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spk16: Ladies and gentlemen today's conference is scheduled to begin shortly. Please continue to stand by and thank you for your patience. Thank you. Thank you. Hello. Thank you for joining the CLRS Third Quarter 2021 Financial Results Conference Call. Today's call is being recorded and webcast live on the company's website, at www.clairstherapeutics.com in the investor relations section and will be available for replay for 10 days following this live call. Please note that discussions today may include forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, some of which are beyond Clery's control, or other assumptions that may cause actual results or performance to be material or different from those expressed or implied by these forward-looking statements. These risks and uncertainties include but are not limited to the risk association with the pharmaceutical development, risk association with Clery's financial position, and those factors described under the heading Risk Factors in the Prospective Files with the Securities and Exchange Commission, the SEC, under Rule 424B3 on October 7, 2021, and those that are included in any of Clarence's future filings with the SEC, including the 10-Q. These forward-looking statements speak only as the date of this call, and Clarence disclaims any intent or obligation to update these forward-looking statements to reflect events or circumstances after the date of such statements expect except as may be required by law. Following the prepared remarks, Clarence will take your questions. At this time, I'd like to turn the call over to Dr. Bob Dudley, President and Chief Executive Officer of Clarence. Sir, you may begin.
spk07: Thank you. Good afternoon and good evening, everyone. Thank you for joining us today for a very exciting milestone in Clarence's history, that is being a publicly traded company. and I want to say publicly we appreciate your interest in Claris. With me today is our Chief Financial Officer, Rick Peterson, our Chief Commercial Officer, Frank Yeager. Also on the line is our Chief Administrative Officer, Steve Bourne. Let me get started with some recent highlights from the business. We closed the transaction between Blue Water and Claris Therapeutics and debuted as a publicly traded company to develop androgen and metabolic therapies for men and women. Our first day of trading was September 10th, 2021, and we currently trade on the NASDAQ Global under the CRXT ticker. We're very proud to have accomplished this transaction, and I want to thank everyone involved for all of the work they've put in to make this transaction a success. Other business highlights, we received two notices of allowance from the US Patent and Trademark Office covering Gitenzo. Upon issuance of these patents, which will be listed in the orange book, this will bring the total number of orange book patents listed protecting Gitenzo to seven. Additionally, we entered into an exclusive worldwide license agreement with McGill University, Canadian's top-ranked medical doctoral university, to develop and commercialize technology to treat conditions associated with CoQ10 or ubiquinone deficiencies. We also entered into an exclusive license agreement with Hava Therapeutics, an Australia-based biopharmaceutical company developing androgen therapies for inflammatory breast disease, principally in women, and also a common form of breast cancer, also principally in women, but afflicting men as well. Next, we announced a comprehensive settlement of patent litigation with Lifesim that resolved all outstanding claims against CLARIS and with payments to CLARIS as part of that settlement. And finally, we experienced total prescription growth for Jitenzo in the third quarter of 2021 with an increase of 12% sequentially and 132% year over year. With those brief highlights, I will now turn the podium over to Rick Peterson, our Chief Financial Officer, to discuss financial highlights. Thank you, Bob. Over the financial results for the three months ended September 30th, 2021 are as follows. Net product revenue of approximately $4.3 million and a net loss of $0.26 per share, both basic and diluted assets. as we were in a loss position. Revenue growth represents a year-over-year increase of 93% driven by the growth of the Detenzo brand through our sales and marketing efforts. Frank will be talking in more detail about Detenzo in a few minutes. Gross profit margins were approximately 88% for both quarters ending September of 21 and September of 2020. Sales and marketing expenses were approximately $7.6 million, compared to $8.7 million for the comparable quarter of 2020. This represents a year-over-year decrease of approximately 13.3%, primarily attributable to timing of sales and marketing expenses, such as media buys and agency fees that we run. General and administrative expenses were approximately $3.4 million, compared to 0 million for the comparable quarter of last year. This represents a year-over-year increase of approximately 11.3%, primarily attributable to personnel costs, external consultants, and other general corporate expenses. R&D expenses were approximately 1.3 million for the third quarter. This represents a year-over-year decrease of approximately 11.3% due to a decrease in R&D consulting services offset by an increase in license fees. We paid license fees to our third parties with HAVA and McGill. Both those agreements, license agreements for R&D projects were signed in the nine months of this year. Total cash and cash equivalents were approximately 22 million at quarter end. And our weighted average common share is outstanding For calculating net loss and income per common share, we're at $9.2 million. So that's the financial highlights. At this point, I'll turn it over to Frank to cover the Gitenzo grant highlights.
spk20: Thank you, Rick, and thank you, Bob. It is a pleasure to be here today to give the public a high-level commercial overview. So let's just jump right in. This has been an exciting time for Clarissa. Gitenzo has experienced several notable milestones in the third quarter as the brand continues to grow. First, let me give you some clarity on performance. Despite the COVID pandemic timing and the associated challenges that we continue to face, we continue to see that Gitenzo is gaining momentum as prescriptions have increased steadily throughout the year. Our prescription growth has been driven by several things. Expanded reach and frequency by our sales team to targeted healthcare providers. Increased sales rep access to prescriber offices and success with being able to reach and educate the prescriber virtually when live calls aren't possible. More patients returning to healthcare provider offices, which is a trend that we expect to continue. Increased overall payer coverage across all channels of our business. continued success of our Jitenzo co-pay assistance program, and finally, continued positive feedback that we've received from prescribers and patients regarding their experiences with Jitenzo. So second, I am pleased to showcase that we have presented at the Sexual Medicine Society of North America meeting this past month. On October 21st, we presented an abstract on our real-world Jitenzo experience data. That data showcased that Jitenzo can be dose-adjusted to reach the targeted testosterone levels that a healthcare provider is trying to achieve. This flexibility is important because, as we know, healthcare providers value the ability to customize treatment to achieve the individualized therapeutic response for each patient. We believe that ability to manage hypogonadal symptoms with individualized dosing is important to the provider, as this is consistent with current medical practice may increase patient satisfaction and ultimately result in better patient adherence, which is a very common issue associated with testosterone replacement therapy. We anticipate submitting this data and other data, not covered in the abstract, at upcoming medical congresses and into a peer-reviewed medical journal for publication in the coming months. And finally, we have positioned ourselves for continued growth by increasing the number of our sales force to 60 representatives, in order to continue to expand our reach in the market to targeted healthcare providers. So, in summary, we believe Chitenzo is poised for continued and accelerated growth, as we know that the testosterone replacement therapy market is large, with about, you know, approximately 8 million prescriptions written in this market each year. And it continues to grow year over year. In fact, the market achieved over 7% growth in 2020 over 2019, despite COVID. Okay. We also know that roughly three out of every four patients are not satisfied with their current non oral therapy. This is a large number considering that there are about 2.2 million patients who are currently being treated with an additional 4 million patients who have either been diagnosed or have stopped treatment. These patients collectively represent our opportunity because as an oral, Jitenzo overcomes the significant administration issues associated with the injections and the gels, where a majority of the prescriptions are written today. In fact, 80% of all patients are interested in learning about an oral such as Jitenzo. As we move forward into 2022, we intend to continue to invest additional resources to educate healthcare providers and their patients that they serve through strategic use of targeted promotional programs, and by expanding the sales force. So at this point, I will turn it over to Bob, who will provide some updates on the pipeline for Claris. Bob? Thank you, Frank.
spk07: As many of you know from our public announcement, in May of this year, we in-licensed from HAVA, an Australian company, a combination of testosterone plus anastrozole in a pelletized form for subcutaneous delivery. This product has opportunity to treat inflammatory breast disease, specifically periodontal mastitis and other inflammatory conditions of the breast, as well as being adjunctive therapy in estrogen receptor positive, androgen receptor positive breast cancer. HAVA has used this product in over 1,000 women in Australia, and HAVA's PK safety and early efficacy data we believe will support our ability to move into phase two studies earlier than had there not been this good database. There currently are about 150,000 women in the U.S. with periodontal mastitis. Therefore, we've recently applied for orphan drug status and expect to hear back from the FDA over the coming months. From a market size for periodontal mastitis, we believe this product has an opportunity to have peak sales of roughly $400 million. And there are even greater opportunities for the testosterone plus anastrozole. Our CLAR-121 product number exists for the treatment of high breast density in women and as adjunctive therapy in certain forms of breast cancer, roughly 80%. of all breast cancers could potentially be a target for this combination of therapy. In September of this year, we announced a second in-license product, this from McGill University, where we brought on worldwide rights to develop and commercialize technology to treat conditions associated with CoQ10 deficiencies. The other name for CoQ10 is ubiquinone. The technology is unique because it enables CoQ10 to see intracellular uptake unlike over-the-counter CoQ10 derivatives. So we think this has real potential to treat individuals with both primary and secondary ubiquinone or CoQ10 deficiency. And in some of these categories, this also would fall, likely under an orphan drug status. So two very exciting products for us that tap into our expertise in androgens and in endocrinology generally. Relative to Jitenzo per se, we continue to work on several label expansion life cycle management products, all which we believe will bear fruit in the marketplace. First is the treatment of hypogonadal man with chronic kidney disease. This would ultimately be a label expansion in our view. Next would be work on a once daily oral to you product. We've initiated work in this already and hope to move expeditiously next year into early phase clinical testing. And then finally, we are working on testosterone therapy for female to female transgender individuals. This, in our view, would be another label expansion with a phase four initiation study anticipated in the first half of next year. With that, I'll pivot to just a few IP updates and highlights for Jitento. As I noted earlier, we recently announced two notices of allowance for Jatenzo patents. Once approved, these will bring the total number of Orange Book patents listed to Jatenzo. I mentioned earlier our settlement with Liposine, where we prevailed in that action, and that also resulted in a global settlement, which not only dealt with the assertions Lipocene made against this from patent infringement, but also settled any interference actions that were active at the time. From a global settlement perspective, Lipocene agreed to pay Clarus $4 million in installments with a $2 million, $2.5 million of that having been received already. Rick, I'll turn it over to you to talk about investor conferences and then questions. You bet. Thanks, Bob. So in the nine months ended, we were able to attend the Oppenheimer Fall Healthcare and Life Science and MedTech Summit, September 20th. And also we attended the 2001 Cantor Virtual Global Healthcare Conference, September 27th. And really appreciate both Oppenheimer and Cantor for inviting us to those conferences and we're able to tell our story about Jatenzo and the exciting things we have going on here at the company. So with that, we'll turn the call over to the operator for questions.
spk16: Thank you. Ladies and gentlemen, today's question and answer session will be conducted electronically. If you would like to ask a question, please press star then one on your telephone keypad. We will take as many questions as time permits and we'll Proceed in the order that you signaled and to the queue. We will begin with Luis Chen with Cantor. Your line is open.
spk09: Hi, good afternoon, everyone. This is Patrick Carvey in for Luis. Congrats on your progress this quarter. We have a couple of questions. On Jetenso, the market exclusivity is expected to expire next year. So I just want to know how you guys are strategizing your commercial efforts differently as you are getting closer to that date. Secondly, just want to get a sense of your plan on potential ex-U.S. opportunities. How big will it be and how are you guys going to start working on those regions of the world? Thank you so much.
spk20: Frank, why don't you take the question? Thank you, Bob. I'll cover the first part of that question. So, yes, as we know, our regulatory exclusivity expires at the end of March. next year in 2022. As we continue to look forward towards that date, we believe that with Jatenza, we have an oral that is what the physicians and the patients are looking for. We know that physicians need and like the ability to individualize dosing to their patients. So as we continue to prepare for that timeframe, we are definitely prepared to be able to educate the physicians and patients around the importance of having individualized dosing. So that's certainly something on our radar as they're coming forward. But I will say this, look, you know, at the end of the day, having another competitor that's out there talking about the benefits of treating hypogonadism and the ability to talk about the importance of oral therapy, we believe also helps the market out in general because of the importance of oral therapy. So, you know, we believe we have a good product. We also believe that come the time when April comes, that we'll be in a really strong position to continue to grow our business beyond the introduction of any new competitor.
spk04: Great. Rick, do you want to talk XUS, or would you like me to?
spk07: Yeah, no, I'm happy to take that, Bob, and thank Frank for those comments on Jutenzo and the competition, which we've been expecting and anticipating, so I think it's been worthwhile as we prepare for that. Speaking to the XUS competition, opportunities. We have worldwide rights to JITENSO, so that puts us in a very favorable position as we seek partners ex-U.S. And I think there are a number of partners in a number of regions where we have reached out to and have, you know, had dialogue with those partners. And so, you know, currently I wouldn't forecast any particular country or region or timing on a deal. but those are active discussions that we are having. And look at that really as an important piece, not only for non-dilutive revenue, but to expand the reach of Jitenzo worldwide.
spk10: Got it. Perfect. Thank you so much.
spk16: Thank you. Our next question comes from the line of Greg Fraser with Truard Securities. The line is open.
spk02: Thanks, and good afternoon, folks. First on Gitenzo, what elements of Gitenzo's profile would you say are resonating the most with prescribers? Is it oral delivery? Is it the high percentage of patients who achieve normal T levels? Any additional color would be helpful.
spk20: Sure. Greg, I'll take that team. So the great question about our profile, I would say that there's a lot of components that are baked into that, Greg. So let me kind of dive right in. First is obviously the ability to have an oral, right? At the end of the day, they like the route of administration. But then it goes really back down to the key issues that a physician, any reason why they prescribe a product, efficacy, safety, and dosing. So when we talk about efficacy, what is really resonating with physicians is our ability to increase the amount of free or circulating unbound testosterone in the bloodstream And by the way, that's the key that is actually able to work at the target sites. They like that message. From a safety perspective, not only do they view us in context against the gels as they look at those as the gold standard and see that we have a better profile on safety, but specifically they've come to understand that we do not have any liver toxicity that we've seen in any of our clinical trials. But more importantly, as it relates to where they write a majority of their prescriptions with injections, they see our hematocrit data as very impactful. In our clinical study, although we did increase hematocrit, 97% of all of our patients started and stayed in the normal range for hematocrit. And in fact, not one single patient discontinued. Contrast that with injections and where physicians will see about 40 to 50% of all of their patients who are on injections, where they would actually actively have to manage them, whether they stop therapy, come off, take a break, go donate blood, decrease their dose. So this is very impactful as well. And as I mentioned already earlier, the other thing that's very impactful is the fact that we have the ability to go and have a customized dose, depending on what the target therapeutic level is that the doctor is looking for, as well as the individual patient response. So all of those kind of in combination. are the things that really differentiate Chitenzo with our healthcare providers.
spk02: Is a twice daily dosing a hurdle for some, and do you think that going to once a day will make a big difference? I'm curious to hear your thoughts on once versus twice daily dosing for this patient population.
spk20: You know, it's a question that really comes up a lot, not really from the physician's perspective. When we've talked to patients, it is really weird, the data that we get back, which is that somehow Patients actually feel like they're getting more testosterone by taking it twice a day. You know, it takes them in the morning, and then, oh, I must be low, so I get to take more testosterone later, when the reality is that we, you know, over a 24-hour period, we're in the normal range. And so we don't see that twice a day from a patient perspective or have heard, to follow up with that as well, that we haven't heard that there has been an issue with twice a day. Certainly once a day is something as, you know, would be great to get to. I think it's one of those that's the unicorn that's out there because it's very difficult, I think, to be able to get into a normal range and stay there over the course of the day because of the importance of staying in that normal range and not going too high. But we'll see.
spk02: Got it. That's very helpful. And then just on coverage, how high of a priority is expanding coverage with new payers as well as working to improve the coverage that you already have?
spk20: Right. So very happy to say that currently we have about 66% of all lives in the United States that have coverage. Those plans cover Jitenzo. So very, very good that we've made a lot of progress over the course of the year. As I look forward to, you know, into next year and beyond, there are still plans that we have availability to go back to from a commercial perspective, as well as additional plans from a Medicare Part D, other states, the health exchange lives. So continuing to grow coverage is certainly something that remains at the forefront of our priorities.
spk02: Got it. Thanks very much for taking the question. You bet.
spk16: Thank you. Our next question comes from the line of Serge Belanger with Needleman Company. Your line is open.
spk08: Hey, good afternoon. A couple questions for me. The first one for Frank. Can you just talk about where current Jitenzo patients are coming from? Are they mostly newly diagnosed or are they switching from existing products? And secondly, I guess for Rick, can you just talk about growths to nets? They seem to be still moving around. Where do you think they'll settle and maybe when? Thanks.
spk20: Sure. So I'll handle the first question, and then I'll pass it over to you, Rick. As far as where are the patients coming from? So if you look at all of our prescriptions currently, what you'll see is that about 81% of all of the prescriptions are continuing patients. That would be a patient who was on Jutenzo the previous month. we see that about the other 20 or so percent is broken up as follows. 12% are from switch patients, and the other 6% or so are new to market. So if you break that out a little bit more, so the 12 and the 6.4, it's basically anybody who's not on Gitenzo, 67% of the patients that are coming over to us for the first time are from a switch perspective. And the balance, the 23%, is coming from patients who are new to the market, or at least defined that way in the data source. Does that help, Serge?
spk07: Yep, very helpful. Okay. Super. Hey, Serge, it's Rick. And on the second question, on the gross to net, we continue to monitor gross to nets very close. As script levels increase, we're going to have more prescription running through plans. We're going to have more prescriptions set are going through our co-pay assistance card. And all of those we have made estimates historically on and continue to watch those very closely. So we had projected earlier a 45% net, so 55% adjustment to get to net sales. We are trending favorable to that in the third quarter and year to date. We think it will continue to trend favorably But again, we want to watch this carefully as Scripps increase. I don't have a guidance number for you today. Historically, it's been 45 percent, but we are seeing over the last quarter it trend favorable to that 45 percent.
spk08: Okay, that's helpful. Let me squeeze in one more. A follow-up to a prior question about the market exclusivity ending in March. I'll ask you to look in your crystal ball How many additional new entrants do you expect after the exclusivity expires? This is Bob.
spk05: I expect one or about another.
spk14: Okay.
spk16: Thank you.
spk14: Thanks.
spk16: Again, ladies and gentlemen, if you'd like to ask a question, please press star then 1 on your telephone keypad. Our last questions will come from Naz Rahman with Maximum Group. Your line is open.
spk13: Hey, guys. Congrats on the quarter. Just a few questions from me. First, I'm going to start on prior odds. Have you guys seen the rates of prior odds, like increase, decrease, or sort of remain the same? Also, has it been easier for, like, physicians to get all the prior odds approved?
spk20: Okay. So, thanks for those questions. I'll cover those. So, first, the rate of PAs continue to decrease, actually, as we continue to move forward. You know, as our coverage has expanded over the course of the year, more and more patients, obviously, are getting covered. I will say, though, that the PA, it's important to distinguish what your question, though, just to be fair, that, you know, there is a class PA that exists, and that exists for anybody who is in the testosterone replacement therapy space. So a generic injection, a generic gel, a branded competitor, Jatenzo. You know, those are the questions around are you a male? Do you have two T levels? Those are all specific, you know, that are related to the class overall. And then if you look, actually, I would say that what we've seen is as of the last data period that came out, about 77% of all TRXs, are now getting approved and going through. So that certainly represents a kind of a strong correlation to as our payer coverage has improved that we're seeing more of those prescriptions going through. Does that answer your question, Nas?
spk13: Yeah, it does. So my next question is just on the sales for the quarter. Was there any significant stocking by wholesalers or any significant stocking of the channel for the quarter?
spk07: No, this is Rick. There was not. So our sales go to a third party logistic provider and then the wholesalers order through them. So we don't take orders directly from the wholesalers, but we do have wholesaler data. So no, there was no stocking days on hand at the wholesalers remained consistent and no, you know, large orders at the end of quarters, anything like that. So it's not something we, we manage or we take orders from the wholesalers in that manner.
spk13: Got it. And my final question is sort of on your capital priorities going forward. If you could just sort of, from your perspective, how would you rank sort of like increasing your spend on DTC versus increasing development spend on your CoQ10 or the Hava asset?
spk07: Yeah, I'll start off and then certainly Frank and Bob can jump in. You know, we watch our spend very carefully, and as we prioritize that, you know, we're focused on Jitenzo and making Jitenzo our market leader. And so when you look at those programs, whether it be DPC or media buys or maybe a hub program, those types of things are certainly their priority for us. And we'll continue to spend on those as we have the funding to spend on those programs. So I think that remains the highest priority is growing that business. Secondly, Our R&D programs, I think, are structured very favorable to us where they're really milestone-based. So as we achieve success and build value in those programs, we will make milestone payments associated with those. So I think they're structured very favorably from that standpoint. Also on these R&D programs, I would say that they're not large, hugely expensive programs. So I think we can very effectively manage those without, you know, huge significant dollars going to those programs. All right.
spk11: Thanks for taking my question, guys.
spk07: Thank you.
spk11: Thank you.
spk16: Thank you. Ladies and gentlemen, we do apologize, but we only have time for a limited number of questions. If you would like to ask a question but did not have the opportunity to, please contact Claris Investment Relations directly. Dr. Dudley, I would now like to turn the call back over to you for closing remarks.
spk07: Thank you. I appreciate everyone taking time to be on the conference call today. Our first one is the public company. We're very excited about where we are and where we're going and certainly commit to do our utmost to continue to grow Claris into a very profitable pharmaceutical company. So again, our thanks. give you our best wishes for the upcoming Thanksgiving holiday. And this call will then conclude after the operator's remarks.
spk16: Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Everyone have a wonderful day. Thank you. Thank you. you Thank you.
spk00: Thank you. Thank you. you you
spk16: Hello. Thank you for joining the CLRS Third Quarter 2021 Financial Results Conference Call. Today's call is being recorded and webcast live on the company's website at www.claristherapeutics.com in the Investor Relations section, and will be available for replay for 10 days following this live call. Please note that discussions today may include forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, some of which are beyond Clery's control or other assumptions that may cause actual results or performance to be material or different from those expressed or implied by these forward-looking statements. These risks and uncertainties include but are not limited to the risk association with the pharmaceutical development, risk association with Clery's financial position, and those factors described under the Heading Risk Factors and the Prospectives Files with the Securities and Exchange Commission, the SEC, under Rule 424 on October the 7th, 2021, and those that are included in any of CLER's future filings with the SEC, including the 10-Q. These four looking statements speak only as the date of this call. and CLRS claims any intent or obligation to update these forward-looking statements to reflect events or circumstances at the date of such statements except as may be required by law. Following the prepared remarks, CLRS will take your questions. At this time, I'd like to turn the call over to Dr. Bob Dudley, President and Chief Executive Officer of CLRS. Sir, you may begin.
spk07: Thank you. Good afternoon and good evening, everyone. Thank you for joining us today for a very exciting milestone in Claris' history, that is being a publicly traded company. And I want to say publicly we appreciate your interest in Claris. With me today is our Chief Financial Officer, Rick Peterson, our Chief Commercial Officer, Frank Yeager. Also on the line is our Chief Administrative Officer, Steve Bourne. Let me get started with some recent highlights from the business. We closed the transaction between Blue Water and Claris Therapeutics and debuted as a publicly traded company to develop androgen and metabolic therapies for men and women. Our first day of trading was September 10th, 2021, and we currently trade on the NASDAQ Global under the CRXT ticker. We're very proud to have accomplished this transaction. And I want to thank everyone involved for all of the work they put in to make this transaction a success. Other business highlights. We received two notices of allowance from the U.S. Patent and Trademark Office covering Gitenzo. Upon issuance of these patents, which will be listed in the orange book, this will bring the total number of orange book patents listed protecting Gitenzo to seven. Additionally, we entered into an exclusive worldwide license agreement with McGill University, a Canadian's top-ranked medical doctoral university, to develop and commercialize technology to treat conditions associated with CoQ10 or ubiquinone deficiencies. We also entered into an exclusive license agreement with Hava Therapeutics, an Australia-based biopharmaceutical company developing androgen therapies for inflammatory breast disease, principally in women, and also a common form of breast cancer, also principally in women, but afflicting men as well. Next, we announced a comprehensive settlement of patent litigation of the liposome that resolved all outstanding claims against CLARIS and with payments to CLARIS as part of that settlement. And finally, we experienced total prescriptive excuse me, prescription growth for Jitenzo in the third quarter of 2021 with an increase of 12% sequentially and 132% year over year. For those brief highlights, I will now turn the podium over to Rick Peterson, our Chief Financial Officer, to discuss financial highlights. Thank you, Bob. Over the financial results for the three months ended, September 30th, 2021 are as follows. Net product revenue of approximately $4.3 million and a net loss of $0.26 per share, both basic and diluted as we were in a loss position. Revenue growth represents a year-over-year increase of 93% driven by the growth of the Detenzo brand through our sales and marketing efforts. Frank will be talking in more detail about Detenzo in a few minutes. Gross profit margins were approximately 88% for both quarters ending September of 21 and September of 2020. Sales and marketing expenses were approximately 7.6 million compared to 8.7 million for the comparable quarter of 2020. This represents a year-over-year decrease of approximately 13.3%, primarily attributable to timing of sales and marketing expenses such as media buys and agency fees that we run. General and administrative expenses were approximately $3.4 million compared to $3.0 million for the comparable quarter of last year. This represents a year-over-year increase of approximately 11.3%, primarily attributable to personnel costs, external consultants, and other general corporate expenses. R&D expenses were approximately 1.3 million for the third quarter. This represents a year-over-year decrease of approximately 11.3% due to a decrease in R&D consulting services offset by an increase in license fees. We paid license fees to our third parties with HAVA and McGill. Both those agreements, license agreements for R&D projects were signed in the nine months of this year. Total cash and cash equivalents were approximately $22 million at quarter end. And our weighted average common share is outstanding. We're calculating net loss and income per common share were $9.2 million. So that's the financial highlights. At this point, I'll turn it over to Frank to cover the Gitenzo grant highlights.
spk20: Thank you, Rick, and thank you, Bob. It is a pleasure to be here today to give the public a high-level commercial overviews, so let's just jump right in. This has been an exciting time for Claris. Jutenzo has experienced several notable milestones in the third quarter as the brand continues to grow. First, let me give you some clarity on performance. Despite the COVID pandemic timing and the associated challenges that we continue to face, we continue to see that Jutenzo is gaining momentum as prescriptions have increased steadily throughout the year. Our prescription growth has been driven by several things. Expanded reach and frequency by our sales team to targeted healthcare providers, increased sales rep access to prescriber offices, and success with being able to reach and educate the prescriber virtually when live calls aren't possible. More patients returning to healthcare provider offices, which is a trend that we expect to continue. increased overall payer coverage across all channels of our business, continued success of our Jitenzo co-pay assistance program, and finally, continued positive feedback that we've received from prescribers and patients regarding their experiences with Jitenzo. So second, I am pleased to showcase that we have presented at the Sexual Medicine Society of North America meeting this past month. On October 21st, we presented an abstract on our real-world Chitenzo experience data. That data showcased that Chitenzo can be dose adjusted to reach the targeted testosterone levels that a healthcare provider is trying to achieve. This flexibility is important because, as we know, healthcare providers value the ability to customize treatment to achieve the individualized therapeutic response for each patient. We believe that ability to manage hypogonadal symptoms with individualized dosing is important to the provider, as this is consistent with current medical practice, may increase patient satisfaction, and ultimately result in better patient adherence, which is a very common issue associated with testosterone replacement therapy. We anticipate submitting this data and other data not covered in the abstract at upcoming medical congresses and into a peer-reviewed medical journal for publication in the coming months. And finally, we have positioned ourselves for continued growth by increasing the number of our sales force to 60 representatives in order to continue to expand our reach in the market to targeted healthcare providers. So in summary, we believe Chitenzo is poised for continued and accelerated growth as we know that the testosterone replacement therapy market is large with about approximately 8 million prescriptions written in this market each year. And it continues to grow year over year. In fact, the market achieved over 7% growth in 2020 over 2019 despite COVID. Okay, we also know that roughly three out of every four patients are not satisfied with their current non-oral therapy. This is a large number considering that there are about 2.2 million patients who are currently being treated with an additional 4 million patients who have either been diagnosed or have stopped treatment. These patients collectively represent our opportunity because as an oral, Jitenzo overcomes the significant administration issues associated with the injections and the gels where a majority of the prescriptions are written today. In fact, 80% of all patients are interested in learning about an oral such as Jitenzo. As we move forward into 2022, we intend to continue to invest additional resources to educate health care providers and their patients that they serve through strategic use of targeted promotional programs and by expanding the sales force. So at this point, I will turn it over to Bob, who will provide some updates on the pipeline for Claris. Bob? Thank you, Frank.
spk07: As many of you know from our public announcement in May of this year, we in-licensed from HAVA, an Australian company, a combination of testosterone plus anastrozole in a pelletized form for subcutaneous delivery. This product has opportunity to treat inflammatory breast disease, specifically, periodontal mastitis and other inflammatory conditions of the breast, as well as being adjunctive therapy in estrogen receptor positive, androgen receptor positive breast cancer. HAVA has used this product in over 1,000 women in Australia. and HAVA's PK safety and early efficacy data, we believe will support our ability to move into phase two studies earlier than had there not been this good database. There currently are about 150,000 women in the US with periodontal mastitis. Therefore, we've recently applied for orphan drug status and expect to hear back from the FDA over the coming months. From a market size for periodontal mastitis, we believe this product has an opportunity to have peak sales of roughly $400 million. And there are even greater opportunities for the testosterone plus anastrozole. Our CLA-R121 product number exists for the treatment of high breast density in women. and as adjunctive therapy in certain forms of breast cancer. Roughly 80% of all breast cancers could potentially be a target for this combination of therapy. In September of this year, we announced a second in-license product, this from McGill University, where we brought on worldwide rights to develop and commercialize technology to treat conditions associated with CoQ10 deficiency. The other name for CoQ10 is ubiquinone. The technology is unique because it enables CoQ10 to see intracellular uptake unlike over-the-counter CoQ10 derivatives. So we think this has real potential to treat individuals with both primary and secondary ubiquinone or CoQ10 deficiency. And in some of these categories, this also would fall likely under an orphan drug status. So two very exciting products for us that tap into our expertise in androgens and in endocrinology generally. Relative to Jitenzo per se, We continue to work on several label expansion life cycle management products, all which we believe will bear fruit in the marketplace. First is the treatment of hypogonadal men with chronic kidney disease. This would ultimately be a label expansion in our view. Next would be work on a once daily oral to you product. We've initiated work in this already and hope to move expeditiously next year into early phase clinical testing. And then finally, we are working on testosterone therapy for female to female transgender individuals. This, in our view, would be another label expansion with a phase four initiation study anticipated in the first half of next year. With that, I'll pivot to just a few IP updates and highlights for JITENSO. As I noted earlier, we recently announced two notices of allowance for JITENSO patents. Once approved, these will bring the total number of Orange Book patents listed to JITENSO. I mentioned earlier our settlement with Liposine. where we prevailed in that action, and that also resulted in a global settlement, which not only dealt with the assertions Lipocene made against us from patent infringement, but also settled any interference actions that were active at the time. From a global settlement perspective, Lipocene agreed to pay Clarus $4 million, in installments with $2.5 million of that having been received already. Rick, I'll turn it over to you to talk about investor conferences and then questions. You bet. Thanks, Bob. So when the nine months ended, we were able to attend the Oppenheimer Fall Healthcare and Life Science and MedTech Summit September 20th. And also we attended the 2001 Cantor Virtual Global Healthcare Conference, September 27th. And really appreciate both Oppenheimer and Cantor for inviting us to those conferences. And we're able to tell our story about Jatenzo and the exciting things we have going on here at the company. So with that, we'll turn the call over to the operator for questions.
spk16: Thank you. Ladies and gentlemen, today's question and answer session will be conducted electronically. If you would like to ask a question, please press star then one on your telephone keypad. We will take as many questions as time permits and we'll proceed in the order that you signaled into the queue. We will begin with Louis Chen with Cantor. Your line is open.
spk09: Hi, good afternoon everyone. This is Patrick Carvey and for Louis, congrats on your progress this quarter. We have a couple of questions. On Jutenso, the market exclusivity is expected to expire next year. So I just want to know how you guys are strategizing your commercial efforts differently as you are getting closer to that date. Secondly, I just want to get a sense of your plan on Jutenso XUS opportunities, how big it will be, and how you guys are going to start working on those regions of the world. Thank you so much.
spk20: Frank, why don't you take the question? Thank you, Bob. I'll cover the first part of that question. So, yes, as we know, our regulatory exclusivity expires at the end of March next year in 2022. As we continue to look forward towards that date, we believe that with Chitenza, we have an oral that is what the physicians and the patients are looking for. We know that physicians need and like the ability to individualize dosing to their patients. So as we continue to prepare for that timeframe, we are definitely prepared to be able to educate the physicians and patients around the importance of having individualized dosing. So that's certainly something on our radar as they're coming forward. But I will say this, look, you know, at the end of the day, having another competitor that's out there talking about the benefits of treating hypogonadism and the ability to talk about the importance of oral therapy, we believe also helps the market out in general because of the importance of oral therapy. So, you know, we believe we have a good product. We also believe that, you know, come the time when April comes, that we'll be in a really strong position to continue to grow our business beyond the introduction of any new competitor.
spk04: Great. Rick, do you want to talk XUS, or would you like me to?
spk07: Yeah, so I'm happy to take that, Bob, and thank Frank for those comments on Jutenzo and the competition, which we've been and anticipating, so I think it's been worthwhile as we prepare for that. Speaking to the XUS opportunities, we have worldwide rights to JITENSO, so that puts us in a very favorable position as we seek partners XUS. And I think there are a number of partners in a number of regions where we have reached out to and have had dialogue with those partners. Currently, I wouldn't forecast any particular country or region or timing on a deal, but those are active discussions that we are having. And look, that really is an important piece, not only for non-dilutive revenue, but to expand the reach of Jitenzo worldwide.
spk10: Got it. Perfect. Thank you so much.
spk16: Thank you. Our next question comes from the line of Greg Fraser with Truard Securities. The line is open.
spk02: Thanks, and good afternoon, folks. First on Gitenzo, what elements of Gitenzo's profile would you say are resonating the most with prescribers? Is it oral delivery? Is it the high percentage of patients who achieve normal T levels? Any additional color would be helpful.
spk20: Sure. Greg, I'll take that. Teens? So a great question about our profile. I would say that there's a lot of components that are baked into that Greg. So let me, let me kind of dive right in. First is obviously the ability to have an oral right at the end of the day, they liked the route of administration. Uh, but then it goes really back down to the key issues that a physician, any reason why they prescribe a product efficacy, safety, and dosing. So when we talk about efficacy, what is really resonating with physicians is our ability to increase the amount of free or circulating unbound testosterone in the bloodstream. And by the way, that's the T that is actually able to work at the target sites. They like that message. From a safety perspective, not only do they view us in context against the gels as they look at those as the gold standard and see that we have a better profile on safety, But specifically, they've come to understand that we do not have any liver toxicity that we've seen in any of our clinical trials. But more importantly, as it relates to where they write a majority of their prescriptions with injections, they see our hematocrit data as very impactful. In our clinical study, although we did increase hematocrit, 97% of all of our patients started and stayed in the normal range for hematocrit. And in fact, not one single patient discontinued. Contrast that with injections and where physicians will see about 40% to 50% of all of their patients who are on injections where they would actually actively have to manage them, whether they stop therapy, come off, take a break, go donate blood, decrease their dose. So this is very impactful as well. And as I mentioned already earlier, the other thing that's very impactful is the fact that we have the ability to go and have a customized dose depending on what the target is. therapeutic level is that the doctor is looking for, as well as the individual patient response. So all of those kind of in combination are the things that really differentiate Chitenzo with our healthcare providers.
spk02: Is a twice daily dosing a hurdle for some, and do you think that going to once a day will make a big difference? I'm curious to hear your thoughts on once versus twice daily dosing for this patient population.
spk20: You know, it's a question that really comes up a lot, not really from the physician's perspective, we when we've talked to patients, it is really weird, the data that we get back, which is that somehow, patients actually feel like they're getting more testosterone by taking it twice a day. And I take some in the morning, and then Oh, I must be low. So I get to take more testosterone later, when the reality is, is that we, you know, over a 24 hour period, we're in the normal range. And so We don't see that twice a day from a patient perspective or have heard, to follow up with that as well, that we haven't heard that there has been an issue with twice a day. Certainly once a day is something as, you know, would be great to get to. I think it's one of those that's the unicorn that's out there because it's very difficult, I think, to be able to get into a normal range and stay there over the course of the day because of the importance of staying in that normal range and not going too high. But we'll see.
spk02: Got it. That's very helpful. And then just on coverage, how high of a priority is expanding coverage with new payers as well as working to improve the coverage that you already have?
spk20: Right. So very happy to say that currently we have about 66% of all lives in the United States that have coverage. Those plans cover Jetenzo. So very, very good that we've made a lot of progress over the course of the year. As I look forward to, you know, into next year and beyond, there are still plans that we have availability to go back to from a commercial perspective, as well as additional plans from a Medicare Part D, other states, the health exchange lives. So continuing to grow coverage is certainly something that remains at the forefront of our priorities.
spk02: Got it. Thanks very much for taking the questions. You bet.
spk16: Thank you. Our next question comes from the line of Serge Belanger with Needleman Company. Your line is open.
spk08: Hey, good afternoon. A couple questions for me. The first one for Frank, can you just talk about where current Gitenzo patients are coming from? Are they mostly newly diagnosed, or are they switching from existing products? And secondly... I guess for Rick, can you just talk about growths to NETs? They seem to be still moving around. Where do you think they'll settle and maybe when? Thanks.
spk20: Sure. So I'll handle the first question, then I'll pass it over to you, Rick. As far as where are the patients coming from? So if you look at all of our prescriptions currently, what you'll see is that about 81% of all of the prescriptions our continuing patients, those that would be a patient who was on Jitenzo the previous month. We see that about the other 20, 20 or so percent is broken up as follows. 12% are from switch patients and the other 6% or so are new to market. So if you break that out a little bit more so that 12 and the 6.4, it's basically anybody who's not on Jitenzo, 67% of the patients that are coming over to us for the first time, are from a switch perspective, and the balance, the 23%, is coming from patients who are new to the market, or at least defined that way in the data source. Does that help, Serge?
spk07: Yep, very helpful. Okay. Super. Hey, Serge, it's Rick. And on the second question, on the gross-to-net, we continue to monitor gross-to-nets very close as script levels increase. We're going to have more prescription running through plans. We're going to have more prescriptions that are going through our co-pay assistance card. And all of those, you know, we have made estimates historically on and continue to watch those very closely. So, you know, we had projected earlier a 45% net, so 55% adjustment to get to net sales. We are trending favorable to that in the third quarter and year to date. I think it will continue to trend favorably, but again, we want to watch this carefully as Scripps increase. I don't have a guidance number for you today. Historically, it's been 45%, but we are seeing over the last quarter it trend favorable to that 45%.
spk08: Okay, that's helpful. Let me squeeze in one more. A follow-up to a prior question about the market exclusivity ending in March. I'll ask you to look in your crystal ball. How many additional new entrants do you expect after the exclusivity expires? This is Bob.
spk05: I expect one or about another.
spk14: Okay.
spk16: Thank you.
spk14: Thanks.
spk16: Okay, ladies and gentlemen, if you'd like to ask a question. please press star then one on your telephone keypad. Our last questions will come from Naz Rahman with Maximum Group. Your line is open.
spk13: Hey, guys. Congrats on the quarter. Just a few questions from me. First, I'm going to start on prior odds. Have you guys seen the rates of prior odds, like increase, decrease, or sort of remain the same? Also, Has it been easier for like physicians to get all the prior arts approved?
spk20: Okay. So thanks for those questions. I'll cover those. So first the rate of PAs continue to decrease actually, as, as we continue to move forward, you know, as the, as our coverage has expanded over the course of the year, more and more patients obviously are getting covered. I will say though, that the PA, it's important to distinguish what your question though, just to be fair, that, you know, there is a class PA that exists and that exists for anybody who is in the testosterone replacement therapy space. So a generic injection, a generic gel, a branded competitor, Jatenzo, you know, those are the questions around, do you, are you a male? Are you have two T levels? Those are all specific, you know, that are related to the class overall. And then if you look, actually, I would say that what we've seen is as of the last data period that came out, about 77% of all TRXs are now getting approved and going through. So that certainly represents a kind of a strong correlation to as our payer coverage has improved that we're seeing more of those prescriptions going through. Does that answer your question, Max?
spk13: Yeah, it does. So my next question is just on PR. the sales for the quarter. Was there any significant stocking by wholesalers or any significant stocking of the channel for the quarter?
spk07: No, this is Rick. There was not. So our sales go to a third party logistics provider and then the wholesalers order through them. So we don't take orders directly from the wholesalers, but we do have wholesaler data. So no, there was no stocking days on hand. at the wholesalers remains consistent and no, you know, large orders at the end of quarters or anything like that. So it's not something we manage or we take orders from the wholesalers in that manner.
spk13: Got it. And my final question is sort of on your capital priorities going forward. If you could just sort of, from your perspective, how would you rank sort of like increasing your spend on DTC versus increasing development spend on your CoQ10 or the Hava assets?
spk07: Yeah, I'll start off, and then certainly Frank and Bob can jump in. You know, we watch our spend very carefully, and as we prioritize that, you know, we're focused on Gitenzo and making Gitenzo a market leader. And so when you look at those programs, whether it be DPC or media buys or maybe a hub program, those types of things are certainly their priority for us. and we'll continue to spend on those as we have the funding to spend on those programs. So I think that remains the highest priority is growing that business. Secondly, our R&D programs I think are structured very favorable to us where they're really milestone-based. So as we achieve success and build value in those programs, we will make milestone payments associated with those. So I think they're structured very favorably from that standpoint. Also on these R&D programs, I would say that they're not large, hugely expensive programs. I think we can very effectively manage those without huge significant dollars going to those programs. All right.
spk11: Thanks for taking my question, guys.
spk07: Thank you. Thank you.
spk16: Thank you. Ladies and gentlemen, we do apologize. but we only have time for a limited number of questions. If you would like to ask a question but did not have the opportunity to, please contact Claris Investment Relations directly. Dr. Dudley, I would now like to turn the call back over to you for closing remarks.
spk07: Thank you. I appreciate everyone taking time to be on the conference call today. Our first one is the public company. We're very excited about where we are and where we're going and certainly commit to do our utmost to continue to grow Claris into a very profitable pharmaceutical company. So again, our thanks. Give you our best wishes for the upcoming Thanksgiving holiday. And this call will then conclude after the operator's remarks.
spk16: Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Everyone have a wonderful day.
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