Good day, ladies and gentlemen, and welcome to Societal CDMO Third Quarter 2023 Financial Results Conference Call. At this time, all participants are on a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call may be recorded. I would now like to hand the conference over to Stephanie Diaz of Societal's Investor Relations Group. Please go ahead. Hello, and thank you for joining us. On today's call, we have David Enloe, President and CEO, and Ryan Lake, Chief Financial Officer. Today, we will be providing an overview of Societal's contract development and manufacturing business, including updates on corporate activities and financial results for the quarter and nine months ended September 30, 2023. After our prepared remarks, we will welcome your questions. Before we begin, I'd like to caution that comments made during this conference call today, November 8th, 2023, will contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, concerning the current beliefs of the company, which involve a number of assumptions, risks, and uncertainties. Actual results could differ from these statements, and the company undertakes no obligation to revise or update any statement made today. I encourage you to review all of the company's filings with the Securities and Exchange Commission concerning these and all other matters. Our earnings press release and this call will include discussion of certain non-GAAP information. You can find our earnings press release, including relevant non-GAAP reconciliations, on our corporate website at societalcdmo.com. With that, I will turn the call over to David Enloe, Societal's President and CEO. Thank you, Stephanie, and thank you to everyone participating today via webcast. During the third quarter, Societal continued the important work of delivering high-value manufacturing services to our customers, as well as adding multiple new and existing customer projects to our pipeline. In addition, during the period, we opened a new revenue channel by securing a Schedule I controlled substance manufacturing license from the Drug Enforcement Administration that will allow us to expand our work beyond Schedule II products to manufacture for the growing psychedelic drug market. Importantly, during the quarter, the company also took steps to secure its financial position in light of the financing challenges that continue to impact many of our customers and indirectly impact Societal's immediate pipeline. To further stabilize our financial standing, we restructured our debt and certain covenants with our creditors to provide additional financial flexibility to the company. Societal also successfully closed a public offering of common stock, raising gross proceeds of $8.3 million, and initiated a corporate restructuring that is expected to result in annualized savings to the company of approximately $5.5 million. The efforts of the third quarter demonstrated the company's ability to continue to attract new pipeline projects, raise capital, and rapidly reorient the business to best serve existing and new customers, despite today's challenging market conditions. When we combine these achievements with our expectations for 2024 and 2025, we believe we are firmly on the path to a steadily growing business, generating positive cash flow. I will provide a more detailed review of all of our Q3 2023 achievements following an overview of our financial results for the quarter ended September 30, 2023. For that, I'll turn the call over to Ryan. Thank you, David. Good afternoon, everyone. Before I begin, in addition to the brief financial overview I'll provide on the call today, additional details on our financial results for the third quarter and nine months ended September 30th, 2023, are included in our press release issued prior to this call and in our Form 10-Q, which is on file with the SEC. I'll now begin with the results for the third quarter. Revenues for the quarter ended September 30th, 2023, were $23.6 million, compared to $21.6 million for the comparable 2022 period. The increase of $2 million was primarily driven by an increase in revenue from the company's largest commercial customer, Teva, due to the continued pull-through and demand during the quarter, resulting from market share gains against the sole competitor for the Verapamil SR products, as well as a catch-up in shipments to Teva from Q2, during which, as mentioned in last quarter's earnings call, saw a decrease in shipments due to the company's scheduled shutdown of the company's packaging line to implement upgrades required to comply with the new serialization aggregation compliance standards. In addition, there was an increase in shipments to Lannett for Verapamil PM due to timing of customer orders during the year. Further, the company had its first shipment to Otsuka commercial batches during the quarter. Offsetting these increases were a decrease in Novartis and InfectoPharm shipments due to timing of customer orders, as well as prior year inventory builds for InfectoPharm as a then-new customer. Cost of sales for the quarter ended September 30th, 2023, was $19.9 million, compared to $16.1 million for the comparable period of 2022. The increase of $3.8 million was primarily due to higher commercial manufacturing revenue and higher fixed costs to support the newly installed aseptic fill finish line that has expanded the company's capabilities. In addition, there were $0.7 million of restructuring costs recorded during the current year period. Selling general and administrative expenses for the third quarter of 2023 of $5.3 million were relatively consistent with the comparable prior year period of $5.1 million. Included within the current year period was $0.4 million of restructuring costs. Interest expense was $3 million for the three months ended September 30, 2023, a decrease compared to $3.6 million for the comparable period of 2022. The decrease of $0.6 million was primarily due to a significantly reduced amount of aggregate principal and lower interest rates under the company's refinanced debt as compared to the borrowings outstanding during the period that ended September 30th, 2022. For the quarter ended September 30th, 2023, the company recorded a net loss of $4.6 million, or $0.05 per diluted share, as compared to a net loss of $3.3 million, or $0.06 per diluted share for the comparable period of 2022. EBITDA, as adjusted for the period, was $2.8 million, compared to $3.8 million in the prior year period. The $1 million decrease in EBITDA is primarily due to higher expenses during the period as discussed previously. I'll now review the results for the nine months ended September 30th, 2023. Revenue for the nine months ended September 30th, 2023, was $66.9 million, compared to $65.9 million for 2022. The increase of $1 million in revenue was primarily driven by increases in revenue from Teva and Lannett, as well as an increase in pre-commercial development revenues, which were partially offset by a decrease in Novartis and InfectoPharm revenues, as discussed previously. Cost of sales for the nine months ended September 30th, 2023, was $56.5 million, compared to $49.6 million in 2022. The cost of sales increase of $6.9 million was primarily due to mix of revenue and related fixed cost absorption, including increased costs associated with the new aseptic fill finish line that has expanded the company's capabilities and increased material costs. In addition, there were $0.7 million of restructuring costs recorded during the current year period. Selling, general and administrative expenses for the nine months ended September 30th, 2023, were $15.2 million, compared to $15.9 million in 2022. The decrease of $0.7 million was primarily related to lower public company costs and administrative costs than the prior year, offset by $0.4 million of restructuring costs recorded in the current year period. Interest expense was $7.4 million and $10.5 million for the first nine months of 2023 and 2022, respectively. The decrease of $3.1 million was primarily due to a significantly reduced amount of aggregate principal and lower interest rates under the company's refinanced debt as compared to the borrowings outstanding during the period ended September 30, 2022. For the nine months ended September 30th, 2023, Societal reported a net loss of $12.5 million, or $0.14 per diluted share, compared to a net loss of $10.7 million, or $0.19 per diluted share for 2022. EBITDA, as adjusted for the first nine months, was $6.3 million, compared to $10.6 million in the prior year period. The $4.3 million decrease in EBITDA is primarily due to a mix of revenues and related fixed cost absorption, offset by reduced selling general and administrative costs. This concludes my financial overview. For those interested in reviewing our non-GAAP reconciliations, please refer to our 8-K filing or the press release issued today. I'll now turn the call back over to David for an update on operations and achievements during the period. David? Thanks, Ryan. Before addressing the events of the quarter, I want to quickly discuss two matters that fall outside of our specific Q3 achievements. The first is the company's land sale that we announced in August 2022, and the second is the projected margin growth of our Verapamil business. Many of you have requested updates on these efforts, which I'm happy to provide today. As a reminder, Societal signed a sales and purchase agreement to sell approximately 121 acres of lakefront land to David Weekley Homes, an established home builder, for $9.1 million. The land is located adjacent to Societal's manufacturing facility in Gainesville, Georgia. While the land sale process is taking longer than originally expected to close, the transaction is still advancing, with all parties involved working together to obtain the necessary permits and approvals needed prior to closing. I'll now provide an update on Societal's Verapamil business. As a reminder, Societal CDMO owns the NDA and the Drug Master File for Verapamil, a long-approved calcium channel blocker for the treatment of hypertension. Societal's long-standing partners for the marketing of this product are Teva and Lannett. The company's current Verapamil marketing and distribution contracts expire at the end of 2024. As we begin planning for those contracts to be revisited, early indications give us confidence that the economics of the new Verapamil contracts will be measurably improved for Societal. We believe that these improved economics will further strengthen our financial position and facilitate the continued growth of our CDMO business. I will now spend some time discussing key activities during the period. During the third quarter, Societal successfully executed a number of important objectives, with the intent not only of strengthening our customer base and backlog, but also establishing a stronger financial platform from which to navigate the challenging financial environment that continues to impact the businesses and related decision-making of many of our existing and prospective customers. I'll first highlight two Q3 achievements that we believe will support the company's organic growth objectives. First, during the quarter, the company announced that it has taken another step to expand our services by securing a DEA Schedule I license to manufacture in support of psychedelic drug development without committing any additional capital investment. This strategic expansion is a natural fit for the company based on our decades of experience in manufacturing and handling controlled substances. We believe this unique experience positions Societal well to address the emerging psychedelic therapy sector, as well as the growing number of ongoing and planned clinical trials in this area. Also, during the quarter, the company continued to successfully add multiple new and existing customer projects to our pipeline. During the quarter, we signed our first government contract with the NIH for a project to be conducted at our Gainesville, Georgia, facility. With respect to our existing customers, the new work agreements signed during the quarter span a range of capabilities, highlighting the quality of our services and the trust we have earned from our clients. Given today's market dynamics that continue to create financing risk for drug developers, it's important to emphasize that Societal continues to win important projects being advanced by both new and existing customers. We are grateful for their trust and partnership, and we view this as a strong indicator for our ability to build our customer base, project pipeline, and backlog in the future. And while we remain confident that today's financing challenges are temporary, we also believe that it is critical for organizations like Societal to meet the needs of the changing market. For that reason, during the period, the company renegotiated our debt structure and certain covenants with our creditors to provide us with additional breathing room as we wait out the current financing conditions. Specifically, among other benefits, the new terms defer previous mandatory payments, reduce certain payments, and lower certain minimum liquidity and fixed charge coverage ratios. Given this improved debt structure, we were able to further fortify our financial position during the third quarter by closing a public offering of common stock, raising gross proceeds of approximately $8.3 million. These funds will provide added operating flexibility during this time when several projects are being deferred pending a correction of the fundraising environment. Concurrent with the closing of this financing, which was largely supported by many of the company's existing investors, the company's board of directors appointed Wayne Weisman, Societal's previous board chairman, to the position of executive chairman, and Matt Arens joined the board as a new director. Matt is a senior portfolio manager with First Light Asset Management, one of Societal's largest investors and a longtime supporter of the company. Matt has a track record of success supporting micro-cap, small-cap, and mid-cap healthcare companies, and we are thrilled to have expanded access to his experience in guiding companies towards growth and sustainable profitability. Another important undertaking during the third quarter was the initiation of a strategic realignment designed to rightsize the company and increase cost efficiencies by focusing internal operations on later-stage programs. As part of this realignment, Societal reduced its workforce by 26 positions, or 9%, across all aspects of the business, effective September 20th, 2023. We also eliminated nine open positions. It's important to note that a significant majority of the cuts will impact the portion of the business supporting earlier-stage services, which are most acutely affected by the current financing environment. While it was difficult to take these steps, as I stated in my opening comments, these moves are expected to result in annualized savings of approximately $5.5 million. When combined with our improved debt structure, as well as the proceeds from our recent financing, we believe that we are well positioned not only to weather today's difficult environment, but we believe we have created a path to future growth, cash flow positivity, and ultimately, sustainable profitability. Hand in hand with the reduction of our workforce, we have also made decisions to scale back or discontinue aspects of our operations, which will impact the company's manufacturing capacity and accordingly, our revenue-generating capability. Specifically, following a review of our entire project pipeline, we have made the decision to eliminate several one-off transactional projects that contributed little to cash flow on a net basis. We have also opted to discontinue certain early-stage operations that have been recently underutilized as a result of the financing market pullback. While we believe these decisions will drive improved cash flow for the company, they will also reduce the company's overall revenue-generating capacity in the near term by approximately 5%-10%. While the company continues to prioritize achieving sustainable profitability in the future, we believe that it is our first priority to establish a healthy cash flow today to sustain the company in the current financial environment. As a result of our restructuring and our strategic refocusing of assets, we are today resetting our 2023 revenue guidance to account for the discontinuation of certain programs and services to between $92 million-$94 million... and EBITDA as adjusted guidance to between $11.5 million-$13 million. Given the achievements of the quarter, combined with our leaner and highly focused operation, I wish to emphasize the optimism we have for the future of Societal CDMO. We have high conviction that the current market valuation of our company is not at all reflective of, nor indicative of, the real value of the company we have built and continue to grow every day. When we view the company's 2023 achievements to date in the context of expectations for 2024 and beyond, we are bullish on our prospects for growth in the near future. As I have outlined today, the third quarter was a highly productive time during which the company's operational performance was strong. During the period, our team added new projects for both new and existing customers. These projects span a range of Societal's capabilities, and we believe speak to the growing strength of our reputation within the industry and track record of success with our existing customers. As a result of our rebranding and related marketing activities, as well as the consistent efforts of our business development team the past couple of years, the company's name recognition has increased in the CDMO space and resulted in the strong lead generation that continues to fuel our product pipeline. While we have scaled back much of our early-stage work, we continue to successfully support several early-stage programs that are advancing through the clinic, each with increasing manufacturing demands. Importantly, we are executing on more than 10 programs, which are either commercial tech transfers or programs in phase III testing that are moving toward approval filings. These phase III to commercial ramping activities are highly profitable for the company. Keep in mind that we only had one such project only a couple of years ago. We're very excited to have such a strong portfolio of projects at this stage. Beyond this, the company opened what we hope will ultimately become a significant new business channel by securing a license to manufacture in support of psychedelics drug development. Given our years of experience handling controlled substances, we believe we are uniquely qualified to support the emerging psychedelic therapy sector, as well as the growing number of ongoing and planned clinical trials in this area, and we're very excited to be working in this innovative area of drug development. Over the last few months, we've also had a number of notable corporate achievements. During the third quarter, we initiated a strategic reorganization, favorably restructured our debt, and raised funds in a very challenging market. As a result, our balance sheet has improved significantly in recent quarters, and we believe our financial standing will continue to strengthen in 2024 due to a number of factors. As discussed earlier, during 2024, we expect to close the land sale, further lowering the company's debt and interest expense. In addition, in 2024, we expect to pay off the note related to the acquisition of IriSys, which will reduce our non-operational cash obligations. And finally, we expect to execute new marketing contracts for Verapamil that we believe will increase our profit levels due to favorable economics for this important part of our revenue portfolio. When you consider these achievements and our building of a CDMO over the past three to four years on the back of an enterprise with legacy commercial manufacturing experience measured in decades, and combine that with increasingly optimistic projections for CDMO outsourcing trends in our industry, particularly in the U.S. right now, we believe that Societal CDMO is well positioned to achieve steady growth in the near term and are positioned to reach positive cash flow in 2025. This concludes my prepared remarks for today. We can now open up the call for questions. Operator? Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star one one on your telephone. Again, to ask a question, please press star one one. One moment for our first question. Our first question comes from the line of Sean Dodge of RBC Capital Markets. Your line is open. Yep. Thanks, good afternoon. David, the cuts you're making to the earlier stage services and capacity, should we think about these as being somewhat temporary and that they could be added back or resumed at some point when the macro recovers? Or are these more, kind of permanent modifications you're making to the long-range revenue-generating capacity of the company? Yeah. Hey, Sean, thanks for the question. No, I definitely would say it's the former. We're really responding to the rate by which these early-stage programs are being decided upon. And we see a lot of proposal activity. We have a lot of lead identification, but then we see those programs being, you know, proposed on and then held until further notice by the sponsors. And so we needed to ratchet down that part of the organization to be more appropriately aligned with the pace by which the work was coming to us. But it can definitely be put back in place, and we've got a fully functioning organization there, just a smaller version of it. Okay, great. And then, the timeline on the restructuring, it sounds like a lot of that was kind of put in place as of September 30th. You said $5.5 million of annual savings. Will you realize any of that this year, or should we think about that being kind of more incremental for next year? ... Hi, Sean, it's Ryan. So I would say that, you know, we expect it to be roughly net neutral for 2023, and that expected savings to really start to be materialized at beginning in the first quarter of next year. Okay, great. And then just last one for me. David, I think you said you all now are involved in 10, if I heard right, 10 late phase in commercial engagements. Is there some sense you can give us of when all of those should begin to ramp and contribute to revenue? Is that something you expect to see being pulled through kind of en masse in 2024? Are these more engagements that they're gonna take a little bit, kind of longer to, I guess, to kind of iron out? Yeah, good question. I would say that, you know, the average tech transfer might take between 18 months to 2.5 years, and they're starting at different points in time, and we're obviously seeing revenue throughout that tech transfer process. So each of those programs that we've alluded to is in motion and is part of our revenue profile at this point. But, you know, the part that I'm really trying to emphasize is that as they become commercial, we really get to fold them into the way we have historically conducted business in such a fantastic way, which is through our supply chain organization, with forecasts and the ability to plan for those and you know, put them into the engine that we've built that is delivering between 98% and 100% on time and full on a yearly basis. And so, I think it's good for the business that those get approved, and you know, we see it's actually more like 12 or 13 of those programs, so the greater than 10 is, you know, real. We're really excited about the growth that we've been able to see in that part of our business. Okay, great. Thanks again for the time. All right, thanks. Thank you. One moment, please. Our next question comes from the line of Matt Hewitt of Craig-Hallum. Your line is open. Good afternoon. Thank you for taking the questions. Obviously, a very busy quarter, and quite frankly, a busy year. Maybe first up, regarding the market, obviously, it's been a challenging environment, to say the least. But have you seen any changes over the last 90 days? Some companies out there are saying that they're starting to see some green shoots emerging and some customers starting to, you know, talk about, programs and projects, and maybe those could start here Q4, but more likely, Q1 of the new year. But what have you heard over the past 90 days? Mm-hmm. Yeah, thanks, Matt. This is David, obviously. Yeah, you know, thinking back to a couple of weeks ago at the CPHI conference in Barcelona, the tone and tenor was, I would say, I don't wanna exaggerate, but it was definitely more upbeat and I would say, sort of quietly competent than the year prior, right? Which was the beginning of the downturn last year. So, it feels like the industry has accepted and embraced the new normal. Certainly there are a lot of cell and gene therapy programs that are, you know, cycling through the system for good and bad and faced with some challenges there. But, we are having more positive conversations with companies who have programs that they intend to move forward. And, you know, it looks like we're back to 2019 capital funding levels, and it also looks like people are willing to accept that that's going to be where we stay for a while. And I think that clarification and that lack of uncertainty is what everybody has been looking for. And so, you know, I can't point you specifically to spaces and say, green shoot here, green shoot there, but definitely the tone and tenor and attitude is one of: We've got to move forward and we've got to continue to develop our pipeline and our products. That's very helpful. Thank you. And then regarding the new psychedelic opportunity, obviously, it's very early days. But given your track record, given you're already participating in the Schedule II market, you know, are you having some conversations? Is that an area where, given what seems to be a lot of excitement about that market, you think that you could have a contract within the next quarter or two? Just, I'm just trying to figure out the timing on when that first one might come through. Yeah. I mean, that part of the market is certainly getting a lot of attention. It's early days, as you pointed out first, but they too are struggling from a financing perspective. But I do definitely see green shoots in that space. You've-- I've seen a couple of acquisitions, one from a major Japanese pharmaceutical company that bought a small Jap-- excuse me, a small Canadian psychedelic firm, and we found that to be encouraging news and validating for the space, right? And so I would say, Matt, we're bullish. I don't wanna say in Q1 or Q2 there's going to be a contract, but there have been several conversations with companies in the space, and we're definitely doing everything we can to make sure that we've created the awareness that we're ready to support those programs. That's great. And then maybe the last one, and, it's - I'm not sure if this is for you or Ryan, but from a gross margin perspective, obviously there was a little bit of a hit in Q3, from some of the restructuring charges. But should we anticipate a little bit of improvement even beyond that in, the fourth quarter? And I realize it's still early, maybe you haven't kind of worked through this yet, but how should we be thinking about gross margins next year? Thank you. Thanks, Matt. So, we do expect improvement in gross margins, I think, in the high 20% range. So for the year, that should bring us to kind of 19%-20% gross margin range for the year based upon the guidance that we put forth. We haven't provided guidance yet for 2024, but, you know, just, you know, thinking about a couple of things that are extremely important for us as we are planning for 2024. You know, we're always looking at ways at how we can reduce our cash burn and prioritize our spend on, you know, strategic value and growth drivers. And, you know, we do expect to generate positive cash flow from operations next year and also be free cash flow positive in 2024. In addition, we have debt service payments and expected gross proceeds from the land sale that David mentioned earlier, and that would result in a reduction of our debt balance from roughly $40 million-$25 million by the end of 2024. So we still have a few cards to play in terms of improvement in not only the balance sheet, but also margin improvement next year, and heading into 2025 through, renegotiated contracts with Verapamil. That's very helpful. Thank you very much. Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star one one on your telephone. Again, to ask a question, please press star one one. One moment, please. Thank you. One moment, please. Okay, we do have a question from Max Smock of William Blair. Your line is open. Mr. Smock, your line is open? Thank you. One moment, please. Okay, I'm showing no further questions at this time. Back over to David Enloe for any closing remarks. Many thanks to all of our clients, supply chain, and other service providers and partners, and particularly to our excellent Societal team. We look forward to many great achievements in the months ahead. Thank you again for participating today and for your continued support of Societal CDMO. Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating, and have a great day. You may all disconnect.