Good day ladies and gentlemen, and welcome to the Achieve Life Sciences Third Quarter 2018 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. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Ms. Jaime Welch, Executive Vice President of Commercial at Achieve. Ma'am, you may begin..

Thank you, Shanelle, and thanks everyone for joining us. With me today from Achieve are Rick Stewart, Chief Executive Officer; Dr. Anthony Clarke, Chief Scientific Officer; Dr. Cindy Jacobs, Chief Medical Officer; and John Bencich, Chief Financial and Operating Officer.

Before we begin, 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 the website. I'll now turn the call over to Rick..

Thank you, Jaime. On today's call we will provide an update on the tremendous progress we continue to make on the cytisinicline development program. We will also discuss the near-term milestones that we believe have the potential to create significant value for the company over the next 12 months.

Following our development program updates, John will discuss our recent financing and third quarter 2018 financial results. To begin, as you have may noticed, a new generic name for cytisine has been adopted by the United States Adopted Names Council or USAN. USAN is responsible for selecting simple, informative and unique generic drug names.

They established logical nomenclature classifications based on pharmacological and/or chemical relationships. Our new names cytisinicline went into effect in the third quarter and will be used in future.

Moving on to our clinical development program, as discussed last quarter, consistent with the FDA's suggestion to consider evaluation of alternative dosing strategies for cytisinicline, we've initiated a Phase 2b optimization trial in approximately 250 smokers in the U.S.

This trial known as ORCA-1 will evaluate both 1.5 milligram and 3 milligram doses of cytisinicline on a declining titration schedule over 25 days as well as three times daily dosing. This trial is randomized and blinded to compare the effectiveness of the cytisinicline doses and schedules to respective placebo groups.

The primary efficacy endpoint is reduction in the number of cigarettes smoked during treatment with secondary analysis conducted on smoking cessation rates, safety and compliance. We were excited to announce last week that the ORCA-1 trial has been initiated.

Clinical trial sites have been instructed to limit patient enrollment due to the upcoming holiday season. Accelerated recruitment will start in the New Year. ORCA-1 is being conducted at eight trial locations across the U.S. and data results are expected in mid-2019.

We believe the results of this trial will help us better define key elements of our Phase 3 clinical trials such as cytisinicline dosing, behavioral support and packaging. Our Phase 3 program is expected to begin in the second half of 2019 following results of the Phase 2b trial and subject to additional financing.

The next key milestone that we accomplished in the third quarter was completion of our second food effect study using an improved formulation of cytisinicline. This new formulation has an extended shelf life and is already being used as commercial product in Central and Eastern Europe through our partners Sopharma.

This recent study evaluated the bioavailability of cytisinicline with the new formulation under fed and fasted conditions in 12 healthy volunteer smokers.

Similar to our prior food effects study using the original formulation, it was concluded that there were no clinically significant food effects with the new formulation of cytisinicline may be administered with or without food. The new formulation was well tolerated at a 3 milligram dose.

These positive results are important as they further reinforced the new formulation moving forward in our clinical development program. Finally, in the third quarter we announced publication of new cytisinicline data in the International Journal of Drug Policy.

This observational study conducted in the Russian Federation compared the effectiveness of cytisinicline and nicotine replacement therapy or NRT as an aid to nick that smoking cessation.

Study results determined that smokers in the cytisinicline group were approximately three times more likely to achieve 90 day abstinence compared to those who attempted to quit with NRT.

The authors concluded that the findings provide real world evidence supporting previous trial results that cytisinicline is superior to NRT in achieving short and long-term abstinence. This is consistent with the conclusions of the CASCADE trial as previously published in The New England Journal of Medicine.

I will now turn the call over to John to discuss our recent financing and third quarter financial results..

Thanks Rick. As Rick mentioned earlier, we were pleased to announce in early October we completed a registered direct offering raising total gross proceeds of $5.6 million. After deducting fees and operating expenses we received net proceeds of approximately $5 million.

We plan to use the proceeds from the financing for working capital and other general corporate purposes including funding ongoing operations and to continue the development of cytisinicline in the clinic including execution of the Phase 2b trial.

Details of the offering included the purchase and sale of approximately 1.8 million shares of common stock at a price of $3.14 per share.

The company also agreed to issue unregistered warrants to the investors in a concurrent private placement to purchase up to one half share of common stock for each share purchased with an exercise price of $3.14 per share. The warrants will be exercisable upon issuance and will expire five years following the date of the issuance.

The exercised price of the warrants are fixed and do not contain any variable pricing features or any price-based anti-dilutive features. As of September 30, 2018, the company's cash, cash equivalents and short-term investments were $13.2 million.

On a pro forma basis, when including the net proceeds from the October financing, the company's cash balances as of the beginning of the fourth quarter were approximately $18.2 million. Total operating expenses for the three months and nine months ended September 30, 2018 were $3.3 million and $9.1 million respectively.

Total net loss for the three months and nine months ended September 30, 2018 was $3.2 million and $9.1 million respectively. We anticipate our operating expenses to increase over the next three quarters in line with the initiation and execution of the Phase 2b ORCA-1 trial.

We expect external trial cost of approximately $5 million related to the ORCA-1 trial through completion of the study. That concludes the summary of our third quarter financial results. I would now like to turn the call back over to Rick..

Thank you, John. In conclusion, we are pleased with our progress made in the third quarter, specifically the initiation of our Phase 2b ORCA-1 trial. We look forward to announcing upcoming milestones including the final results from our repeat dose pharmacokinetic and pharmacodynamic study in the first quarter of 2019.

Thank you again for your continued interest in Achieve. We will now open the line for questions..

Thank you. [Operator Instructions]. Our first question comes from the line of Michael Higgins of Ladenburg Thalmann. Your line is now open..

Thanks operator. Hi guys. Thanks for hosting the call. Congrats on the smooth quarter and your continued progress. Couple of questions for you if I could. If I can go to Europe for the first one, can you give us an update on your discussions with European marketing partners, types of companies that are showing interest we'd appreciate? Thanks..

Thanks Michael. Yeah, we're in the process right now of evaluating the overall strategic partnering or actually on a global scale versus kind of on the regional scale. Our preferred position would be to find a single global partner to aid with the commercialization.

Having said all of that, clearly if an opportunity comes about in any of the individual regions be that Europe or Japan, we'll look at it. So, I think it's too early to give a clear statement in terms of what we're doing in Europe. But I would look over the next probably 12 months or so that we'd actually have some further traction on that..

Okay. I appreciate the color on that. Regarding the Phase 2b 250 patient trial, despite the pause of the holidays, is it fair to assume you can complete that in Q1, complete the enrollment? Thanks..

Yes, this is Cindy. Yes that is our plan. I mean the sites, there are seven out of eight sites already initiated and treating patients, they already have them identified.

The last site will be initiated within the next week on the slow start is clearly to get all the processes and the sites familiar with everything and then to be able to handle the primary enrollment after the New Year.

That would be expected to have enrollment completed by the end of the first quarter so that then we would have the final results mid-year..

Great. Thanks for that.

John, if you can give us a decent review of the cash and the recent financing for the [ph] warrants, if you could also add how many diluted shares do you have adding at this point including those warrants? Thanks?.

Sure. Thanks Michael. In terms of the post - after the recent financing, when looking at all of the common shares, the remaining outstanding preferred shares as well as options and warrants, we have just over 11.5 million shares outstanding..

Okay. I appreciate that. I'll jump back in the queue. Congrats again. Thanks guys..

Thanks Michael..

Thank you. [Operator Instructions] And I'm showing no further questions at this time. I would now like to turn the call over to Mr. Rick Stewart for closing remarks..

Well, once again I'd like to thank you all for your interest in Achieve and your continued support. And we look forward to updating you at the fourth quarter and full year results. Thank you very much..

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day..