Clarus Therapeutics Holdings, Inc.

Ladies and gentlemen, thank you for joining in the CLARIS fourth quarter and four-year 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 it will be available for replay for 10 business days following this live call. Please note that discussions today may include forward-looking statements. Forward-looking statements may involve a number of risk uncertainties, some of which are beyond CLERD's control, and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the risks associated with CLERD's financial position, risk inherited and pharmaceutical development, and those factors described under the Heading Risk Factors in the Prospectus, filed with the Securities and Exchange Commission, the SEC, under Rule 424B-3, on December the 23rd, 2021. And those that are included in any of Clara's future filings with the SEC, including its annual report on 10-K, for the year ended December the 31st, 2021, when filed. These four statements speak only as of the date of this call, and Clarice disclaims any intent or obligation to update these forward-looking statements to reflect events or circumstances after the date of such statements, except as may be required by law. Following the prepared remarks, Clarice will not be taking questions. At this time, I'd like to turn the call over to Dr. Bob Dudley, Founder, President, and Chief Executive Officer of Clarice. Please go ahead, sir.

Thank you. Good afternoon, everyone, and thank you for joining us today. We appreciate your interest in Claris. With me today is our Chief Financial Officer, Rick Peterson, and our Chief Commercial Officer, Frank Yeager. Let's get started with our recent business highlights. We continue to see total prescription growth for Jatenzo in the fourth quarter of 2021, with an increase of 11% sequentially and 81% year over year, driven primarily by advertising and promotion, and an increase in payer coverage across all channels. Two new patents were issued for Gitenzo in November 2021. These have been listed in FDA's Orange Book, bringing the total number of patents protecting Gitenzo to seven. It closed a $15 million private placement with a leading healthcare investor in December 2021, the proceeds of which support the ongoing commercialization of Gitenzo. In January of this year, we appointed Zhanna Jumadulova as Chief Clinical Development Officer. She brings a depth of clinical development experience that will be important as we develop our pipeline products and explore potential new indications for Jitenzo. And to this very point, we initiated screening for the first patient in an investigator-initiated phase four clinical study of Jitenzo for the treatment of hypogonadal men with chronic kidney disease in March 2022. We expect to announce results from this trial in the first half of 2023. On the commercial side of the ledger, we launched strategic partnerships with AltHealth and AssistRx in February to make patient access to Jatenzo easier and enhance their overall prescription process. Included in this initiative as a telemedicine portal for patients who do not have access to a healthcare provider. Recently, we completed filming of a direct-to-consumer advertisement for Jitenzo as part of a comprehensive plan to increase awareness among hypogonadal men for whom Jitenzo is medically appropriate. Assuming we are able to address our capital needs, our current plan is to air this piece later in the year and avail ourselves of the highly focused media technologies that are a far cry from buying expensive time in major network channels. Finally, while we are excited that Gipenzo continues to perform well in the market, the ability to raise capital to support the brand remains a challenge, and in light of our current cash position, we have initiated a process to explore strategic alternatives to maximize shareholder value. Now, Rick Peterson, our Chief Financial Officer, will discuss Claris' financial status. Rick?

Thanks, Bob, and good afternoon, everyone. I will be going over the fourth quarter and full year 2021 financial results. To start with, fourth quarter revenue was $4.6 million compared to $2.4 million in the same period for last year. Full year revenue was $14 million compared to $6.4 million in 2020. This represents growth of 119% attributed to the growth in Gitenzo sales. Gross margin for the quarter was 71.7% compared to 85.2% for the corresponding prior year period. Gross profit was 80.5% for the full year compared to negative margin in 2020. Cost of goods sold decreased 68.7% in 2021 compared to 2020 attributable to write-offs in those years of 0.7 million and 7.8 million for inventory obsolescence reserves for the years added December 31st, 2021 and 20 respectively. Fourth quarter operating expenses were 10.5 million compared to 10.2 million in the same period last year. And for the full year, operating expenses were 51 million compared to 44.9 million for 2020. This represents an increase in operating expenses that were driven mostly by headcount and professional fees associated with financing activities and operating as a public company. Fourth quarter sales and marketing expenses were $5.7 million compared to $6.0 million in the same period last year. Full year sales and marketing expenses were $30.7 million compared to $30.5 million for 2020. This represents a 0.5% increase primarily due to Gitenzo and commercial analytics, marketing research costs, and additional sales and marketing expenses associated with the brand. Fourth quarter, general and administrative expenses were 4.3 million compared to 3.7 million in the same period last year. Full year, general and administrative expenses were 16.7 million compared to $11.9 million for 2020. This represents an increase of $39.6 million attributed to higher personnel costs due to an increase in headcount and consulting costs and an increase in public company expenses. For R&D, R&D increased were $0.5 million compared to $0.6 million in the same period in the previous year And then looking at the full year for research and development, expenses were $3.6 million compared to $2.4 million in 2020. This represents a 51.4% increase, primarily attributable to clinical costs associated with our lead commercial asset, Jatenzo, and licensing fees related to the HAVA and McGill in licensing agreements. Our cash and cash equivalents as of December 31st, 2021, will fund our current operations plan into April 2022. As Bob noted, we continue to explore strategic alternatives for the purpose of maximizing stockholder value, and while we expect to devote significant efforts to raise capital, restructure, or indebtedness, and identify and evaluate potential strategic alternatives, we may not be successful, which could force us to delay, limit, or terminate our operations, including workforce reductions pursuant to asset sales or other alternatives, including seeking protection under the provisions of the U.S. Bankruptcy Code. Notwithstanding our challenges, Jetanzo has continued to perform well in the marketplace. Now, Frank Yeager, our Chief Commercial Officer, will discuss some of these important highlights. Frank?

Thanks, Rick. Thank you, Rick. I'm proud to announce that Jitenzo has experienced several notable milestones in the fourth quarter and full year as the brand continues to grow. Total prescription growth for Jitenzo in the fourth quarter increased 11% sequentially and 81% year over year. driven primarily by advertising and promotion and an increase in payer coverage across all payer channels. Specifically, our prescription growth has been driven by the following. First and foremost, we continue to receive positive feedback from providers and patients regarding their experience with Jitenzo. Second, we've made changes to our sales force by increasing the number of sales representatives from 55 to 60, and optimizing the sales territories to ensure we have a national footprint. These have resulted in sales territories increasing their overall testosterone replacement therapy prescription coverage volume from 59% to 80% of all prescriptions written in the marketplace in the United States. Next, we are seeing increased access with waning COVID concerns to physicians. despite Omicron's presence in the fourth quarter. Specifically, we have been able to increase sales rep access to providers' offices. In fact, nearly 90% of all of our healthcare provider calls are live calls. Additionally, we are seeing patient visits for hypogonadism return back to normal levels, which means more patients returning to healthcare provider offices, and we expect to see this trend continue throughout the year. And finally, we have increased patient access to Jitenzo. As for payer coverage at the end of 2021, Jitenzo had access to 70% of the overall lives that patients have coverage in the United States. Those plans cover Jitenzo. And when you look specifically at the commercial channel, where the bulk of the prescriptions are written in this class, 77% of all commercial plans now cover Jitenzo. These are significant changes over the course of the year, and now Jutenzo is one of the best in the class. And as for patient assistance, we are seeing continued success and growth in our Jutenzo co-pay assistance program. We believe Jutenzo is poised for accelerated growth throughout this year. In fact, the TRT market is large at approximately 8 million prescriptions written in this market each year, and it's growing. with an over a 6% compounded annual growth rate in 2021 over the past seven years, again, despite COVID. This is a large number considering that there are 2.2 million patients who are currently being treated and greater than 4 million patients who have either been diagnosed or have stopped treatment. These patients represent our opportunity. because we know, based on an independent survey in over 400 hypogonadal men, that nearly 8 out of 10 patients are not satisfied with their current non-oral option. Additionally, we know that 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. Jitenzo is the only oral that's approved that has multiple doses so a prescriber can individualize treatment to each patient. And finally, we know through our market research that physicians universally report that they would nearly always switch a patient to Gitenzo if the patient requested the switch, even if the patient was therapeutic on their current product and was not experiencing any side effects. Bottom line is that if patients ask for Gitenzo, they are very likely to get prescribed Gitenzo. As we move forward into the second quarter of 2022 and beyond, we are excited about the impact we are seeing and the initiatives that we have put in place and are on the horizon. We expect that our recent Salesforce national footprint expansion will continue to reach and educate more healthcare providers at a time when COVID is becoming less of a concern. Additionally, we recently held a live national sales meeting where we focused on raising the bar on what good messaging and good selling looks like. We expect that our overall payer coverage will continue to grow throughout the year. And already in Q1 of this year, we have already seen our overall payer coverage increase now to 72%. Also, in the first quarter, we launched two new strategic partnerships with Vault Health and AssistRx, leaders in providing healthcare services to patients, both of which underscore our continued commitment to providing solutions for patients. Our partnership with Vault Health enables patients who may be suffering from hypogonadism to get clinical care from the comfort of their own home via a telemedicine approach. And our partnership with AssistRx, who is a leader in providing prescription initiation and patient support solutions, allow patients to streamline the process in getting Jutenzo prescriptions fulfilled and sent directly to them via mail order. These two partnerships work together synergistically and an end-to-end solution from diagnosis to product fulfillment, helping to eliminate barriers through a streamlined single portal experience. What this means is that through our partnerships, we can help patients determine if they are hypogonadal, ship Gitenzo directly to their homes, and importantly, refill prescriptions automatically at a cost savings. Bottom line, we believe these customized patient support offerings will result in better treatment and ultimately better adherence to therapy. And finally, as Bob mentioned, briefly mentioned just a few minutes ago, on the near-term horizon, we are excited as we finalize our new integrated healthcare provider and consumer promotional campaign. And with additional outcome, additional capital, we expect to launch that in the coming months. As part of that new campaign, we will be launching a direct-to-consumer television component that will target the appropriate hypogonadal, diagnosed, and currently or previously treated patients. This is really exciting for the business, and we expect that this will be a significant driver of Jitenzo growth in the future as we move forward. And now, Bob will provide recent pipeline and other updates. Bob?

Thank you, Frank. Regarding Jitenzo, we announced the initiation of screening for the first patient in an investigator-initiated phase four clinical trial of Jitenzo for the treatment of hypogonadal men with chronic kidney disease. And we expect the results from that to read out in the first half of 2023. We continue to work on several label expansion lifecycle management projects for Jitenzo. And pending availability of funds, these are all in large markets, including testosterone therapy from female to male transgender individuals, another label expansion with phase four initiation anticipated in the second half of 2022, again, subject to availability of funding, and once daily oral to you for the phase two study initiation anticipated in the second half of 2022 as well, again, subject to our ability to fund these studies. Next, subject to availability of a capital, we continue to advance our pipeline candidates, including CLAR-121, the combination of testosterone and anastrozole. This is a product licensed in May 2021 from HAVA Therapeutics in Australia for the treatment of certain inflammatory breast diseases in particular, periductal mastitis, and as adjunctive therapy, an estrogen-positive, androgen-positive breast cancer. Projected initiation of Phase II for PDM would be in the second half of 2022. For CLAR222, which is the combination of coenzyme Q10 plus caspofungin, this is technology and licensed from McGill University in September of 2021. with projected initiation of phase one for the treatment of primary and secondary forms of CoQ10 deficiency and related mitochondrial dysfunction in the second half of 2022. Regarding intellectual property highlights, as noted earlier, in the fourth quarter, we now have a total of seven orange booklisted patents for Jutenzo providing coverage to 2030. Finally, two upcoming medical conferences offer a long awaited opportunity for us to showcase Jatenzo. For the first time since COVID altered the Medical Meeting Landscape Institute, we are extremely excited to have a significant presence at two important medical meetings in May and in June. Both of these will be live. These represent the first opportunity since Jatenzo was launched just three weeks before COVID. that endocrinologists and urologists can interact with CLARIS commercial and medical affairs personnel in what was a common annual gathering. So these two meetings are the AUA meeting in New Orleans and the Endocrine Society meeting in Atlanta. And I should mention, we will have at least one abstract presented at the Endocrine Society meeting in April, 21st to the 23rd in Orlando. So as we close, my sincere thanks to Team Claris and all of our external partners for the hard work on our behalf. Thanks also to our stockholders and to our directors for their support. I'll now turn the call back to our operator, Tawanda.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.