Greetings, and welcome to electroCore First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Hans Vitzthum of LifeSci Advisors. Please go ahead, sir.

Thank you, operator, and thank you all for participating in today's call. Joining me are Frank Amato, Chief Executive Officer; Brian Posner, our Chief Financial Officer; and Tony Fiorino, Chief Medical Officer. Earlier today, electroCore released results for the quarter ended March 31, 2019. A copy of the press release is available on the Company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements including, without limitation, our examination of operating trends and our future financial expectations are based upon the Company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risk and uncertainties associated with the Company's business, please see the Company's filings with the Securities and Exchange Commission. electroCore disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive material information that is accurate only as of the live broadcast today, May 14, 2019. And with that, I'll now turn the call over to Frank.

Thanks Hans. Hello everyone and thank you for joining us today. As you know in 2018, we took a number of key steps to build out our commercial infrastructure to support the launch of gammaCore. It positioned the Company for growth in 2019. Our quarter-over-quarter growth in total prescriptions, refilled prescriptions and prescribing physicians demonstrated that demand for our therapy was strong throughout 2018 and that the business model of delivering our therapy in monthly prescriptions is robust. Toady, I'm pleased to report that the first quarter of 2019 has continued that trend. We have sustained momentum among patients, physicians and payers. During the first quarter, we had key milestones across all the leading indicators of our business including total prescription with March coming in with our best monthly total to-date. This increase in prescriptions written is a result of writing by existing prescribers as well as newly prescribing physicians. At the end of 2018, we reported that we have reached over 1,800 patients who had read at least one prescription. By the end of Q1, we have seen prescriptions from 2,170 physicians cumulatively since the launch of product. 332 new physicians prescribed gammaCore from the first time in Q1, which speaks to the comfort that physicians have in prescribing a therapy that is safe and had minus systematic side effects no drug interactions. During the quarter, we expanded our free goods program Partners for Coverage our PFC, which was initiated in Q4. Under this program, our specialty pharmacy partner Asembia dispenses gammaCore or one month of therapy patients to qualify. Simultaneously, this initial dispensing of the product Asembia also submits a refill prescription with the patients' authorization to their insurance company to initiate the reimbursement progress. This submission remains in place until the insurance company makes a final adjudication,…

Thank you, Frank. I'm excited to be part of the electroCore team which has already accomplished so much in bringing gammaCore to market in migraine and cluster. Although, I am still on the steep part of the learning curve regarding the vast amount of underlying science, supporting non-invasive VNS and beginning to build out a strategic vision for where we can take gammaCore both within headache and beyond and how we get there. What attracted me to electroCore and what I see is so compelling about non-invasive VNS is its multimodal mechanism of action for the direct and broad impact on CNS function coupled with local and systemic anti-inflammatory effects in the context of an exceptional safety profile. Last week, our collaborators presented data at the American Academy of Neurology from our cluster headaches registry and from a functional MRI mechanism of action study. I had the opportunity to meet in Philadelphia with some of our investigators and I found their enthusiasm for gammaCore in headache to be quite palpable. These are clinicians who have participated in our studies and who used the device in their practices. So, they have seen firsthand its benefits in their patients. I will note here that there will be additional oral and poster presentations at the upcoming European Headache Federation and American Headache Society meetings. Today, I would like to provide an update on our clinical programs and share some thoughts on areas of future interest. Our current and near-term company sponsored clinical trials are all-in migrating and I will provide some details on those shortly. Beyond the sponsored studies, there are a number of investigator initiated trials getting underway that are testing new hypothesis and could lead us into significant new directions. As you know, electroCore has a long history of supporting innovative,…

Thank you, Tony, and again welcome to the team. Now, I’d like to turn the call over to our new Chief Financial Officer, Brian Posner, to run through the numbers for the quarter. Brian comes to us with a broad background in finance, having most recently served as the CFO for Cellectar Biosciences. Like Tony, Brian has a well public market experience spanning six companies in healthcare field over the last three decades. Many of you may have interacted with Brian in the past, but for those of you who have not, I had the pleasure of knowing him from positions. I speak from several months of closely working with him at this point, and I can truly say, he's a wonderful addition to our team. Take it away, Brian.

Thank you, Frank. It is a great company and I'm excited to be part of electroCore. Thanks to you and the board for the opportunity. Last quarter, we provided some commentary about our anticipated revenue ramp from quarter-to-quarter this year. Frank spoke to this a bit earlier in his remarks around the evolution of our payer contracts and various channels of revenue. Due largely to the timing of new coverage decision, on the part of CVS Caremark, the Federal Supply schedule and others that commence reimbursement in the first quarter of 2019 as well as continued growth in unique prescribers and the ongoing conversion of promotional scripts to be reimbursed, we continue to anticipate that revenue for 2019 we'll be back-end weighted. Specific to the second quarter for example, we have already seen a growth in the number of product requisitions from the VA and DoD facilities in April that was almost as much as all of the first quarter. Of course, the growth is over very small base, but it speaks to the multiple factors that are all converging on a growing opportunity. Now to the numbers. For the quarter ended March 31, 2019, electroCore reported net sales of $410,000, an increase of approximately $42,000 from $368,000 in the fourth quarter of 2018, reflecting increased sales of gammaCore Sapphire. As Frank noted earlier, the majority of gammaCore prescriptions during the quarter, 94.5% to be specific were dispensed under promotional program. As a result, we're proud to report that we've delivered an additional $1.6 million of product sales value of gammaCore therapy to patients through our promotional programs. Our co-pay assistance program is where we assist patients who had attained commercial coverage with up to $250 of their co-pay at the time gammaCore was dispensed. We continue to believe these…

Thanks Brian. We’re pleased with our performance during the first quarter. The steps that we undertook last year are yielding positive results and are leading indicators in the form of covered lives, unique prescribing physician and total prescriptions and refill prescriptions are strong. We entered 2019 with significant momentum across both our commercialization and research and development initiatives, and we look forward to providing future updates on our progress. And with that, operator, please open the call up for questions.

At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Josh Schimmer with Evercore ISI. Please proceed with your question.

Hey, thanks for taking the question. I have a few. First, can you remind us the difference between the pharma reimbursement pathway and the device reimbursement pathway in terms of what it means for payments, revenues, rebates and timing to electroCore?

Sure, the pharmacy benefit pathway typically requires a rebate back to PBM. And the medical reimbursement pathway is one that requires typically a payer to change the medical policy in our case for vagus nerve stimulation. Most of the players have a medical policy in place indicating that vagus nerve stimulation should only be used for refractory epilepsy because you choose you have $30,000 implant that requires maybe surgery. Once we change the medical policy like in the case of Highmark then patients can get access to the therapy through usually a prior off with a neurologist or at least that’s the case with Highmark at this current time. As far as the reimbursement goes, for some of the plans who reimbursed in the medical benefit pathway, a patient may have to expend their medical deductable before the payer will begin to share in the cost of the therapy. On the pharmacy benefit side which typically with the PBM as I mentioned earlier, there’s usually a co-pay that’s required. In the case of CVS Caremark, it’s in the $65 to $75 range, depending upon who the patient is. And in that case, we try to assist the patient with our co-pay assistance.

What is the typical deductable into the device reimbursement pathway?

The deductibles whatever the patient’s medical deductible is for whatever plan that they've signed up for with their payer. In the case of most of the CVS Highmark patients, it’ll be around 50% of which will cover $250 in the therapy. So if you take of the $575 treatment, we cover most of the cost of the therapy. The patient has to come out of pocket for somewhere around $45.

And what do you expect the ultimate split now is going to be between covered lives under pharma versus devise reimbursement?

That’s a very god question. We think that the medical plans or the insurance plans will start to come on with medical benefit reimbursement and those will be largely Blue Cross Blue Shield plans, which is the predominant number of plans across the United States. And then, right now, we're looking to enhance our CVS Caremark agreement, which will be for about 30 or so million lives and Express Scripts when that comes online that will be for about 35. So, I think the split will be 50-50 about a year from now to answer your question directly, Josh. 50, about half the patients will be the medical benefits halfway through the Blue Cross Blue Shield plans and the other half will come through the PBMs as we negotiate those contracts.

And will the creation of a new package for the First DataBank coding impact any of the other payers beyond Express Scripts? And if so, how might that act?

It very well may so Express Scripts probably manages somewhere around 70 million lives with the recent addition of Cigna. And in those 70 million lives, about half are managed in a formulary that is used uniformly across those 35 million lives. The other 35 million lives out there are ones where we would have to take a rebate agreement that was negotiated with Express Scripts and pull that through to the plan. Those plans may decide to want to contract with us directly for additional rebate for better terms, or they may just take the Express Scripts agreement, as it stands today. And in that case, the First DataBank opportunity would allow us to then pull that through to some of those plans as well.

And then last question I have to ask because a few investors have expressed dismay over JP initiating stocks don't plan at the time of the stock is so far below the IPO price. So perhaps, you can address why you felt that this prudent timing, considering the poor optics and why we shouldn't take that as a lack of confidence and the outlook for the Company at the current valuation? Thanks.

Sure. So, JP can speak for himself as to what his thinking is, but I know that much like most senior executives in any publicly traded company, employees and senior folks put 10b5 plans in place that go in place long before the stock is sold. And in JP's case, pretty sure that his stock was sold through his 10b5 plans. And that was something that was put into effect during an open window back in the latter part of last year. So I think the selling is just a function of, 10b5 plan. JP has been invested in the Company here as one of the founders for the past 13 years, and I think he's probably selling a very small portion of what he owns in the Company.

Yes, and Josh, this is JP. I would just add price exactly right. There was a 10b5-1 plan that was written and implemented back last year. I have not had a window open to me to change it. That is the fundamental. And I've told investors who called me and asked me that I've spoken to them directly about it. It's not something that I am legally allowed to change until a window opens. I do intend to make changes to it when the window opens, but I can't do it until then.

Our next question comes from the line of Dave Turkaly with JMP Securities. Please proceed with your question.

Thanks. Just want to ask, just start a quick follow-up on that medical and pharma benefit. So under either scenario, you're still billing it or intend to bill it as a monthly prescription. I think you said that when it’s the medical, you’re recovering some of that monthly cost, but there’s today as you look at those two options they’re both still sort of a monthly perspective based model.

That is absolutely correct, David. They are both -- we’re still maintaining our business model which is the reimbursement therapy monthly. In the case of a medical benefit, the co-pays are often higher can be up to 30% as I mentioned earlier whereas with most of the PBMs or the pharmacy benefit pathway, those co-pays are lower typically 15% to 20%. Now, the Company pays a rebate for those typically. So net, net back to the Company it could be the same profit margin because between the co-pay assistance and the rebate on the pharmacy benefit side the Company could still net about the same revenue there as you would on the medical benefit side where there’s no repay but the co-pays can be much higher around 50%, so hope that’s clear and that’s kind of how we’re navigating to the market on -.

I appreciate that. You mentioned that the refill doubled. I had a number of something like 2000 last quarter, but I don’t even know. I'm not sure that’s exactly correct, but can you comment -- what was the actual number of refills are you giving that number?

We hadn’t been giving the number up to this point but we were speaking to the fact that about 35% of our prescriptions are being refilled in the partners for coverage program. So, we believe that that program will begin to mimic broader reimbursement coverage across the United States between our co-pay systems and the rebate we give the payers. We see that opportunity to be fairly commensurate with the program as it exists today. And then overall, we had growth in our refills quarter-over-quarter that’s been in the 300% range as what we were communicating back in the first quarter.

And then, it sounds like you’re making some progress with Express Scripts. I think you’ve commented that there is a big percentage maybe 30, 35 at the Scripts that you have seen today. Is that still the case? Are they still sort of the biggest that in terms of the number of scripts that you’re seeing?

They’re very large across the U.S. market. They much like most of the PBMs out there of the 5000 prescriptions I referenced earlier during the call that currently I then prescribed through the three PBMs. ESI is about the largest of the three and the three cargo of the United States almost equally upto more X having United as their largest payer. And then ESI working across the number of payers including Cigna and then lastly CVS Caremark having merge recently with that luck all cover somewhere in the somewhere with that in the $60 million to $90 number of lives range but ESI seems to be one of the plans that for whatever reason represents somewhere in 30 to 35% of the prescription that are written for our product.

Our next question comes from line of Sean Lavin with BTIG. Please proceed with your question.

Hey, it’s Marie Thibault on for Sean Lavin and I appreciate the time taking the question. I wanted to dig a little more on the timeline that we can kind of expect for the Express Scripts. The work they're doing with First DataBank. How long might it take to build that sort of third package? And is this a Q2, Q3 kind of time frame or we thinking much longer than that?

So, we have been in constant discussions with Express Scripts as you know Marie for quite some time, but really in the first quarter here is when the NCPDP came back and universalized our codes that it kind of was disparate to get the conversations going with Express Scripts and First DataBank from my understanding. They decided that a digital therapies module would be the work around so that Express Scripts didn't have to buy the database with a house or the medical device codes, which is called the present database. And that that building of that database, testing it, and then making it available to their, various different customers not just Express Scripts, it would take about six months. And we were told that back in the first quarter, so my anticipation is that there could be an opportunity for us to ink some type of agreement in the third quarter of this year, at its earliest.

Okay, thanks. That's very helpful. And then maybe a quick question for the new Chief Medical Officer, Tony. I'd love to hear about the conversation. And any progress you're making with some of the medical policy plans out there, the Blue Cross Blue Shield of the world, anything to report there?

Let Tony speak from self, but he's not been the one kind of spearheading a lot of those discussions. Those discussions have been actually, up to this point happening with our previous Chief Medical Officer, Peter Staats, who, as you may recall from our press release, has opted to stay on as a senior advisor to the executive team here to Tony as the Chief Medical Officer, and has been working largely on our behalf with large payers as he has for the past couple of years here, as well as the VA, DoD and CMS for coding for our product as we think about bringing us into the Medicare segments for future opportunities. So, I'll stop there and when I see Tony has anything to add.

What I will add is that, my sense of how these conversations have gone as I talk with both Peter and our head of market access is there is a increasing receptivity to the data set, we've had, as we've met with payers, more data published in the literature, expanded label where the presentations are quite well received.

Great. Just one last one, if I may. I wanted to ask about the step up in total prescriptions written. Nice to see a sequential step up but I was curious why it wouldn't be maybe a little bit higher given we did see a large step of the number of physicians actually prescribing?

Sure. Yes, I think that's a very insightful question, Marie. Thanks for the question. In the first quarter, I attempted to lay out in the call here that, we've been working feverishly at a lot of the logistics required to make sure that your product is available in the various different segment and or channels that we’ve been operating in. For example, our sales representatives have been working closely with neurologists around making sure the prior officer required to get patients through the CVS Caremark agreement that we have right now is one where we’re having a chase down between the specialty pharmacy that sends the prior [indiscernible] back to the doctors' office and gets to the staff to make sure they’re aware that some things was out of back stack to them or something needs to be filled out, more in detail. That also holds true for Highmark which came on board towards the end of February for us so a little more than halfway through the quarter. We’ve been working through the process that they’re acquiring and order to get access to gammaCore which is again paper work related. And then lastly we spent a lot of time after our Federal Supply Schedule agreement came on line in the middle of January ensuring that everyone of its centers out there in the VA hospitals and also the active duty military treatment facilities understand how to access getting down core in the VA centers we’re sending gammaCore right to the actual hospitals themselves for the active duty military treatment facilities we end up having the work through cardinal health as a wholesaler. So it’s just, it’s been a logistical bug for us that has a focused on making sure the different channels understand how to access on product oppose to being in further physicians driving total prescription. So although the growth wasn’t what we had hoped it would be. It’s not surprising to me considering all the other logistics that we’re working through to make sure that this unique product is innovative therapy is available for patients who need it.

[Operator Instructions] Our next question comes from the line of Ahu Demir with Noble Capital Market. Please proceed with your question.

Thank you very much for taking my questions. My first question is in the last earnings calls you mentioned addition PBM. Should we expect anything for cover in the second quarter in the near term?

Beyond the three large ones -- first of all, I would thank you for the question and good to hear your voice.

Likewise, Francis you.

We do have other PBMs that we’re interacting with. We were down in Florida just last week, meeting with the large PBMs that covers significant part of the Medicare and Medicaid segment. They have significant interest in what we’re doing in our technology and we presented our clinical data to their Chief Medical Officer, last week. We’re waiting to hear back from them on how they would prefer reimbursement to therapy. We would imagine as a PBM that would do it in the pharmacy benefit pathway. And if that’s the case then it’s possible, we could have an additional PBM contract by the end of the second quarter. Beyond that, most of the other opportunities are with changing medical policies through either a PBM by prime therapeutics, which is owned by about a third of the Blue Cross Blue Shield plans down in Texas or indirect communications and interactions by our account management team who are themselves, meeting with multiple dozens of plans across the United States on a monthly basis. But to answer your question directly, there could be an opportunity for an additional PBM to come online by the end of the second quarter. I think it would be one in Florida that we met.

My next question will be on, if you have any anecdotal usage from physicians or patients for provisional migraine. I'm really excited to hear about the PREMIUM II data, but I was just curious, do you have any anecdotal usage for the prevention migraines?

As you know, prevention migraine is off label for our therapy. The business model where a patient has access up to 30 doses a day, for 31 days of therapy. It's quite possible that if a physician decides to prescribe our products for the prevention of migraine, much like they would be able to prescribe it today un-label for the prevention of cluster headache, and also recommended for the acute use of cluster headache and or migraine, the physician has the opportunity to do that. We have not heard a lot of feedback from the medical community that physicians are using it ubiquitously in that regard. I'll look and we'll look to the opportunity to speak to some of those customers as the American headaches society comes up in some of the other opportunities to see some of these doctors, but I do not have a lot of anecdotal experience coming back from the field on an off label use.

I would just add nor do I. Most of my conversations with our prescribing neurologist are really not drill down into whether using it acute versus preventive, but the overall experience with the product for their patients.

Okay, thank you very much. And Tony welcome on Board. My next question would be just struck deal on the RA study. Do we expect data in 2019, end of 2019? Or do we -- or is it going to be later like 2020 timeline?

So, it's an open label study. It isn't IIT, so we don't control the data per se. The investigator controls the data, but I would anticipate that we will see some data from that study, not before Q4 would be the earliest ever even see it, but hopefully we will see some data in 2019.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Frank Amato, Chief Executive Officer, for closing remark.

Okay, thanks again for joining our call this afternoon, everyone. We look forward to providing our next quarterly update in August. Thank you and thanks for your time today.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.