary-Jane who will take you through our financial results for the third quarter of 2021 and year-to-date.

Thanks, Jesse. Today's presentation includes reference to certain 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 a reconciliation of these measures, please refer to Slide 26 and 28 of the presentation, which is posted on the Miravo website, as well as Miravo's Management's Discussion & Analysis filed on SEDAR. During the third quarter of 2021, the company recorded $14.7 million non-cash impairments of goodwill and intangible assets in Commercial Business and Licensing and Royalty segments.

As it has changed commercial expectations for certain products in response to COVID-19 trends, additional details regarding the company's methodology and assumptions are disclosed in Note 4 and Note 5 of the unaudited condensed consolidated interim financial statements and discussed in the company's MD&A. For your reference, Slide 5 through 8, 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 $17.1 million and $51.6 million for the three and nine months ended September 30 2021 compared to $16.7 million and $53.6 million for the three and nine months ended September 30 2020. The $0.4 million increase in adjusted total revenue in the current quarter was primarily attributable to an increase of $1.8 million in the Commercial Business segment and an increase of $0.4 million of revenue from the Licensing and Royalty Business segment, offset by a decrease of $1.8 million of revenue in the Production and Service Business segment.

Revenue for the Commercial Business segment increased during the three months ended September 30, 2021, due to a $1.8 million increase in sales of the company's promoted products Blexten, Cambia, Suvexx and Neovisc. In the current quarter, revenue from the company's mature products was consistent with the three months ended September 30, 2020.

The Production and Service Business segment revenues decreased during the three months ended September 30, 2021, primarily due to a decrease in Pennsaid product sales, which was slightly offset by an increase in sales of Pennsaid to the company's European partner. The increase in revenue in the License and Royalty business segments during the three months ended September 30, 2021, was primarily due to $0.5 million increase in royalty earned on the European net sales of Vimovo, and a $0.2 million increase in royalty earned from net sales of Yosprala, and $0.2 million increase from the recognition of milestones in the Suvexx related SK Chemical project.

The increase in license revenue in the current three-month period was slightly offset by an unfavorable foreign exchange movement, with the stronger Canadian dollar against the U.S. dollar reduced the contribution from U.S.

denominated royalty stream, as well as $0.6 million decrease in the royalty earned on U.S. net sales of Vimovo due to a competitor launching a generic version of Vimovo in the U.S.

in March 2020. The company earned $0.2 million and $1 million royalty on U.S.

net sales of Vimovo during the three and nine months ended September 30, 2021, compared to $0.8 million and $4.4 million during the three and nine months ended September 30, 2020. Adjusted EBITDA was $7 million for the three months ended September 30, 2021, compared to $6.6 million for the comparative quarter.

During the current quarter, a $2.3 million increase in gross profit contribution from the company's commercial business segments net $0.4 million decrease in inventory step-up expense, and $0.3 million increase in gross profit from the company's License and Royalty business segment was offset by $1.2 million decrease in gross profit contribution from the company's Production and Service business segments, a $0.8 million increase in sales and marketing expenses, and $0.2 million increase in general administrative expenses. During the current quarter, the company did not record government assistance from the Canadian emergency wage subsidy, compared to $1.1 million in the comparative three-month period.

Adjusted EBITDA was $18.8 million for the nine months ended September 30, 2021, compared to $22.2 million for the comparative nine month period. During the nine months ended September 30, 2021, a $4.3 million increase in gross profit from the company's commercial business segment, net a $1 million decrease in inventory step-up expense, was more than offset by $5 million decrease in contribution from the company's License and Royalty business segments, and $1 million in gross profit contribution from the Production and Service business segments, a 1.4 million increase in sales and marketing expenses, and $0.2 million increase in general and administrative expenses, net of $0.1 million increase in stock-based compensation.

During the three and nine months ended September 30, 2021, the company repaid U.S. $2.9 million and U.S.

$8.3 million of the amortization loan to Deerfield, reducing its cash value of loans outstanding to U.S. $90.9 million.

Since the inception of the Deerfield financing on December 31, 2018, the company has repaid U.S. $27.6 million towards the Deerfield bumps.

The interest rate for both the amortization loan and convertible loan is a fixed 3.5%. The company anticipates making a U.S.

$2.5 million payment to Deerfield over the next week. As at November 10, 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 $3.53 Canadian strike price, of which $11.3 million are currently classified as flexible exercise shares.

The company's convertible loan, which 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 $1.60 per share on November 10th. The company's amortization and convertible loans mature and outstanding warrants expire on December 31, 2024.

As of September 30, 2021, the company had cash on hand of $28.4 million with an enterprise value of $103.8 million. Jesse will now continue with our business update.

Great. Thanks, Mary-Jane.

Our growth strategy is driven by five components. First, we are 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 2020. The two line extensions of Neovisc, which were launched in early January of this year, and the anticipated launch of Blexten pediatric in early 2022.

Third, our international business continues to grow through our license and distribution partnerships worldwide like our recently announced Suvexx deals in Europe and Korea. 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 for Pennsaid 2%, and other contract manufacturing opportunities. Finally, the company holds over 100 patents globally and has several patent applications pending, including new IP for our revised and improved formulation 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.

20 products in our current portfolio exists because of BD activities, and our current management team was involved in sourcing, closing, integrating, and/or launching the products that came out of 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've 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 who are the best fit for promoting our key products.

Our partners are big and small, global and regional. We know how to work effectively with partners and we believe this helps differentiate us from many of our peers.

Turning back to our commercial business, Suvexx, which is our prescription to 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 last year.

According to IQVIA data, in the first year of launch over 10,000 prescriptions have been written with approximately 0.7% of total prescription or TRX market share achieved to-date. While we are pleased with the results achieved so far, we acknowledge that the evolution of the COVID-19 pandemic continues to challenge the companies to Suvexx commercial efforts.

In particular despite the easing of many COVID-19 government restrictions within Canada, and the uptake of people receiving COVID-19 vaccinations many prescribers have not resumed to seeing patients in-person at pre COVID-19 pandemic levels. We anticipate that the gradual return of in-person, patient physician visits over the coming quarters will provide enhanced opportunities for patients' education and new prescription growth.

We continue to advance our product pipeline towards commercialization. On August 12, Health Canada issued a notice of compliance for Blexten Pediatric.

Blexten Pediatric is indicated for the treatment of seasonal allergic rhinitis and chronic spontaneous urticaria in children as young as four years of age, and includes two new dosage formats, a 2.5 milligram per ml oral solution and a 10 milligram Quick Melt tablet. These new products will help to further strengthen our relationships with allergist, dermatologist and primary care physicians who treat allergy in urticaria patients in Canada.

Two of our key growth assets Blexten and Cambia have continued to grow in both revenue contribution as well as prescriptions during the third quarter, in spite of COVID-19 impacts. Blexten demonstrated continued year-over-year growth of total prescriptions or TRX and TRX market share.

Blexten Q3 and year-to-date 2021 TRX increased 16% and 22% over the same periods in 2020. Blexten year-to-date prescriptions are growing at a rate over three times faster than the entire prescription antihistamine market in Canada.

Blexten Q3 2020 TRX market share increased to 18% compared to 16.2% for the comparable period in 2020. Blexten continues to capture year-over-year market share from our number one competitor Cetirizine, also known as Reactine.

Our sales force is back in the field and interacting with healthcare providers' in-person. While we believe in-person and evidence-based interactions with healthcare providers is extremely important to supporting a brand, we will continue to embrace virtual promotional opportunities, which enhance our sales force reach in a very cost effective way.

We expect ongoing year-over-year growth and market share gains in the prescription antihistamine market in the quarters to come. And I'd like to remind everyone that 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 Q3 and year-to-date 2021 TRX increased 5% and 10% over the comparative periods in 2020. Cambia year-to-date prescriptions are growing at a rate nearly seven times faster than the entire prescription migraine market in Canada.

Cambia Q3 2020 TRX market share was 4.9% compared to 4.8% in the comparable quarter in 2020. Cambia will also benefit for patent protection in Canada through mid-2026.

The next slide highlights how we are expanding the geographies where our proprietary products are commercialized and generating revenue. In July, Miravo Ireland entered into an exclusive licensing supply agreement with SK Chemicals for the right to commercialize Suvexx in the Republic of South Korea.

SK Chemicals as part of the multibillion dollar Korean conglomerate the SK Group, the third largest conglomerate in South Korea after Samsung and Hyundai, SK Pharma business generated $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 the mid high-single-digit royalties on net sales of Suvexx in South Korea, and revenue pursuant to the supply of finished products.

The Korean FDA regulatory decision is expected in Q4 of 2022 and subject to regulatory approval, the commercial launch is anticipated in early 2023. On 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 authorizations 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.

Finland, the Finnish regulatory approval decision is expected in Q2 or Q3 of 2022 with the commercial launch anticipated in Q1 2023, obviously subject to regulatory approval. Miravo and our partner Orion anticipate that Suvexx will enjoy at least nine years of market exclusivity in the Orion territories upon approval.

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

specific commercial activities and Miravo Ireland will earn revenue from The Mentholatum Company pursuant to the supply of finished product under the license agreement. We're pleased to announce The Mentholatum Company commercially launched results in the United States in October of this year.

Our licensee for Pennsaid 2% in Switzerland, Gebro Pharma launched the product in early January and is receiving positive feedback from physicians and patients thus far. Pennsaid 2% is currently available in pharmacies in Switzerland.

And of course, Miravo earns revenue from royalties on net sales and the supply of finished products. 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 for continuing to complete 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. We've evaluated over 100 opportunities this year and progressed a number of high potential deals into the term sheet phase.

We are very excited about the products in our business development funnel, and look forward to providing more details once we are in a position to do so. Beyond what I've already discussed in May, we filed a provisional patent application in the United States for a new and improved formulation of our Headlice 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 some final basic development work over the course of the next 12 months or so.

We are in the process of preparing a resubmission for Pennsaid 2% increase, which is one of the historical markets for the original Pennsaid formulation. And look forward to a potential registration decision in this 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 before the end of this year. That ends our formal remarks.

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

Good morning. My first question, Blexten and Cambia market shares dipped sequentially.

And I'm wondering if you can comment on what's behind that?

Sure. I think historically we've seen a bit of a dip in market share in the summer months.

And one of the reasons for that has been just the sheer number of prescriptions that occur in those summer months and the bolus of additional physicians that are prescribing cetirizine during those months. And then as you've seen historically, the market share bounces back as the year goes on, that's kind of what's happened historically.

I think that was perhaps compounded this year by the COVID environment that we're working in. And what we've seen and/or heard anecdotally what we've seen in various reports in the media.

And I'm sure you've heard other reports from other pharmaceutical companies as of late that there has been a sort of distinct drop in the number of patients that are actually going to have in-person or even virtual consultations with their physicians. And that's perhaps having a bit of an impact on the market.

I would anticipate that this would be sort of temporary and transient in nature. And certainly as the world continues to slowly emerge from the pandemic that we're in, and more and more patients go back to interacting with their physicians that will see a return to growth.

But I think that's perhaps -- those two situations are perhaps the culprit for what happened with that, that decline. That being said, we're not seeing any other indicators that our market share is in jeopardy of declining in the coming quarters.

And our anticipation is that the business will continue to grow as it has historically.

So no new competition for Cambia or Blexten?

No, no. And if you look at even our growth relative to the entire market growth in each of these therapeutic areas, we continue to outpace the growth of the entire prescription migraine market and the prescription antihistamine market, so all positive indicators.

Okay. So moving on to the next question, you took an impairment charge.

Can you talk about the products that were subject of it, and you mentioned COVID being one of the reasons for taking the charge, but Blexten and Cambia continue to grow, why are these products different and why did you have to take the impairment charge on those products?

Sure. Sure.

No, it's a good question. And ultimately it's a non-cash adjustment that really comes as a result of IFRS fair value accounting.

And I won't get into all the specifics on IFRS accounting, because we don't have all day. But ultimately, the intangible assets and goodwill on our balance sheet came from the airless transaction as well as the results transaction.

And as time passes, the benefit of the intangible assets patents and trademarks as well as goodwill is realized by the company and those assets ultimately are removed from the balance sheet over time. And so for intangibles like patents and trademarks with a definite life, this is handled through amortization, which is an expense that you would see on our financial statements.

Goodwill is not amortized. And so then in order for us to remove this value from our balance sheet, an impairment is required.

And so what we have to do under IFRS is we're management -- us -- we're required to assess whether there has been a change in assumption related to expected performance of these intangibles that could potentially impact the valuation or the valuation of the goodwill that they're connected to. And so you sort of rightly mentioned the COVID-19 dynamic.

We've seen a couple of things happen in the quarter that caused us to reassess the valuation or the commercial expectations of some of the products in the commercial business segment as well as the License and Royalty segment. And so for the Commercial segment, despite the easing of government restrictions, which we've talked about, fewer patients seeing their doctors that's had an impact on sort of where we are relative to where we expected to be, and obviously changes the forward looking view of the performance of those products.

These products continue to grow. And like I said before, we continue to expect growing revenue from these products, but the pandemic has caused headwinds for the prescription business.

And if we think about even a product like Suvexx, which was launched during the pandemic, we haven't been able to go out and see as many physicians in-person, physicians, there's data all over the place saying that IQVIA has reports, KPMG has reports about physicians not seeing patients in-person and a little more reluctant to put patients on new starts on new products. And so this is just one of the headwinds that we're experiencing.

So again, we anticipate the return of in-person patients and physician visits, which will continue to provide opportunities for growth for our products. But this caused us to sort of take a pause and take a look at our future projections for the business, and it's a little bit lower than it was historically.

And then, of course, for results, there's the -- headlights market has dropped off precipitously, so it's just a change in the forecast for both the groups and products.

Okay. Another question, the appeal or the trial date for the Miravo patent litigation, is there any visibility on when that trial will occur?

Not yet. Not yet.

We're still anxiously awaiting news from the trial judge to set a date. So obviously, as soon as we have more info to share, we'll share that with the -- our investors and the world at large.

But hopefully, we -- I think originally, we were hoping that something would be announced before the end of this year, but we're getting pretty close to the end of the year. So we'll have to see.

When you say hopefully something that would be announced, would that be a date or a decision?

A trial date, yes.

A trial date.

So there's a whole. Yes, then there's a whole other process, of course, that comes after that.

So we -- I think we've got a ways to go. But like I said, we don't really have any visibility whatsoever in terms of the -- why it's taking the court so long, or why it's taking the judge so long, it's in the judges hands and once we get an update, we will update the world accordingly.

Okay. And one last question.

M&A growth by M&A? What are the resources you have available to you right now?

And what are you looking for as far as growth by M&A?

Sure. Well, when you say resources, can you clarify what you mean by resources?

Well, I know the cash on the balance sheet. Could you draw down more debts?

Is that a possibility or --?

Okay. So you're talking about financial resources?

Yes, yes.

Thanks for clarifying. Yes, obviously, we've got cash on the balance sheet.

And we can use some of that to put towards M&A. Obviously, we can't deploy all of that cash, because we don't have a working capital line of credit.

So we're self-financing our working capital investments. But there's a good chunk of cash that we could use there.

I think there's a limited appetite for drawing down additional debt. And so really, what we are looking at are M&A transactions that could be realized with cash on hand, or other creative means.

And but I think a big focus for us on business development is really on in- licensing, looking at bringing in new products that have not been launched or approved in Canada, at this point of time. So other Blexten, Cambia, Suvexx type products, where we can bring those products in, get them approved, launch them utilize our existing infrastructure, and relationships and grow them over a longer period of time.

That's a big focus for us right now. But we are obviously looking at different acquisition type opportunities as well.

And is the market such that we should expect some transactions on the M&A front or are things pretty tight?

We're certain -- we've made really good progress on discussions, timing is always challenging, right. And it'd be nice to be able to say, we can guarantee that we're going to get a certain number of transactions done in a certain period of time, but there are lots of variables that affect that.

Like I said, in my remarks earlier, we've got a number of opportunities that have moved past sort of the initial diligence phase. We're getting into some very serious conversations, term sheet phase discussions with different partners on some interesting assets.

And so, we're working hard. We've made the investment in the BD team, at the start of this year.

They've got a mandate to go out and find products and build that pipeline, and I'm pretty confident that that we will succeed in that and really achieve our goal of being in a position to launch one to two new products every single year for the foreseeable future that's what we're aiming for. So, the timing is just like I said, always hard to pin down.

Great. Well, thanks everyone for listening in.

As always, if you have additional questions, feel free to reach out to us through the Investor Relations email address on our website. We'd be happy to connect.

Thanks a lot. Take care.

Bye for now.