Q2 2021 TherapeuticsMD Inc Earnings Call
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Good morning, ladies and gentlemen, thank you for joining us for the Therapeutics M. D second quarter 2021 financial results conference call. Following prepared remarks from the company. We will open the call for questions I would now like turn the call over to the Investor Relations for Therapeutics M Day, Lisa Wilson Lisa.
Thank you Christy and good morning, everyone and thank you for joining us today to discuss.
Our second quarter financial results and business update.
Good morning, Therapeutics MD issued a press release announcing our second quarter financial results.
Press release is available on the company's website.
<unk> dot com in the investors the media section.
On today's call from Therapeutics M D. Our Chief Executive Officer, Rob <unk>, Chief Financial Officer, James Director Chief.
<unk> commercial officer, Don how cost and chief strategy and performance Officer Michel crashing.
I would like to remind everyone.
Certain statements made during this conference call may be forward looking statements.
Such forward looking statements are based upon current expectations.
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.
All of which are identified in our press release, and our annual quarterly and other reports filed with the SEC the.
These forward looking statements are based on information available to therapeutics M. D. Today, and the company assumes no obligation to update the statements as circumstances.
Stance has changed.
And the audio recording and webcast replay for today's conference call will also be available online in the investors the media section of the company's website.
So the benefit of those who may be listening to the replay.
The archived webcast this call withheld and recorded on August 4.2021 with that I'll turn the call over to therapeutic Sundays CEO, Rob Cynthia 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. An addition, the efforts we have made during the quarter to create a more streamlined and improved online patient experience are gaining.
Traction with up script, our newest telemedicine relationship now of lives, 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 the insurance coverage throughout Q3 and Q4.
As shown in slide 3 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 body care of prescription services is also experiencing growth with <unk>.
Recently signed our third body care customer contracts and half of <unk>.
The pipeline of over 30 potential customers. In addition, we continue to evaluate the investment in the body care, including of potentially potentially selling a minority stake in bite of care, which would provide a non dilutive source of capital for our company. We're building a solid foundation provided care to become a freestanding.
Entity in this high growth sector.
I turn the call over to James I'd like to welcome Hugh O'dowd, who is stepping into the position of president of Therapeutics empty, which John Milligan vacated to take the position of Chief Executive officer of by the care prescription services earlier. This year. He was previously the CEO and president of Neon Therapeutics huge on me.
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 will turn the call over to James to discuss our financials in more detail James.
Thanks, Rob and good morning, everyone.
Slide 5 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 versus Q1 of 'twenty.
The 21 net revenue increased by 17%.
Friend of era, 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 1100 and $57 from $1071 in the first quarter. We continued to expect that average net revenue per unit of <unk>.
[noise] of era will approximate $1100 for the year.
In vaccine net revenue increased by 40% of on a sequential quarter basis and average net revenue per unit increased to $64 from $61 in the previous quarter net.
Net revenue per unit continues to benefit from in vaccines 75 dollar cash co pay program along with the new preferred payer contract that became effective in the first quarter also important to note with regard to index. These performance is that second quarter prescriptions for index. The included a larger portion of the 90 day scripts.
Over 20% of the total prescriptions filled.
Turning to buy Juba net revenue decreased by 12% and average net revenue per unit was $68. As a reminder, we are minimally supporting by Juba at present.
As of June 32021, looking at all 3 products inventory quantities in the wholesaler and pharmacy channel remain within normal levels.
Yes.
Let me share some highlights from our financial statements on slide 6 our gross profit margin rebounded to 82% in the second quarter back in line with our expectations operating expenses increased from the second quarter as we had anticipated, reflecting our continued investment to enhance marketing and strengthen our digital capabilities.
Weighted to commercial initiatives, which are promotional the sensitive.
This is of critical stage in the lifecycle of our products and we are committed to supporting them and driving growth.
The 1 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 32021, we out of $111.4 million in cash.
I'll now turn the call over to Don to provide more detail around our commercial progress dawn.
Thank you James on.
On the product side, let's start with an <unk>.
As you can see on slide 8 and the Dara showed continued growth both of them.
On the sequential quarter basis and year over year, we are making good progress positioning and of era as the only long lasting procedure free product and this is driving uptake.
At times of quarter growth of 17% illustrates this positive trend where net revenue per unit held steady at 11, 57, and refill rates remain strong at about 50%.
There are a couple of the 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 of live calls.
And the second trend is that all channel, where we sell and <unk> are seeing increased growth with telemedicine continuing to lead the pack with growth trajectory as patients can access any of their even if they are not going to their doctor for a light bad debt.
Turning now to Ana there of radar trends on slide 9 the bars represent the total number of anova of 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 person.
That from 2 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, it's coming from 2 places.
The sales force penetration to the primary targets and from the successful marketing efforts and while the impact of Covid on access to providers is waning there are still challenges, making these gains all of the more impressive.
On slide 10, we see that importantly, and Advair is benefiting as women's switched their method of birth control and it is capturing market share from various contraceptive method.
It's interesting to note that the majority of Ana pair of users have never used the vaginal ring before and are making the change from other methods, including implants or ieds.
And of their AR is creating a new segment within this market and increasingly is being recognized as the procedure free long acting alternative and filling an unmet need.
Turning now to slide 11.
At the end of a data point kind of moving in the right direction and we see potential broad near term growth catalysts that support continued uptake of Vantiv era.
Let me touch on a few of them broadly first the environment around women's health is supportive of the Affordable Care Act has been upheld and advocacy efforts around birth control choice and access for women have increasing support.
The second from the payer perspective and of Vera continues to have strong unrestricted access at 57% and the majority of patients continued to pay $0 from annual prescriptions due to the AC a federal and state laws.
Where we do not have coverage. We currently have of 64% prior authorization approval rate across all payers. In addition, CMS recommended that anniversary of receive its own unique national J code that'll last title 10 facilities to be reimbursed for dispensing and of era.
This could be life as early as the fourth quarter and we believe it will drive increased uptake in the public health market for Ana Vera.
Third as mentioned access to providers is improving and we continue to utilize marketing tools to communicate with the broader physician base, including primary care providers to expand the market opportunity for Anna era.
Lastly on the consumer front, we believe telemedicine will continue to have the significant positive impact and we are leveraging that channel and our peer to peer influence your program to reach millions of women keep in mind that more than 50 per cent of women know what they want in terms of contraception book.
Before they go see their doctor and their preferences are often shape based on what they have learned from influencers in France.
Moving now onto our menopause products.
Slide 13 shows the key metrics for and vaccines for the second quarter Index, we have faster T. Our ex growth outpacing the BVA market Q2 over Q1, and achieving an 8% increase from T. Rx prescription net revenue per unit improved to $64, which I'll discuss in more detail in a moment and we.
Got 2% increase in the number of prescribers, writing a prescription in the second quarter compared to the first quarter.
In fact, we have the 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 remained higher than average for the category with approximately 6 and a half total fee.
Hill's over the lifetime of the patient with over 20% of patients filling of 90 day supply.
Slide 14 shows the pattern of improvement in net revenue from the taxi. After the January 1st 2021 cash pay change to $75.
There was a 56 per cent increase of net price for Q2, 'twenty, 1 compared to Q2, 'twenty and of 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.
Slide 15 shows there are strong potential near term growth catalysts, it support and vaccine going forward and vaccine has strong unrestricted commercial coverage at 61%, including a top 5 per that has in fact, the as their only preferred branded product for those patients not cut.
We continue the support them with an affordable cash program to fight of care and is noted for Ana Vera access the 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 ups script that provides.
Access to and vaccine for patients and we believe will improve conversion to prescription in the online channel.
Our recently launched direct to consumer campaign called long makes the rain is already showing a positive impact of interest and engagement.
Turning finally to by July on Slide 17, total prescriptions for bite you of that grew by 3.5% quarter over quarter, notably there was a 4% increase in prescribers writing the prescription for Baidu that in Q2, 'twenty, 1 compared to <unk> 21, and net revenue per unit stayed steady at <unk>.
$68.
In addition in the second quarter by Juba received approval in 7 European countries, we have been minimally supporting by Giovanni 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 Baidu below dose with the producer date of March.
The 21st 2022, both of which we believe will be important catalyst for growth going forward I would now like to turn it over to Rob for closing remarks. Thanks, Sean.
As you've just heard we delivered a great quarter for our products with 115% net revenue growth year over year and cash used in operating activities decreased to $26.5 million.
Looking ahead to Q3 and Q4, we expect the prescription trends to accelerate due to improved health care provider access both online and in person and.
And we also expect near term growth in our commercial and government insurance coverage, which should accelerate prescription trends throughout Q3 in Q4.
In addition, the grin and bear it in every channel and from vaccine, we achieved record net revenue per unit for the fourth quarter and of Ralph.
We havent accepted the filing for Baidu of a low dose with the <unk> date of March 22022, and received multiple approvals across Europe for Baidu, the and the second quarter.
Finally by the care closed the third customer it's grown its pipeline of over 30 potential customers and we are working to secure a minority investor in via the care 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 we'll be star then the number 1 on your telephone keypad or any audio questions. Once again that is star then the number 1 little policy of just a moment to compile the Q&A roster.
Your first question comes from the line of Louise Chen with Cantor.
Hi, congratulations of the corner and thanks for taking my questions. Here. So first question I had for you is how are you thinking about valuation range is for a minority stake in your body care of franchise and then secondly, how much do you actually expect sales to improve went anova receives that J code. If he could put anything of behind that would be held.
Paul and then I know you addressed this in the call, but is the resurgence of COVID-19 going to impact your second half of 'twenty 1 sales. Thank you.
Yes.
Louise Thanks, Great Great question, so for Avaya the care, what what I can't say enough to be very careful because we are working on this actively today. What we were looking at doing was retaining of minority stake are you now below 20% of around 20%.
4.
And investment the.
The market has grown significantly the value of the company of the vital care company has grown significantly in the pipeline has exploded.
Now, we're looking at hopefully selling off a minority and keeping vast majority of the company.
And and getting a solid investment that would make a difference to our shareholders from the 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 Don because we've got a lot of good great. We'll have the best catalysts we've had.
And the commercial history of the company throughout Q3, and Q4 here and I'll have Don talk about that sort of highways and thanks for the question. So the first question. You asked is what do we expect the J code of 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 catalysts for us the J code.
How's the title 10 facilities, you can think about the net the planned parenthood facilities. There of about 5000 of them to actually get reimbursed for dispensing and of their apps and the public health market is growing quickly for us with the universities opening and and of their App will be the only procedure free product.
Long acting procedure free product that the planned parenthood of facilities will have and the analogs of suggest that this would be.
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 will impact the second half sales Rockfish 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 varying out there we.
We're 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.
Steering thing in terms of catalysts, we still see our ability of access to broach of providers. We've got incredible consumer programs in the online world, the 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 mentioned is that we.
Debt to grow of rush 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.
Okay.
Once again, ladies and gentlemen that istar they need number 1 for any audio questions.
Your next question will come from Annabel Sammy.
Stifel.
Hi, Thanks for taking my question.
So I had a question regarding your online presence again, I I apologize if I missed the 1 of the earlier comments.
And I think you touched on it before you're seeing growth of 26 per cent and the online channel.
What percent of penetration do you have any of the online channels and and do you expect to.
To use of online channels for both and of their AR and in vaccine both or is it weighted more towards 1 product versus the other and then separately.
4 by June of that you mentioned youre going to restart simply can you just give us an idea of what youre going to be doing there as far as as that supporting that product, Thank you and and and not just the supporting the product, but what's going on with bio ignite. Thank you.
Sure Annabel thanks for joining so from an online standpoint, so telemedicine has been strong strong area of growth for us as you've heard but the numbers, but we think we are just starting now with up script lives 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 if you put those 2 together I think youll see the volume of scripts increased going in to Q3, and Q4, and we haven't had any real payer wins 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.
Build just with what we have today with the payer improvement, but we expect the volume of scripts to go up with the online the improvements we've had in working with some of these partner companies. We've done a great job of improving that as well on top of that we have our bulk of bear we just really launched last July because of Covid. So the.
We fill volumes that will come up and work 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 of great back half of the year and I'll I'll turn it over to Don for the rest of the those questions and before I move onto by June.
A couple of 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 of the large ones in terms of anniversary and as Rob Just mentioned, we just launched up script. So penetration from that perspective on partnership are high, but certainly theres a lot of.
The tomorrow as Rob just mentioned and those catalysts are going to support that growth as far as the difference between the Ana Vera and in vaccines. The birth control of telemedicine channel is much more involved in the menopause telemedicine channel. So index is slightly smaller, but we are also launching up script within vaccine and we.
The same programs that we are leveraging across the portfolio.
As far as Baidu that 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 of loyal set of providers that need samples that they are making sure that they are covered there as well as any baidu the education.
And the bio ignite program, there's no shift there we are still working with all of the partners and have a team that continues to support them for when we start to reinvest in the product in the future.
That's correct, Greg and if I could just the follow up on on something with and that's the.
Obviously, it's a different population.
Then the birth control market and it's an older population, but.
Given I guess the vaccination of the rate among the elderly that are quite high have you seen better and for your access to the physician practices now is that kind of normalize the better they learned how to operate in this environment or is it still pretty restricted.
So it's definitely much better than it was but its not near where it was before COVID-19.
True to probably 50% of where we were before COVID-19.
I think you can see that through our recent numbers growing and for both <unk> and of era.
Now we do expect that.
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 per.
Ascribed and we're starting to see people of return for the annual visits where they're 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 and it's good.
It's good it's not what it once was but it'll it'll get back eventually.
Okay. Thank you.
You know I'll tell you the Annabel.
Sorry in of all just 1 last thing.
1 of the things Youll see in our numbers, 20% of our investing scripts were actually 3 months of supply.
So like 3 units, which is a phenomenon that's growing and you know per accuse me of that's supposed to stay and I think part of that phenomenon is due to COVID-19 and retail pharmacy strategy here.
So that's that also you can see on our numbers kind of a <unk>.
Ticket of of what you were asking right. There certainly helps on the revenue side because that 3 units for every patient going in when theyre getting the tiara yep.
Got it got it great. Thank you.
Youre welcome.
Once again, ladies and gentlemen debt is star then the number 1 for any audio questions.
Yeah.
Our next question comes from the line of Douglas Tsao of H C.
Wainwright.
Hello can you hear me sorry.
Sure Doug Thanks for joining us.
Thank you.
I'm just curious just given the strength you've seen from line actually.
Recently.
Which is great to see you.
You sort of thinking in terms of moving it up in terms of prioritization in terms from a promotion standpoint, I mean, I know and of ore had been sort of become the focus and it's obviously doing well, but we're obviously seeing some very strong numbers from the back to the right now thank you.
Doug Great question I will tell you that.
We were 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 Ana Vera as well as how effective and evolve the telemedicine channel is for birth control put together with our refill effort and a lot of our retail strategies, including VAT of care.
We think we will have strong growth in Q3 and Q4.
For Anna Vera, but to your point and vaccines, we expect to grow right there with it and it's been great rent lately and we expect that to continue the on anything of that and just to add to that if you think about what's going to grow in vaccine. Rob is right on the on the sales force side, we feel really confident in the split we have and in vaccines and easy product yourself, but where we are.
<unk> leaned in is in 2 places.
1 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 Nishi reign campaign that we just launched is gaining a tremendous amount of traction as well of patient testimonials and those of 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 Tonight, and we look forward to seeing the next quarter.
Yes.
Ladies and gentlemen, thank you for participating in therapeutics.
2021earnings call you may now disconnect.
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