Agile Therapeutics, Inc.

Good morning and welcome to the Agile Therapeutics second quarter of 2023 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.

Hello everyone and welcome to today's conference call to discuss our second quarter 2023 financial results and corporate updates. Before we start, let me remind you that today's call will include forward-looking statements based on our current expectations, including statements concerning our financial outlook and financing prospects for the future, our outlook for the second half of 2023, management's expectations for our future financial and operational performance, including our expectations regarding the market growth of Twirla and our operating expenses, our business strategy, our partnerships with Afaxas and Cineos and their ability to promote growth, our relationship with Nurex and its ability to make Twirla broadly available to patients, 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 forward-looking statements. Further, during today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release issued today, which can be found on the investor relations section of our website. For more information concerning risk factors that may affect the company, please refer to our filings with the STC, which are available through the investor relations section of our website. 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 is Al Altamari, Agile Therapeutics Chairperson and Chief Executive Officer, and Amy Welsh, Chief Commercial Officer. Following our prepared remarks, we'll open the call to questions from our covering analysts. I will now turn the call over to Al.

Thanks, Matt, and thank you for everyone joining us this morning. I'm personally very excited to share our quarterly results with you, and that is in part of the reason why this is our first quarter we're holding our call in the pre-market. We think a 44% growth in our net revenue to $5.5 million for the second quarter, combined with our double-digit growth in demand, made this a significant quarter for both Agile and Twirla. We believe This affirms our confidence in our business plan, our progress towards the goal of generating positive cash flow, and achieving 2023 net revenue in the range of $25 to $30 million. I'm going to kick things off by reviewing the performance metrics from the second quarter of 2023 that have us all excited. Amy will then discuss why we are confident in our belief we can sustain momentum into future quarters. Total demand for the second quarter was 55,687 total cycles, a 24% increase from the first quarter 2023 and another single quarter record. Retail demand as reported by Symphony, was 35,682 total cycles in the second quarter of 2023, a 17% increase from the first quarter 2023. The retail channel is our most profitable channel, and the retail demand accounted for 64% of the second quarter 2023 demand. Non-retail demand for the second quarter of 2023 was 20,005 total cycles, an increase of 38% from the first quarter 2023. Our non-retail demand is comprised of data from Symphony as well as our wholesalers. Second quarter 2023 net revenue was $5.5 million, which represents a 44% increase from the 3.8 million reported for the first quarter in 2023 and the 159% increase from the 2.1 million reported for the comparable period in 2022. Factory sales for the second quarter 2023 as reported by our wholesalers were 61,770 total cycles compared to the 43,446 total cycles reported for the first quarter 2023 a 42% increase. As discussed last quarter, on a year-to-date basis, we think channel inventory has now normalized. We expect to see both net revenue and factory sales continue to grow in the second half of 2023, driven by our growth in demand and the execution or business plan that Amy will describe. Growth margin. Along with the growth in our net sales and demand, we continue to make progress in generating gross profit. In the second quarter of 2023, we generated a gross profit of approximately $3.2 million, or a margin of 58%. compared to the $1.8 million or gross margin of 47% in the first quarter of 2023. We think gross margin is becoming a meaningful part of our progress, and we believe we will continue to see improvement in the second half of 2023. Operating expenses, or OPEX, for the second quarter of 2023 were $8.3 million, a 2% decrease from the $8.5 million reported in the first quarter of 2023. Before Amy takes over, I'd like to comment on a few other of our financial results, which we believe also demonstrate continued progress of our business. Cost of goods sold, or CODS, which represents direct and indirect costs related to the manufacture of the twirl is sold, was $2.3 million or 42% for the second quarter of 2023 compared to $2 million or 53% for the first quarter of 2023. We ended the second quarter of 2023 with cash on hand of $2.8 million. In addition to our at-the-market or ATM arrangement, we'll continue to evaluate all available options to finance the company. Our gap net loss for the second quarter of 2023 was $3.8 million, or $0.2015 per share, for the second quarter of 2023, compared to a gap net loss of $5.4 million, or $5.91, for the first quarter of 2023, and a GAAP net loss of $5.2 million, or $57.29 per share, for a comparable period in 2022, respectively. Non-GAAP loss was $5.5 million, or $3.10 a share, for the second quarter of 2023, compared to a non-GAAP loss of $7.1 million, or $7.76 per share, for the first quarter of 2023 at $12.2 million or $135.46 per share for the comparable period in 2022. The non-GAAP results reflect the exclusion of fair market remeasurement of warrant liabilities, which resulted in an other income of $1.7 million in the second quarter of 2023 $1.7 million in the first quarter of 2023, and $7.1 million in the second quarter of 2022. We set a single quarter record highs in demand, net revenue, factory sales, all by reporting another quarterly decrease in operating expenses. We are beyond pleased with the second quarter results, but the job is not done. we continue to ask ourselves how we can accelerate our growth. I will now hand over the call to Amy to answer that question by explaining the business model which we have built and is designed to deliver future growth across the board.