Good afternoon, ladies and gentlemen and welcome to Strongbridge Biopharma’s Plc Corporate Update and Q3 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session. Instructions will follow at that time. As a reminder, this conference is being recorded. I’d now like to hand the conference over to your host, Ms. Lindsay Rocco. Ma'am, please go ahead.

Thank you and good afternoon, everyone. We are pleased that you could join us today for Strongbridge Biopharma’s third quarter 2020 earnings and corporate update conference call. Joining me from Strongbridge this afternoon are John Johnson, Chief Executive Officer; Scott Wilhoit, Chief Commercial Officer; Rob Lutz, Chief Financial Officer; Dr. Fred Cohen, Chief Medical Officer; and Rich Kollender, Chief Operating Officer. Before we begin, I would like to remind you that during this call, the company will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements. Reference to these risks and uncertainties are made in today’s press release and disclosed in detail in the company’s periodic and current event filings with the US Securities and Exchange Commission. I’ll now turn the call over to John Johnson.

Thanks, Lindsay, and thank you for joining us today. Strongbridge has made significant progress this year and I am proud of the team's performance, especially given the challenges presented by the ongoing global COVID-19 pandemic. I will start by addressing KEVEYIS, which has continued to show strong growth in the third quarter and exceptional year-over-year growth. KEVEYIS achieved net product sales of $8.1 million for the third quarter in 2020, representing a 42% increase from $5.7 million in net revenue for the third quarter of 2019. As a result of this growth, the company remains on track to meet full year 2020 KEVEYIS revenue guidance of $28 million to $29 million. I would like to recognize the KEVEYIS team led by Scott Wilhoit, our Chief Commercial Officer, for driving this growth and for the team's unwavering commitment to meeting the many unmet needs of the primary periodic paralysis community that we serve. Moving to our clinical development program for RECORLEV, an Endogenous Cushing Syndrome, in early September, we announced positive and highly statistically significant topline results from the phase 3 LOGICS study, which met its primary and key secondary endpoints. Additionally, RECORLEV was generally well-tolerated with a safety and tolerability profile comparable to the profile observed in the Phase 3 SONICS study. These results, coupled with the positive results from our Phase 3 SONICS study, will support a new drug application in the US, which we remain on track to submit to the Food and Drug Administration in the first quarter of 2021. If approved, following a projected 10-month PDUFA review cycle, the launch of RECORLEV is anticipated in the first quarter of 2022. This would represent a major step forward in our mission to help address the needs of the estimated 8,000 Cushing syndrome patients in the US who are not treated with prescription therapy, many of whom are not well controlled with current therapies. We look forward to leveraging our rare disease commercialization expertise and infrastructure to bring RECORLEV to the Cushing's community. Before I turn the call over to Scott, who will discuss these efforts in more detail, I would like to briefly comment on the successful completion of our recent $25 million equity raise, which included participation from existing shareholders as well as new healthcare-focused institutional investors. The capital from this equity financing, combined with our other existing financial resources, provides us with the ability to appropriately invest in prelaunch activity and, if approved, the launch of RECORLEV. Following the completion of the recent equity offering, we are pleased to have increased our cash position and extended our runway to fund operations into and potentially beyond the first quarter of 2023. Rob will provide additional details later on in the call. With that, I will turn the call over to Scott.

Thank you, John. Good afternoon, everyone, and thanks for joining us. As John mentioned, we continue to be pleased with KEVEYIS performance in Q3 and thus far in 2020. Early in the second quarter, we quickly developed a comprehensive COVID-19 mitigation plan. The core elements of the plan consisted of maintaining and growing our base of patients and generating new referrals by creating new and innovative ways to interact with healthcare providers. We believe that our rapid response and continued execution contributed to both the continued flow of referrals and new patient starts for KEVEYIS, as well as an improvement in both conversion and retention rates. We continue powerful prosecution of intellectual property that we've developed for KEVEYIS, which includes more than a dozen patent applications. We believe the claims in the application based on drug and drug interactions that promote the safe prescription of KEVEYIS, which are recognized by the FDA and included in the FDA KEVEYIS label last November, are allowable, and if issued, will be eligible for Orange Book Listing. We are working closely with multiple intellectual property law firms on many fronts, including expedited prosecution and appeals processes when possible, and we'll provide updates on key developments regarding these and other related activities. I want to take this opportunity to recognize the efforts of the KEVEYIS commercial team, who continue to focus on serving the needs of the primary periodic paralysis patients and the physicians who treat them, especially during these unprecedented times. Moving on to RECORLEV, we're very pleased with the positive and highly statistically significant Phase 3 LOGICS results announced in September. The results are consistent with SONICS and we believe they collectively provide the data required for FDA approval. If approved, we believe RECORLEV can achieve $250 million to $350 million in peak revenue. The peak sales estimate is based on results from the quantitative market research we conducted with 153 endocrinologists with Cushing Syndrome and the qualitative research within payers in which we learned several key insights. First, significant unmet needs for additional pharmacologic Cushing Syndrome treatments remain despite a variety of approved and unapproved off-label alternatives. Importantly, 40% of patients are not well controlled with current therapies. Second, physicians generally indicated they would like to prescribe RECORLEV, and our peak revenue estimates reflect this feedback. Of note, the research included profiles for current products with potential new entrants. Third, our research shows that 75% of respondents were either not using ketoconazole or were reluctant to use it; in fact, 20% indicated they do not use ketoconazole, and 35% use it on a limited basis, primarily due to safety concerns. This large cohort of endocrinologists are looking for FDA-approved Cushing Syndrome treatments with improved efficacy and safety profiles. After seeing its circadian profile, there is a high likelihood they would prescribe RECORLEV. Fourth, our key takeaway from this therapy was that for a complex rare disease like Cushing Syndrome, payers would generally cover RECORLEV as they do other branded drugs in the Cushing's space. Physicians will likely need to document medical necessity, which is common for rare disease drugs, including branded Cushing's syndrome products. Importantly, our commercial team and single-source specialty pharmacy have experience navigating these common payer requirements. Fifth, although not tested in our research, we believe RECORLEV may be especially useful for women in Cushing's syndrome, which represent approximately 75% of patients. Many current drugs for Cushing have side effects that are particularly concerning for women, and RECORLEV's clinical data and mechanism of action suggest that it may be particularly well-suited for women. Given our confidence in RECORLEV, we're aggressively moving ahead with prelaunch activities. We believe we are well-positioned for a successful launch given our current commercial infrastructure and experience launching KEVEYIS. With that, I'll turn the call over to Rob Lutz, our Chief Financial Officer, who will review financial highlights from the third quarter, before we open the call up to questions. Rob?

Thank you, Scott. Our press release contains details of our financial results for the third quarter of 2020. Rather than read through all of those details, my comment today will focus on some key financial results. We ended the quarter with approximately $82 million in cash, inclusive of $23.1 million in net cash received from the equity offering announced on September 16 and $4.8 million in net cash received from completing an aftermarket or ATM sale to an established healthcare dedicated investor at $3.50 per share earlier in the quarter. Although operating cash flow will vary from quarter to quarter due to timing and working capital changes, we are pleased to announce that we only used $6 million in operating cash this quarter. This positive trend resulted from continued growth in KEVEYIS revenue as well as a 28% reduction in SG&A in the third quarter of 2020 compared to 2019 and a 10% reduction in R&D spend for the same period. With the positive results from the Phase 3 LOGICS Study of RECORLEV in hand, we now have the ability to draw an additional $10 million from our lenders in the fourth quarter of 2020 under the terms of the existing debt facility. Assuming we draw that $10 million tranche, as well as the final $10 million tranche following potential RECORLEV FDA approval and lender consent, we believe we can fund operations into and potentially beyond the first quarter of 2023. Importantly, we expect that more than one year's worth of cash will be on hand at the expected time of the potential RECORLEV FDA approval, which gives us the flexibility to reach that milestone before needing to make decisions on if, when, and how to access additional capital. And operator, with that, we are ready for questions.

Your first question comes from the line of Annabel Samimy from Stifel. Your line is open.

Thank you for my question, and congratulations on a solid quarter for KEVEYIS. I have a couple of quick questions. Firstly, regarding RECORLEV, do we have all the data? Is there any additional data or extension data we should anticipate from the LOGICS trial and any rollover patients from other trials? Separately, when considering market entry and the competitive landscape, given your familiarity with ketoconazole, how do you view the potential new entrants, particularly the RECORLEV product? We expect it might be an appealing first-line option. How do you see the landscape evolving with these shifting competitive dynamics, and where does RECORLEV fit into that?

Thanks Annabel. Fred, one of you address the data, and then I'll answer the feedback surrounding market entry along with some help from Scott.

So thus far we see top line results from the end of the randomized phase of LOGICS. We'll present a full picture of those data and we're planning to do it at the Endocrine Society if our abstract is accepted, and we all know that till the end of the year. But if we calculate different reasons, we would do it around that timeframe at another scientific venue. And then, the full study, which includes the restoration phase, will follow that presumably sometime next year, towards the end of next year. So that's sort of the timeframe we have for representing data.

Thanks Fred. As it pertains to market entry, Annabel, the research that Scott mentioned previously did include ISTURISA in that research along with other potential new entrants. So we looked at that, and the peak sales estimate that Scott referenced at the end and we have a pretty good view of how physicians are going to think about that basket of products assuming a relaunch in the timeframe that I outlined. Scott, is there anything you want to add to that?

I guess I'd just add that the fair landscape piece is an important part. We did the same with payers right. We laid out the potential profile for RECORLEV as well as some of the current products that are on the market, both labeled and off-label, and asked about coverage and so forth because reimbursement and the pathway to reimbursement is so important. I think it's important to mention that we believe they view the profile of RECORLEV favorably and then secondly, we believe based on their responses there is a pathway for reimbursement. So I think those two things combined, the competitive profile that John just mentioned and the pathway for reimbursement, we feel really good about entering the market with RECORLEV and how it may be received.

I was going to say, as we continue to do research and talk to physicians, I think you'll see them begin to think in the front-line more about different patient types and directing certain patient types to one particular therapy. We're not going to go into depth on that now, but we have a lot of work as you can imagine that’s ongoing. We're in full launch prep mode, but we feel very confident in the peak revenue adjustments that we provided earlier.

Okay. So just to follow up on the thermostat, did I hear correctly that 75% had not yet used ketoconazole and that 40% of those were reluctant to use it?

Scott, do you want to clarify that?

Yeah, sure. So I think what we found in our research was that 75% either don't use it or are reluctant to. Of that 75%, 40% have essentially discontinued their use and 35% use it on a limited basis. So the 40% and 35% make up the 75%, but I think the important point there is that it was primarily for safety reasons, and they're looking for a new option that’s FDA approved with a broader label and more utility than ketoconazole.

And that's also your plan right, target?

Yes, certainly. They indicated, I have it Scott. So certainly, they indicated that they would be very interested in using RECORLEV, and a group of those physicians will be key targets at launch. We continue to refine that but we know that there's a subset inside of that group that will be very, very hard targets, a very high likelihood of prescribing RECORLEV. And I did make one point in my script earlier. I got ahead of myself a little bit; there are 8,000 patients treated till date, out of which approximately 40% our research indicates are not well-controlled. So that group of patients will certainly be a key target for us and the physicians within whose offices they are.

Your next question comes from the line of Mr. Chris Howerton from Jefferies. Your line is open.

Thank you for taking my questions and congratulations on a strong quarter for KEVEYIS. I have a couple of clarifications. First, regarding the cash runway expectations you mentioned, do those include plans to hire additional sales representatives, or does it assume that you will only utilize the current sales team for promoting KEVEYIS? Second, I noticed your script touched on some lifecycle management efforts related to KEVEYIS patents. Can you provide more details on the nature and timing of that potential intellectual property? Finally, I’d like to hear Fred's perspective on whether there will be challenges in educating endocrinologists about the safety profile of RECORLEV compared to ketoconazole. If there are challenges, how do you plan to emphasize that differentiation, especially concerning safety, based on your recent conversation with Annabel?

So Rob, why don’t you take the first question, Rich, the second, and Fred, then you can close with the question. Thanks for the questions Chris.

Good question on the nature of the assumptions we made for cash runway, and we have indeed included additional reps in the forecast at this point. We're obviously doing more work to refine exactly what size the team will be and how we'll coordinate and combine between KEVEYIS and RECORLEV, but for sake of assumptions for now, we have assumed additional incremental reps in the forecast.

Hi Chris, it's Rich. Thank you for your question. Regarding timing, it's challenging to provide an exact timeline, but we anticipate having further information by mid-year into the second half of next year, particularly about outcomes. We are actively engaged on several fronts, collaborating with a couple of IP law firms, and utilizing all available methods to progress, including appealing when appropriate. We feel positive and confident about our IP estate. At this juncture, it's still early as we prepare for launch, and we are contemplating various educational programs and materials. However, we believe we have gathered the necessary data for launch that will significantly influence key decisions, especially regarding the critical data for doctors to weigh benefits. It's important to note that there will be no hassle in adding a clinical comparison. We're discussing indirect comparisons to other drugs that have been previously used, but the crucial point is that RECORLEV is a novel drug; it is not ketoconazole and is recognized as such from a regulatory standpoint. Additionally, it is supported by a much higher quality of evidence than what's available for ketoconazole. Consequently, we expect the labeling for Cushing's Syndrome will be detailed regarding its use and monitoring, including what to be cautious about in terms of efficacy. The monitoring we are conducting, in terms of both quantity and quality, aligns with what endocrinologists are accustomed to and is similar to most drugs in this class. So it's not just ketoconazole; it's quite routine, and the adverse effects observed in clinical trials are mainly common across most, if not all, drugs currently used for Cushing's Syndrome, not solely ketoconazole. Therefore, doctors are likely to feel at ease with the monitoring and the types of adverse effects to be expected. We need to provide doctors the information we have and help them understand how it compares to the quality of data available for ketoconazole, ultimately clarifying the proper role of levoketoconazole in treatment. We will need to present this argument effectively to establish its appropriate position.

Okay, so basically your perspective then is it's going to be viewed as a separate therapeutic and there shouldn't necessarily be any inference drawn based upon the safety profile of ketoconazole, and the monitoring that you're doing based upon your clinical study design is very much routine and shouldn’t raise any specters of safety for RECORLEV?

It shouldn’t be anything uniquely special to RECORLEV. It certainly shouldn’t look anything like the kinds of monitoring requirements that are currently in the levoketoconazole label, which talked about weekly monitoring, and it's a shorter course of therapy for a fungal infection, entirely different than usage in a chronic condition like Cushing's Syndrome. And of course, there are all the other reasons for why levoketoconazole is a preferable therapy. Obviously, that does contribute to both.

As you think about the established critical profile for RECORLEV, have you had any additional thoughts on how you see clinical features of the drug having differentiated uptake for particular segments of the market? I know you mentioned key sub-populations, and I presume referring to maybe side effects such as endometriosis associated with other competitive agents, but just wonder if you have any thoughts there in terms of sub-populations that might have a differentiated benefit and therefore a stronger rationale for using the drug?

Scott, do you want to talk a little about what we learned both through research as well as some of our discussions post-research?

Sure, good question. I think you hit on a couple of key wins. The first thing I’d say is any chance there is more work for us to do in terms of some of the targeting work with physicians and the segmentation and the messaging that would apply to various segments, but I think importantly when you look at ketoconazole and the discussions that Fred just had, we have done started from segmentation wherein ketoconazole and clearly that is a go-to slide because of what we said. There is a number of physicians who have decided in large part based on the safety profile that of the data that they're looking for alternative options in the profile that we tested tested very, very well and feel that that unmet need in particular. So not only the ones that have decided to move away, but also those that really have limited its use in their practice and that's a significant cohort. So that will be clearly a target. We also know post-research have been talking about the importance of this product for women and that's the largest segment, right, with 75% of the population being women. So that will be a focus because if you know some of the products that are available from a treatment perspective have adverse events that may be particularly troublesome to women, in particular the organic effects, whether that's happening in unwanted hair growth and those types of things, which impact compliance and a number of things. So we think that that is a very good opportunity. More work on that as we think about segmentation, but those are two that come to mind and they are very important ones that we'll be more aware of and targeting our segmentation work and factor that into our targeting at launch.

Okay. Got it, great. And then maybe for Fred, if you could just walk us through some of the stuff we might anticipate ahead of an NDA submission. Just wondering what sort of feedback might be relayed back to the investor community beyond, let's say, a filing acceptance and some commentary around that potential outcome?

Sure. As we indicated at the last call, we are still anticipating our first quarter submission and we probably will not be releasing any updates before then in terms of data or anything of that nature or anything from a regulatory perspective as we prepare for the submission. Now once the submission goes in, it's reviewed for filing and the FDA takes roughly two months to do that, and then I'm sure we will announce once it's accepted. In terms of the Advisory Committee, we don’t anticipate having an Advisory Committee just given the precedent for other drugs in the category, for example, Esterase, which was recently approved without one. That being said, we are preparing as if there could be one, and so in the event the FDA decides that they would like to have more, we would certainly be fully prepared for that.

That brings us to the end of our Q&A session today. I'll now turn the call back over to Mr. John Johnson.

In closing, Strongbridge has made significant strides towards its mission of serving the unmet needs of rare disease patient populations. We are pleased with the growth of KEVEYIS on a quarter-over-quarter basis, and we are eager to advance RECORLEV to market, so that we can make a meaningful improvement in the lives of patients with Cushing's Syndrome. We look forward to continuing the momentum from this quarter and executing upon our strategic priorities as we work to advance Strongbridge's transformation into a multi-product commercial stage biopharmaceutical company with a portfolio of differentiated products that address the unmet needs of patients with rare neuromuscular and rare endocrine diseases. Finally, I'd like to thank our employees at Strongbridge for continuing to drive forward on these critical efforts. While 2020 has been a difficult year for many of us, I'm incredibly pleased with the state of our business and the progress that we are making and will continue to make going forward. Thank you for joining today's call and for your continued support.

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