Good morning ladies and gentlemen, and welcome to the Achieve Life Sciences First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Jaime Xinos, Executive Vice President of Achieve.

Thank you, everyone, for joining us. On the call today from Achieve we have Rick Stewart, Chief Executive Officer; Dr. Cindy Jacobs, Chief Medical Officer; Dr. Anthony Clarke, Chief Scientific Officer; and John Bencich, Chief Financial and Operating Officer. I’d like to remind everyone that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions, and actual results may vary materially from those projected. Please refer to Achieve documents filed with the SEC concerning factors that could affect the Company, copies of which are available on our website. I will now turn the call over to Rick.

Thank you, Jaime. Before we begin the discussion of our first quarter activities, I'd like to take a moment to address the challenging times we are experiencing globally, as a result of the COVID-19 pandemic. Our thoughts and condolences go out to all those who have lost loved ones or whose health and wellness has been directly impacted by the illness. We're living in a new era facing many unforeseen disruptions and challenges to our daily way of life. We're learning to conduct business in new ways and also the importance of staying virtually connected with friends, family, and colleagues. We're facing unprecedented times that truly test our resilience. We remain hopeful and we're also proud to be part of an industry that is working diligently to expedite the development of COVID-19 testing and treatments. Achieve is fortunate and as a multinational organization, we're accustomed to working in a virtual environment with the exception of not being able to travel to meet with each other. Many of you were conducting business as normal. We are of course carefully evaluating the impact of COVID-19 on the initiation of our Phase 3 clinical development program. The health and safety of our trial participants, healthcare providers, and employees will continue to be our number one priority. Given the impacts of COVID-19 on individuals with pre-existing conditions, such as pulmonary disease, it is now more important than ever for smokers to quit. We believe in the potential of cytisinicline to help them do so. In addition to our clinical trial sites and our CRO, we continue to anticipate initiation of our first Phase 3, the ORCA-2 trial in the second half of this year. This is, of course, subject to financing and confidence in our ability to conduct this trial in a manner that is safe for participants and healthcare providers. From a regulatory perspective, we have now submitted to the FDA all requested non-clinical data allowing for cytisinicline treatment of both 6 and 12 weeks in the upcoming Phase 3 ORCA-2 trial. We did not observe any new safety or toxicology signals when evaluating either 13 or 26 weeks of treatment in these non-clinical studies. Subject to final review by the FDA, the Phase 3 trial will be ready to initiate. As a reminder, the ORCA-2 trial will address three key factors. Number one, the evaluation of the higher 3-milligram dose of cytisinicline, number two, the simplification of the dosing schedule given only three times daily, leading to ease of use. And number three, the extension of the treatment duration to 6 and 12 weeks expected to yield better and more durable efficacy results. The extension of the dosing period to 6 weeks in the Phase 3 trials could have significant benefits. It will allow us to measure the primary endpoint of 4 weeks of continuous abstinence while patients are still receiving cytisinicline. This was not possible with a 25-day treatment period in the ORCA-1 trial. As documented in the literature, measuring efficacy while patients are on treatment typically results in higher quit rates. Shifting toward other opportunities for cytisinicline as a treatment for nicotine addiction, as previously discussed, we initiated an agreement with FreeMind, an organization that assists life science companies with non-dilutive financing opportunities. Through this partnership, we recently submitted a grant application for funding of our Phase 2 clinical study to evaluate the potential for cytisinicline as a nicotine cessation treatment for vapers and e-cigarette users. If this non-dilutive financing is granted, this study will be the first multi-center, double-blind randomized placebo-controlled Phase 2 study conducted in daily nicotine e-cigarette users seeking to quit. This trial will then enroll approximately 150 adult subjects at 8 sites throughout the United States. The number of vapers and e-cigarette users continues to grow. As reported in the Annals of Internal Medicine in 2018, it has reached nearly 11 million users in the US alone, of which nearly half are under the age of 35. While e-cigarettes and vapes have historically been viewed as safer than combustible cigarettes, their long-term safety remains controversial. Since these products also sustain addiction, many vapers are now seeking to quit nicotine completely. To further explore vapers' interest in quitting, we recently conducted a survey with IQVIA in approximately 500 users of nicotine vapes or e-cigarettes. Looking specifically at individuals that only vape nicotine, approximately 74% indicated that they intend to quit vaping within the next 3 to 12 months. Of those who intended to quit even sooner within the next 3 months, roughly half stated that they will be extremely likely to try a new prescription product to help them do so. Ending grant approval and the outcomes of the study, we believe cytisinicline could be the first prescription drug offering a new option for nicotine vapers and e-cigarette users who are ready to quit for good. Now, before I turn the call over to John for our financial discussion, I want to give a brief update on the timing of the RAUORA study. As you may recall, this is an investigator-led study being conducted by Assistant Professor Natalie Walker and the New Zealand National Institute of Health Innovation. The trial is a single-blind, randomized controlled non-inferiority trial to evaluate the safety, efficacy, and cost-effectiveness of cytisinicline compared to varenicline in the Māori indigenous population. The results of the RAUORA trial are eagerly awaited, as is the first head-to-head evaluation to determine whether cytisinicline is at least as effective as varenicline and provide insights into how the safety profiles compare in this population. We applaud Dr. Walker's efforts in conducting this challenging real-world trial and expect the data to be submitted for presentation at a medical conference later in the year. I'll now turn the call over to John to discuss the recent financing and our first quarter results.

Thanks, Rick. Last month we announced the completion of a private placement that resulted in gross proceeds of approximately $1.9 million prior to deducting placement agent commissions and offering expenses. The financing was the result of inbound interest from existing investors and was substantially oversubscribed. It had to be capped at the maximum amount allowed under the NASDAQ and SEC rules based on the structure of the transaction. The additional capital will help to maintain momentum on critical path activities. I'd also like to provide an update on our cash balance, as of March 31, 2020, and also our operating expenses for the first quarter of 2020. As of March 31, the company's cash, cash equivalents, short-term investments, and restricted cash were $12.2 million. Turning to our statement of operations, the company incurred a net loss of $3.3 million for the quarter ended March 31, 2020, as compared to a net loss of $5.9 million for the quarter ended March 31, 2019. Research and development expenses in the first quarter 2020 decreased to a total of $1.5 million compared to $4.1 million in the first quarter of 2019. General and administrative expenses for the quarter ended March 31, 2020 were $1.8 million compared to $1.9 million in the quarter ended March 31, 2019. As noted previously and highlighted during our call in March, we expect our quarterly operating expenses to remain lower in advance of initiating the Phase 3 developments of cytisinicline. That concludes the summary of our first quarter financial results. I would now like to turn the call back over to Rick.

Thank you, John. Our continued momentum of the cytisinicline program for the treatment of nicotine addiction remains impressive. The additional data from the RAUORA trial is important, as it will be the first direct comparison between cytisinicline and the current market leader Chantix, which recently reported 2019 global sales just shy of $1.1 billion. The non-clinical data required to commence the ORCA-2 Phase 3 trial has now been submitted for FDA review. Preparations for the start of the Phase 3 trial continue with the aid of leading KOLs, and we remain optimistic that the first Phase 3 trial will commence in late 2020, COVID-19 and financing permitting. Thank you again for joining the call. Operator, please open the line for questions.

Your first question comes from Michael Higgins with Ladenburg Thalmann.

Good morning, guys. Thanks for taking the questions. Appreciate the update. First, I wanted to ask is on RAUORA, when do you think you’ll get results? How do you think they'll be presented and what kind of a forum, if you can give any clarity on that'll be helpful? Thanks.

Yeah. Thanks, Michael. You know, our expectation is the results will be available later in the - I think we said on the fourth-quarter call that the trial had been challenging, but the visibility we have so far is that it will be available later on in the year. Pretty much, we can't give you any greater indication than that. But I do think its importance cannot be underestimated, given that really this is the first time that cytisinicline and varenicline and or Chantix have been compared head-to-head. It is a non-inferiority study. So our expectation really is that we're looking to see that cytisinicline is at least as good as Chantix in terms of efficacy. But I think given the meta-analysis that has been conducted historically, you know, primarily by the Cochrane Group, we would like to think that the superiority of side effects of cytisinicline versus Chantix will be maintained.

Is it possible that we see that certainty in September?

Yes, yes, it's possible. Yeah.

Do you know when the submission deadline is for that? I believe it has come from the indiscernible in New Zealand, correct?

Yeah, exactly. It depends entirely on Natalie Walker. I think given COVID-19 they have been moving the submission dates around a bit. So I'm not entirely clear on exactly when they - the submission date is.

Okay. I'm sure it's something she's looking at. Given the importance of the study and the whole field of smoking cessation, I'm sure she'd like to get it out over the next big conference, so yeah, makes sense there. Question on ORCA-2 in the start, they are in the conduct there, given the impact overall, we're all having here from COVID-19. I think I saw you’re starting that in the second half of the year. What adjustments do you make to the trial design to account for the FDA's guidance? And how does that trial come together? Thanks.

Well, actually I am going to hand that one over to Cindy.

Yeah, actually we're working with our CRO as far as any changes in procedures that would become virtual. I think the communication with the sites right now are the most important as far as when they're ready. Some sites, they're ready now, some sites will be ready later. So as we go through this, our communication with the site and with virtual procedures, that if a COVID outbreak comes later in the fall while we're in the trial, those are the things that we're evaluating right now. As far as the overall design of the study, nothing will be changed.

Okay. Very helpful. All right. And staying on the theme of the ongoing pandemic, I assume, and as we've been hearing, it takes some resources away from government officials working on wherever they’ve been working on towards this for the most part. How is that affecting your efforts to start an e-vaping study in your conversations with government officials? Thanks.

I am sorry, as far as starting the ORCA-2 study?

E-vaping study, I guess…

Well, right now we have submitted the grant and we don't know as far as if it is going to affect the timelines for the reviewing, but per their guidance as far as the reviewing for this grant, it should be later this year. So we do expect that we would know by fall or quarter 4.

Okay. It helps. I’ll jump back in queue.

Another bit of flavor to that. Well, Michael, I mean, when we started discussions with the KOLs on the concept of using cytisinicline for e-cigarette users and vapers, we got a tremendous amount of enthusiasm from them, and I think that's principally because, you know, some of that controversy that surrounded it. Yes, we understand there is a significant harm reduction in comparison to combustible cigarettes. Well, I think some of the issues that we're confronted with through the middle of last year with respect to the side effects of the vapes. But also, I think increasingly with COVID-19, people are questioning some of the issues that are related to smokers and a potential increased prevalence of COVID-19, so that also applies to e-cigarette users and vapers.

Makes sense, appreciate it. Thanks, guys.

Your next question comes from James Molloy with Alliance Global Partners.

Hey, guys. Thanks for taking my question. I had a quick question on talking about the ORCA study, your ORCA-2 trial enrollment over the summer. I know that the prior study you guys enrolled right, sort of as the New Year is coming and the winter. Everyone thinks being everyone's in the New Year are going to quit smoking and that really helped enrollment. Does that – how does that impact or not impact the sort of the different time of the year, given the trial enrolled expeditionary again assuming COVID-19 allows the trial to be enrolled at all?

Yeah, so let me just make a correction, we're not enrolling right now over the summer months. We are looking at re-evaluating in September, October or whether we would start slower enrollment. It would be very much similar to the ORCA-1 where we would have sites if we were to open, start slow enrollment just before December, the holiday season and then ramp up immediately after the New Year. We have 15 sites, 5 of them actually are experienced with the ORCA-1, so those five sites might have faster enrollment as far as the release, so not a slow enrollment. So all of these factors are being looked at as far as the end of this year.

Okay. So many ways a similar timeline on the enrollment for ORCA-1, okay?

Correct.

Can you speak a little bit to the buildings run, any parts of this trial, sort of at home or virtually? It seems like this maybe - this could be a trial that landed sort of nice.

Yes, and actually we're looking at obviously FDA wants to have vital signs as far as the safety. So we're looking at situations where there would be home nurses that would go if they couldn't come into the clinics and other virtual processes for the clinics in that regard. The CRO that we're working with has already been performing COVID testing and studies, so they are getting quite experienced with a lot of their virtual procedures. So we're really taking a lot of guidance from our CRO on this one.

And then maybe last question, the non-dilutive for the Vaping trial and just talking about submitting the grant, what sort of the number that you need to get with the grant covered all of the trial, most the trials sort of?

So the grant is actually - it covers for three years up to 5 million a year. For us when we are running a trial usually the costs are primarily that first year. So, but we didn't cap over the 5 million and then it runs into the second year. So we're looking at a grant that would support pretty much the predominant site costs and some of our costs as far as personnel for the 2 years it would run.

Okay. Thank you very much for taking the questions.

And your next question comes from John Vandermosten with Zacks.

Good morning. I wanted to start out with just some examples of the hurdles that you may face due to coronavirus. I've heard that in many cases critical trials can continue, but non-critical ones cannot and I think it's mostly on a state-by-state basis. Can you just give some clarity on how that might go forward?

Well, with our different sites, various states and obviously we're relying on the sites to let us know as far as their ability and safety for their subjects and the trial is always our first priority. And at this time, we have not heard that any of our sites would not be able to participate.

Okay, great. And those five sites you mentioned before in our previous caller's question, how much of the volume did those five do of the total population enrolled, caller's question, how much of the volume did those five do of the total population enrolled?

Are you talking about ORCA-1? We pretty much had the sites for pretty much equal, they all met their quota. I mean, these sites are pretty active as far as they can each figure that's 20 to 40 subjects they can do easily. So we have to really limit the number of sites sometimes on studies, because they don't want to participate unless they can have an equal share. So it's really interesting with these trials. We don't have a problem with enrollment in that regard, as far as one site not participating or enrolling, as well as another.

Okay. And just remind me whether or not that the breath test will be given at every visit. Is that required every visit?

Yeah. Well, this is the CO monitoring, absolutely. It's on a weekly and every clinic does that. Now that is something that can be virtualized as far as I could get CO monitors for a patient. So those are all the types of things that we're looking at, as far as if someone could not come into the clinic.

Okay, great. Great. That's great it can be done virtually. It's like Pfizer as far as I understand their Chantix is coming off patent this month. What is a competitive environment going to look like for the rest of the year for that?

Well, that's an interesting one, John, because our latest intelligence we believe that they still got – I mean, the first of the patents to expulsion maybe into late 2022. We are expecting frankly at any time, you know, kind of generic competition, but I think our latest intelligence says it might actually be a little bit later than we had actually expected. What we are expecting frankly, when that generic arrives or generics could be, it'll be one to start off with, with a six-month exclusivity. But we are expecting probably a reduction in price by potentially a third, and when the second one arrives, it will kind of equal out to somewhere around about the $700 treatment level and then subsequent to that we'll just have to see where the market goes. I think if you position cytisinicline in comparison to varenicline, I think our major advantages obviously the reduced side effect profile of cytisinicline. I think the lack of nausea and vomiting or the reduced nausea and vomiting that we see with cytisinicline really does provide it with a very significant advantage. We believe that the nausea and vomiting is one of the causes of the non-compliance that we're seeing with varenicline. But also the shortened treatment period is another advantage for cytisinicline. Yeah, we'll have a single prescription over a six-week period versus varenicline which currently has three prescriptions over its 12-week treatment period. So I do think that even in a generic environment, we have some pretty significant advantages, but it has to be put in the context that on average it takes a smoker between 8 and 11 quit attempts to be successful. So there will be a continuing cycling between varenicline, cytisinicline, and maybe even nicotine replacement. But I do believe that we do have some advantages as the new entrant.

Okay. And Pfizer made a brief comment about Chantix on its call. I think they suggested that because people that don’t go to the doctor that prescriptions were down during the coronavirus, but they anticipated to come back strongly, perhaps even more strongly than before, just to get the concern over, you know, susceptibility to coronavirus if you're a smoker. What – any thoughts on that, does that sound like a fair assessment or any additions to what Pfizer had said based on what they're seeing in their trends?

Yeah. What I see is a resetting of the smoking cessation market. I think the real concern has been and will continue to be, you know, what are the effects on smokers of COVID-19. Are they more severely affected and are more susceptible to COVID-19? And I think certainly, you know, where I'm sitting here in the UK, we've seen a significant increase in smoking cessation prescriptions over the last two to three months. So I do believe that once the landscape starts to settle, there will be a significant upswing in interest in smoking cessation treatments. And we aim to be part of that program as quickly as we can get there.

Great. Thank you, Rick. And thank you, Cindy.

I am showing no further questions at this time. I will now hand the conference back to Rick Stewart for closing remarks.

Well, I'd just like to say thank you for your interest in Achieve Life Sciences and we look forward to updating you again on our second quarter results. Thank you very much.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. And have a wonderful day. You may all disconnect.