Agile Therapeutics, Inc.

Good afternoon and welcome to the Agile Therapeutics 3rd Quarter 2021 Financial Results Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to Matt Riley, Head of Investor Relations.

Hello everyone and welcome to today's conference call to discuss our 3rd Quarter 2021 Financial Results and Corporate Updates. 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, and our assessment of the combined hormonal contraceptive market and the potential market share for Twrla, among other things, regarding our plans, prospects, and expectations. Such statements represent our judgments 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 for 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, Agile Therapeutics Chairman and Chief Executive Officer, and Dennis Riley, Chief Financial Officer. Following our prepared remarks, we'll open the call to your questions. I will now turn the call over to Al.

Thank you very much, Matt, and thank you all for joining us this afternoon. In our third quarter, 2021, we once again saw growth in all key performance areas for Tuareg Life. From the end of Q2 2021 to the end of Q3 2021, we saw the following. Total cycles dispensed grew 61%. Total prescriptions, or TRXs, grew 47%. New prescriptions, or NREXs, grew 25%. And refills grew 86%. We're encouraged by the double-digit growth in our prescription demand but we are not content. Our goal is to accelerate the growth of Twirla Brands and reduce our time to profitability. We believe we have the awareness and access programs in place to execute on our plans and intend to make meaningful investments in marketing to help increase demand. I'll delve into these initiatives later on this call. First, let me discuss what we believe are the key takeaways on these performance metrics. Refill growth at 86% is a great sign. Our head of marketing, Amy Welsh, always reminds us that we believe this is a sign of a healthy brand because it tells us women are on Twirla, like Twirla, and are staying on the product. In turn, this gives us the confidence and the longevity of the brand because new patient starts are translating to repeat customers. Second, we want to increase the rate of new prescription growth. When we consider the rate at which toilet prescriptions are being refilled, we believe more new patient starts can lead to more refills and greater overall brand growth. Part of the new prescription equation is also the prescriber count. The prescriber count grew 63% in the quarter to 3,394 total prescribers, and we continue to consistently pick up approximately 100 new prescribers each week. Third, during quarter three, we said twirl of cycles or retail units were expected to grow between 50 and 56% higher than the retail units sold in quarter two, 2021. We saw retail units actually grow at 61% this quarter. And again, we are pleased to see this growth, but are not content. We want more. I'd like also to address the guidance provided during quarter three. During the third quarter, we said we expected quarter three 2021 net sales to be in the range of 1.4 to 1.6 million. We came in slightly under our guidance as wholesalers reduced their channel inventory by approximately eight days. The double-digit growth in prescription demand leads us to believe we have the underlying demand to support the business long-term, and we expect to see the wholesale activity reflected in the near future. Dennis will provide some additional commentary on revenues and inventory reserves for the quarter when I hand over the call to him. We need to accelerate prescription growth, which accelerates the revenue grant, and that is our singular focus. We're executing on initiatives that we believe can help accomplish this goal. For this call, I'd like to discuss three of these initiatives, telehealth, Medi-Cal, and DTC in our influencer program. First, telehealth. In the third quarter of 2021, we announced a partnership with Pandia Health, a telehealth service provider, which is now active. Pandia offers an additional point of access for Twirly in a fast-growing channel and represents the first telehealth alliance for our company and our product. We're excited to enter telehealth as its use in the contraceptive care has grown over the past several years, and has come into the spotlight during the COVID-19 pandemic. We always believed telehealth was a priority channel for our target consumer prior to the pandemic, and we believe it's even more so now. To that end, we continue to explore additional telehealth partnerships to maximize our footprint in this channel. Because Twirla became available on payday at the very end of the third quarter, we expect to start seeing its contribution to our tier Xs as we progress through the fourth quarter of 2021 and into 2022. Second, Medi-Cal. As we previously announced, the California Medicaid program placed Twirla on the preferred drug formulary list effective October 1st, 2021. This secured a preferred position for Twirla on the formulary for Medi-Cal and its related programs which provides healthcare to approximately 15 million beneficiaries. This is significant for Swirla because Medi-Cal is the largest Medicaid program in the U.S., and we believe roughly one-third of the existing contraceptive patch market comes from Medicaid. Again, this just went into effect at the beginning of the fourth quarter of 2021, and we expect to start seeing this contribution to our business as we progress through quarter four of 2021 and into 2022. Third, DTC and our influencer program. We believe that our DTC advertising program can perhaps have the biggest impact on NRX growth. We recently activated branded influencer program to increase awareness of Twirla as birth control options and encourage women in our target market to engage in open conversation about the product. We are focused on leveraging influencers via Instagram and ensuring this program focuses on TWRLA through clinic storytelling, which further is supported by our paid social amplification to reach even a broader audience. Our influencers include individuals of varying tiers from micro to macro, which we believe will allow us to optimize the unique benefits each level of influencer offers. We rolled out our first wave of activity in early October and are seeing the type of engagement we envision, not just likes and impressions, but also in the comments and conversation. We are pleased with the first wave of influencers and posts. We continue to focus here to reach our target market. We previously discussed our plans for DT advertising and are pleased to announce that Twirla is the first prescription birth control brand to launch branded podcasts on Spotify. Twirla is also the first birth control brand to run branded content across BuzzFeed, leveraging their social handles across Facebook, Instagram, and Snapchat. Finally, and importantly, we are partnering with U.S. soccer star Carly Lloyd as our corporate spokesperson. As corporate spokesperson, we believe she will help amplify the message of our commitment to women's health. As the partnership really kickstarts later this year and throughout 2022, you can expect to see Carly Lloyd promoting Agile and its mission on Instagram and Facebook, where she has a combined 2 million followers. These are important initiatives, which we believe build our business. At the top of the call, I reported we saw growth on all our key brand performance metrics. This is without the contributions of any of the programs I just mentioned. As we continue to implement these programs, we believe they will contribute significantly to increase product awareness, uptake, and growth acceleration as we finish 2021 and enter 2022. I also want to review two other announcements from the third quarter that we anticipate having positive impact on our overall business. First, the appointment of Josephine Terente to our Board of Directors. Josephine is a highly experienced regulatory expert who we believe can contribute to our growth of our company through her strategic insights on the FDA regulatory process and her experience evaluating business development opportunities. We believe this will be useful as we evaluate our own pipeline and explore other ways to expand our business. Second, the Patient Protection Affordable Care Act, or ACA, established an important standard for coverage of contraceptives. Nearly all the commercial and Medicaid coverages are required to cover the full range of female-controlled contraceptives without cost-sharing, such as coinsurance, copayments, or deductibles. Despite the APA protection and the government's guidance on implementation, women around the country are not getting the contraceptive they need or are prescribed or entitled to at no cost. Recently, health committee leaders the National Women's Law Center, and the Family Planning Council all urged the Biden administration to clarify and enforce the regulations to ensure consumers access to a full range of FDA-approved contraceptives. We believe this issue has been an impediment to prescribing and the uptake of all new, innovative contraceptive products, including Swirly, that has been approved by the FDA since the ACA's passage. Kimberly Whalen leads our policy and advocacy and market access for Agile and is closely following this development for us. We hope to see the Biden administration address this important issue and ensure all women have access to contraception that has been decided as medically appropriate between the patient and their provider. We believe that we've been able to grow despite this access barrier, and we applaud the congressional chairs for urging enforcement. I'll now turn it over to call to Dennis to provide you more clarity about the third quarter from a financial perspective. Dennis, take it over. Dennis Dixon Thank you, Al. My goal here is to highlight key financial areas related to our financial performance and our cash position, then move over to Q&A so we can answer your questions. In the third quarter of 2021, we realized net product revenue of $1.3 million on sales. As Al stated, this came in slightly under our guidance as our wholesalers reduced their channel inventory by approximately eight days, the equivalent of $115,000 to $160,000 in net sales. In addition, we made some increases on our gross to net revenue allowances. Our cost of product revenue for Q3 2021 was $2.7 million and included a $1.4 million inventory obsolescence charge.