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spk01: Good afternoon and welcome to the Agile Therapeutics First Quarter 2022 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 Investor Relations.
spk02: Hello, everyone, and welcome to today's conference call to discuss our first quarter 2022 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 and financing prospects for the future, our outlook for the second quarter of 2022, management's expectations for our future financial and operational performance, including our expectations regarding the growth of Twrla, 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 every statement 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 Dennis.
spk03: Thank you, Matt, and thank you all for joining us on the call this afternoon. I will review the key areas of our financial performance for the first quarter of 22 and then provide an update on our cash position and plan to finance the company. I will then hand the call over to Al for an update on our 2022 business plan. In the first quarter of 22, we realized net product sales revenue of $1.8 million, which is near the middle range of our guide. Our cost of product revenues totaled $1.5 million, which consists of direct and indirect costs related to the manufacturing of Twirla sold during the first quarter. We had no charges for obsolescence during the first quarter of 22, and we remained focused on managing our inventory levels to meet the demands of our customers while avoiding oversupply. Accordingly, we are working closely with Corium, our contract manufacturer and supplier of TORLA, to revise the structure and application of the contract minimums for the years 2022 and beyond under our supply agreement. Our operating expenses were $15.8 million in Q1 2022. within our guidance of $15.5 to $16.5 million. We communicated in April 22, and down from the $18.2 million of operating expense for the fourth quarter of 2021. We continue to focus on disciplined spending approach and making the right investments to encourage strategic growth, while implementing what we believe to be impactful partnerships and agreements. We plan to continue to optimize our spending by engaged in targeting focused spending in support of growing TROLA while seeking reductions in other areas of our operation. Based on this plan, we anticipate future 2022 quarterly operating expenses to be lower than those experienced in the first quarter of 2022. For example, our management team has decided to voluntarily forego the annual bonuses for 2021 performance that were awarded in January of 2022, which is estimated to be a result in a savings of approximately $700,000, and that will be used for general corporate purposes. We're examining other areas within our operations that can be reduced in a sensible way that will not compromise our plan to grow TOROS. We closed out the first quarter of 2022 with a net loss of $11.8 million, or $3.78 per share, compared to a net loss of $17.1 million, or $8 per share, for the comparable period in 2021. As of March 31, 2022, we had cash and cash equivalents of $3.7 million, compared to $19.1 million of cash and cash equivalents as of December 31, 2021. The decrease in cash on hand in Q1 2022 reflects our working capital firm during the quarter and a $5 million paydown of our debt with Perceptive Advisors in January. offset by proceeds from a $4.85 million registered direct offering of preferred stock with a single healthcare-focused institutional investor. In April of 2022, we added cash of $4.7 million from the sale of our New Jersey net operating loss, for which a receivable was recorded in the first quarter. Financing updates. We continue to explore financing options to support the growth of Twirl. As we discussed on last quarter's call, our plan to finance the company is focused on three parts. Part one, work down our debt facility with perceptive advisors in exchange for relief on financial coverage. We currently have no plans to further leverage the company and, therefore, will not add additional funds under our debt facility with Perceptive. In January 22, we paid back $5 million to Perceptive, reducing our debt to $15 million. In the second quarter, 2022, we plan to make another payment of $5 million in principle to Perceptive in exchange for further relief. This payment is tied to our ability to raise additional capital. Part two, regain compliance with NASDAQ. As we have previously reported, we were notified by NASDAQ that we are out of compliance with their minimum bid price requirements. To that purpose, we believe we have taken the necessary steps to regain compliance with the NASDAQ stock market and in which, in turn, we'll put us in a better position to finance the company. Part three, raise additional capital. We've been transparent that we will require additional capital to achieve our goal of being cash flow positive. We acknowledge that the capital markets recently have been unpredictable in general and especially in our sector. Our plan is to remain flexible and continue to evaluate all options available to us to finance the company, including the ATM we recently established, further equity offerings, and various business development and partnership opportunities to accelerate our past profitability. We remain committed to our plan to grow revenue while reducing burns. with a goal to shorten the time to become cash flow positive. Al will now provide an update on the business plan designed to help do exactly that. Al, over to you.
spk04: Thank you, Dennis, and thank you to everyone for joining us today and continue to follow our story. On the fourth quarter 2021 earnings call, we referenced our belief that in 2021, we began to build momentum for Torla, and we believe we saw that momentum carry into the first quarter of 2022. As we announced on April 14, 2022, our first quarter 2022 prescription data for Torla demonstrated strong double-digit growth in all key performance areas. This was the third consecutive quarter where we saw consistent and meaningful growth, and we expect to see this trend continue throughout 2022. Additionally, we're encouraged with the growth and momentum we're now seeing in the second quarter of 2022. Beginning in the third quarter of 2021, we started to see steady demand growth, and we believe the three-part business plan we introduced on the fourth quarter call of 2021 is contributing to the continued momentum in the early stages of 2022. I'd like to provide you a brief update on each of these three key initiatives. First, our partnership with AFAXIS. As a reminder, in January of 2022, we launched our co-promotion partnership with AFACSIS through their group purchasing organization, which primarily provides services to non-retail channels, and AFACSIS Pharma, which has a potential access to over 25,000 accounts, including college and university student health centers and the Planned Parenthood network. During the first quarter of 2022, we focused on initiating and mobilizing the AFACSIS partnership, and we believe we're beginning to see the positive results into April and May of 2022. The graph you see here provides insight into the impact that the non-retail channel is starting to have on our business, and we believe AFACSIS can drive non-retail growth as contribution from this channel continues to ramp throughout 2022. The second component of our plan is the continued focus on the state of California. As previously highlighted, California is the largest U.S. market for contraceptives, as well as the largest Medicaid program in the United States, with roughly one-third of the existing contraceptive patch market coming from Medicaid. For these reasons, beginning in the first quarter of 2022, we began prioritizing Twirla adoption and awareness in the state of California. Thus far, we are pleasantly surprised with the results we're seeing for two reasons. First, we're seeing an uptick in Twirla market share in California and also an uptick in the Twirla prescribers in California. We believe these results are attributable to our existing sales team, amplified by both general and targeted digital media spending. The last initiative is the Twirla direct-to-consumer commercial on connected TV, also known as CTV. On the fourth quarter call in 2021, we announced our new patch and play CTV commercial with the objective of prompting patients to ask their doctors about Twirla. At the end of March 2022, we deployed the commercial with a highly targeted, efficient focus on women in our target market, of 18 to 24 years old in the states that have the large market for contraceptives and potentially strong commercial coverage for Twirla. While the commercial has only been in the market for a little over one month, the first month data suggests that our target consumers are efficiently being exposed to the ad at a frequency of approximately twice per week and that a significant majority of the viewers are not skipping through the ad. For those who are interested in viewing the ad who aren't in the target demographics, it is available on TWRLA's YouTube channel. We continue to execute on our plan for 2022 and focus on building upon the momentum we established through 2021 and now into the first quarter of 2022. As a reminder, each of these three persons truly became activated in the first quarter of 2022 with the CTV commercial launching at the very end of the quarter, and we expect each to continue to contribute to our demand throughout 2022. So now let me briefly talk about ACOT. Before we open up the call for Q&A, I want to touch on our recent presentation of TWRLA's first year post-marketing pharmacovigilance at the 2022 Annual Clinic and Scientific Meeting of ACOG that was held in San Diego. During the first year of TWRLA's launch, we received no reports of venous symbolic events, or VTEs, and two reports of serious adverse events, or SAEs. which is consistent with the safety profiles that were reported in the secure clinical trials. This was the first ACOG meeting that was live since the pandemic started, and we welcome the opportunity to present these data and interact with the contraceptive thought leaders and prescribers in general. I was personally thrilled to be in California, our nation's biggest market for Torolla, and I saw firsthand the physicians' excitement about our product. As a reminder, our cumulative prescriber count grew approximately 26% from the end of the fourth quarter in 2021 to the end of the first quarter in 2022, and we consistently gained roughly 100 new prescribers each week during that period. We believe having the opportunity to present the post-marketing data and to speak to physicians face-to-face with prescribers from all around the country will have a positive impact on our prescription growth. In summary, we had another solid first quarter of 2022, evidenced by our growing quarterly prescription data, and that we have a good base on which to continue to build a healthy, growing brand. Based on the prescription data trends we are now seeing so far in the quarter two, and the advancement of our twirl of business plan, we currently expect to report a fourth quarter of consecutive growth and strong demand growth for the second quarter of 2022 and provide further proof points that our business plan is now delivering. We also believe that an important part of our plan moving forward is to explore all of our strategic options to grow or transform our business. We'd like now to give or Covering Analyst the opportunity to ask any questions. Operators, you may now open the line for Q&A.
spk01: Ladies and gentlemen, at this time, we'll do the Q&A session. To ask a question, you will need to press star and the number 1 on your telephone keypad. Please stand by while we compile the Q&A roster. Your first question comes from Oren Lidnett at AC Wainwright.
spk05: Hi. Thanks for taking the question. I have a few. Thanks for that graph on a fax. I'm not sure if that's the first time you've shown that or not. That's really interesting. You can see that, you know, it looks like, you know, growing, albeit small, still trended non-retail volume there. And so I have a couple questions. First of all, what kind of economics do you see on that business? Is it substantially different or not from your retail business? And going forward, does that seem like it'll be a consistent trend? business for you, you know, on a week-to-week or month-to-month basis, or should we expect or hope for sort of huge bolus orders like we saw, you know, last year early in the launch from OneCenter? You know, I'm just curious now, do you have a more formalized relationship with the faxes, if that will be lumpy or a steady grower? And then I have a couple follow-ups.
spk04: Yes, this is the first time we're putting it in public. So I think, you know, it's next to hopefully a couple dots. You know, first of all, back in May of last year, when you see that big order, we alluded to that on a call. But if you remember way back when we were talking about the prescription data, this is what caused the algorithms and the prescription data to get a little crazy. So we got a big order, as you can see, in May, and that was kind of a wake-up call for us. It came from a single state. not a Planned Parenthood. It came from a state and county organization that bought a lot of product in one day, you know, without a fax, by the way. That was just, they called it in. We were delighted to take the order on, you know, and then you see on an ongoing basis, hopefully you start getting an appreciation that we get a a smidgen of it. So, you know, every month or so without much activity put against it. So we weren't marketing in that channel. You know, we're going to onesies and twosies. We make our product available to state and county organizations that weren't at a 340B pricing, so the Medicaid pricing. So some hospitals buy, some little businesses buy. And then in January, we announced our relationship and we started going after it in earnest, you know, with the faxes. And you see a little bit of a, you know, smidgen of a bump, hopefully in March, you know, that we started getting in some orders, a couple Planned Parenthoods. Arne, I think to your question about how to think about this business, it's almost like a hospital business. We start saying how many accounts do we owe? So these are a couple Planned Parenthood accounts, a couple state organizations. And I mentioned in my script that we're seeing a lot more of the volume going forward. So, I think on this graph, I really want to emphasize that our retail channel, look at the pot. Look at March. March was a super month for us. And the retail channel, we've got a preview of kind of what this non-retail channel can be. I will tell you, going forward, that April is awesome. The April data is on both channels. We're lightening up. So, we're bullish on our growth going forward in both channels. You'll see in this channel, the non-retail channel, some pretty big, that little deep purple is going to grow substantially in April. So, we're just starting to see a factor kick in, Oren. Now, to your question about how do you get your head around this, I wish I could tell you that we see it every week. Accounts come in, they place big orders, some place small orders. We just don't have a steady flow of business yet. You know, we even think of it as lumpy. So I think the best way we can communicate that to you is to show you kind of the business like we're doing, show you both channels. I think Dennis and Jason's in the room, and, you know, we might have to start reporting this separately. But we're not quite there yet, you know, but the economics look great. We make money in this channel. These are profitable prescription trusts. If it comes from a non-GPO customer, they basically get the product at $340B pricing, which is really pretty good. It's not that big of a discount. So, you know, a true of fact is GPO customer gets a bigger discount, you know, that we haven't revealed yet. So, but it's pretty substantial, but profitable. I want to emphasize, but profitable. We are not in the business of putting on profitable business out there. You know, it's got to have a margin. It's got to throw off cash, you know. And so, we're pretty excited. And, you know, like, as you can see, We start bending that curve on cycles based on what we're doing. I mean, we get paid for cycles. We talk a lot about TRX, and we get paid for cycles. So, boy, I'll tell you, it's nice to see the cycles just jump. And then you'll see us going forward. I mean, it's starting to light up. You know, we came out of shoots in January, February kind of a little bit slow, as all of us did. The market was a little soft, and we popped in March. April looks great in May. May 4th, I'm seeing it's going to be still going. So we've been going forward. We're going to grow both these channels. So it's lumpy orange. We're trying to get our heads around it. When I can figure it out, I'll communicate it to you. But right now, we'll take the business.
spk05: Okay, and on the focus on California, I'm not sure if I totally understand. Are you, you know, with the concurrent sort of cost consciousness or, you know, required cost consciousness you have at the moment, are you exclusively focused on California or just in, you know, prioritizing California, you know, not necessarily of other territories?
spk04: now our sales you know we're looking at cost across the whole company i mean we've been at this a while i think we really understand what drives the business and kind of what what's important to spend to make and then it's alluding his talk you know kind of what are the bright spends to make so look you know we're looking at our sales force and saying you know we've been at it a while territories aren't productive meaning they're not making money you know they've got to be put on hold so we're looking at our sales footprint in general we're looking at our gna spend But in California, California, we have a decent sales footprint. And then Amy, who's in the room with me right now, double down on owners. We're putting our consumer spend, the CTV spend, only in five states. You know, we mentioned before, California, Texas, Florida, New York, and Illinois. So, we're double down in those states, Oren. So, we're not spending our money in consumer across the nation. We're double down. So, we're California is, you know, getting hit with its sales force, you know, pretty good footprint, and, you know, doubled down with Amy's consumer spend. So we're not exclusive, but we're heavy enough. Think of it as a heavy upping, not exclusive.
spk05: And then just lastly, and sorry for taking so much time, you know, up front, you clearly aren't hiding from the, you know, resource constraints that you're facing at the moment. You mentioned that BD or partnership opportunities are clearly something you're looking at, certainly given the current market conditions. I'm just curious, just philosophically, is everything on the table in terms of buying, selling, merging, or is there something specific that you're thinking about as far as, I don't mean as far as specific targets, but just a type of transaction that would make sense for a company like yours in your current situation?
spk04: Sure. I mean, the answer to your first question, everything's on the table. You know, so, I mean, I think, you know, the state of the sector and the broader take, anybody who's not saying it's all on the table is probably not being true to themselves. So, it's all on the table. I mean, clearly, what we're looking to do is to accelerate our revenue and or take down our burn significantly. So when we were at ACOG, Amy's in the room with me, you know, we talked about, you know, the ways to co-promote with other people. You know, we've got a one-product sales force. Is there an efficient way to do it? Can we lighten the load, you know, and so taking down some of the costs? It even goes into the G&A areas, you know, and then also potentially in the marketing areas, you know. So reducing our burn and or growing our revenue is mission-critical. But if there's a strategic move that can happen, we're not afraid of that either. So everything's on the table, Oren, but we're laser-focused on the top line and or reducing our cost structure, ultimately lightening the requirement to burning money, if you will. So it's all on the table. All right.
spk05: Thanks so much.
spk04: My pleasure. Thanks for the question, Oren.
spk01: Just a reminder, to ask a question, you will need to press star one on your telephone keypad. There are no further questions at this time. I would like to turn the call back to Al, I do apologize, Al Altomare for closing remarks.
spk04: you got it operator that was good you know um yeah so thank you i know i know we just were in front of you not too long ago you know with our year end so and we tried to be very descriptive in our press statement so i'd like to thank everybody for joining us today and we have a little bit of good news that we were able to disclose on our press statement but we couldn't get in our scripts fast enough we did receive a letter from that fact um letting us know that we're back again in compliance you know on the minimum bid price requirement and and that's really important to us and you know we you know so you know that's off the table as dennis described in his comments that was a big part of our plan so we moved forward so that's a you know a step in the right direction i would say um beyond that news i want to reiterate a couple things from space calls We currently expect to report a fourth consecutive quarter of demand growth. So we're signaling to you right now that we think the second quarter is strong. We've seen about roughly half of the second quarter, you know, so we get obviously the demand data a little bit earlier. So we're really confident that we can deliver to you another strong quarter of growth, which will put up a year of growth. And our fourth quarter, I think about it as a year of solid growth. And so we're really excited about that, which tells us the good work that Amy and her team are doing is really kicking in. So we expect, you know, also as Dennis talked about on the 2022 quarterly OPEX, we're going to be burning less money than we burned in the first quarter. So we're trying to set the company up you know, that our top line is growing and our OpEx burn is going the other direction. So, we think that's a good position to be in. We're proud of that and we're at it. Then the partnership, you know, that orange question to me, I think was the right question, the non-retail channel, we are, you know, bullish. We're starting to see it wake up and we're starting to see that it's becoming, we think, an important part of our business. But we don't want to lose sight of the retail business. The retail business is our core. That's the most profitable business. That's the business we've got to deliver. We think of the de facto partnership augmenting, not replacing retail volumes. and then we expected you know that our larger footprint there's orange question again it asked me about the state of california look that we think it's a big idea i mean it's singularly the biggest market we've got winning there is important to us winning in the other big five states that we've identified also is very important to us so we want to we want to win in those states it's approximately slightly under 50 percent of the volume those five percent states bring in And we think we can leverage the business smartly like that, and we can guide our marketing efforts to a very targeted area. That's the beauty of CTV. We could put it where we want it. So, based on what we see and what we can control, we believe our strategy is working. The Twrller brand is healthy, as we described, and growing. We're determined on executing our plans that we have in place to keep the brand growing. And we're in good hands with Dennis and financing the company. We look forward to giving you future updates on our progress, but we're excited. You know, we feel great coming out of this shoot in 22. Like the first quarter a lot. You know, it seems like I'm going to like the second quarter even a lot more. And if we can continue to work on our expense structure at the same time, I think we're setting the company up nicely, you know, for the following year. And, you know, but we want to take this company, which ultimately is to cash flow positive, as Dennis mentioned in his comments. So thanks again. I know these calls were on top of each other. I appreciate you, you know, keeping track of our business. And good night to everybody.
spk01: This concludes today's call. You may now disconnect.
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