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spk01: Good afternoon and welcome to the Agile Therapeutics Fourth Quarter and Full Year 2021 Financial Results Conference Call. After today's presentation, there will be a question and answer session. To ask a question, press star and the number 1 on your telephone. Please note today's event is being recorded. I would now like to turn the conference over to Matt Riley, Head of Investor Relations.
spk06: Hello, everyone, and welcome to today's conference call to discuss our fourth quarter and full year 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, our outlook for the first quarter of 2022, management's expectations for our future financial and operational performance, our business strategy, and our assessment of the combined hormonal contraceptive market, among other statements regarding our plans, prospects, and expectations. Such statements represent our judgments 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 Altamari, 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 Dennis.
spk08: Thank you, Matt, and thank you all for joining us on our call this afternoon. I will review the key areas of our financial performance for fourth quarter and full year 2021, and then discuss our cash position and plan to finance the company. I will then hand the call over to Al for an update on our business plan for 2022. Overall, 2021 was our first full year of commercialization and we saw steady growth in Twirla across a number of revenue as we sought to establish Twirla in the market. Beginning with revenue, we realized net product sales revenue of 1.5 billion in the fourth quarter as compared to 1.3 million in the third quarter of 2021. Our net revenue for the fourth quarter was at the high end of the range we guided in January and brings us to $4.1 million of revenue for the full year 2021. Our cost of product revenue for Q4 2021 was $5.7 million, which included a $4.5 million inventory obsolescence charge for product not expected to be sold prior to its shelf life date, which is 12 months prior to expiry. Full year cost of product revenue was $10.7 million, including $5.9 million of inventory obsolescence reserves. While we believe we have managed our inventory down to a level that more closely tracks to demand, We will continue to closely monitor this area and take the appropriate steps when necessary. Our operating expenses were $18.2 million in Q4 2021.
spk03: $18.2 million communicated in January. Our operating expenses were $64.4 million.
spk08: to $49.5 million in 2020. The overall increase is primarily related to our spend in support of building and promoting our brand in order to establish it in the marketplace through our direct consumer or DTC marketing and our sales force which was in place for the full year of 2021. We remain focused on maintaining our disciplined spending approach and making the right investments to encourage strategic growth while implementing what we believe to be impactful partnerships and agreements. Al will provide more detail on our 2022 business plan in a moment. We anticipate our quarterly spending for the first quarter of 2022 to decrease slightly and to be maintaining spend on product sample batches and brand marketing. This reflects our plan to reduce spending in other parts of our operations in order to maximize and focus our investments in the DTC campaign that Al will describe. We closed out the fourth quarter 2021 with a net loss of $23.4 million, or 20 cents per share, compared to the net loss of $17.6 million, or 20 cents per share, for the comparable period in 2020. The full year net loss was $74.9 million, or 77 cents per share, for 2021 compared to 51.9 million or 61 cents per share in 2020. At December 31st, 2021, we had cash equivalents of $19.1 million as compared to 14.7 million of cash and cash equivalent at the end of the third quarter of 2021. This increase on hand related to a public offering completed in the fourth quarter netting $21.1 million offset by a working capital burden during the quarter. Financing update. We continue to explore financing options to support the growth of Twirla. Our plan to finance the company is focused on three parts. One, working down our debt facility with perceptive advisors. Two, regaining compliance with the NASDAQ listing requirements. And three, raising additional capital. We currently have no plans to further leverage the company and therefore will not add additional funds under our debt facilities. In January of 22, we retired 5 million in debt from perceptive advisors, reducing our debt to $15 million in exchange for relief on certain of our financial covenant. And in the second quarter, we plan to make another payment of $5 million in principle in exchange for further relief. In March, 2022, we closed a $4.85 million registered direct offering healthcare-focused institutional investor.
spk03: In addition, we anticipate an additional $4.7 million in funding in the coming weeks from the sale of New Jersey net operating losses.
spk08: As we have previously reported, we were notified with their minimum bid requirement, which requires our stock dollar, and that we have until May 9, 2022, to regain compliance.
spk03: While we might be able to secure it and regain compliance, we are working to regain compliance by NASDAQ's original target date.
spk08: We believe that increasing the price of our common stock at this time would allow us to regain compliance with NASDAQ and better position us for further fundraising, thereby helping to de-risk stockholders on April 21, 2022, to seek approval for a reverse stock split.
spk03: We will require additional capital to achieve our goal of being cash flow positive.
spk08: We anticipate that as our sales growth continues to gather momentum, our optics on revenue find the path and timeline to positive cash flow.
spk03: We will continue to evaluate all options.
spk08: available to us to finance the company, including further equity offerings and various business development and partnership opportunities to accelerate our path to 2021 with momentum behind Twirlline and a focused, targeted plan to build on that momentum.
spk03: Great. Thank you, Dennis, and thank you, Matt. And thank you, everyone, for joining us today and continuing to following our story at Agile. Dennis referenced our belief that in 2021, we began to build momentum for Torolla.
spk07: I want to spend my time today providing further context and highlighting our plan to build on that progress and lay the foundation for Torolla by deploying our Salesforce and Salesforce.
spk03: Beginning in the third quarter of 2021,
spk07: we started to see consistent and meaningful demand growth. From the end of the third quarter to 2021, we saw the following.
spk03: Total cycles to spend grew 35% to 12,849.
spk07: Total prescriptions, or TRXs, grew 33% to 9,837.
spk03: to 4,381. Refills grew 47% to 5,456. And total prescribers grew 40% to 4,640 prescribers. Another quarter of double-digit growth is encouraging, and we believe there are many signs of a healthy
spk07: growing brands, for instance, the level of refills.
spk03: Now our objective is to design a plan that could allow us to continue to build on this theme and the twirler growth while assuming no change could have potential upside in 2022. The components that we think will contribute to reaching our objectives.
spk07: First, our partnership in January 2022, we launched our co-promotion partnership with Afaxis through their group purchasing organization to the non-retail channel.
spk03: And Afaxis has the potential to access including colleges and Planned Parenthoods. We have previously stated that access to Planned Parenthood and we believe the in an efficient, targeted way.
spk07: The growth graph we just showed and have traditional retail channel only. Generally, to the end user at pharmacy or through mail order telemedicine and non-retail sales are units sold or dispensed to public health clinics or institutions. In the second quarter of 2021, retail units, which shows us the potential impact that this non-retail channel can have on our business. We believe that AFAXIS and its sales force can deliver on the non-retail growth, and we expect to see contributions from this channel ramp throughout 2022.
spk03: Our business plan is to focus on U.S.
spk07: market for contraceptives through the preferred position on Medi-Cal formulary.
spk03: On last quarter's call, the largest Medicaid program to the preferred drug list. As of October 1st, preferred drug placement
spk07: for Medi-Cal applied to those beneficiaries who received their pharmacy benefits through the fee-for-service plans and related programs, with the remainder of the beneficiaries gaining access as a significant for Agile and Twirla because Medi-Cal provides healthcare to approximately 15 million beneficiaries, and one-third of the existing patch market comes from Medicaid. Because Twirla is now active on the Medi-Cal formulary, driving Twirla awareness and adoption in California is a priority, which leads us to the third component. We are excited to announce a brand-new Twirla direct-to-consumer commercial that will air on Connected TV, also known as CTV, in early April. The tagline for this commercial is Patch and Play, and the objective of this spot is simple. We want patients to ask their doctors about twirling.
spk03: For those of you who are unfamiliar with CTV, it's a video streaming across smart TVs, desktops, mobile, and tablets, which is the
spk07: allows us to buy exposure to a specific target viewers wherever they are watching streaming content, rather than buying space on particularly TV shows or networks. We are deploying the commercial in the big five states of California, Texas, Florida, Illinois, and New York.
spk03: These states have large markets for contraception, and potentially strong commercial coverage for Twirla.
spk07: By targeting these five states, we believe we're able to reach between 41% and 45% of our key customer base in this country, or approximately 5.7 million women ages 18 to 24.
spk03: For those of you interested in viewing up the ad who aren't an 18- to 24-year-old, go to twirla.com.
spk07: We've been adamant that traditional cable TV is an inefficient mass advertising approach that does not land directly on our target to our audience.
spk03: Moreover, we believe cable TV is an expensive strategy and is currently not a responsible way to utilize our valuable consumer marketing dollars.
spk07: We think CTV is a highly targeted and cost-effective way of our DTC approach to increase twirl awareness. This complements the digital DTC programs we announced on the third quarter call of 2021, and it's worth noting we are seeing talent representatives producing prescriptions
spk03: We believe this signals that current DTC efforts are gaining traction. This is the plan we have in place for 2020.
spk07: It is on building upon the momentum we established throughout 2021. The FACTS Partnership and the new Medi-Cal program development have effectively come online in January of 2022, and we expect that the contribution to our growth to ramp well into 2022. The Twirl SCTV commercial will air early in April 2022 and we believe will contribute to the demand growth components being fully deployed in the first quarter. We saw the brand's momentum continue as you will see on the graph here that shows the four week rolling average for the fourth quarter of 2021 and the first quarter of 2022. This is why we have confidence that as our key initiatives for 2022 begin to contribute to our referral results, our business... Before we get into the Q&A, I want to touch on the federal activities surrounding the enforcement of the Affordable Care Act for the ACA. We believe the high interest level regarding contraceptive access and the implementation of the ACA requirements across advocacy groups, members of Congressional and Senate Committee Chairs, is an effort to support a basic, sound policy. Women and their providers are the best determinants of contraceptive care. In January 2022, U.S. Departments of Labor, Health and Human Services, and Treasury updated enforcing the requirements for most commercial insurers and their PBMs to cover all contraceptives at no cost if deemed medically necessary by their provider.
spk03: They specifically indicated that the plans try and fail multiple options or require patients to try methods other than the one recommended.
spk07: preventive service guideline for plan years beginning in 2023 to include coverage of all FDA-approved, granted, or clear contraceptives be made available as part of contraceptive care. These updated guidelines We will continue to engage with plans as they begin to evaluate their practices to comply with the ACA requirements. We will continue to monitor developments in this area very closely. We think we have a well-designed plan for 2022, and if we continue to execute consistently, we can achieve meaningful progress in building our business in 2022. We'd like to give a chance for our covering analyst to take this opportunity to ask any questions. Operator, you may now open the line for Q&A.
spk01: Ladies and gentlemen, just as a reminder, if you'd like to ask a question, please press star and then once again, that is star and then number one. Your first question comes from the line of Leland Gershell.
spk05: Hi. Congratulations on the progress.
spk02: Thanks for taking my question. A couple of questions. First, just as you expand the DTC campaign, just want to ask if you have any metrics or kind of feedback on the effectiveness on the different aspects, you know, of your DTC initiatives.
spk05: And also, with respect to the enforcement under the ACA, just want to ask if you've seen, you know, any tangible signs of either enforcement or threat of enforcement, how that may have positively impacted TWRLA at this point. Thank you.
spk07: Thanks, Leland. To assume an order, your first question about metrics or signs of DTC, that, you know, clearly DTC works better.
spk03: It's clear that that's, you know, the best outcome. But we have kind of a...
spk07: We look at where we said, well, where don't we have sales representatives? We have zip codes and in some case states where we don't have sales representatives that we said, well, let's deploy DTC and see if we can move the needle. And we can. So we know DTC is strong enough to work on its own. We know it's better when it works in parallel with our sales force. So that's an important metric for us. So it gave us confidence to say, okay, let's take it to the next level because our DTC has generally been You know, Amy Walsh, our head of marketing, you know, I'm not sure if she would agree if I call it print advertising, but it's print. It's flat media. It's, for the most part, digital, you know, print. And it works really hard, but we think we could take it to the next level, and that's why we're excited about the CTV. It's a video. It's a video. We don't want to call it a commercial, but it's a video. Hopefully you'll get not only a good laugh at it, you know, because, you know, it shows women interacting with other women because we want to be number one. and, if you will, advocate for a brand is a woman's girlfriend. You know, that's why we do the influencer programs we do. So we want to take advantage of that dynamic. So then the other metric we look at just to complete the interview is we look at when we run media, do we light up our websites? You know, do we get, you know, traffic? And we do. So we see a pretty quick response. So we know it works. You know, we know it can work harder. And then what we want to do is, you know, be smart with it, as I mentioned in the talks, because we know we're throwing a DTC into some states where we don't have great coverage or we don't have enough of a Why don't we deploy our spending? Let's go heavier in areas that the pumps already primed, if you will. So with Salesforce footprint, you know, reimbursement coverage and, you know, obviously, you know, high density. So that's why we picked the big five. So, you know, that's what we looked at, Leland, to kind of get to the next level. The second question you asked is about the ACA. I wish I could tell you that we're seeing a lot of changes in behavior. We're seeing a lot of interest, a lot of activity. We've gotten inbound calls about our coverage. She was come to at least to the forefront, you know, of the insurance company, the PBM's mind, you know, but now it's got to get to the next level. They, we've got to change behavior. And so we're starting to see that, you know, work a little bit better, you know, so we get a better conversion of our scripts, you know, best month ever, and I'll put my neck on the line a little bit. We saw the highest growth we've seen in this brand in March, and we're not quite over yet. So we think the market's evolving, Leland, probably not as fast as I want. So we said, let's just develop a business plan that says status quo. We've got a plate of cards we're dealt, and that's what we're doing, and we're just At the end of the first quarter that we put up three monster quarters in a row where we've grown our top units well over 30%. To keep compounding 30% on 30% on 30% on the cycles going out the back door, you know, it's just, I think, a great testimony to the brand and the people in our company. So, you know, we're optimistic and we just see it as an upside. You know, we think based on these guidelines for HRSA, you know, and then, you know, we think that what's going on in D.C. and the awareness We still think our better days are ahead of us, but it doesn't mean it's gloom and doom right now. We're motoring right now. And, you know, we've officially dropped the flag and said we've got momentum on this brand. We don't see growth. We see real momentum now. So we're pleased. We want to do more. And I think these initiatives, we didn't. You know, hopefully, you know, accelerate that. But right now we're pleased. And so, you know, on the ACA side, the scripts go through a little bit easier. We're seeing some upside. You know, we think there's less friction, if you will, in the marketplace, but not enough just yet. So we think it's an evolving story, but, you know, we're ready. You know, we'll keep working hard with the cards we're dealt. And, you know, in the meantime, we see that as a big upside for later in 22 and hopefully into 23. So, yeah. If you'd like the 30%, 35% growth, let that get cleaned up and we'll really rock. Sorry, but two really important questions.
spk05: Not at all very helpful. Thanks so much, Al. Thanks.
spk01: Your next question comes from the line of Oren Livnot with HC Wainwright.
spk04: Hi, guys. Thanks for taking the question. curve you got going. I hope you can keep it up. Regarding these, I guess, key focus areas for 2022 in terms of, you know, the most exciting growth opportunities you've called out being Medi-Cal and the effects, I was just hoping, you know, if possible, you could just help me better understand, I guess, sort of the size of those pies potentially. I think you said that one-third of all patches go through Medicaid. I guess that's overall Medicaid. Are you able to Give us a sense of what sort of, you know, CHC volume, prescription volume, patch, maybe specific volume goes through Medi-Cal specifically. And on the F-axis front, I guess, you know, I don't really have a great, I mean, I know that's not, it doesn't show up on IQVIA, right? That's a volume I can't track. Are you able to give us any sense of sort of how big the volume of their overall, you know, contraceptive portfolio businesses, you know, just so we can have a sense of what kind of scale potential exists within those channels. And I have a follow-up or two.
spk07: Super questions, Oren. So let's call them Medi-Cal first. You know, California is roughly in line with the nation. So in general, about a third of the current patch volume in this country runs through the Medicaid books. And we see that in California. So, you know... You know, I don't have the exact numbers in front of me, but it's a huge potentially market for us running through that Medicaid book. It's meaningful. It can move the national needle itself. What's exciting for me is that, you know, generally you put reps in front of doctors and you say, well, it takes multiple times to kind of you know get doctors the right product or like the first week of january we sold scripts in college not many but we sold california scripts and it's growing in a pretty nice clip so um i think of market share sometimes our our market share in california and medical in california might be at or beyond the national market share we have. You know, so we're already doing as well in Medicaid, in Medi-Cal, I'm sorry, after two months that we took us the better part of 21. That shows you how excited the doctors are in California. So, you know, I wish I had that top of hand, you know, the size of the market. But patches are a big piece of business there. It's a significant amount of volume in California. It's meaningful to move the national needle. So the other thing with the faxes, You know, they have their own brands, so they have a lot of generic pills they sell, so they have their own products. They obviously don't have a patch, and they don't have other forms of contraception like the ring. So they kind of work with partners to complete their offering, if you will. But, you know, and you're right, their volume in Medicaid, generally the Planned Parenthood volumes don't run through Acuvia or Symphony. Because you get the data for these, generally everything runs through there, Acuvia, and a lot of student health centers don't either. So, I mean, nationally we think it's hundreds of thousands of potential cycles up for grabs in patch volume, hundreds of thousands. So we'd like to take a piece of that pie, right? So if we take a reasonable slice of that pie, you know, based on what I just reported, you know, like in the quarter, let's do it, you know, we said we were proud of the 12,000 cycles we did in the fourth quarter. You know, that's less than 4% or 5% of, you know, a fax business patch volume. So imagine I could get a decent slice of your fax business. It's meaningful. So if there's hundreds of thousands of you know, patched volumes, you know, that's up for grabs. They have faxed this current book. And we think we want to get a piece of it. So that's going to take us some time. You know, these are contracts. It's not like you walk into a doctor's office and they write a script for you. This takes us time to get under contract and, you know, they have to purchase through the GPO. So, you know, we're starting to see a smidgen, you know, small amount, not very meaningful to show up in the first couple weeks they've been in business. We think this is going to build over time, and we think probably in the next couple quarters, more than likely the second or third, it will be more meaningful that we might report it separately to you. But for right now, we're just starting to lay the groundwork for that. So I think AFACSIS is going to contribute more, I think, to the top line of Agile, I'd say, in the second half of the year. I think Medi-Cal will start paying, you know, getting some scripts that it's already getting now, and we expect that's already contributing. But I think that's why our March data is starting to light up. That's why you – thank you for the comment about the curve. We like March a lot. We like to think that if you tease out March, it really looks good, you know, because we're having a really great March. We'd like to see that continue, obviously. But thank you for noticing it. So it's important to us. And I think that's – you know, we want to keep going.
spk04: All right. And if I may, just, you know – You talk about targeting 18- to 24-year-olds, and you also mentioned taking patched share, and so I'm not sure these are the same pools of patients. I just want to understand your targeting and how you've sort of chosen Obviously, the oral contraceptive market is the vast majority of the overall volume and switches from there or new starts represents a bigger potential pie overall for you long term. So is that why you're targeting younger patients just because they're earlier on the journey or is there some other profile that you're targeting?
spk07: No, I think you answered your own question. I mean, I think in general, I think we mentioned before that about 50% of our business comes from a woman, you know, who probably more than likely is this her first step on the journey or maybe she's been on pills before. Roughly 75% to 80% of our business comes either from a new start or somebody who's been on pills before. So we think she's relatively early in her journey, as we probably all know, is that women can start before 18 and oftentimes do. But we think the 18 to 24 kind of is that sweet spot where more than likely she's either tried a pill or more than likely hasn't been that happy with a pill and is looking for something different and isn't ready to sign up for tubal ligation or a ring or potentially an IUD. So we think it's a sweet spot. It also happens to be, Oren, that there's There's some science to buying media. It actually is a real clean media buy, too. We think they're very engaged with their media. So we think they're very responsive. And at that point, they're making a lot of decisions for themselves about which brands they go on. So we think it's a really smart buy of media. But we also think it lines up with what we're seeing and, you know, who's using our product right now. But then you're right. There's a case to be made. We should go a little older and maybe a little younger. But We've got to walk before we run a little bit. We'll put our media where we think we get the best bang for the buck.
spk04: Okay, and if I may, I appreciate you're not hiding from the liquidity situation. You're not alone. It's obviously tough launching a single drug as a small company, and you're not the only one, even in the women's health business, that is facing those challenges. So just strategically, given there are several companies in this space, in similar situations you know how much thought do you lend to you know strategic uh alternatives whether it's you know you know merge buying selling in some way to get some leverage in this space uh so that uh they could you know where one plus one equals three
spk07: Yeah, I mean, it's probably, you know, short of running our business, it's the second thought that hits my mind. I think all of us that have a one-product company with the point of Salesforce should look for ways to make that more efficient. You know, we are really open to... you know, collaborating with other women's healthcare companies. We're open to finding another, if we could find another product for our bag, if we can help somebody else. I think, you know, I think we all should be looking for ways to leverage our infrastructure costs. So I think it's a really important effort that We take really serious, you know, so we're in a lot of conversations. We try real hard. You know, obviously we don't have anything to show you, but I think it is top of mind for me. I do. I think if there's two things, if we can get another product in our bag, it makes our math clearly a lot better. But also, I leave a lot of open gaps on the map. You know, there's only so many sales reps that we can afford. We put them where we think the best bang for our buck, but if somebody wants to put our product in their bag, and can do it more efficiently than us, we're open for that too. So based on your comments about the capital markets, you know, we all should be thinking of that, Oren. So it's certainly top of mind. Unfortunately, it's a relatively small space. There's not a ton of opportunities. So we all, you know, so just we don't have 50 choices, if you will. So we've got to work harder at it. And so, you know, we're in good conversations. But for right now, you know, that's all I can tell you, that I'm just being straight. All right. Well, thanks for accommodating all the questions.
spk01: And I'd like to turn the call over to Al Altamare for any closing remarks.
spk07: No, thank you, Operator, and thank you to Matt and Dennis for our help. Dennis described, you know, that we're trying to, you know, and Oren just touched on it, you know, look at our, you know, managing our quarterly operating expenses, you know, and working to regain compliance with NASDAQ. And we have to finance the company, you know, so we're not, we want to lay out our plans as Dennis did and let you know exactly what's in our minds. We think we're using our marketing spend in a very wise way, focusing on large markets with potential good coverage for our strong commercial coverage. In summary, we believe this brand is demonstrating steady growth, you know, and steady momentum. You know, so it's beyond, it's now predictable. You know, so it's not, you know, a surprise that we had one or two good quarters. We've now strung together three quarters, hopefully going into the first quarter of strong growth. And we think our business plan, you know, that we're working with is designed to help Quartz Roll even grow more in 22. But in the meantime, you know, you can keep an eye out for the CTV ad we mentioned. You know, we'll put out an announcement, you know, shortly about it. And also I want to let you know that, you know, the company's, you know, gone to a very major conference. It's the American College of Obstetrics and Gynecology, or called ACOG. It's in May, so we're going to have a strong footprint there, both on the commercial side and also on the scientific side. So more to come there. So anybody would like to know more about that, we'll be putting out some information about that. I think the other thing I want to mention about ACOG that I think it's important for you to know, Sometimes you just get lucky. So ACOG this year and our key market, ACOG in California and San Diego. So we're thrilled to put our major presence out and our foot four in the California market at such a critical time. So thank you for joining us. And we look forward to updating you as we go through the 2022. And thanks for following our story and thanks for your interest in the company. So we appreciate it.
spk01: Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.
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