Agile Therapeutics Inc (AGRX) 2021 Q1 法說會逐字稿

Good afternoon, and welcome to the Agile Therapeutics First Quarter 2021 Financial Results Conference Call. Please note today's event is being recorded.

I would now like to turn the conference over to Matt Riley, Head of Investor Relations.

Hello, everyone, and welcome to today's conference call to discuss our first quarter 2021 financial results and corporate update. Before we start, let me remind you that today's call will include forward-looking statements based on current expectations, including statements concerning our financial outlook for the future, management's expectations for our future financial and operational performance, our business strategy, our assessment of the combined hormonal contraceptive market, and the potential market share for Twirla among other statements regarding our plans, prospects and expectations.

Such statements represent our judgment as of today, are not promises or guarantees and may involve risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements. Please refer to our filings with the SEC, which are available through the Investor Relations section of our website for information concerning risk factors that may affect the company. We undertake no obligation to update forward-looking statements except as required by law. The information on today's call is not intended for promotional purposes and not sufficient for prescribing decisions.

Joining me on today's call are Al Altomari, Agile Therapeutics' Chairman and Chief Executive Officer; and Dennis Reilly, Chief Financial Officer. Following our prepared remarks, we'll open the call to questions.

Let me now turn the call over to Al.

Thank you very much, Matt. Good afternoon, and welcome everyone to our first quarter 2021 conference call. To kick off the call, I'd like to highlight what we believe are the 4 most significant takeaways from today's update. Number one, I want to remind everybody we began our initial commercial shipments of Twirla to the wholesalers in late December 2020. As the wholesalers worked down their inventory, we anticipate product revenue will more closely reflect script demand growth at the retail level. Number 2, our sales force received their samples also in late December and commenced distributing samples to healthcare providers or HCPs in the first quarter of 2021.

While samples are not reflected in the total prescriptions or the TRx data, we believe samples often lead to HCPs writing future prescriptions. Number 3, we will continue to invest in growing Twirla and expect our operating expenses in the second quarter 2021 to be higher, reflecting increased spending on brand marketing and product sampling. Number 4, we are excited about the recent growth in the number of HCP writers and the resulting TRx growth, and we believe the brand is laying the foundation for revenue growth into 2021.

To that end, I want to spend our time today walking through Twirla's progress to date, and why we are so encouraged. I will also discuss updates on our marketing efforts to increase awareness of Twirla. Finally, we will provide an update on our financial performance. We're using slides this quarter to guide and supplement today's conversation, and you'll hear me refer to these as we progress through the updates. You can find this presentation on our website.

Now let’s talk about Twirla's performance. First I'd like to give an update of Twirla and our performance to date, our first full quarter of commercial launch. As I mentioned, we began sampling in the first quarter and we believe our sampling efforts are important to driving HCP and patient awareness of Twirla. The first several weeks of quarter one included intensive sampling, and in the weeks that followed we've seen steady trend of increasing scripts, refills and awareness of our product.

On Slide 4 of the deck, which outlines a 4 week rolling average of the first quarter, you'll be able to see the trend quite clearly and we're thrilled to see the growth on all these key performance metrics. We believe this is a sign of a healthy brand and have seen these trends continued into the early part of the second quarter. As we progress through 2021, as we did so in our earnings press release, we expect to update you on a quarterly basis rather than providing such granular detail as shown on Slide 4, but we thought this data would be useful for the purposes of providing on initial insights in the first quarter of our launch.

Our growth in total prescriptions was driven by an increased number of prescribers and growing refill rates. The graph on Slide 5 showcases our monthly Rx data. As you can see increase in the number of TRxs from January onwards and an increasing refill trend as well. We expect this uptake will continue as we move into the second quarter and beyond.

We're pleased with the progress today on the growth of our prescriber base. When we last spoke, we told you that we would continue to focus on educating and expanding our prescriber base as we seek to grow our brands. I am excited to update you on this progress of what we're seeing.

During the first quarter the number of prescribers has increased dramatically. As of March 31st, we had more than 855 writers and the number has continued to increase into the second quarter to over 1,200 prescribers. You can see the prescriber growth on Slide 6. The growth in the number of prescribers writing TRxs for Twirla has continued to steadily grow and increasing the momentum at the TRx level.

Importantly, the number of TRxs each prescriber is writing has also grown, and we are seeing higher refill rate and approximately 25% of our units dispensed to pharmacies are now refills. Our sales team of 65 sales representatives and 8 virtual sales specialists continue to engage with both in-person and virtual visits with prescribers.

With vaccination rates continuing to increase, we anticipate having the ability to meet in person with a growing number of practices, which we expect to enable us to make continued inroads in complement with our virtual sales efforts.

I also want to comment on our efforts to expand our distribution network. On our last call, we discussed a new arrangement with Sterling Specialty Pharmacy. Today we can report this relationship, while it's early stage, has been a very productive one. We are encouraged by the efforts to date and believe this collaboration will support our continued sales uptake of Twirla. While the agreement has only been active for 1 month, we see a number of patients and prescribers continuing to grow. We also recognize the increasing role of telemedicine in facilitating access where we continue to evaluate this channel as we move forward with Twirla.

Now on the managed care. We remain focused on increasing access to Twirla through a variety of efforts including the focus on expanding access and reimbursement coverage for Twirla across managed care and government insurance plans. In particularly, we made a lot of progress in obtaining Medicaid coverage for Twirla. Currently, Twirla is covered with no prior authorization in 20 states and we're expecting coverage in Texas in May of 2021.

The Medicaid market represents a large number of combined hormonal contraceptive or CHC users. Medicaid volume for oral contraceptive total prescriptions in 2020 was nearly 8 million. It's worth noting that we believe roughly 1/3 of the business of the other patches comes from Medicaid. We're encouraged by this trend and view this as another source of ongoing market growth for Twirla. We remain committed to maximizing access for Twirla for all women interested in using our product.

Now I'd like to turn to a market update. I want to some time on the work we've been doing to increase awareness of Twirla. If you've been following along with the deck, I'm now on Slide 7. We focused on reaching ACPs and consumers alike through our branded and unbranded marketing efforts. Let me walk through some of our efforts this quarter.

For the I'm So Done unbranded campaign, our efforts continue. Last quarter we told you we were the first unbranded contraceptive campaign to launch on TikTok. This was very positive for us driving increased visits on our unbranded website. We believe this is a strong indication of the interest and underlying need for birth control education. We're also leveraging I'm So Done to drive awareness of the birth control category, and now we're focused on driving Twirla consideration and trial amongst consumers.

This leads us into our branded Twirla efforts. We believe that a robust brand marketing effort is important to drive awareness and trial of Twirla. Our strategy is focused on reaching women with a multi-channel creative campaign that positions Twirla as the first and only weekly contraceptive patch that delivers a low dose of estrogen, and which meets women at key moments in their day to support engagement with our brand.

With this in mind, we are extending our digital reach by advertising on dating apps, which include Tinder and OkCupid. Over 29 million women leverage dating apps and the user base skews to millennials and Gen Z, both of which coincide with the Twirla market segment. Moreover, we expect to begin advertising on Spotify, which has a monthly user base of approximately 22 million U.S. women between the ages of 18 and 34.

The key takeaway here is that we're strategically rolling out more and more branded consumer marketing communications and resources as we simultaneously increase HCP awareness. We expect a stronger incremental branded consumer investment to continue over the quarter and into the quarters throughout 2021, and we look forward to providing you additional updates.

Before handing over the microphone to Dennis, I'd like to reiterate our commitment of building a robust women's healthcare business. We believe this is the first step of achieving this is through the growth of Twirla.

I'll now turn over the call to Dennis Reilly, our Chief Financial Officer, and he'll provide an overview of our financial results and a business update. Dennis?

Thank you, Al, and everyone joining us today. As Al commented, we are excited about the growth potential of our business, and I'd like to provide you with more clarity around the phasing of our growth for this year particularly what we experienced in the first quarter from a financial perspective, a bit more detail on how Twirla's performance has been trending year-to-date, and some general parameters on how to think about our results for the full year.

If you're following along in the deck, I'm referring to Slide 8. As Al mentioned we closed out December 2020 with the initial stocking of Twirla. This represented shipments of approximately 6,500 units of Twirla into our wholesalers and resulted in nearly $750,000 in net product sales revenue in the fourth quarter of 2020.

Wholesalers needed to work down these inventory levels and as a result, we realized $116,000 in net product sales revenue for the first quarter of 2021. The rate of inventory depletion came broadly in line with our expectation. And we expect that wholesaler restocking will likely be reflected in our second quarter 2021 results.

We are encouraged by the progress of the sell-through of inventory for wholesalers into the market, and as Al said, in the momentum we are seeing in prescription growth. We believe now that our wholesalers have less than 30 days inventory on hand based on our current estimated demand levels. Therefore beginning later in the second quarter 2021 and throughout the second half of the year, we anticipate our product sales revenue will track closely to the increasing script demand and wholesaler restocking should more closely reflect retail sales.

This aligns with our initial full year expectations for Twirla, which was based on the assumptions that sales growth would increase in 2021 as product samples are worked through, our prescriber base expands, patient awareness of Twirla increases, refills begin to occur and overall, we gain traction in the CHC market.

Regarding our quarterly cost. Our cost of product revenue for Q1 2021 was $1.2 million. This included expenses supporting our manufacturing and distribution efforts as well as personnel costs and $500,000 of non-cash depreciation expense. We expect these relatively fixed costs will become less significant as a percentage of sales as volume increases. There is no direct cost of product revenue during the 3 months ended March 31st as all the product that we sold was validation inventory that was previously expensed as R&D in the fourth quarter of 2020. We expect all this validation inventory to be utilized in 2021.

Our operating expenses were $15.2 million in Q1 2021 versus $7.6 million in the same period a year ago. We anticipate our second quarter operating expenses to be $3 million to $5 million higher or approximately $18 million to $20 million reflecting increased commercial costs from product samples and spending on branded marketing.

Our R&D expenses were approximately $2.1 million in the first quarter 2021 compared to $3.2 million in the same period a year ago. The decrease was primarily attributable to the absence of 2020 pre-validation manufacturing costs for commercial manufacturing of Twirla by Corium, our contract manufacturer, offset in part by higher clinical development and personnel-related expenses.

Selling and marketing expenses were $9.2 million compared to $1.7 million in the same period a year ago. This increase in period-over-period selling and marketing expenses was due to higher costs associated with the activities for Twirla including brand building and advocacy, and development of the company's contract sales force. G&A expenses totaled $3.9 million compared to $2.7 million in the same quarter a year ago reflecting higher personnel costs and professional fees in support of the product launch and commercial activities as well as an increase in stock compensation expense.

We closed out the first quarter with a net loss of $17.1 million or $0.20 a share compared to a net loss of $7.9 million or $0.10 per share for the comparable period in 2020. As of March 31, 2021, we had cash, cash equivalents and marketable securities of $40.1 million compared to $54.5 million of cash and cash equivalents as of year-end 2020.

As a reminder, we have $25 million of capital potentially available through our loan facility with Perceptive Advisors, including a tranche of $15 million available in 2021, and another tranche of $10 million, which will be available through June of '22. Both are contingent on achieving a pre-determined revenue target.

We will continue to monitor our spending closely and if we need to we can modify our sales and marketing expense. Additionally, we have the potential to access additional capital through our existing at-the-market arrangement, under which we can sell up to an aggregate of $50 million gross proceeds through the sale of shares of common stock.

Our team continues to be excited for what lies ahead. We believe we have established and remain encouraged by the continued momentum for Twirla. We remain focused on maintaining our disciplined and nimble approach, and are focused on making the right investments to encourage strategic growth and maximize shareholder value.

With that, we're happy to take your questions. Operator, you may now open up the line for Q&A.

(Operator Instructions) Our first question is from Dan Busby from RBC Capital Markets.

This is Steve on for Dan. I've got 2, and I'll ask them both upfront, but the first one, I was wondering if you can provide us a little more color on how the launch is progressing. And in more particular, what are you hearing from physicians or in patients on the product, any particular push backs you're hearing? But I also think it might be pretty interesting to hear any feedback from maybe older physicians who've had experience with prior contraceptive patches and how they're viewing Twirla here today? So that's the first question.

And then the second question is related to, obviously it's early in the launch, but any type of trends you're seeing with patients with regard to age or maybe different types of BMI. And along with that you guys recently released some post ad hoc data from the SECURE trial and was wondering how that data may help physicians potentially prescribed patients with a BMI between 25 to 35. And then maybe any other type of dynamics we should be thinking about here going forward?

Steve, this is Al. You packed a big punch in 2 questions, so let me do them in the order you asked. So how has the launch gone, so what are we hearing from physicians and patients. So it's interesting. I think the group on the phone knows that we -- so we're hearing great things from physicians and also patients, and equally as important we're not hearing any problems.

So I'll just give you an example. We had a patch replacement program set up that made -- if anybody had a problem with one of our patches, they can just call us, we'd replace it. I believe as of yesterday we had 3 phone calls after multiple, multiple thousands of prescriptions and samples. So medical affairs we don't hear many complaints or any other than questions from doctors.

So we hear day in and day out rave reviews of our product from both patients and physicians, which is really wonderful. And I think the reason I can point to that quite frankly is what we're seeing is high refill rates. We're seeing our brands getting refills, which is to me a surrogate of patients liking the product and staying on the product.

So the more we see refills grow, Steve, the more we feel good that we have got and that describes a very healthy brand and then it describes that and I was trying to say that also. So every indicator says that when a patient goes on our drug they like it, and so we hear nothing.

Your question about older physicians is a very good one. We do get a lot of questions from older physicians about what makes us different than the other patch either the Ortho Evra patch or sort of current generics of Ortho Evra. So that always comes up, if not our reps proactively bring it up. It's interesting some of the younger physicians don't even know that patches are available. So we're re-teaching physicians and all that was really borne out in our market research. We expected both those phenomenon, so market satisfaction, patient feedback, physician feedback, everything is green, Steve.

So trends, you mentioned ACOG. We're very proud of that paper that we -- was published at ACOG. So what we were able to do was use our SECURE trial to look at that cohort of patients between 25 and 30 BMI to say do we see anything more in there and can we just give more granularity. And I think you could see in the paper, we were quite satisfied, as was the authors, that Twirla is an effective use. We don't get a lot of questions honestly in the field with the limitation of use of 25 to 30.

And when we present the actual upper bound being you can’t prescribe to over 30s as off-label most physicians say thank you. Thank you for telling me the appropriate patients. They really give the company a lot of credit for its trial and then they say look, I probably know that other products have that. And I think the group on the phone knows that after we got the product approved the other patches were relabeled also with the weight restriction of through 30.

So -- and I think as we -- the company stated before, we see more and more products that are going to really run into this issue. So from a trending perspective, I think the most important piece of information I can share with the group is that 56% of our prescriptions are coming from new patients that have never been on therapy the best we can see. So that's fantastic. About 25% of the patients have come off birth-control pills.

So about 81% of the patients are either new to therapy or to have come off the pill and that's exactly in line what we thought. About 15% are from another patch and the rest is coming from other methods. So the market's responded pretty much the way we've seen everything. We're getting news to our patients, we're getting folks that are tired and frustrated with pills and the market is talking to us. It likes our product. So that's a long answer, Steve, but you gave a complicated question.

Your next question is from Oren Livnat from H.C. Wainwright.

Can you hear me?

Yes. I can, Oren.

Great. Okay. It's obviously very early and clearly, we don't have a real representation of underlying demand given samples, but I've been really encouraged to see the last several weeks prescription trends in IQVIA. I mean it might be modest but it looks like the early stage of a parabolic-looking curve, I'm no geometry major.

So could you help us understand what sort of coverage are these scripts coming through? Are these -- do these represent the Medicaid coverage or they represent your relatively limited commercial coverage at this point? Or are you perhaps already pushing through or getting some docs to push through prior auths such that this volume, as it increases, should maybe drag other managed care payers to the table to cover you?

Yes. Terrific question, Oren. So we are also very encouraged the last couple of weeks. So I'm not a geometry major either but I like when things point north, that's all I know. So no, I think that -- I think what I would say in the last couple of weeks what we believe is happening in the data is that we continue to grow, number one, our prescriber base. Number one. Number 2, we're getting new prescriptions. New prescriptions are the lifeblood of us in any chronic med, but any meds in general but also is our refills.

Our refills are starting to become very meaningful to our weekly data. I don't want to say it's a floor, but it's nice to know that you're going to -- before even the week starts you're getting some refills from the prior week’s acquired work. So I think it's an accumulation born of those 3 things that is generating the momentum and hopefully it's a harbinger of things to come.

Hopefully, it's what we tell our team that look, the more docs we get, the more they write, the more new prescriptions we're getting. If they're happy, as Steve just asked me, on the medication they keep going back for more, the business starts moving. And then as we tried to educate everybody in the first quarter, we knew, Oren, all along that look, the first 4 to 6 weeks we were just laying down samples.

As you could see in the data we put out on Slide 4, there just wasn't much action in refills, and the new prescriptions were just really slow because there of the sampling phenomenon. So I think we need to work past that. I can tell you that your last question, I can say without the data perfectly in my head, very little Medicaid business. We -- most of the Medicaid wins we just got happened in April, so we're just starting to get a taste of Medicaid.

So it's overwhelmingly commercial payers at least in the first quarter results. The Medicaid businesses is pretty good for us. I mean it's an important part of the category. 1/3 of all patch business roughly or I think you said 25%, I'll say 25% right over my skis of the business was sitting in Medicaid. We couldn't touch it. It just -- we were locked out. So boy, it's nice to see those 20 states open up and Texas coming right behind. These are big markets for us. So we also think that will play into the future uptake, if you will.

And to your last question. Look, we're seeing physicians and the plans we have good access to obviously, it's easy but we are seeing physicians step up and you're going on prior auth, but they're allowed under the Affordable Care Act to ask for our brand, and they're speaking into it. So we're seeing that and that's where the Sterling organization helps us out, Oren, fight through some of those prior auths, if you will.

So we are seeing physicians say, hey, this brand's working. I'm going for it. So now, we'd like to get more coverage and we’d like to pick up more accounts in both the commercial side and Medicaid side but boy, it's nice to start the second quarter of the line pointing North, Oren, in the Medicaid business and the commercial business still clicking along. So I think it's a series of little things. I wish I could point to one event.

And then last thing I would say, like we haven't spent much money in the first quarter on unbranded. I think you can tell that in my script. We throttled back. We said let's wait until the market is ready. So all the consumer insights I was mentioning and the extra spending, it’s all coming in the second quarter, you've not seen the benefit of that yet. So hopefully that will continue our momentum, if you will.

I just didn’t think the market was ready. So we held back on some of our bigger spending on HCPs and the branded stuff until the market was a better condition. I wanted to see a bigger beachhead of doctors, so we're ready now.

And if I could ask a quick follow-up because obviously you want to -- even though this doesn't translate to revenue yet as you work through inventory and samples. But when we try to think of the run rate that we keep track of as your prescriptions continue to climb, we need to plug in some sort of normalized value per script or net value per script number.

So I know it's early but given where you see these scripts are coming from and the contracting that you've put in place in Medicaid, ballpark can you give us any kind of guesstimate what's a normalized run rate?

Yes. I can help you a little bit. I think, Dennis, I'll take a shot and you can clarify. What we -- we got some revenue in the first quarter, right so the channel is beginning to working down. I know it's very symbolic, the amount of money we put on the table but it's indicative of towards the end of the first quarter the channel was kind of getting more normalized. We would expect by the end of this quarter that we're really almost on a one-for-one basis. So as we sell a unit, they stock a unit, give or take now. So we're very hopeful. So I think the second quarter cleans up the normalization, Oren, if you will.

I think the one thing we'd like to point out that I think is worth and again, I'll go on Slide 4, the cycles. Every time we get a script, we get about 1.3 cycles. So we get more than 1 cycle. So if you think of the value of a script, it's not 159, 75 WAC, it's about 210 or 215, whatever. So the value of a script started becoming important to us. So we'd like to see that cycle dispense number to continue to grow. So I think, Oren -- I think the channel gets more normalized in second quarter, and I think in third quarter onward, I think that's what Dennis was saying. I don't know Dennis, did I get that right?

Yes, you got it right. I mean it's normalizing now really, I'd say by the end of May. We're shipping pretty close to demand levels. They should all be equaling out.

Your next question is from Leland Gershell from Oppenheimer.

Congrats on the progress. Two questions from me. First, on the reimbursement side, it sounds like your progress so far has been good at least as good, if not even a little bit better than what you had. I believe you had kind of given us some soft indications around where you expected to be on reimbursement progress over the initial kind of near 1 to 2 years of the launch period.

Have there been any areas where you've had pushback? Or is it just simply the nature of the process that you've been going through the states and that we could actually be kind of at the majority of covered lives by the end of '21, which I think would be a little bit ahead of prior? And then I have a follow up. Thanks.

Yes, Leland, really good question. I think at this point we think we're chipping away at this. The wins we've got in Medicaid certainly add up a nice bucket of lives. So I think we're being very scrappy and I think looking for every opportunity to make Twirla available for women.

Look, the option is still at the PBM level, that's the game changer. We've got one PBM, we've got -- we're in a great position with the 2 other ones, they're okay. But until we get on a national coverage with those, it's hard to pick up the huge wins. But even though the PBMs kind of rule the roost, Leland, at the high level it's not the individual plans under them. So even though we're not on contract at the national level with the PBM, we're seeing a lot of coverage and availability.

And then just to remind everybody on sort of what Oren was asking me under the Affordable Care Act even if we were like all formulary or excluded from formulary, if a physician wants the product, he writes what is called a letter of medical necessity. And it's on our website, it’s on our twirla.com website. You could see it. It is a relatively simple form that says, look I want this patient to get this product.

And by the way the Affordable Care Act is designed, the physician is supposed to get their wishes. So this is where kind of hand-to-hand level we're getting these scripts to go through and that's where Sterling will be able to help us. They get patients and providers really great service, both of these letters of medical necessity, Oren -- I mean, Leland, and also give the patient some extra handholding if they need them where they also -- and then if the patient wants drugs shipped to them at their home, we'll get to them. We’ll ship it anywhere in the country for them. So they get a lot of -- that's a very big value add service.

So I think for us, Leland, until we can get the brands to the point that we can get on the national coverage, we're going to keep chipping away at these local wins, if you will. And the GPO agreement last quarter we mentioned to you all, that was another example. So we're swinging for the big ones, and we're taking the singles too. But I think we're -- I think what you can expect from us is we're still at it and we can -- we would expect it to continue to grow.

Thanks. And I know it's still relatively early days, but I'm sure you're learning a lot as you go out with all the different avenues by which you can reach the consumer these days online and in other advertising. Just wondering if you could comment at all on kind of where you're seeing the effectiveness of your different campaigns in terms of how much you need to put in terms of the spend and how much you think you're getting out. And how that may affect kind of your decisions for marketing strategy as we get through the rest of the year and beyond?

Yes. Good question. I mean, I think that everybody on the call knows we're big fans of activating consumers. I think we made 2 strategic decisions that are, I think -- in hindsight I think were the right ones. Number one, we decided to use samples instead of vouchers. So we said let's just get the doctor to write -- use a sample. It’ll slow down the flow to the patients at the pharmacy, if you will, but once they get there we get paid for everything. So I like that. Even though at times sometimes we were considering using like pharmacy vouchers, but we thought it was the right thing to do. So I think that was -- I'm really glad we did that.

But then, look, I think for us to spend -- big spend on TV or even radio while it feels good, you get your TV ads. And I was watching TV last night and an ad came across for a contraceptive product. I'm like, I'm not the right target. So we just aren't big believers that most of these young women don't even own TVs.

So we think the streaming platforms like Spotify, TikTok and all those ones where we could target the branded advertising, Leland, is a better spend of the money. We have a higher degree of confidence that's a better target and -- so for us, that's what's exciting and we're seeing some early signs that our early work there is really paying off.

I mean, ultimately it's great to say, hey, the consumer saw your ad, we want to see if we're getting patients into the door. And we're starting to hear with our ears and we're starting to do some work on this. The doctors are starting to see patients come in asking for Twirla by name, so they saw the ad and our Twirla website is starting to light up with people coming in.

So relatively early days, but I think they are the decisions we made saying, let's spend our money more smartly in digital where we think arrivals are and then we have a much higher chance of activating her to either come to our website or even better yet go to a doctor. So I hope the next quarter I'll be able to tell you a little bit more, but we're full bore now in the second quarter with our -- if you are DT social spending. I don't really know what it's called anymore, but we're going pretty heavy.

And also with the physicians, we've held back on some spending in the first quarter. That's why we're signaling the second quarter is going to be a little stronger from a spending perspective. Same drill with the healthcare providers. We are, right now, only deploying some of our more aggressive campaigns even to them. We just wanted to give our reps that beachhead to get out there in the first quarter. So we wanted to see the brand get its legs under it and we do, and that's why we're turning it all now. So we like what we see.

Your next question is from Tim Lugo from William Blair.

And I believe Q4 the 749,000 was mostly stocking, can you just confirm if that's around how much stocking we should expect in Q2 as well? And then looking at the number of HCPs you ended the quarter at 850 but I think in your prepared comments, you said you're now about 1,200, so that’s 350 in April. So, kind of where do you expect that number to trend throughout the next couple of quarters?

Yes, bigger, Tim, is the number, right? I mean...

Understood.

No, and you're my math guy. Keep me honest. We're picking up about 100 new doctors a week, give or take. Some weeks 90, some weeks 110, but let's say about 100 doctors a week. That's awesome. That's awesome. They're new writers, hopefully they've been through their samples, and now they're writing scripts.

So I think I mentioned it before and the group before and that's an important metric for me. I mean, that's how we grow this business, getting doctors that said okay, I’m done with the samples. Let me start writing scripts. So I think that is an important one.

Yes, I mean, in the fourth quarter -- Dennis, I'll say it, everything was stocking. I think we had like 10 scripts. I mean it's stocking. So that net sales reported was us filling the wholesaler's shelves, if you will, and you could see that they've worked down in the first quarter, a lot of it. And they're actually re-buying inventory from us.

We posted a small quarter, but it's still good to say in the end of the first quarter that we're saying, okay, we worked down the shelves and the product is making its way in the pharmacy and the consumers’ hand. So as Dennis mentioned, we're not quite done yet, so we think it will be fully normalized in May, and then from that point on, Tim, it’s almost like a one-for-one. Every script you see we should get a sale for it, give or take.

But that's the way it should work and I think we are optimistic that they’ve worked down the bulk of that and then we should be able to just look at script volume and say, okay that should be, give or take, and less -- and there's some channel that we don't -- that don't report. As you know our GPO agreement doesn't report, but other than that, that should be directionally what you should be seeing later in the second quarter and particularly into the third.

Okay. And looking at the cash burn. I think over $14 million in the quarter. With the direct-to-social kind of ramping up, I assume that's going to ramp as well, but I don't quite understand how efficient this is and obviously, a direct-to-social is different than Super Bowl ads.

Yes. So I just want you to walk, Tim, through what you were guiding for the second quarter because the first quarter was light, Tim. So I mean -- because we didn't had a -- we had to buy samples, a few of those from Corium, and then as I mentioned, we didn't do too much in the way of consumer spending. So Dennis, why don't you walk Tim through what -- the reason why we're signaling the second quarter being up?

Yes. I mean, as Tim said, we burned about a little over $14 million net in Q1, the OpEx was $15 million, a little bit right around there. We're going to buy some more samples, we're going to do some more sampling and we're going to also kick up the branded marketing in Q2 as Al said. So we anticipate it could be $18 million to $20 million. Now the offset there is all roads lead to revenue, right. If we continue to start to see the revenue cranking, we should see cash flowing in. It's how fast does the revenue grow is kind of our whole challenge going forward there.

So we think in the third quarter, Tim, that's our goal. I mean our third quarter our revenue line, as Dennis was saying, our margin line should need to work for us right. So that's what we're expecting, so the first quarter we didn't draw up any margin because it was just insignificant. And second quarter onward, the revenue line's got to work for us. So but we're seeing on the rise, I should say, the sampling cost is -- I don't know, Dennis, I’m going to use a complicated term called lumpy, so some quarters we need to buy more samples, some we don't. So this year...

Yes, we will pay for that.

Understood. Lumpy is a technical term, so I get it.

Your next question is from Naz Rahman from Maxim Group.

I want to talk a little about your pipeline. At this point have you guys decided which asset you guys plan on advancing next and what's the next asset or what's the timeline for potentially moving the asset into the pipeline -- I'm sorry into the clinic.

Yes. I mean we -- On our website we're saying hey, everything's on hold for a while. That really isn't terribly fact. We are doing work on our pipeline, Naz. We are spending some money. We've activated and we're doing some formulation work and some PK work but we're not spending big clinical dollars.

So as far as I'm concerned we have activated our pipeline, but we're just -- we haven't selected our final clinical candidate yet. So our intention is the next couple of quarters to spend a little bit of money to develop them along. We'd like to get some feedback from both. We've done some market research, also I should say with consumers and physicians.

So the good news is all of our pipeline seems to be high interest, both from physicians and consumers and Dr. Kroner, our Chief Medical Officer has done great work and has a development plan for each one of them. So I think before we announce our clinical candidate I think we'd like to have a conversation with the FDA, so we understand the read. Because I can't see us going into the clinic, even if I do a Phase II, possibly until the end of this year or into next year, but we're going to continue. You should see us spending a few bucks continuing to developing.

Paul and his team have activated them. They've done more work in the last 3 months than we might have done in 3 years. I mean honestly, I mean they've done some really good work but we still haven't pulled the trigger on uniting the ones to the clinic until we get some of this PK work under our belt and get a little bit more regulatory feedback.

You guys don't have to file like another IND right with Twirla approved.

It depends for -- it depends on what one we would do. So like the one, the extended regimen would be a follow on, if you will, to the Twirla NDA. So the progestin-only is a little bit different. Depending on the way we go with the progestin-only, we may have to file another IND. So it really depends on what candidate.

But in general, they are generally thought to be line extensions but the progestin-only may require a new IND. It's really that different. So that's the work we're still doing right now. But if it's the other 2, more than likely they are under the same IND. I mean I'm not a regulatory guy, so take that with a grain of salt, but I think I'm right.

There are no questions over the phone. Presenters, back to you for closing remarks.

Great. Thank you, operator. So I'd like to close today by saying that we think we have the building blocks in place right now for continued growth, and we believe we're on track near to achieve our near-term goal. We wanted Twirla to be a real serious player in the multi-billion dollar U.S. hormonal contraceptive product.

We continue to implement our commercial plan, as you heard in the call. We're going to continue to work on expanding coverage and reimbursement and access for our brands in the United States. And working through all the channels, both on the HCP side and the consumer side and as well as the supply chain to make sure Twirla is available for as many women and many prescribers as we can in the United States.

So I'd like to thank everybody for joining us on the call. Be well, and we're looking forward to giving you more updates, and maybe down the road, we'll actually see each other sometime. But in the meantime be safe and thanks again for dialing in. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.