TherapeuticsMD Inc (TXMD) 2018 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for joining us for the TherapeuticsMD Second Quarter 2018 Financial Results Conference Call. Following prepared remarks from the company, we will open the call for questions.

I would now like to turn the call over to TherapeuticsMD's Vice President of Investor Relations, Nichol Ochsner. Nichol?

Good morning, everyone. Thank you for joining today to discuss our second quarter 2018 financial results and business update. This morning, TherapeuticsMD issued a press release announcing our second quarter financial results. The press release is available on the company's website, therapeuticsmd.com, in the Investors & Media section.

On today's call from TherapeuticsMD are Chief Executive Officer, Robert Finizio; Chief Financial Officer, Daniel Cartwright; Co-Founder, Dr. Brian Bernick; and Chief Medical Officer, Dr. Sebastian Mirkin.

I would like to remind everyone that certain statements made during this conference call may contain forward-looking statements. Such forward-looking statements are based upon current expectations, and there can be no assurances that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release and our annual, quarterly and other reports filed with the SEC. These forward-looking statements are based on information available to TherapeuticsMD today, and the company assumes no obligation to update statements as circumstances change.

An audio recording and webcast replay for today's conference call will also be available online in the Investors & Media section of the company's website. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on July 30, 2018.

With that, I'll turn the call over to TherapeuticsMD's CEO, Rob Finizio.

Thanks, Nichol. Good morning, everyone. On today's call, we will review the following developments in our prepared remarks and then open up for Q&A.

Dan will start with a review of our financial results. Sebastian will provide a clinical update. And I will then discuss the progress we have made on the commercial front with our limited launch of IMVEXXY that will be filed via our full national launch on August 6 and potential approval of TX-001HR.

Now let me turn the call over to Dan.

Thanks, Rob. Second quarter 2018 financial results are included in the press release issued today. Let me summarize a few key points.

Net revenue from the company's prescription prenatal vitamin business was approximately $3.8 million for the second quarter of 2018 compared with approximately $4.3 million for the second quarter 2017. This decrease was primarily attributable to a decrease in the average net revenue per unit of our products, which is primarily related to higher discounts offered in 2018, partially offset by an increase in the number of units sold.

Total operating expenses for the second quarter of 2018 increased compared with the second quarter of 2017. These changes primarily reflect an increase in commercialization expenses as we launch IMVEXXY.

R&D expenses during the second quarter of 2018 were approximately $6.8 million compared to approximately $8.7 million during the prior year's quarter. This change is a direct result of the completion of the REPLENISH trial for TX-001HR.

SG&A expenses for the second quarter of 2018 were approximately $29.5 million compared with approximately $14.6 million for the prior year's quarter. This change is primarily due to higher sales, marketing and personnel costs to support commercialization. We continued to invest in commercialization activities to support the launch of IMVEXXY. We expect these factors to increase the growth rate of our SG&A expenses throughout 2018.

Turning to the bottom line. Our net loss for the second quarter of 2018 was approximately $33.2 million or $0.15 per basic and diluted share compared with approximately $19.7 million or $0.10 per basic and diluted share for the second quarter of 2017.

We finished the second quarter of 2018 with approximately $153.4 million in cash compared with approximately $107.3 million at March 31, 2018. For the second quarter of 2018, cash utilized for operations was approximately $25 million.

As of June 30, 2018, we had approximately $75 million in debt from our non-dilutive term loan financing with MidCap Financial, with an overall effective rate of approximately 10.6% as of June 30, 2018.

Let me turn the call over to Sebastian for a clinical update.

Thank you, Dan. To remind everyone, the PDUFA target action for TX-001, our combination of estradiol and progesterone product candidate is October 28, 2018. If approved, TX-001 has the potential to become the first and only FDA-approved bio-identical combination of estradiol and progesterone product.

In terms of our medical affair efforts, during the second quarter, we have a major presence at the World Congress on Menopause, where we presented 7 abstracts related to TX-001 and IMVEXXY. We also expect to have a very strong presence during the North American Menopause Society meeting in San Diego in October of 2018, presenting a total of 10 abstracts, of which 5 of them will include novel data from the REPLENISH trial, highlighting the benefits of TX-001. We will present for the first time the unique data on the effect of TX-001 on population parameters, weight, blood pressure as well as data supporting the robust efficacy of TX-001 for vasomotor symptoms.

Now let me turn the call back to Rob.

Thank you, Sebastian. We're very happy to announce, on July 9, we initiated our early experience program for IMVEXXY, with a limited launch of the 10-microgram dose to a targeted sample of health care providers throughout the country.

In the first 3 weeks of the limited launch, which is July 9 through July 27, approximately 1,363 health care providers have initiated at least one patient on treatment and sent in the subsequent prescription for continuation of treatment on the maintenance pack. These results are more than encouraging. The full national launch of the 10-microgram dose of IMVEXXY will begin next Monday on August 6. Our BIO-IGNITE customers are expected to go live in late August, and we plan to launch the 4-microgram dose in September.

Moving forward, the key performance indicators we intend to provide include the number of new writers and total writers, which indicates the pace of adoption by health care providers; new prescriptions, which shows the market penetration; total prescriptions; the refill rate, which will show how our affordability and compliance programs are taking hold; the ramp of commercial insurance coverage, which will be an indicator of adoption by payers and a precursor to increases in gross to net; and lastly, a quarterly trend of gross to net.

We will listen to payer feedback and price IMVEXXY at parity with other currently branded products. Our direct discussions with commercial payers related to IMVEXXY continue to be positive, which we believe is due to the clinical and the unique physical characteristics. At 4 and 10 micrograms, IMVEXXY is the lowest-dose estrogen VVA product in the market, which we believe resonates well with payers because of medical guidelines encouraging clinicians to start with the lowest effective dose, which IMVEXXY is by far.

On the payer front, as we stated, historical trends suggest significant majority of unrestricted commercial access within 9 months after launch, understanding that [is]up to 6-month formulary review process is standard for most new products. Our market access team is working hard to speed up this review process and has already made advances in achieving these goals. As such, we expect approximately 15% market access at full national launch, which is August 6, increasing significantly by the end of February for the approximately 2/3 of VVA prescriptions that are currently covered by commercial insurance.

This follows a similar access curve to INTRAROSA. Medicare, which represents approximately 25% of the current VVA scripts, will begin bids in September '18, and if accepted, will begin coverage in October '19. We're pleased with our market access team efforts and confident that the company is prepared for robust market access in late 2018 and beyond.

So far, there's been 2 generic entrants into the VVA space, a generic ESTRACE CREAM and generic Vagifem. It is very important to recognize that the impact of generics have only taken market share from the referenced brand products and has not resulted in substitution or cannibalization of the other brands within the category.

We believe that there is a significant opportunity to improve compliance in this category. We plan to use the successful copay assistance and education program that we developed for the prenatal vitamin franchise to help patients manage out-of-pocket costs and improved education with the goal of increasing patient compliance.

Our innovative copay assistance and education program, together with the clinical and physical attributes of IMVEXXY, are all important reasons why health care providers and women may prefer these products and why we believe we'll be successful at improving patient compliance over prior products.

We are focused on commercial execution with IMVEXXY and on our other transformative catalysts throughout the remainder of 2018. Our PDUFA date for TX-001, our bio-identical combination product of estradiol and natural progesterone is October 28. And if approved, the launch of TX-001 will be as early as the first quarter of '19.

We would also like to give an update on partnerships discussions to license IMVEXXY and TX-001 outside the U.S. We are in very late-stage negotiations to license TX-001 and IMVEXXY into Canada and discussions to license Latin America. They're both progressing very nicely. We're currently holding off on plans to license into Europe until after TX-001's PDUFA date.

And 2019 is shaping up to be a transformational year for the company. We are pleased with the current progress and with the limited launch of IMVEXXY. By this time next year, TXMD has the potential to have our second late-stage product approved and launched, delivering on our promises to bring innovative, bio-identical and new lower-dose hormone therapy products to the large, underserved and growing markets of postmenopausal women.

We'll now open up the call for Q&A. Operator?

(Operator Instructions) Our first question comes from Bill Tanner with Cantor Fitzgerald.

Hey, just on the -- just thinking about the 4-mcg launching later than the 10-mcg, I mean, I'm wondering if you or Brian or Sebastian might be able to opine on that. I mean, it seems like the convention is for the lowest effective dose to be used initially, and I'm curious why going ahead with the 10 first. And then secondly, so it sounds like you had some pretty good experiences thus far. I'm wondering, with the intent to prescribe again with the patients to use again, wondering what kind of feedback, qualitative would be helpful, that either sales reps had gotten from the position to have prescribed it.

Sure. Bill, I'll take the 10 versus 4 and hand it over to Brian because he just had a big KOL meeting over the weekend. So it's simply the 10, we put through the line first and manufactured first and wanted to get out. The 4 is through the line. As you know, you've got to -- with the new products, you've got to get it through wholesalers, distributors and into retail. And we couldn't do both at the same time, so we went out with the 10 first. No specific reason. We're very, very encouraged by the numbers so far. And the 4 is on track, will be out in general availability at all retail pharmacies in September. As we said, August 6, we'll have full retail availability of the 10-microgram. Brian, do you want to talk about any feedback?

Sure. Thanks, Bill. So this weekend, as a matter of fact, we held our speakers training bureau where we had about 40 of the leading KOLs in the country, of which most of them have already been writers of the product. And in fact, many of them have written several prescriptions to many patients. And the feedback has been overwhelming, both from the physicians and the patients, so we're really excited and encouraged by it.

And Brian, if I could, just one quick follow-up on that. As it relates to the feedback, is that mainly around the administration? Or is there anything at least on the symptomatic front that people are seeing that's making them want to come back?

Yes, well, I think it's a little bit too early to have feedback on the symptomatic front. Although the ability to use them and have a good user experience is -- had been very clear. The feedback from the clinicians is that it's easy to describe, it's easy to dispense, it's easy to explain. They really like the product attributes. Many of these people had never seen or had been familiar with the product itself. They've just been really excited about prescribing them. I mean, we have some physicians that have prescribed 10s, if not 20s, 30s and 40s of these products already. So it's really exciting.

Some of the -- Bill, this is Rob. Some of the feedback that I'm getting is some of the efficiencies with the product on educating patients and prescribing it. So that's very encouraging. And I think the numbers, at this point, to be where they are without many physicians so far. So remember, it's a limited launch with only the 10. We think it's incredibly encouraging if you compare it to what else has happened out there before us with other products.

Our next question comes from Ken Cacciatore with Cowen.

Just as we're waiting for managed care, and it sounds like you're making good progress there, but as we're waiting for that, could you talk about a little bit more detail of your patient support, how you're sampling and kind of ensuring that these patients can continue to get access as you ramp up that commercial coverage, just in a little bit more nuance and detail.

Yes. Ken, it's Rob. So we have a very, very well-executed copay assistance and education program. It is back-end integrated. So it's standard in the industry. But we, as you saw in the prenatal, really push it. I mean, I think we had about 85% compliance in the prenatal franchise. And although that hasn't been the focus for about 3 quarters now, we've developed solely for the implementation of 04 and 01, our vaccine 01. So when patients go in, if there is not insurance coverage yet, it will still be a $35 or below copay for that patient. And that is what we are clearly trying to articulate here with the managed care coverage over the next 3 quarters. So what we want it to be is transparent to the doctor, transparent to the patient and have it just be $35 or less regardless of the coverage up front. And as the payers come on, those gross to a natural flip. And as we said, the next 2 to 3 quarters, we expect to have some good volume there in the commercial side. So it should not impact the launch, the acceptability or have any physician or patient pushback at all. And again, we've proven it out to the prenatal franchise, and it's looking really good so far.

Great. And maybe for Sebastian, give a little bit of context with the FDA interaction on 01, just how do you characterize, like normal, on-track, any kind of perspective you can give.

So everything looks fine. So we are on track for approval on our PDUFA date of October 28.

Our next question comes from Dana Flanders with Goldman Sachs.

My question is just on 001 and just the rollout of that if approved later this year. Can you just talk about the BIO-IGNITE program you have in place and the progress you're making on that front? And just, what should we think about as gating factors to announce additional partnerships and get kind of above, I think it was around 2 million scripts that you have right now?

Yes, Dana, this is Rob. So we are going to implement, believe it or not, and start towards the very end of August to implement BIO-IGNITE with 04. There is some volume there that we didn't anticipate previously. And the whole idea is to get approximately 100 or so of these pharmacies that are very, very focused on women's health and specifically in bio-identical hormones. They've already signed up into the BIO-IGNITE program, up and operational. From there, with 01, we looked in the filing, let's call it 2 years, to get about 600 to 900 more pharmacies up. We believe these 900 pharmacies is more than half of the total, not just the 2 million that are in PVPCN and our current BIO-IGNITE customers for 01, but the total scripts, which is 12 million to 18 million. We believe approximately 50% to 60% of those are in the top 900 pharmacies. So 04, we'll build trust, we'll build relationships. We will get the key opinion leaders in the space up and going. And again, these are your normal corner pharmacies that are focused on women's health and compounded hormones. And then a lot of people think of compounded pharmacies as big sterile places. These are your corner pharmacies that really focus in this women's health space. Get those guys up with 04. And then with 01, we will take that model and expand significantly and get, hopefully, in the first 2 years, over up to 60% of those scripts covered through the pharmacies.

Our next question comes from Chris Schott with JPMorgan.

First one here, when we think about the patient compliance efforts and your goals kind of improving refill rates here, when do you think we'll be able to see that showing up in prescription trends? I guess, how quickly do you think you're going to be able to kind of make a difference on the refill rates relative to some of the prior therapies we've seen in the category?

Yes. So in our Investor Day, we focused some slides on that, and I'll refer to the graphs that we put in place. So through education and through copay assistance, half of all VVA scripts are not filled once they're written just due to either insurance coverage, copay cost or lack of education. That is a chronic progressive disease. So we see that as a very low-hanging fruit. And to answer your question, new scripts versus total scripts, I believe in the first 2 years, it's about 1.3 to 1.7 would be the benchmarks you're looking at. So with us, it's real simple. As you look at new scripts versus total scripts, and you take the delta, and that will give your compliance rates. And what we'll do is we've talked about that earlier in the earnings script, that will be a key performance indicator. So not only it will be out there, but we will focus on it and bring that in as well as the payer coverage, which will show gross to net, hopefully, improving as payer coverage comes on, which is strongly what we expect, and the prescribing physicians. So we'll make it crystal clear for you, okay?

Great. And then the second one, just I know you talked about OpEx kind of ramping here. Just any more color on how we should think about the OpEx trends next few quarters as you launch IMVEXXY and then we think about the 001 launch coming on board?

Sure. This is Dan Cartwright. We expect those to continue to increase for the next couple of quarters as we get prepared for 001 and its approval. As far as the spend on IMVEXXY, we don't expect that to go up significantly from here, but we will be getting ready for 001. So we will see those costs go up some more here.

Our next question comes from Jay Olson with Oppenheimer.

You mentioned some abstracts coming up at medical meetings. And in particular, I think you mentioned weight loss, which sounds very interesting. Can you -- is there any additional color you can share with us on what we should be looking for in those abstracts and whether or not we should expect any of that data to get into the label for TX-001?

Well, Jay, let me tell you what's going on, right? So as you know, TX-001 is the only bio-identical combination study. And we certainly -- in our REPLENISH trial, we saw the benefit of using estrogen plus natural progesterone on several parameters. So in the North American Menopause Society, very, very important key opinion leader, we are presenting for the first time effect on weight, population parameters and blood pressure. You may know that synthetic progestins increase weight sometimes, increase blood pressure, and they have a detrimental effect on population. We have a unique profile in the final REPLENISH trial. So we're very happy to do this. We invite everybody to come to NAMS this early October in San Diego, California, and we're going to be there all very excited to show in our data.

Okay, great. We'll look forward to that. And then thanks for the update on your x U.S. activity. I'm just curious if the plan for IMVEXXY and TX-001 in Europe is definitely an out-license or is there a potential collaboration? Or would you potentially consider filing it yourselves?

Great question. So we definitely would not file it ourselves. The whole world pales in comparison to just the U.S. market, so we will stay focused here in the U.S. And we can only take on so much building at once. So look at once the 01 product is approved, we will start a process, depending on the country and where you are, the need for a clinical trial based on the approval, might be more additional clinical trials needed, might not be. Either way, we'll work it out, and it seems pretty straightforward at this point that there won't be a trial required. But until it's approved, we really don't know. So that's the reason we're not moving forward quickly on that one. Canada is imminent. We want to remind folks that, that market, from a size standpoint and what they pay for these products, is not exactly huge. It's about $20 a unit [LACT] cost. So we are very encouraged on our partnerships up there, and we -- that is imminent, expect something here in the very near future on Canada. Latin America is behind Canada. And -- but we do expect some things there going forward in the near future. And again, that market is nothing near what it is in the U.S. But they are definitely going to help us in a lot of different ways, and we are very encouraged on our potential partner up in Canada. I think it's going to help a lot.

Our next question comes from Annabel Samimy with Stifel.

I just want to go back to the conversations that you're having with the payers. I know that, clearly, you're working on the 004 right now. I think you said it's 15% right now or by September and then you would be ramping up completely more by February. But have you already started conversations on 001? I would imagine slightly different conversation with payers, given that 004 was at 4-mcg, and that's not available in the marketplace right now, but there are same doses available in the marketplace for the E plus P products. So just if you could give us a little color there.

Yes. Thanks, Annabel, and this is Brian. So you're absolutely right, we've been in active negotiations with the payers throughout the country, and that continues. So the focus of that is on IMVEXXY itself. Although we do have conversations at the same time about 001 and actually excited about the opportunity for both of the products, including 001. With respect to 001, though, remember that there is not available today a combination product in these doses that are together. So it's a unique product that they're looking to make available to their patients. So we're extremely excited about it, and it's been very well-received.

And Annabel, this is Rob. So we've tried to put out on our Investor Day somewhat of a ramp that INTRAROSA had that we would expect. Just going through the 6-month review process, I think the 15% coverage is ahead of schedule going into launch, August 6. And again, it's going to be transparent to our patients and to our docs with our copay assistance program. And as those additional above 15% provider -- or payers come on, the gross to net will reflect that, and we will track that very carefully in quarterly earnings. And we are hoping that will ensure a nice effective launch with copays under $35 for IMVEXXY.

Okay, great. And just to get a little bit more specific on the 001 product, do you expect a more rapid ramp-up in terms of the coverage for 001 than for 004, or just about the same?

It's just a process that will be the same. It's just a process you go through. And no matter what the drug, these are open formularies more than other products. But the 6-month process is just a piece of managed care regardless of the drug, and we are part of that, and it is what it is.

Okay. And just one more question on that. Do you --I forget it, I lost my last question. All right. I can't (inaudible) remember it.

No problem at all. You got it, anytime.

And we have a follow-up question from Bill Tanner with Cantor Fitzgerald.

I actually have a couple of them, and maybe the first one is for you, Sebastian. You mentioned some of the presentations at NAMS, and I guess when I thought about 001, I thought about maybe the biggest draw of it is that it's FDA-approved versus compounded. So I'm wondering, what kind of data are out there that you would be comparing the results from REPLENISH against as it relates to some of the parameters that you mentioned? As I think about 004, then it's the ease of administration, it's the potentially lower -- or potential for using a lower effective dose. So I'm wondering if we're not thinking about this correctly, that there's more to it than just not being compounded, being FDA-regulated, and do you think that these data would resonate with folks that they're going to think, okay, well, the compounded is better because it's regulated and because it does this? Or is there, again, is there anything to compare it? And I do have one follow-up.

There are 2 types of comparison, Bill. So number one, the comparison versus a compounded HRT. And certainly, you are aware, for example, there was a NAMS survey in which they identify an increased risk of endometrial cancer with compounded HRT. So there you have, right, so we will have our first and only FDA-approved bio-identical product that show a robust endometrial efficacy. And in terms of the metabolic profile, all synthetic progestin has a detrimental effect on population, weight and blood pressure. What we're trying to say before is we did not see that in the REPLENISH trial. We do see the much more benign metabolic effect with our product, something that was suspected. There is not an engagement of any other receptors. It's purely a progesterone effect with natural progesterone. And therefore, that's a right blend on metabolic profile as compared to synthetic progestin. Very similar to what we see with transdermal estrogens. So it's a very, very benign profile of this combination of natural estrogen and natural progesterone.

Got it. Okay, that's helpful. And then it seems like the -- obviously, so NAMS is October 3, so your PDUFA date. Is there anything that can be done at NAMS, sort of any kind of discussions or any kind of profiling of 001 out of NAMS? Actually, the PDUFA date is after NAMS, right, for 001. So I'm just wondering if there's any kind of disease awareness that takes M.D.s who's going to be involved in, in NAMS?

Yes. Bill, this is Brian. We expect to have a nonbranded campaign for 01 at NAMS as well as the branded IMVEXXY campaign there.

As there are no further questions, let me turn the call back to Rob Finizio for closing remarks.

Thank you, everyone, for joining today. We are very, very encouraged to look forward to our next earnings and show the progress of IMVEXXY and, hopefully, the approval of 01. It will be a big one. So looking forward to that, and we're confident we will work very hard here to deliver for our shareholders. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.