TherapeuticsMD, Inc.

Good morning, ladies and gentlemen. Thank you for joining us for the TherapeuticsMD second quarter 2021 financial results conference call. Following prepared remarks from the company, we will open the call for questions. I would now like to turn the call over to Investor Relations for TherapeuticsMD, Lisa Wilson. Lisa?

Thank you, Christy. Good morning, everyone, and thank you for joining us today to discuss our second quarter financial results and business updates. This morning, TherapeuticsMD issued a press release announcing our second quarter financial results. The press release is available on the company's website, therapeuticsmd.com, in the Investors and Media section. On today's call from TherapeuticsMD are Chief Executive Officer Rob Fenizio, Chief Financial Officer James Durecka, Chief Commercial Officer Don Halkoff, and Chief Strategy and Performance Officer Mitchell Crassens. I would like to remind everyone that certain statements made during this conference call may be forward-looking statements. Such forward-looking statements are based upon current expectations and there can be no assurance that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release and our annual, quarterly, and other reports filed with the SEC. These forward-looking statements are based on information available to TherapeuticsMD today, and the company assumes no obligation to update statements as circumstances change. An audio recording and webcast replay for today's conference call will also be available online in the Investors and Media section of the company's website. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on August 4, 2021. With that, I'll turn the call over to Therapeutics MD's CEO, Rob Fenicio.

Good morning, and thank you for joining our Q2 call. We are pleased with our steady progress in line with our expectations. Our sales force is benefiting from improved access to providers, which while not back to pre-pandemic levels, has opened up. In addition, the efforts we have made during the quarter to create a more streamlined and improved online patient experience are gaining traction. With Upscript, our newest telemedicine relationship now live, we expect to see continued growth with or without COVID-19 through our online channels. Finally, we have strong coverage for all of our products in the marketplace, and we expect continued improvement in insurance coverage throughout Q3 and Q4. As shown in slide three, overall, our revenue increased by 17% in the second quarter of this year compared with the first quarter. Our overall volumes and net revenues were healthy, and VitaCare Prescription Services is also experiencing growth. We recently signed our third VitaCare customer contract and have a strong pipeline of over 30 potential customers. In addition, we continue to evaluate the investment into VitaCare, including potentially selling a minority stake in VitaCare, which would provide a non-dilutive source of capital for our company. We're building a solid foundation for VitaCare to become a freestanding entity in this high-growth sector. Before I turn the call over to James, I'd like to welcome Hugh O'Dowd, who is stepping into the position of President of TherapeuticsMD, which John Milligan vacated to take the position of Chief Executive Officer of VitaCare Prescription Services earlier this year. Hugh was previously the CEO and President of Neon Therapeutics. Hugh joined Neon from Novartis. where he spent more than 20 years in a variety of leadership roles, including chief commercial officer and head of global strategy. I'll now turn the call over to James to discuss our financials in more detail.

James? Thanks, Rob, and good morning, everyone. Slide five shows a snapshot of our quarterly net revenue trends, which increased across the board. Our net product revenue for the second quarter was $23 million, which satisfied our second quarter covenant. On a quarter-over-quarter basis, our total net product revenue increased by 115%, and on a sequential quarter basis, verse Q1 of 2021, net revenue increased by 17%. For Anavera, net revenue increased by 9% on a sequential quarter basis. Average net revenue per unit, calculated based on units sold to wholesalers and pharmacies for the quarter, increased to $1,157 from $1,071 in the first quarter. We continue to expect that average net revenue per unit of Anavera will approximate $1,100 for the year. Invexi net revenue increased by 40 percent on a sequential quarter basis, and average net revenue per unit increased to $64 from $61 in the previous quarter. Net revenue per unit continues to benefit from Invexi's $75 cash copay program, along with the new preferred payer contract that became effective in the first quarter. Also important to note with regard to Invexi's performance is that second quarter prescriptions for Invexi included a larger portion of 90-day scripts, over 20% of the total prescriptions filled. Turning to Byjuva, net revenue decreased by 12%, and average net revenue per unit was $68. As a reminder, we are minimally supporting Byjuva at present. As of June 30th, 2021, looking at all three products, inventory quantities in the wholesaler and pharmacy channel remain within normal levels. Let me share some highlights from our financial statements on slide six. Our gross profit margin rebounded to 82% in the second quarter, back in line with our expectations. Operating expenses increased in the second quarter. as we had anticipated, reflecting our continued investment to enhance marketing and strengthen our digital capabilities related to commercial initiatives, which are promotionally sensitive. This is a critical stage in the lifecycle of our products, and we are committed to supporting them and driving growth. Dawn will elaborate on these important activities and their impact in a moment. Due to a shift in timing of SG&A and R&D spending, we expect the expenses in the back half of the year to be moderately higher than the first half of the year. Total 2021 spending remains consistent with our initial expectations for the year. Net cash used in operating activities was $26.5 million for the second quarter. As of June 30th, 2021, we had $111.4 million in cash. I'll now turn the call over to Dawn to provide more detail around our commercial progress. Dawn?

Thank you, James. On the product side, let's start with Anavera. As you can see on slide eight, Anavera showed continued growth, both on a sequential quarter basis and year over year. We are making good progress positioning Anavera as the only long-lasting, procedure-free product, and this is driving uptake. The sequential quarter growth of 17 percent illustrates this positive trend. Our net revenue per unit held steady at 1157, and refill rates remained strong at about 50%. There are a couple of main drivers behind the sequential quarter growth trajectory. First, as the world begins to open up again, our sales representatives are slowly regaining access to providers, now able to reach over 50% of our primary targets with live calls. And a second trend is that all channels where we sell Anavera are seeing increased growth with telemedicine continuing to lead the pack with growth trajectory as patients can access Anavera even if they are not going to their doctor for a live visit. Turning now to Anavera writer trends on slide nine. The bars represent the total number of Anavera prescribers by quarter and show that the number was slightly up Q2 over Q1. What's important to note here, however, is that the average number of prescriptions written per prescriber increased by 10% from two in the first quarter of this year to 2.2 in Q2, indicating that we are seeing an increase in depth of prescribing. This prescriber uptake is coming from two places, improved sales force penetration to the primary target and from successful marketing efforts. And while the impact of COVID on access to providers is waning, there are still challenges, making these gains all the more impressive. On slide 10, we see that importantly, Anavera is benefiting as women switch their method of birth control, and it is capturing market share from various contraceptive methods. It's interesting to note that the majority of Anavera users have never used a vaginal ring before. and are making the change from other methods, including implants or IUDs. Anavera is creating a new segment within this market and increasingly is being recognized as a procedure-free, long-acting alternative and filling an unmet need. Turning now to slide 11. As the Anavera data points are moving in the right direction, we see potential broad near-term growth catalysts that support continued uptake of Anavera. Let me touch on a few of them broadly. First, the environment around women's health is supportive. The Affordable Care Act has been upheld, and advocacy efforts around birth control choice and access for women have increasing support. Second, from the payer perspective, Anavera continues to have strong unrestricted access at 57%, and the majority of patients continue to pay $0 for an annual prescription due to the ACA federal and state laws. Where we do not have coverage, we currently have a 64 percent prior authorization approval rate across all payers. In addition, CMS recommended that Annavera receive its own unique national J-code that allows Title X facilities to be reimbursed for dispensing Annavera. This could be live as early as the fourth quarter, and we believe it will drive increased uptake in the public health market for Anabara. Third, as mentioned, access to providers is improving, and we continue to utilize marketing tools to communicate with a broader physician base, including primary care providers to expand the market opportunity for Anabara. Lastly, on the consumer front, we believe telemedicine will continue to have a significant positive impact, and we are leveraging that channel and our peer-to-peer influencer program to reach millions of women. Keep in mind that more than 50% of women know what they want in terms of contraception before they go see their doctor, and their preferences are often shaped based on what they have learned from influencers and friends. Moving now on to our menopause products. Slide 13 shows the key metrics for Invexi for the second quarter. Invexi had faster TRX growth, outpacing the VBA market Q2 over Q1, and achieving an 8% increase in TRX prescriptions. Net revenue per unit improved to $64, which I'll discuss in more detail in a moment. And we saw a 2% increase in the number of prescribers writing a prescription in the second quarter compared to the first quarter. Invexi has a steady base of prescribers, which has enabled the product to withstand the impact of COVID. The loyalty of regular writers, together with improved access for our sales representatives, support this growth. And importantly, refill rates remain higher than average for this category, with approximately six and a half total fills over the lifetime of the patients, with over 20% of patients filling a 90-day supply. Slide 14 shows the pattern of improvement in net revenue for Invexi after the January 1st, 2021 cash pay change to $75. There was a 56% increase in net price for 2Q21 compared to 2Q20 and a 5% improvement in net price for the second quarter of this year compared to the first quarter. As a reminder, this is our new high for net revenue per unit, and the fourth quarter in a row we have seen improvement in net revenue per unit. As slide 15 shows, there are strong potential near-term growth catalysts that support Invexi going forward. Invexi has strong unrestricted commercial coverage at 61%, including a top five payer that has Invexi as their only preferred branded product. For those patients not covered, we continue to support them with an affordable cash program through VitaCare. And as noted for Anavera, access to top providers is improving as the country opens up and virtual formats amplify outreach. And on the consumer side, we recently launched a new telemedicine relationship with Upscript that provides increased access to Invexi for patients and we believe will improve conversion to prescription in the online channel. Our recently launched direct-to-consumer campaign called Long May She Reign is already showing a positive impact in both interest and engagement. Turning finally to Byjuva on slide 17. Total prescriptions for Byjuva grew by 3.5% quarter over quarter. Notably, there was a 4% increase in prescribers writing a prescription for Byjuva in 2Q21 compared to 1Q21. and net revenue per unit stayed steady at $68. In addition, in the second quarter, Byjuva received approval in seven European countries. We have been minimally supporting Byjuva, but recently resumed our sampling and merchandising efforts with the field force, and we just received acceptance from the FDA of our filing for the Byjuva low dose with a PDUFA date of March 21st, 2022. both of which we believe will be important catalysts for growth going forward. I would now like to turn it over to Rob for closing remarks.

Thanks, Dawn. As you just heard, we delivered a great quarter for our products with 115% net revenue growth year over year and cash use and operating activities decreased to 26.5 million. Looking ahead to Q3 and Q4, we expect these prescription trends to accelerate significantly due to improved healthcare provider access, both online and in person. And we also expect near-term growth in our commercial and government insurance coverage, which should accelerate prescription trends throughout Q3 and Q4. In addition, we grew in Avera in every channel, and for Invexi, we achieved record net revenue per unit for the fourth quarter in a row. We had an accepted filing for Byjuva Low Dose with a PDUFA date of March 22nd, 2022. and received multiple approvals across Europe for Byjuva in the second quarter. Finally, VitaCare closed its third customer. It's grown its pipeline to over 30 potential customers, and we are working to secure a minority investor in VitaCare as a source of non-dilutive capital for the company. Operator, please open up the call for questions.

At this time, ladies and gentlemen, that will be star, then your number one on your telephone keypad for any audio questions. Once again, that is star, then the number one. We will pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Louise Chen with Cantor. Hi. Congratulations on the quarter, and thanks for taking my questions here. So first question I had for you is, how are you thinking about valuation ranges for a minority stake in your VitaCare franchise? And then secondly, how much do you actually expect sales to improve When Anna Vera receives that J code, if you could put anything behind that would be helpful. And then I know you addressed this in the call, but is the resurgence of COVID-19 going to impact your second half 21 sales? Thank you.

Louise, thanks. Great question. So for VitaCare, what I can say, and I have to be very careful because we're working on this actively today, what we were looking at doing was retaining a minority stake below 20%. or around 20% for an investment. The market has grown significantly. The value of the company, of the VitaCare company, has grown significantly, and the pipeline has exploded. So now we're looking at hopefully selling off a minority and keeping vast majority of the company and getting a solid investment that would make a difference to our shareholders from a non-dilutive standpoint. I wish I could be more specific than that, but I can't because we are in active negotiations on that. As far as the commercial progress, I'm going to turn that over to Dawn because we've got a lot of good, great, we'll have the best catalysts we've had in the commercial history of this company throughout Q3 and Q4 here, and I'll have Dawn talk about that.

Sure. Hi, Louise. Thanks for the question. So the first question you asked is what do we expect The J-code, how do we expect it to impact our trajectory? So just to explain a little bit about the J-code and why it's an exciting catalyst for us, the J-code allows the Title X facilities, you can think about them as the Planned Parenthood facilities, there are about 5,000 of them, to actually get reimbursed for dispensing Anavera. And the public health market is growing quickly for us with universities opening, and Anavera will be the only procedure-free product long-acting procedure-free product that the Planned Parenthood facilities will have. And the analog suggests that this would be, you know, a 20% bump up to the public health portion of our forecast. So a really exciting catalyst for us that we're looking forward getting implemented. As far as your second question around, you know, with the resurgence of COVID and how it'll impact the second half sales, Rob just mentioned it. We have a tremendous amount of catalysts that are supporting our growth going forward. I mean, it really is such a unique moment for us. And the reality is, is that with the Delta variant out there, we are already experiencing some of the COVID impact, and we are still growing across every channel. And if you really think forward to what we are experiencing in terms of catalysts, we still see our ability of access to grow to providers, We've got incredible consumer programs in the online world. So with or without COVID, that doesn't impact us, and we're seeing the growth of that channel, 26% quarter over quarter. And with the payer catalyst that Rob mentions, which we expect to grow across government and commercial, that alone is going to support our growth in the back half of the year. So the reality is we're really bullish about the growth and feel good about the path we have for the rest of the year. Thank you.

Once again, ladies and gentlemen, that is Dardeni number one for any audio questions. Your next question will come from Annabelle Semmy with Stifel.

Hi, thanks for taking my questions. So I had just a question regarding your online presence. Again, I apologize if I missed some of the earlier comments, and I think you touched on it before. You're seeing growth of 26% in the online channels. What percent penetration do you have in these online channels? And do you expect to use those online channels for both Anavera and Invexi both? Or is it weighted more towards one product versus the other? And then separately, for Byjuva, you mentioned you're going to restart Stampley. Can you just give us an idea of what you're going to be doing there as far as supporting that product? Thank you. And not just supporting the product, but what's going on with Bioignite. Thank you.

Sure. Annabelle, thanks for joining. So from an online standpoint, so telemedicine has been strong, strong area of growth for us, as you've heard with the numbers. But we think we are just starting. Now with Upscript Live, and it just recently went live, we expect that growth to accelerate. And even though Delta is out there, our access has improved with our reps on the ground into the offices as well. And you put those two together, I think you'll see the volume of scripts increase going in to Q3 and Q4. And we haven't had any real payer wins, you know, this year. and we expect significant payer coverage improvements in both commercial and government across the portfolio in Q3 and Q4. So more of the scripts written will be filled just with what we have today with the payer improvements, but we expect the volume of scripts to go up with the online improvements we've had. In working with some of these partner companies, we've done a great job improving that as well. On top of that, we have our bulk. You know, Anavera, we just really launched last July because of COVID. So the refill volumes that will come up, and we're still at about a 50% refill on refill volumes, should kick in here in Q3 and Q4 on top of that. So it should be a great back half of the year, and I'll turn it over to Dawn for the rest of those questions.

And before I move on to Byjuva, You know, a couple things I want to add on the telemedicine side, because you asked about the penetration. If you look at the partners that are out there, you know, we are with all the large ones in terms of Anavera, and as Rob just mentioned, we just launched Upscript. So penetration from that perspective on partnership, we're high. But certainly there's a lot of places to grow, as Rob just mentioned, and those catalysts are going to support that growth. As far as the difference between Anavera and Invexi, The birth control telemedicine channel is much more evolved than the menopause telemedicine channel. So Invexi is slightly smaller, but we are also launching Upscript with Invexi, and we, you know, the same programs that we are leveraging across the portfolio. As far as by JUVA, I mentioned that we are restarting sampling, and so the entire field force has that. And they are making sure that for those providers, and we have a loyal set of providers that need samples, that they are making sure that they are covered there as well as any by JUVA education. And the BioIgnite program, there's no shift there. We are still working with all the partners and have a team that continues to support them for when we start to reinvest in the product in the future.

Okay, great. And if I could just follow up on something with Invexi, obviously it's a different population than the birth control market, and it's an older population. But, you know, given, I guess, vaccination rates among the elderly that are quite high, have you seen better entry or access to physician practices now for Has that kind of normalized a bit? Are they learning how to operate in this environment, or is it still pretty restricted?

We'll both do it. So it's definitely much better than it was, but it's not near where it was before COVID. We moved to probably 50% of where we were before COVID, and I think you can see that through our recent numbers growing for both Imbexia and Avera. Now, we do expect that to potentially moderate, but given the access we do have, we see the improvements in both online and coverage to continue to accelerate the growth. No questions asked in Q3 and Q4.

Yeah, and here's the best news, that people are starting, the patients are starting to go back into the office, which is a real catalyst for us being able to get the products prescribed. and we're starting to see people return for the annual visits, whether younger or older, and that's going to help us out.

Yeah, they can only put those things off so long, and it's built up, and it's coming back. It's good.

It's good.

It's not what it once was, but it'll get back eventually.

Okay. Thank you.

You know what? I'll tell you, Annabelle. Sorry, Annabelle, just one last thing. Yeah, I'm sorry. One of the things you'll see in our numbers, 20% of our infection scripts were actually three-month supplies, so like three units, which is a phenomenon that's growing. And per IQV, that's supposed to stay. And I think part of that phenomenon is due to COVID and retail pharmacy strategies here. So that also, you can see on our numbers, kind of is indicative of what you're asking right there.

Certainly helps on the revenue side because that's three units for every patient going in when they're getting that TRX.

Yep.

Got it. Got it. Great. Thank you.

You're welcome.

Once again, ladies and gentlemen, that is Dara Denny, number one, for any audio questions. Our next question comes from the line of Doug LaSalle with HC Wainwright.

Hello. Can you hear me? Sorry. Sure can, Doug. Thanks for joining. Thank you. Just I'm just curious, just given the strength you've seen from Invexi recently, which is great to see, is there any sort of thinking in terms of moving it up in terms of prioritization in terms from a promotion standpoint? I mean, I know Anavera had been sort of become the focus, and it's obviously doing well, but we're obviously seeing some very strong numbers from Invexi right now. Thank you.

Doug, great question. I will tell you that... We will keep it the way it is for now, and we can always reevaluate that. And let me tell you why. Because of the growth that we see coming that will have more scripts written filled for Anavera, as well as how effective and evolved the telemedicine channel is for birth control, put together with our refill effort and a lot of our retail strategies, including VitaCare, we think we will have strong growth. Thank you, Q3 and Q4 for Anavera. But to your point, Invexi, we expect to grow right there with it, and it's been great lately, and we expect that to continue. Dawn, anything to add?

Yes, and just to add to that, if you think about what's going to grow Invexi, Rob is right. On the Salesforce side, we feel really confident in the split we have, and Invexi is an easy product to sell. But where we have leaned in is in two places. One is the online telemedicine channels and really making sure that we expand there. And then overall in consumer, we didn't talk a lot about it today, but the Long May She Rain campaign that we just launched is gaining a tremendous amount of traction as well as patient testimonials, and those are the places we're leaning in that support also the sales force as they sell it into offices.

Okay, great. Thank you. Thanks, Doug.

There are no further questions at this time. Do you have any closing remarks?

I want to thank everyone for joining the call today, and we look forward to seeing you next quarter.

Ladies and gentlemen, thank you for participating in Therapeutics 2021 Earnings Call. You may now disconnect.