SAVA - NASDAQ

Remi Barbier - Chairman, President and Chief Executive Officer Eric Schoen - Chief Financial Officer,

Jason Kolbert - H. C. Wainwright

Greetings and welcome to Pain Therapeutics Report of the Third Quarter 2018 Financial Results. 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 Eric Schoen, please go ahead.

Good afternoon and thanks all of you for joining today's call. I'd like to remind you that any statements made during this call by management other than statements of historical facts will be considered forward-looking and as such will be subject to risk and uncertainties that could materially affect the company's expected results. Those forward-looking statements include without limitation the various risks described in the company's Annual Report on Form 10-K for the year ended December 31, 2017 and its quarterly report on Form 10-Q for the quarter ended June 30, 2018. Importantly this conference call contains time sensitive information that is accurate only as of the date of the live call October 29, 2018 except as required by law the company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the day of this call.

Thank you, Eric. This is Remi Barbier. As we begin let me review the format for today's call. Eric will present financial information for Q3, 2018. I will then do a very brief update on REMOXY and our program in Alzheimer's disease and then we will turn the call over to you investors and audience for a Q&A session. So before I turn it over to Eric let me just remind everyone that Eric has recently joined as Chief Financial Officer. In fact his first day of full time employment with us will be on Wednesday. He's a very accomplished financial executive with significant expertise and I think he's going to an exceptional addition to our team. He's got broad experience with growth companies in the healthcare environments and this is going to be an asset to us as we move forward with our clinical stage programs targeting Alzheimer's disease. With that I turn the call over to Eric for an update on Q3, 2018.

Thanks for the nice introduction, Remi. Since I'm new to the company, I just wanted to say that I'm pleased to bring almost 20 years of finance experience with growth companies to [indiscernible] at Pain Therapeutics. Most recently I was the Senior Vice President of Finance and Chief Accounting Officer. For Vermillion, a lifescience publicly traded NASDAQ listed company and before that, I started my career with almost nine years at Price Waterhouse Coopers. So again I'm happy to be joining in the company in a position of financial strength after strong quarter of equity offerings and our two non-dilutive National Institutes of Health or NIH grant. We're well positioned to advance our work on the Alzheimer's disease pipeline. On the cash front, we raised approximately $12.3 million in equity financing during the third quarter. Our total cash on hand at September 30, was $20.4 million. We also issued warrants during our recent equity financing. If all these warrants are exercised for cash who would represent growth proceeds to the company of $11.5 million. In August and again in October, we announced that the NIH has awarded up two separate research grants to support a Phase II program with PTI-125 our drug candidate to treat Alzheimer's disease. Collectively these two NIH grants represent up to $6.7 million of non-dilutive financing. During the quarter we received research grant funding reimbursement of $1.1 million from the NIH and recorded this as a reduction in research and development expenses. Research and development expenses were $0.4 million during the quarter compared to $1.6 million for the same period in the prior year representing a 73% decrease due to lower spending on REMOXY. I expect that these expenses were net of the $1.1 million received from the NIH during the current quarter and $800,000 received in the same quarter of the prior year. Research and development expenses included non-cash stock based compensation cost of $0.2 million compared to $0.3 million for the same period in the prior year. General and administrative expenses were $0.8 million in the quarter compared to $1 million for the same period in the prior year representing a 13% decrease. G&A expenses included non-cash stock based compensation cost of $0.3 million compared to $0.4 million for the same period in the prior year. Net loss was $1.3 million in the quarter compared to $2.6 million for the same period in the prior year representing a 51% decrease. Net loss per share was $0.11 compared to $0.40 for the same period in the prior year. For expected cash usage, we reiterate our expected cash utilization for the full year 2018 to be between $5 million and $6 million. Now I turn it back to Remi.

Thank you, Eric, for a very nice detailed overview of our financial situation. I have two topics to discuss. The first would be REMOXY and the second of course is our program in Alzheimer's disease. With regards to REMOXY I think by now everyone knows back in August of 2018 the FDA concluded that the benefits of REMOXY do not outweigh the risks. I continue to believe that based on that, that was a bizarre conclusion to reach especially during a time of opioids abuse in crisis and addiction. We also continue to believe that we have a just a staggering amounts of data evenly supports our best in class abuse-deterrent versus oxycodone and even against certain extensa. On that front I have some good news to announce we recently learned that two publications around REMOXY were accepted in a peer review journal, state to and I don't have an actual public date yet but we will announce it. It should be shortly this month perhaps, I'm sorry November possibly December. As far as going forward we're still processing the so called formal dispute resolution with FDA. This has not been filed yet. It's a very complex document and I don't want drag everyone through all the weeds, but other than to state it's a fairly complex document. If we file something we expect it to happen within the next two or three weeks. I also wanted to set expectations on the formal dispute resolution with FDA to the extent that the dispute resolution is really judged by the very same people who judge the REMOXY NDA. I'm not confident that I expect a whole and slightly different outcome. On the other hand, we must go through a formal dispute resolution and order to open up any further possibilities whether it's a law suit or taking it up in extra level up in management or directly to the FDA commissioner. So it's kind of a door that we must go through in order to open up our options with REMOXY. I also want to be clear a number of investors have emailed me or called me and said we need details on the formal dispute resolution. I want to be clear that this is not something that will be adjudicated in public. These are very sensitive and perhaps confidential discussions between the sponsors i.e. us, ourselves and the FDA. And I don't think either the FDA or anyone else would appreciate taking the formal dispute resolution out in public. So we'll let everyone know when it happens, if it happens and certainly the outcome when we hear about it. But please as far as blow by blow details that's not something we're able to provide. Let's change topics and talk about Alzheimer's for few minutes. Bottom line is that, Alzheimer's program is entirely on track to initiate a Phase II A study by the end of this calendar year. you might recall that our Alzheimer's program consists of a - what we consider to be a first in class program for neuroprotection of the brain and specifically it's two actual programs. One is a proprietary drug candidate that represents an entirely new target to treat Alzheimer's disease. The second leg of this program is a proprietary diagnostic we call PTI-125 DX which is a relatively straightforward, relatively simple blood-based test to detect symptoms of Alzheimer's and hopefully before an actual prognosis of Alzheimer's. We are also doing additional research to expand the science into additional rare diseases of the brain. Now you might recall that our Alzheimer's program has a very strong scientific rationale. It benefits from a number of peer reviewed publications and it has received multi-year support from NIH. The scientific evidence for filamin A [ph] which is the target is published in a number of prestigious peer review academic journal and again, as Eric has told us the science program has been awarded multiple very competitive peer review NIH grants. The Phase I study of PTI-125 that we conducted last year I remind you it was a successful study the drug candidate was found to be safe, well tolerated and really demonstrated a very favorable profile for further drug development. We're now in a very last stages of preparing for a really two Phase II studies. Phase II A and Phase II B with PTI-125 in Alzheimer's patients. Phase II A should be again we hope to start this study, very shortly. It's a small study open label study and equals 12 with twice daily dosing and one month treatment regimen. The end points of the Phase II A study are simply safety and biomarkers. We are also preparing for a Phase II B study which will be a more of a traditional randomized placebo controlled study that one will be 36 patients, twice daily dosing and a three month treatment period with the endpoint of safety and biomarkers and cognition. The Phase II B study we expect to start mid-2019 as we've guided before. That is a high level overview of where things stands on both the - on the financial fronts, on REMOXY and with Alzheimer's disease and with this. I would like to open up the mike to question from the audience.

[Operator Instructions] our first question comes from the line of Jason Kolbert H. C. Wainwright. Please proceed with your question.

Can you talk just a little bit about the target associated with Alzheimer's drug because I'm not that familiar with it, its new and can you talk a little bit about what expectations do you have around the cognition end point and what cognition scale will you use toward the Phase II B trial that you're planning to start mid next year. Thanks.

Likewise, Jason thank you for joining us. And yes in fact we are very excited about the AD [ph] program. As you may have heard from the CTA

It's a big topic. Thanks Remi. I look forward to following up with you in the days ahead.

[Operator Instructions] since there are no further questions in the queue. I would like to turn call back over to Remi Barbier for closing remarks.

Again thank you for listening in. to be clear we don't expect to have a call every quarter, but we thought it would be important to have a call this quarter both to provide an update, but also to provide an introduction to Eric as usual feel free to contact us via telephone or email, if you have any questions. Thank you.