Good day, ladies and gentlemen. And welcome to electroCore Second Quarter Earnings Conference Call and Webcast. Currently, at this time, all participants are in listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time [Operator Instructions]. Also as a reminder, this conference call is being recorded. At this time, I would 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 and Brian Posner, Chief Financial Officer. Tony Fiorino, Chief Medical Officer will be available for Q&A. Earlier today, electroCore released results for the quarter ended June 30, 2019. A copy of the press release is available on the Company's Web site. 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 differ materially 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 call contains time-sensitive information that is accurate only as of the live broadcast today, August 13, 2019. And with that, I'll now turn the call over to Frank.

Thanks Hans. Hello everyone, and thank you for joining us today. On May 29th, we announced the comprehensive redeployment and cost-reduction plan intended to focus on three things; current and near-term revenue generating opportunities; streamlining our clinical development program; and reducing our quarterly cash burn to extend our cash runway into the beginning of 2021. We believe that this plan best positions us for long-term success. Therefore, in addition to commenting on our second quarter operating and financial results, I will use the time today to update you on activities and developments since that announcement. Beginning with the second quarter, I'm pleased to report the continuation of positive trends in three previously reported metrics; total prescriptions, refill prescriptions and prescribing physicians. By the end of the second quarter, we had reached approximately 2,500 physicians who had written at least one prescription. This represents an increase of 13% over the nearly 2,200 physicians who had written at least one prescription up through the first quarter of 2019. This growth continues to demonstrate physicians' growing comfort with the efficacy and safety of gammaCore, which unlike drug alternatives, carries no systemic side effects or drug-to-drug interactions. During the second quarter, we also had sequential growth of total prescriptions written, a 14% increase to approximately 7,000 prescriptions as compared to the nearly 6,100 during the first quarter. However, as we indicated last quarter, we believe that the better metrics to measure of performance is prescriptions dispensed and ultimately paid months of therapy. Prescriptions expense in the second quarter totaled nearly 3,800, a sequential increase of 27% from the nearly 3,000 in the first quarter. In addition, during the second quarter, growth in paid months of therapy increased by 52% to 1,023. Taken together, these positive trends contributed to a 52% increase in total revenue…

Thanks, Frank. Before getting into the numbers, we thought it might be helpful to review how we recognize revenue from our various revenue streams. Beginning in the U.S., we sell product directly to Bioridge Pharma, our distribution partner at which time we recognize revenue. Bioridge Pharma in turn sells to the various specialty pharmacies that dispense the product to patients. Order quantities from Bioridge Pharma are dependent on paid prescriptions, which are tracked but our paid prescriptions are just a leading indicator of potential revenue for the company down the road since they will help to determine inventory levels at Bioridge. Turning to the VA. We recognize revenue as shipped to the particular VA sites. Cardinal Health is handling DoD orders, so they will be our customer for DoD related shipments. And in the UK, we sell to the National Health Service and NHF England via the Innovation Technology Payment. Now to the numbers. For the quarter ended June 30, 2019, electroCore reported net sales of $623,000, an increase of approximately $210,000 or 50% compared to $410,000 in the first quarter of 2019. The major drivers of this growth Q2 versus Q1 were the VA/DoD channel, which grew approximately 260%, the UK's channel grew 70% and the U.S. Commercial pay channel grew approximately 31%. Total OpEx for the second quarter of 2019 were $12.7 million as compared to $16.4 million for the second quarter of 2018. The decrease in operating expense was driven primarily by a decrease in marketing and stock-based compensation costs. The second quarter of 2019 included a restructuring charge of $850,000 in connection with the previously announced significant adjustment to the deployment of personnel and resources across the organization. Operating loss for the second quarter of 2019 was $12.4 million as compared to an operating loss of…

Thanks, Brian. We're pleased with our performance during the second quarter and continued growth across our key metrics. As our payer outreach efforts continue to bear fruit, we expect these positive trends to continue. There are still very large patient populations who do not yet have access to this groundbreaking therapy. Thus far in 2019, we have built significant momentum and we look forward to providing future updates on our progress. And with that, operator, please open the call up for questions.

Thank you. We'll now be conducting a question-and-answer session [Operator instructions] Thank you. Our first question comes from the line of Ahu Demir with Noble Capital. Please state your questions.

My first question will be on the Express Scripts. Are we still on track to finalize the agreement in the third quarter 2019 for that, and also 100 million covered lives that is expected in the fourth quarter?

So with Express Strips, we remain in conversations with them. In fact, they started a GPO, a group purchasing organization, in Switzerland recently and we've had, to this point, multiple phone calls with their group over their around contract details. If you may recall that a key indicator for getting a contract in place there was ensuring that they had access to our coding through their First Databank compendia. First Databank has requested our codes and they are now working on putting a digital module in place. There been multiple press releases from Express Scripts indicating that that digital module is on pace and being completed. So it's likely that we could have a contract in place before the end of this year. And that will be a key indicator for whether we reach the 100 million lives plateau that we have been shooting for as a goal with the organization. So when we have the PBM contracts loaded and especially Express Scripts, that will be to the possibility of having the 100 million lives.

And my second question will be on the payer front again. On the policy amendment for Highmark, providing reimbursements for monthly refills. Is that finalized or are we still expecting that to finalize in the third quarter?

So Highmark has changed their policy along with Blue Cross Blue Shield of North Dakota. And those policy updates allow patients to get prescribed gammaCore. The reimbursement for the therapy since we don't have a contract in place with, either Highmark or Blue Cross Blue Shield North Dakota, is dependent upon what those entities want reimbursement to the therapy at this point in time. On the medical benefit side, we are offering a contract, meaning we will offer rebate for access to gammaCore. I know our managed market team is been in discussions with Highmark, and I believe are beginning discussions with Blue Cross Blue Shield of North Dakota. Blue Cross Blue Shield of North Dakota is one of the Prime Therapeutics accounts to PBM that manages about half of the Blue's lives. So we're also working with Prime Therapeutics, and have offered a contract, a rebate contract, with them as well on both the pharmacy side and the medical side. So it's just a matter of navigating the local plans to get a contract in place, so that we have a set price that they're expected to pay for both refills and for the initial therapy, or for when their patient receives the device.

Okay. Thank you very much. Thanks for taking my question, and congrats on the positive trajectory.

[Operator instructions] Our next question today is from the line of Josh Schimmer with Evercore. Please proceed with your question.

Can you give us a sense where you are in terms of the target population percent lives covered? To what extent is reimbursement still a gating step towards driving prescriptions and adoption? And what if any other obstacles are there towards achieving a swifter rate of growth of prescriptions, whether in terms of access, awareness, or appreciation to product in cluster or migraine headaches? Thank you.

So, the gating factor for us remains getting rebate contracts in place with PBMs and also with local payers through, right now, Prime Therapeutics as the PBM for about half of those Blue's lives that I mentioned earlier. The CVS Caremark agreement we have in place still requires physicians to fill our paperwork, and prioritize for a majority of the patients within that plan, not all of them. We have offered contract with CVS Caremark and have been gone back and forth with our contract -- in various terms we've offered. So once that gets completed and is loaded that will likely get us access to a large majority of those folks without having to have paperwork filled out by the physician. It still might be a prior off, but it's electronic in the way it's dispensed to the physician today. And then with respect to the other plans, we have Express Scripts, Prime Therapeutics, and other plans in the United States that we're currently negotiating with. In addition to that, we are following-up on legislation that was published on opioids last year, which state directly that neuromodulation therapies could be a good alternative to opioids in the marketplace and CMS is looking at technologies, like ours, to code that in a way that patients will get access to the therapy without having to go through the traditional durable medical equipment pathway that most of these CMS improvements naturally follow. So I would say that access to a large group of the population is going to come by way of those reimbursement contracts and those rebate contracts. In the meantime, without restating everything we just covered. We do have good access and good growth beginning in the VA/DoD segment. We have the workers' compensation opportunity. We have the UK bearing fruit for us. And we're changing medical policies at the local Blue's plans and other payers, local and regional payers that will ultimately allow us to contract directly with those folks. So I think that in 2019, we're making far more headway than we had in the past with respect to these payer opportunities. And it's been delayed, as everyone knows, since our -- what we communicated during the IPO just last year.

Thank you. At this time, I will turn the floor back to Mr. Frank Amato, for closing comments.

Okay. Thanks again for joining our call this afternoon. We look forward to providing our next quarterly update in November. Thank you, everyone.

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