TherapeuticsMD Inc (TXMD) 2021 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for joining us for the TherapeuticsMD Second Quarter 2021 Financial Results Conference Call. (Operator Instructions)

I would now like to turn the call over to Investor Relations for TherapeuticsMD. Lisa Wilson. Lisa? .

Thank you, Christie. Good morning, everyone, and thank you for joining us today to discuss our second quarter 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 and Media section.

On today's call from TherapeuticsMD, our Chief Executive Officer, Rob Finizio; Chief Financial Officer, James D’Arecca, Chief Commercial Officer, Dawn Halkuff; and Chief Strategy and Performance Officer, Mitchell Krassan.

I would like to remind everyone that certain statements made during this conference call may be forward-looking statements. Such forward-looking statements are based upon current expectations, and there can be no assurance 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 August 4, 2021.

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

Good morning, and thank you for joining our Q2 call. We are pleased with our steady progress in line with our expectations. Our sales force is benefiting from improved access to providers which, while not back to pre-pandemic levels, has opened up. In addition, the efforts we have made during the quarter to create a more streamlined and improved online patient experience are gaining traction. With UpScript, our newest telemedicine relationship now live. We expect to see continued growth with or without COVID-19 through our online channels. Finally, we have strong coverage for all of our products in the marketplace, and we expect continued improvement in insurance coverage throughout Q3 and Q4.

As shown on Slide 3, overall, our revenue increased by 17% in the second quarter of this year, compared with the first quarter. Our overall volumes in that revenues were healthy and vitaCare prescription services is also experiencing growth. We recently signed our third vitaCare customer contracts and have a strong pipeline of over 30 potential customers. In addition, we continue to evaluate the investment into vitaCare, including potentially selling a minority stake in vitaCare, which would provide a nondilutive source of capital for our company. We're building a solid foundation for vitaCare to become a freestanding entity in this high-growth sector.

Before I turn the call over to James, I'd like to welcome Hugh O'Dowd, who is stepping into the position of President of TherapeuticsMD with John Milligan vacated to take the position of Chief Executive Officer of vitaCare Prescription Services earlier this year. He was previously the CEO and President of Neon Therapeutics. He joined Neon from Novartis, where he spent more than 20 years in a variety of leadership roles, including a Chief Commercial Officer and Head of Global Strategy.

I'll now turn the call over to James to discuss our financials in more detail. James?

Thanks, Rob, and good morning, everyone. Slide 5 shows a snapshot of our quarterly net revenue trends, which increased across the board. Our net product revenue for the second quarter was $23 million, which satisfied our second quarter covenant. On a quarter-over-quarter basis, our total net product revenue increased by 115% and on a sequential quarter basis versus Q1 of 2021, net revenue increased by 17%.

For ANNOVERA, net revenue increased by 9% on a sequential quarter basis. Average net revenue per unit, calculated based on units sold to wholesalers and pharmacies for the quarter increased to $1,157 from $1,071 in the first quarter. We continue to expect that average net revenue per unit of ANNOVERA will approximate $1,100 for the year.

IMVEXXY net revenue increased by 40% on a sequential quarter basis and average net revenue per unit increased to $64 from $61 in the previous quarter. Net revenue per unit continues to benefit from IMVEXXY's $75 cash co-pay program, along with the new preferred payer contract that became effective in the first quarter. Also important to note, with regard to IMVEXXY's performance is that second quarter prescriptions for IMVEXXY included a larger portion of 90-day scripts, over 20% of the total prescriptions filled.

Turning to BIJUVA. Net revenue decreased by 12% and average net revenue per unit was $68. As a reminder, we are minimally supporting BIJUVA at present. As of June 30, 2021, looking at all 3 products, inventory quantities in the wholesaler and pharmacy channel remain within normal levels.

Let me share some highlights from our financial statements on Slide 6. Our gross profit margin rebounded to 82% in the second quarter, back in line with our expectations. Operating expenses increased in the second quarter as we had anticipated, reflecting our continued investment to enhance marketing and strengthen our digital capabilities related to commercial initiatives, which are promotionally sensitive. This is a critical stage in the life cycle of our products, and we are committed to supporting them and driving growth. Dawn will elaborate on these important activities and their impact in a moment.

Due to a shift in timing of SG&A and R&D spending, we expect the expenses in the back half of the year to be moderately higher than the first half of the year. Total 2021 spending remains consistent with our initial expectations for the year. Net cash used in operating activities was $26.5 million for the second quarter. As of June 30, 2021, we had $111.4 million in cash.

I'll now turn the call over to Dawn to provide more detail around our commercial progress. Dawn?

Thank you, James. On the product side, let's start with ANNOVERA. As you can see on Slide 8, ANNOVERA showed continued growth, both on a sequential quarter basis and year-over-year. We are making good progress positioning ANNOVERA as the only long-lasting procedure-free product and this is driving uptake. The sequential quarter growth of 17% illustrates this positive trend.

Our net revenue per unit held steady at $1,157, and refill rates remained strong at about 50%. There are a couple of main drivers behind the sequential quarter growth trajectory. First, as the world begins to open up again, our sales representatives are slowly regaining access to providers, now able to reach over 50% of our primary targets with live calls. And the second trend is that all channels where we sell ANNOVERA are seeing increased growth with telemedicine continuing to lead the path with growth trajectory as patients can access ANNOVERA even if they are not going to their doctor for a live visit.

Turning now to ANNOVERA rider trends on Slide 9. The bars represent the total number of ANNOVERA prescribers by quarter and show that the number was slightly up Q2 over Q1. What's important to note here, however, is that the average number of prescriptions written per prescriber increased by 10% from 2 in the first quarter of this year to 2.2 in Q2, indicating that we are seeing an increase in depth of prescribing. This prescriber uptake is coming from 2 places, improved sales force penetration to the primary target and from successful marketing efforts. And while the impact of COVID on access to providers is waning, there are still challenges, making these games all the more impressive.

On Slide 10, we see that importantly, ANNOVERA is benefiting as women's switch their method of birth control, and it is capturing market share from various contraceptive methods. It's interesting to note that the majority of ANNOVERA users have never used a vaginal ring before and are making the change from other methods, including implants or IUD. ANNOVERA is creating a new segment within this market and increasingly is being recognized as a procedure-free, long-acting alternative and filling an unmet need.

Turning now to Slide 11. At the ANNOVERA data points are moving in the right direction, we see potential broad near-term growth catalysts that support continued uptake of ANNOVERA. Let me touch on a few of them broadly.

First, the environment around women's health is supportive. The Affordable Care Act has been upheld in advocacy efforts around birth control choice and access for women have increasing support. Second, from the payer perspective, ANNOVERA continues to have strong unrestrictive access at 57% and the majority of patients continue to pay $0 for an annual prescription due to the ACA federal and state laws, where we do not have coverage, we currently have a 64% prior authorization approval rate across all payers.

In addition, CMS recommended that ANNOVERA received its own unique national J-Code that allows Title 10 facilities to be reimbursed for dispensing ANNOVERA. This could be live as early as the fourth quarter, and we believe it will drive increased uptake in the public health market for ANNOVERA.

Third, as mentioned, access to providers is improving, and we continue to utilize marketing tools to communicate with a broader physician base, including primary care providers to expand the market opportunity for ANNOVERA. Lastly, on the consumer front, we believe telemedicine will continue to have a significant positive impact, and we are leveraging that channel and our peer-to-peer influencer program to reach millions of women. Keep in mind that more than 50% of women know what they want in terms of contraception before they go see their doctor and their preferences are often shaped based on what they have learned from influencers and friends.

Moving now on to our menopause products. Slide 13 shows the key metrics for IMVEXXY for the second quarter. IMVEXXY has faster TRx growth outpacing the VVA market Q2 over Q1 and achieving an 8% increase in TRx prescriptions. Net revenue per unit improved to $64, which I'll discuss in more detail in a moment. And we saw a 2% increase in the number of prescribers writing a prescription in the second quarter compared to the first quarter.

IMVEXXY has a steady base of prescribers, which has enabled the product to withstand the impact of COVID. The loyalty of regular writers together with improved access to our sales representatives support this growth. And importantly, refill rates remain higher than average for this category with approximately 6.5 total fills over the lifetime of the patient with over 20% of patients filling a 90-day supply.

Slide 14 shows the pattern of improvement in net revenue for IMVEXXY after the January 1, 2021 cash pay change to $75. There was a 56% increase in net price for 2Q '21 compared to 2Q '20 and a 5% improvement in net price for the second quarter of this year compared to the first quarter. As a reminder, this is our new high for net revenue per unit and the fourth quarter in a row, we have seen improvement in net revenue per unit.

As Slide 15 shows, there are strong potential near-term growth catalysts that support IMVEXXY going forward. IMVEXXY has strong unrestricted commercial coverage at 61%, including a top 5 payer that has IMVEXXY as their only preferred branded product. For those patients not covered, we continue to support them with an affordable cash program through vitaCare.

And as noted for ANNOVERA, access to top providers is improving as the country opens up and virtual format amplify outreach. And on the consumer side, we recently launched a new telemedicine relationship with UpScript that provides increased access to IMVEXXY for patients, and we believe will improve conversion to prescription in the online channel. Our recently launched direct-to-consumer campaign called Long May She Reign is already showing a positive impact in both interest and engagement.

Turning finally to BIJUVA on Slide 17. Total prescriptions for BIJUVA grew by 3.5% quarter-over-quarter. Notably, there was a 4% increase in prescribers writing a prescription for BIJUVA in 2Q '21 compared to 1Q '21, and net revenue per unit stayed steady at $68.

In addition, in the second quarter, BIJUVA received approval in 7 European countries. We have been minimally supporting BIJUVA, but recently resumed our sampling and merchandising efforts with the field force and we just received acceptance from the FDA of our filing for the BIJUVA low dose with a PDUFA date of March 21, 2022, both of which we believe will be an important catalyst for growth going forward.

I would now like to turn it over to Rob for closing remarks.

Thanks, Dawn. As you've just heard, we delivered a great quarter for our products with 115% net revenue growth year-over-year and cash used in operating activities decreased to $26.5 million.

Looking ahead to Q3 and Q4, we expect these prescription trends to accelerate due to improved health care provider assets, both online and in person, and we also expect near-term growth in our commercial and government insurance coverage should accelerate prescription trends throughout Q3 and Q4.

In addition, we grew ANNOVERA in every channel and for IMVEXXY, we achieved record net revenue per unit for the fourth quarter in a row. We had an accepted filing for BIJUVA low dose with a PDUFA date of March 22, 2022, and received multiple approvals across Europe for BIJUVA in the second quarter.

Finally, vitaCare closed its third customer, it's grown its pipeline to over 30 potential customers, and we are working to secure a minority investor in vitaCare as a source of nondilutive capital for the company.

Operator, please open up the call for questions.

(Operator Instructions) Your first question comes from the line of Louise Chen with Cantor.

Congratulations on the quarter. So first question I had for you is, how are you thinking about valuation ranges for a minority stake in your Medicare franchise? And then secondly, how much do you actually expect sales to improve when ANNOVERA receives that J-Code, if you could put anything of behind that would be helpful. And then I know you addressed this in the call, but is the resurgence of COVID-19 going to impact your second half of '21 sales?

Louise, thanks. Great question. So for vitaCare, what I can say, and I have to be very careful because we're working on this actively today. What we were looking at doing was retaining a minority stake below 20% or around 20% for an investment. The market has grown significantly. The value of the company of the vitaCare company has grown significantly and the pipeline has exploded.

So now we're looking at hopefully selling off a minority and keeping vast majority of the company and getting a solid investment that would make a difference to our shareholders from a nondilutive standpoint. I wish I could be more specific than that, but I can't, because we are in active negotiations on that.

As far as the commercial progress, I'm going to turn that over to Dawn because we've got a lot of good -- we'll have the best catalysts we've had in the commercial history of this company throughout Q3 and Q4 here, and I'll Dawn talk about that.

Louise, thanks for the question. So the first question you asked is what do we expect the J-Code, how do we expect it to impact our trajectory. So just to explain a little bit about the J-Code and why it's an exciting catalyst for us. The J-Code allows the Title 10 facilities. You can think about them as the planned parenthood facilities. There are about 5,000 of them to actually get reimbursed for dispensing ANNOVERA. And the public health market is growing quickly for us with universities opening, and ANNOVERA will be the only procedure-free product, long-acting procedure-free product that the planned parenthood facilities will have and the analog suggests that this would be a 20% bump up to the public health portion of our forecast. So a really exciting catalyst for us that we're looking forward getting implemented.

As far as your second question around with the resurgence of COVID and how it will impact the second half sales, Rob has mentioned it, we have a tremendous amount of catalysts that are supporting our growth going forward. I mean it really is such a unique moment for us. And the reality is that with the Delta variant out there, we are already experiencing some of the COVID impact, and we are still growing across every channel.

And if you really think forward to what we are experiencing in terms of catalysts, we still see our ability of access to grow to providers. We've got incredible consumer programs in the online world. So with or without COVID, that doesn't impact us, and we're seeing the growth of that channel 26% quarter-over-quarter. And with the payer catalyst that Rob mentioned, which we expect to grow across government and commercial that alone is going to support our growth in the back half of the year. So the reality is we're really bullish about the growth and feel good about the path we have for the rest of the year.

(Operator Instructions) Your next question will come from Annabel Samimy with Stifel.

So I had just a question regarding your online presence. Again, I apologize if I missed some of the earlier comments. And I think you touched on it before, you're seeing growth of 26% in the online channels. What percent penetration do you have in these online channels? And do you expect to use those online channels for both ANNOVERA and IMVEXXY both? Or is it weighted more towards 1 product versus the other?

And then separately, for BIJUVA, you mentioned you're going to restart sampling. Can you just give us an idea of what you're going to be doing there as far as as supporting that product? And not just supporting the product, but what's going on with BIO-IGNITE?

Sure. Annabel, thanks for joining. So from an online standpoint, so telemedicine has been strong, strong area of growth for us, as you've heard with the numbers. But we think we are just starting now with UpScript Live, and it just recently went live, we expect that growth to accelerate. And even though Delta is out there, our access has improved with our reps on the ground into the offices as well.

And if you put those 2 together, I think you'll see the volume of scripts increased going into Q3 and Q4. And we haven't had any real payer wins this year. And we expect significant payer coverage improvements in both commercial and government across the portfolio in Q3 and Q4. So more of the scripts written will be filled just with what we have today with the payer improvement, but we expect the volume of scripts to go up with the online improvements we've had in working with some of these partner companies, we've done a great job in proving that as well.

On top of that, we have our bulk -- ANNOVERA, we just really launched last July because of COVID. So the refill volumes that will come up, and we're still at about a 50% refill on refill volumes should kick in here in Q3 and Q4 on top of that. So it should be a great back half of the year, and I'll turn it over to Dawn for the rest of those questions.

And before I move on to BIJUVA, a couple of things I want to add on the telemedicine side because you asked about the penetration. If you look at the partners that are out there, we are -- with all the large ones in terms of ANNOVERA, and as Rob just mentioned, we just launched UpScript. So penetration, from that perspective on partnership were high. But certainly, there's a lot of places to grow, as Rob just mentioned, and those catalysts are going to support that growth.

As far as the difference between ANNOVERA and IMVEXXY, the birth control telemedicine channel is much more evolved than the menopause telemedicine channel. So IMVEXXY slightly smaller, but we are also launching UpScript with IMVEXXY, and we -- the same programs that we are leveraging across the portfolio.

As far as BIJUVA, I mentioned that we are restarting sampling. And so the entire field force has that. And they are making sure that for those providers and we have a loyal set of providers that need samples that they are making sure that they are covered there as well as any BIJUVA education. And the BIO-IGNITE program, there's no shift there. We are still working with all the partners and have a team that continues to support them for when we start to reinvest in the product in the future.

Great. And if I could just follow up on something with IMVEXXY. Obviously, it's a different population than the birth control market and it's an older population. But given, I guess, vaccination rates among the (inaudible) that are quite high, have you seen better entry your access to physician practices now? Has that kind of normalized a bit? Are they learning how to operate in this environment? Or is it still pretty restricted?

So it's definitely much better than it was, but it's not near where it was before COVID, so we moved to probably 50% of where we were before COVID. And I think you can see that through our recent numbers growing and for both IMVEXXY and ANNOVERA.

Now we do expect that to potentially moderate. But given the access we do have, we see the improvements in both online and coverage to continue to accelerate the growth, no questions asked in Q3 and Q4.

And here's the best news that people are starting, the patients are starting to go back into the office, which is a real catalyst for us being able to get the product prescribed, and we're starting to see people return for their annual visits where they're younger or older, and that's going to help us out.

Yes. They can always put those things off so long, and it builds up and it's coming back. It's good. It's not what it once was, but it will get back eventually.

I'll tell you, Annabel -- sorry, Annabel, just 1 last thing. One of the things you'll see in our numbers, 20% of our IMVEXXY scripts were actually 3 months supply. So like 3 units, which is a phenomenon that's growing. And for IQVIA, that's supposed to stay. And I think part of that phenomenon is due to COVID and retail pharmacy strategies here. So that also -- you can see in our numbers kind of is indicative of what you're asking right there.

It certainly helps on the revenue side because that's 3 units for every patient going in when they're getting that TRx.

Yes.

(Operator Instructions) Our next question comes from the line of Douglas Tsao with H.C. Wainwright.

Can you hear me?

Sure, Doug. Thanks for joining.

I'm just curious, just given the strength you've seen from IMVEXXY recently, which is great to see. Is there any sort of thinking in terms of moving it up in terms of prioritization in terms from a promotion standpoint. I mean I know ANNOVERA has been sort of become a focus and it's obviously doing well. But we're obviously seeing some very strong numbers from IMVEXXY right now.

Doug, great question. I will tell you that we were -- we're keeping the way it is for now. And we can always reevaluate that. And let me tell you why. Because of the growth that we see coming that will have more scripts written filled for ANNOVERA as well as how effective and evolve the telemedicine channel is for broad control, put together with our refill effort and a lot of our retail strategies, including vitaCare. We think we will have strong growth in Q3 and Q4 for ANNOVERA. But to your point, IMVEXXY, we expect to grow right there with it. And it's been great lately, and we expect that to continue. Dawn, anything else?

Yes. And just to add to that, if you think about what's going to grow IMVEXXY, Rob is right, on the sales force side, we feel really confident in the foot we have and IMVEXXY is an easy product to sell. But where we have leaned in is in 2 places. One is the online telemedicine channels and really making sure that we expand there. And then overall in consumer, we didn't talk a lot about it today. But the Long May She Reign campaign that we just launched is gaining a tremendous amount of traction as well as patient testimonials, and those are the places we're leaning in that support also the sales force as they sell it into offices.

There are no further questions at this time. Do you have any closing remarks?

I want to thank everyone for joining the call today, and we look forward to seeing you next quarter.

Ladies and gentlemen, thank you for participating in Therapeutics 2021 Earnings Call. You may now disconnect.