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spk01: 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 Investors Relations.
spk07: 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 Tamari, Adult Therapeutics Chairman and Chief Executive Officer, and Dennis Riley, Chief Financial Officer. Following our prepared remarks, we'll open the call to questions. Let me now turn the call over to Al.
spk05: 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 four 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 work down their inventory, we anticipate product revenue will more closely reflect script demand growth at the retail level. Number two, Our Salesforce 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 three. We will continue to invest in growing Twrla and expect our operating expenses in the second quarter of 2021 to be higher, reflecting increased spending on brand marketing and product sampling. Number four, we are excited about the recent growth in the number of HCP writers and the resulting tier X 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'll provide an update on our financial performance. We're using Sides 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 banned sampling in the first quarter, and we believe our sampling efforts are important to driving HCP and patient awareness with Twirla. The first several weeks of quarter one included intensive sampling, and in the weeks that followed, we've seen steady trends of increasing scripts, refills, and awareness of our product. On slide four of the deck, which outlines a four-week rolling average over 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 continue 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 four. But we thought this data would be useful for the purposes of providing on initial insights into 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 five showcases our monthly RX data. As you can see, increasing the number of TRXs from January onward and the 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 to date 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 brand. I'm 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 six. The growth in the number of prescribers writing TRXs for Twirla has continued to steadily grow and increase in the momentum at the TRX level. Importantly, the number of TRXs each prescriber is writing is also growing, and we're seeing higher refill rates. And approximately 25% of our units dispensed at pharmacies are now refills. Our sales team of 65 sales representatives and eight 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 and 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 in its early stage, has been a very productive one. We're encouraged by the efforts to date and believe this collaboration will support our continued sales uptake of Swirla. While the agreement's only been active for one month, we see a number of patients and prescribers continuing to grow. We also recognize the increasing role of telemedicine in facilitating access when we continue to evaluate this channel as we move forward with TWRLA. Now in the managed care, we remain focused on increasing access to TWRLA through a variety of efforts, including the focus on expanding access and reimbursement coverage for TWRLA across managed care and government insurance plans. In particular, 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 contraception total prescriptions in 2020 was nearly 8 million. It's worth noting. that we believe roughly one-third 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 marketing update. I want to spend 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 seven. We focused on reaching HCPs 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 websites. We believe this is a strong indication of the interest and underlying need for birth control education. We're also leveraging AumSumDone to drive awareness of the birth control category. And now we're focused on driving TWRLA consideration and trial amongst consumers. This leads us into our branded TWRLA efforts. We believe that a robust brand marketing effort is important to drive awareness and trial of TWRLA. 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 brands. With this in mind, we're 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 Twrla market segment. Moreover, we expect to begin advertising on Spotify, which has a monthly user base of approximately 22 million US 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 Twrla. I'll now turn over the call to Dennis Riley, our Chief Financial Officer, and he'll provide an overview of our financial results and our business update. Dennis?
spk04: 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 TORLIS 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 eight. 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 revenues for the first quarter of 2021. The rate of inventory depletion came broadly in line with our expectations, and we expect that wholesaler restocking will likely be reflected in our second quarter 2021 results. We're 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 of 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 costs, 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's no direct cost of product revenue during the three 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 to $5 million higher, or approximately $18 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 Bicarium, 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 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 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 predetermined 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 in 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 Twrla. 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.
spk01: Thank you, sir. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw a question, press the pound key. Please stand by while we compile the Q&A roster. Our first question is from Dan Busby from RBC Capital Markets. Your line is open.
spk02: Great. Hey, guys. This is Steve on for Dan. Thanks for taking our questions here. I've got two, and I'll ask them both up front. But the first one, I was wondering if you can provide us a little more color in how the launch is progressing. In more particular, you know, what are you hearing from physicians or in patients on the product, any particular pushbacks that you're hearing? But I also think it might be pretty interesting to hear, you know, any feedback for maybe older physicians who've had experience with prior contraceptive patches and how they're viewing twirl here today. So that's the first question. And then the second question is related to, obviously, it's early in the launch, but, you know, any type of trends you're seeing with patients with regards to age or maybe different types of BMI, and along with that, you know, you guys recently released some post-ad hoc data from the SECURE trial, and wondering how that data may help physicians potentially prescribe patients with a BMI between 25 to 35, and maybe any other type of dynamics we should be thinking about here going forward. Thanks for taking the questions.
spk05: Hey, Steve, this is Al. You packed a big punch in two questions, so let me do them in the order you asked. So how's the launch going? So what are we hearing from physicians and patients? So it's interesting. I think the group on the phone knows that 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. You know, that made, if anybody had a problem with one of our patches, they could just call us, we'd replace it. I believe as of yesterday, we had three phone calls after multiple, multiple thousands of prescriptions and samples. So medical affairs, we don't hear many, you know, complaints or any other than questions from doctors. So we hear day in and day out rave reviews about our products 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 brand 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, you know, we have not always Matt described a very healthy brand and Dennis described that, you know, 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 this different than the other patch, either the orthoepra patches or the current generics of orthoepra. So that always comes up, you know, and if not, our reps proactively bring it up. It's interesting, some of the younger physicians say, don't even know that patches are available. So we're reteaching physicians, and all that was really borne out in our market research. We expected both of those phenomenons. So market satisfaction, patient feedback, physician feedback, you know, everything's green, Steve. So trends, you mentioned ACOG. You know, we're very proud of that paper that, you know, 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 that say, did we see anything more in there? And can we just give more granularity? And I think you could see in the paper, uh, we were, we were quite satisfied with the authors, um, that twirl is an effective, you know, use. We don't get a lot of questions, honestly, in the field with the limitation of use sort of 25, 30. And when we present the, the actual upper bound being, you can't prescribe, you know, it's over 30 off label. you know, most physicians say thank you. Thank you for, you know, telling me to appropriate patients. They really give the company a lot of credit for its trial. And then they say, look, I probably know, you know, that other products have that. And I think that the group on the phone knows that after we got the product approved, the other patches were relabeled also with the weight restriction at 30. So, and I think as we, the company stated before, we've seen 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 could 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 come off the pill. And that's exactly in line with 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 new start patients. We're getting folks that are tired and frustrated with the pills, and the market's talking to us. It likes our product. So that's a long answer, Steve, but you gave a complicated question.
spk02: Great. Thank you. I really appreciate the call there. No problem.
spk01: Your next question is from Oren Livnod from HC Wainwright. Your line is open.
spk09: Thanks. Can you hear me? Yeah, I can, Oren. Great, great. Okay, so, yeah, 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, you know, the last several weeks' prescription trends in IQVIA. I mean, it might be modest, but it, you know, looks like the early stage of a, you know, parabolic trend. looking curve, though I'm no geometry major. So can you help us understand, you know, what sort of coverage are these scripts coming through? Are these, you know, do these represent the Medicaid coverage? Do they represent your relatively, you know, limited commercial coverage at this point? Or, you know, are you perhaps already pushing through or getting some docs to push through prior auth such that This volume, as it increases, should maybe drag other managed care payers to the table to cover you.
spk05: Yeah, terrific question, Warren. Yeah, so we're also very encouraged the last couple 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 what I would tell you in the last couple weeks, what we believe is happening in the data is that we continue to grow, you know, number one, our prescriber base, number one. Number two, we're getting new prescriptions. New prescriptions are the lifeblood, you know, of us, you know, in any chronic med, but any meds in general, but also to our refills. Our refills are starting to become very meaningful to our weekly data. You know, 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 weeks of hard work. So I think it's an accumulation born of those three things that is generating the momentum and hopefully, you It's a harbinger of things to come. You know, hopefully it's what we tell our team. Look, the more docs we get, the more they write, the more new prescriptions we get. And if they're happy, as Steve just asked me, you know, 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, you know, we knew all along that, look, the first four to six weeks, we were just laying down samples. You know, as you could see in the data we put out on slide four, There just wasn't much action in refills, and the new prescriptions were just really slow because 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. 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 is pretty good for us i mean it's an important part of the category one-third of all patch business roughly or yeah or i think we said 25 let's say 25 um if i go over my skis um 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 it these are big markets for us so we're We also think that will play into the future uptake, if you will. And your last question, look, we're seeing physicians and the plans we have good access to, obviously it's easy, but we're seeing physicians step up and, you know, you're calling it 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 or, you know, fight through some of those issues. you know, prior off, if you will. So we're seeing physicians say, hey, this brand's worth it. I'm going for it. So now we'd like to get more coverage and we'd like to pick up more accounts and both the commercial side and Medicaid side. But, boy, it's nice to start the second quarter with the line pointing north, Aaron, and, you know, that Medicaid business and the commercial business still clicking along. So I think it's a series of things. I wish I could point to one event. And then the last thing I would tell you, like we haven't spent much money in the first quarter. And Brandon, I think you could tell that in my script. We throttled back. We said, let's wait until the market's 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'll continue our momentum. Well, 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 better conditioned. I wanted to see a bigger beach out of doctors. So we're ready now.
spk09: And if I could ask a quick follow-up, you know, because obviously we want to, you know, even though this doesn't translate to revenue yet as you work through inventory and, you know, 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 and net value per script number. So, you know, I know it's early, but given where you see these scripts are coming from and, you know, the contracting that you know you've put in place and Medicaid, you know, ballpark, can you give us any kind of guesstimate, you know, what's a normalized run rate?
spk05: Yeah, I could help you a little bit. I think Dennis, you know, I'll take a shot, Dennis, and you can clarify things. Well, we got some revenue in the first quarter, right? So the channel is beginning to working down. I know it's very symbolic of the amount of money we put on the table, but it's indicative of towards the end of the first quarter that 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 should stock a unit, give or take. Now, You know, so we're very hopeful. So I think the second quarter cleans up, you know, the normalization, if you will. I think the one thing we'd like to point out that I think is worse, and, again, I'll go on slide four, the cycles, the cycles. Every time we get a script, we get about 1.3, you know, cycles. So we get more than one cycle. So if you think of the value of a script, it's not 159.75 WAC. It's about 210 or 215, whatever it is. So the value of a script is starting to become 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 normalized in second quarter, you know, 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?
spk04: Yeah, 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.
spk05: Yeah.
spk04: All right.
spk05: All right. Thanks. Appreciate it. No, thanks, Lauren.
spk01: Your next question is from Leland Gershell from Oppenheimer. Your line is open.
spk03: Hey, guys. Alan Dennis. Thanks very much for the update. Congrats on the progress. Two questions for 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're expected to be, you know, on reimbursement progress over the initial kind of year, one to two 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 state and that we could actually be kind of at the, you know, majority of covered lives by the end of 21, which I think would be a little bit ahead of prior and then have a follow-up. Thanks.
spk05: Yeah. Really good question. I think at this point, you know, we, you know, we think we're chipping away at this, you know, the, the wins we've got in Medicaid certainly add up, you know, a nice, you know, bucket of lives. So, um, I think we're being very scrappy, you know, and I think looking for every opportunity to make Torello available for women. You know, look, the action's still at the PBM level. That's the game changer. We've got one PBM we're in a great position with. The two other ones, they're okay. But until we get on a national coverage with those, it's hard to pick up, you know, huge, huge wins. But even though the PBMs kind of, you know, rule the roost, you know, Leland at the high level, it's up to 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, you know, availability. And then just to remind everybody, sort of what Oren was asking me, you know, in the Affordable Care Act, even if we're like off formulary or excluded from formulary, if a physician, you know, wants the product, he writes what's called a letter of medical necessity, and it's on our website. It's on our twirler.com website. You can see it. It's a relatively simple form and that said, look, I want this patient to get this product. And, you know, by the way the Affordable Care Act is designed, the physician is supposed to get their wishes. So this is where, you know, kind of hand-to-hand level, you know, we're getting, you know, these scripts to go through, and that's where Sterling's Day would help us. They give patients and providers really great service, both with these letters of medical necessity and Leland and Anam also providing you know, give the patient some extra, you know, hand-holding if they need them or they're off. And then if the patient wants drugs shipped to them at their home, we'll get it to them. We'll ship it anywhere in the country for them. So they get a lot of that. It's a very big value-add service. So I think for us, Leland, I think until we can get the brand to the point that we can get it on the national coverage, you know, 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, you know, that was another example. So, we're swinging for the big ones and we're taking the singles too, you know, but I think we're, I think we can expect from us as we're still at it and we can, we would expect it to continue to grow.
spk03: Thanks. And, and, you know, I know 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 other advertising. Just wondering if you could comment at all on kind of where you're seeing the effectiveness of of your different campaigns in terms of how much, you know, you need to put in 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, you know, get through the rest of the year and beyond?
spk05: Yeah, good question. I mean, you know, I think that everybody on the call knows we're big fans of activating consumers. I think we made two strategic decisions that 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 patients, to 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 I think, you know, for us to spend, big spends on TV or even radio. You know, while it feels good, you know, 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, you know, we just aren't big believers that, you know, most of these young women don't even own TVs. And, you know, so we think the streaming platforms like Spotify, you know, TikTok and all those ones where we could target the branded advertising, you Cleveland is a better spend of the money. We have a higher degree of confidence. That's a better target. And we, you know, so for us, that's, what's exciting. And, you know, we're seeing some early signs that our early work there is really paying off. I mean, ultimately it's great to say, Hey, 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, some, some work on this, that doctors are starting to see patients come in, you know, um, asking for Twirla by name. So they saw the ad, and our Twirla website is starting to light up, you know, with people coming in. So relatively early days, but I think there are decisions in Leland we made saying let's spend our money more smartly and digital where we think our eyeballs are, and then we have a higher chance of, you know, activating her to either come to our website or even better yet, go to a doctor. So hopefully I'll have the next – I'll be able to tell you a little bit more. But, you know, we're full bore now in the second quarter with our, if you are, DT social spending. I don't even know what it's called anymore. But we're going pretty, you know, heavy. And also with the positions. 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 health care providers. You know, we are right now only deploying some of our more aggressive campaigns even to them. We just wanted to give our reps that beat, Chad, to get out there in the first quarter. So, you know, we wanted to see the brand get its legs on there, and we do, and that's why we're turning it on now. So we like what we see.
spk03: Got you. Thanks so much, Al.
spk05: You're welcome. Thanks, William.
spk01: Your next question is from Team Hugo from William Blair. Your line is open.
spk08: Thanks for taking the question. 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 $850,000. By picking your prepared comments, you figure now about $1,200,000. So that's $350,000 in April. So kind of where do you Expect that number to trend throughout the next couple quarters.
spk05: Yeah, bigger, Tim, is the number I expect. I understand. No, 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 that I think I mentioned you before, you know, the group before, and that's an important metric for me. I mean, that's how we grow this business, you know, getting doctors that don't get done with the samples. Let me start writing scripts. So I think that is an important one. Yeah. I mean, in the fourth quarter, Dennis, I'll say it, but everything was stocking. I think we had a, like 10 scripts. I mean, it's stocking. So that net sales reported was, was, you know, us filling the wholesaler shelves, if you will. And you can see that they've worked it down in the first quarter, a lot of it, you know, and they're actually rebuying inventory from us. You know, we posted a small quarter, but it's still good to see in the end of the first quarter that we're saying, okay, we've worked down the shelves and the product's making its way in the pharmacy and consumer's hands. So, as Dennis mentioned, you know, we're not quite done yet, so we think it'll 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. Give or take. Okay. That's great to hear. But that's the way it should work, and I think we're optimistic that they've worked down the bulk of that. And then you should be able to just look at script to volume and say, okay, that should be give or take. And there's some channels that don't report. As we 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 in the third quarter.
spk08: Okay. And, you know, looking at the cash burn, I think it was over $14 million in the quarter. With the direct-to-social kind of ramping up, I assume it's going to ramp as well, but I don't quite understand, you know, how efficient this is. And obviously direct-to-social is different than, you know, Super Bowl ads. Yeah.
spk05: Yeah, Dennis, why don't you walk Tim through what you were guiding for the second quarter? Because the first quarter was light, Tim. You know, so, I mean, because we didn't, you know, we had to buy samples, if you will, from Corium. And as I mentioned, we didn't do too much, you know, in the way of consumer spending. So, Dennis, why don't you walk Tim through the reason why we're signaling the second quarter being up?
spk04: Yeah, I mean, as Tim said, we burned about a little over $14 million net in Q1. You know, 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, you know, we anticipate it could be $18 to $20 million there. Now the offset there is all roads lead to revenue, right? If we continue to start to see, you know, the revenue cranking, we should see cash flowing in. You know, it's how fast does the revenue grow is kind of our, you know, our whole challenge going forward there. Understood.
spk05: Thank you. We think in the third quarter, Jim, that's our goal. I mean, our third quarter, our revenue line, as Dennis was saying, our margin line needs to work for us, right? So that's what we're expecting. So the first quarter, we didn't throw off any margin because it was just insignificant. And second quarter onward, the revenue line has got to work for us. But we're seeing on the ice, I should say, the sampling cost is, I don't know, Dennis, we're using a complicated term called lumpy. So some quarters we need to buy more samples, some we don't. So this is one- Yeah, we'll pay for a batch.
spk03: Great.
spk05: Okay. I understand.
spk08: Lumpy is a technical term, so I get it. That's right. Thank you for the clarity.
spk01: Your next question is from Nev Ramon from Axiom Group. Your line is open.
spk06: Hi guys. Thanks for taking the question. 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 an asset into the pipeline? I'm sorry. Yeah.
spk05: Yeah. I mean, we, you know, we, on our website, we say, we don't, we, we were saying, Hey, everything's on hold for awhile. That really isn't terribly fact. You know, we are doing work on our pipeline now, you know, we are spending some money. We've activated and we're doing some, you know, 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 haven't selected our final clinical candidate yet. So our intention is the next couple quarters to spend a little bit of money, you know, 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 today. So the good news is all of our pipeline seems to be high interest, both from physicians and consumers. And Dr. Corner, 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, you know, I think we like to have a conversation with the FDA so we understand, you know, the repercussions. I can't see us, you know, going into the clinic, you know, even if I do a phase two possibly at the end of this year or into next year. But we're going to continue, you should see, spending a few bucks continuing to develop. And Paul and his team have activated them. They've done more work in the last three months than we might have done in three years. I mean, honestly, they've done some really good work. But we still haven't pulled the trigger on knighting the one for the clinic until we get some of this PK work under our belt and get a little bit more regulatory feedback.
spk06: You guys don't have to file, like, another IND, right, with twirl approved?
spk05: It depends on, you know, it depends on what one we would do. So, like, the one that's the extended regimen would be, you know, a follow-on, if you will, to the twirler NDA. 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're generally thought to be line extensions, but the projection 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 two, more than likely they're under the same IND. Thank you for my question. I'm not a regulatory guy, so take that with a grain of salt, but I think I'm right. I think I'm right.
spk06: All right, sir. Thanks.
spk01: There are no questions over the phone. Please enter us. Back to you for your closing remarks.
spk05: Great. Thank you, Operator. So I'd like to close, you know, today by saying, you know, that we think we have the building blocks in place right now, you know, for continued growth. And we believe we're on track to achieve our near-term goal. We wanted the world to be a real serious player in the multibillion-dollar U.S. hormonal contraceptive product. We continue to implement our commercial plan. As you heard Nicole, we're going to continue to work on expanding coverage and reimbursement and access for our brand in the United States and working through all the channels, both on the HCP side and the consumer side, and also in the supply chain to make sure Twirl 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. So in the meantime, be safe, and thanks again for dialing in. Thank you.
spk01: This concludes today's conference call. Thank you for participating. You may now disconnect.
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