Q1 2022 Evofem Biosciences Inc Earnings Call
With momentum building in the second half of the year.
Gross to net will remain in the 35% to 40% range for the foreseeable future trend towards the lower end of that range in the second half of the year.
We continue to believe this coupled with significantly lower R&D costs as patients exiting the evercore trial will give us the cash flow breakeven on a quarterly basis by the end of 2023.
At the close of Q1, we had $2 8 million in cash and cash equivalents and $4 2 million in unrestricted and restricted cash we raised $10 million in gross proceeds through two unsecured debt transactions and net proceeds of approximately $5 4 million from our equity line of credit.
And additional <unk> 3 million was recorded as other receivables since it was received after the launch of <unk>.
Note. This morning at our annual meeting our stockholders of record approved a reverse stock split of <unk> common stock.
The reverse split is intended to increase the per share trading price of the company's common stock to enable <unk> to satisfy the minimum bid requirement for continued listing on the NASDAQ capital market and with that I'll turn it back Cassandra. Thank you Jake.
Our first quarter results demonstrate that we are consistently delivering quarter over quarter growth.
All indicators give us confidence that we are on track for another strong quarter in Q2, and we are right on track to achieve our 2022 revenue guidance of 30% to $35 million I want to walk you through the underlying reasons. We are confident in this guidance.
Some insight on demand.
We have forecasted the backseat total prescriptions and dispense units would be soft for the first eight to 10 weeks of 2022, and then rebound that is exactly what happened new prescriptions effects increased approximately 30% from February to March the.
The anticipated dip in January and February relative to December was caused by two underlying reasons.
<unk> is the annual reset of patient health care, deductibles, which affects consumer discretionary spending and impacted all contraceptive brands in the industry as a whole.
Second are the adjustments that we intentionally made to our patient support programs in January 2022, most notably the termination of denial conversion.
This significantly increased the profit margin on spec units dispensed and supports our continued net sales growth.
The rebound came on the early side of our expectation and we attribute that to our salesforce driving more than 2300, new first time <unk> prescribers.
In April we entered into an agreement with <unk> to provide enhanced white glove support services to women prescribed sexy who choose to use this avenue to obtain their prescription.
<unk> will help the sexy patient understand coverage identify available savings opportunities and facilitate communication between the health care provider and the Payor.
We believe this new agreement and high level of patient interface will significantly streamline access to vaccines and lead to more patients filling their flexi prescriptions.
Turning to sales and marketing.
We will have a strong presence at the <unk> annual meeting starting this week on Friday right here in San Diego.
<unk> is the largest and the most prestigious gathering of U S medical professionals in obstetrics and gynecology and more than 4000 attendees are expected at this year's meeting.
We secured a prime high traffic locations for our stunning sexy booth.
We're hosting an educational seminar on Friday morning for health care providers to learn more about sexy from one of the nation's leading obgyn.
We will present, new data from the phase III empowered trial on Saturday afternoon and.
Additionally, we will launch the.
Let's make it personal campaign in APAC, which is designed to support health care providers in their patient centered contraceptive counseling and understand how sexy plays a role throughout her reproductive journey.
<unk> is an ideal venue to highlight the post hoc analysis of the empower trial.
These data show that 99% of pregnancies were prevented her act of intercourse in this study.
This is very useful data for our sales force to share with prescribers as they identify who the sexy limited.
Moving to access.
We continue to make tangible and meaningful progress this year in.
In January the U S Department of Labor and Health resources and services administration updated contraceptive guidelines to ensure women have access to all FDA approved contraceptives, including taxi at zero co pay under the Affordable Care Act. We believe these new guidelines make it clear to insurers barriers to al.
Access such as step edits claim denials and prior authorization letters must and.
The department of Labor guidelines took effect immediately but certain plans remain noncompliant. We are gratified that elected officials in the house and the Senate continue to call for heightened enforcement and adhering to the new guidelines.
As mentioned in my opening remarks, we received confirmation last week from one of the largest pbms in the nation. They will act sexy Swiss national template formulary with no restrictions. These template formulary, they're used by employers and downstream payers nationwide and we expect an additional $28 million.
<unk> will gain unrestricted access to Betsy in the next 60 days.
In addition to increasing access to vaccine. This agreement will also directly reduced our operating expenses by removing prior authorizations from taxi prescriptions for the Pbms, which has the highest volume effect CPA of any payer in the nation.
With each PAA currently costing us $35 to process. This agreement is a very big win for <unk> on all fronts.
Additionally, one of the largest plans in Utah has removed its prior authorization on taxi and the largest payer in Hawaii well aspects to all of its commercial formularies on July 1st which is another fantastic win by our team.
We commend these plans for removing barriers to access and for doing what's right for women.
In 2022, we are Reenergizing, our business development efforts, which are predominantly focused on opening new markets for <unk> outside of the U S.
In 2021, our previous business development consultant received significant interest around vaccine in Asia and Europe .
We believe we believed that we would be able to close the deal by year end. However, when the offers came in none of them that are requirements of a significant upfront payment milestone payments and an ongoing revenue stream.
We are thrilled that carina for dogs has joined <unk> as the head of business development.
Karina brings a high degree of business savvy and demonstrated expertise to effectively execute on our strategy.
We'll evaluate and close on good deals that appropriately values the asset and reflects the opportunities in contraception and STI prevention. She is singularly focused on forging the right deal with the right partner at the right terms blending and upfront payments milestone payments and royalties on <unk>.
Future product sales.
We look forward to the results of her focus and strategic work through the remainder of the year.
We continue to seek opportunities to leverage our sales force our co promotion of synergistic women's health products and explore other strategic relationships with potential to add value to our shareholders.
Turning to R&D and.
In Q1, we completed enrollment of the phase III STI trial, Abo guard, which is evaluating sexy, but the prevention of chlamydia and gonorrhea in women.
We look forward to reporting topline data by the end of October this year.
Outcomes would enable FDA submissions for these potential new indications in the first half of 2023.
The CDC estimates there are 4 million new cases of chlamydia infection and won six new gonorrhea infections annually in the United States, which correlates to $962 million indirect medical costs.
According to the CDC every sexually active person is at risk of catching these common infection and there are no FDA approved prescription preventative measures right now the choices are condoms or absence and around the world public health experts and advocates are highlighting the need for new.
Preventative measures.
To reiterate the timeline we are on track to report topline STI data by the end of October positive outcomes would enable FDA submissions in the first half of 2023.
Once the submissions are accepted for filing we expect a six month review because vaccine has fast track designation for both potential new indications.
These are significant near term inflection points for <unk> and our shareholders.
And finally, our research efforts also have led to the very recent publication of sexual satisfaction data in the peer reviewed journal of sexual medicine and.
This manuscript investigators reported at 88, 7% of women using Betsy improved or maintained their sex life.
I collected this exploratory data from the phase III empower trial to increase the understanding of women's sexual experience with Betsy beyond just pregnancy prevention.
And with that operator, I would like to open the call for questions.
Thank you.
We will now be deducting conducting a question and answer session.
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Well.
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Please ask one question and one follow up question.
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One moment, please while we poll for questions.
Okay.
Thank you.
Our first question comes from David.
And so with Piper Sandler. Please go ahead.
Yeah.
Hey, Thanks, So just a couple burst.
Can you give us a.
Sort of a refresher on how we should think about.
Your priorities regarding spend.
All of these cuts on cost, but there's obviously some degree of promotion intensity here. So can you talk about how we should think about the long term trajectory of sales and marketing spend.
And then secondly.
Just remind us once we get this sort of a point, where most patients are getting covered with no copay.
The right way to think about the steady state gross to net once you've gotten to that point. Thank you.
Okay.
Yeah.
Hey, do you want to start.
Chicken Hey, David good to hear from you, yes, So I'll address both of those questions for you real quick on the sales and marketing spend is really when it can be the primary driver at least in the short term. This year score reduction we have stated.
And even at the year end call about a $50 million reduction in opex for the year and thats going to be largely attributable to a reduction in.
Marketing costs directly associated with the DTC media aspect.
R&D itself.
Obviously continue at very low level very similar to last year, because we're wrapping up the trial and there is a large majority of women wrapping up on <unk> and then we'll start dropping out majority of second quarter and a little bit at the front end of Q3, then you'll see that start dropping dramatically G&A should remain relatively flat going forward.
I think you can expect some degree of increase in sales and marketing as we prep for the <unk>.
The addition of the indication for <unk>.
I think most notable some increases to our sales force size will likely occur assigned.
Aside from that we will be spending some time over the next year or so of developing what that marketing plan looks like.
It might not necessarily be as extensive as we entered due for <unk>, because we're not starting from zero, but that will be definitely an item of discussion and we'll give more guidance on that as we get closer to that.
In regards to gross to net obviously, we were super happy about the 30 percentage point increase is direct reflection of the co pay adjustments we made at the beginning of the year.
<unk> largely attributable to turning off denial conversion.
We do anticipate a field.
Best case scenario youre, not going to get much better than 20 ish percent, that's with everything in a perfect environment, which we know is it doesn't quite operate that way because we do have distributor cost and other aspects that roll up into <unk> and so I think it's probably a healthy way to say maybe in a perfect environment. It will fall somewhere.
Best case around 30% and maybe into the high <unk>, but I wouldn't go any further than that and again that is if the stars align and everyone's playing on a level a level playing field.
Okay. That's helpful. Thank you.
Sure.
Okay.
Our next question comes from Annabel <unk> with Stifel. Please proceed with your question.
Hi, This is stacy calling in for Annabel congratulations on the continued growth and thanks for taking our questions.
A couple that we have is first of all how is vital cares engagement with patients different that nipper and why would they be getting a higher response rate translating into fulfillment.
Secondly, how are you providing assistance or coverage prescriptions for those without actual coverage and I guess lastly, any thought or extra color that you can provide us on ex U S partnership or they are holding out for phase III data or are you. Thank you so much.
Yes, great. So so one of the things when we talk about white glove.
Basically the new vital care relationships, they really understand the space very very very well and what I mean by that is that there's going to be a much more engaged interfaced with the patients ensuring that they're getting the repo, making sure. The refills are timely, but also engagement with the provider so what's actually going to be.
We'll circle and so we feel like that enhance engagement is really going to matter with the busy lives of women that yes. We just wanted to make sure that they are having consistent and constant follow up. So that's the difference, which I think is going to make a really I think important.
Climate and also it's really going to provide us more patients. So we feel like they're going to not only engage the patients that we have but theyre going to the patients that are interested they will engage them give them. The information they want which will ultimately lead to more prescription. So we do anticipate this relationship will actually grow our base.
Patients as well.
And then.
The next question.
Ex U S.
Right. It is ex U S.
Thanks, Jason.
Any color on ex U S partnership.
Yes, and the Spi timing has actually remained consistent so we do still intend.
To deliver top line data on our STI study.
By the end of October and we as Jim mentioned, the positive of that field. It will consistently decreased our output of cash because this study was an expensive undertaking certainly well worth it. The one thing that we consistently see by the way that's actually growing is that as our sales force continue.
To talk to doctors one of the things that they continuously share with us and also that we get from market research as we go out to young women on college campuses is that we hear them talk about their concern about their ability to get pregnant when they want to and is using hormonal contraception impacting.
That we know that Columbia by the way is one of the number one reasons for infertility. We also know what causes pelvic inflammatory disease and so we really feel like this is going to be a very significant opportunity for women and for shareholders. Because again, we will be the only product that for.
Both of these in committee as the number one most diagnosed and prescribed STI followed by gonorrhea. So that's very exciting and then to quickly transition to your ex U S opportunity.
The one thing that I hope I made clear in the script is that.
We really know that we needed a focused executive that will be deliberate spending all of their time.
This asset is worth it and when we say the right partner with the right opportunity. We want a partner that has a footprint already that understand that when you are in women's health. There are certain challenges, but there's also significant opportunity and so we know that the upfront is important.
But also the revenue stream that is gonna be forthcoming can also be very significant. So we feel very optimistic that we have brought a person on board that not only understands business negotiation, but in her history. She's also had roles as CFO since he understands the financial piece, the negotiation piece and already in the short time.
He's been here. She has already made very significant inroads. So so I would tell you that that's what was necessary because we needed a full court press. So that we can get the economics that we wanted to know in the past, we could've done a deal, but it certainly would not be representative of the value of this innovation.
And that's why we took a step back but now we're taking 10 steps forward so to speak.
Amazing. Thank you so much that was very helpful.
Okay great.
Our next question comes from Yale Jen with Laidlaw <unk> co. Please proceed with your question.
Good afternoon, and thanks for taking the questions.
Congrats on the very good.
<unk> quarters.
So Paul.
Just a quick few quick one so given a little bit new to the story.
The first is that.
Would you be able to name that the pbms.
Although restrictions or that's too keep in some sort of confidential.
Well, hi, <unk> nice to speak with you and I would love to name the PVM, but I can tell you that a poisoned darts as Danny pointed in my direction, but we.
We are not allowed to go unfortunately, but it is definitely one of the top three pbms in the nation and Unfortunately, we can't get the name out yet, but it is a large win because there are 28 million lives covered so we're very very excited about it I can tell you and it certainly will be forthcoming, but we just needed to give out this important teaser.
It's really going to be very very game changing.
Okay, Great one more follow up here is that.
Would you be able to report.
The number of boxes.
Shifting over this quarter.
Yeah. So Jay do you want to hit the units shipped.
Yes, yes, yes, no we're just.
Pointed out periodically paper, so as far as units dispensed in the first quarter there were 27053.
And I'm going to just give you an illustration I'm going to jump into because we have <unk> in units dispensed and I don't know, but one of the things that I think is important when we message that look.
January February were tough for everybody, but here's what we've seen so far I mean already as an example in March. This is just from a Trs standpoint. It marks we had night over 9300, a little more than that at <unk> and we're already midway through April and we are beyond 45.
So we are going to have surpassed March and April .
Which we feel great about so.
Being realists.
We wanted to manage everybody's expectations and say January February we're going to be.
Truthfully find by most People's standards, but we knew that we did the rebound in March and now April overseeing the upswing, so I think youre going to.
Feel good about the fact that the curve has now adjusted and on an upward trajectory.
Okay, Great. That's very helpful. Maybe just squeezing one more in terms of the first quarter figures is that something where they are within your expectation.
For the your or how would you characterize that.
<unk>.
Yeah could you I'm, sorry could you say that one more thank you broke up a little bit I apologize.
The first quarter or is.
Is that within your expectation or beyond or how would you characterize that numbers.
Yeah, I would I would actually tell you it was exactly at our expectation frankly.
Yes.
We've tried to be very mindful that this guidance that we're giving guidance that is attainable and we.
Feel good about it.
We wanted to use this call as an opportunity to share why we are confident about it.
Okay, Great. That's very helpful again congrats.
Thank you.
Our next question comes from Ram Silverado.
With H C. Wainwright. Please proceed with your question.
Thanks for taking my questions. So firstly on the commercial front I was just wondering if you could provide us with a bit more color on this.
The initiatives that you've undertaken that you see as being particularly central to ensuring that you can maintain the same level of commercial impact, even though youre managing costs.
Yes, Hi, Rob we didn't know you were going to be on the call. We're so happy you are by the way so nice to hear from you.
So here. So here is what I would tell you is that.
I think your point is important right that lowering the costs, how are we going to maintain and grow frankly.
One of the keys, which is an obvious statement is increased access right.
Plans open up and do the right thing we are seeing that it is.
Really been so critical and so important I mean look one of the things that our new chief commercial officer at that after being in the field is that there's nothing more frustrating when.
We go in and we talk to doctors. They say, yes, they are going to write proxy. They write it and then the patient call back an hour later and says I can't get it because their plan will cover it and then obviously that motivates the doctor because the Doctor takes that time for patient counseling, and it's very very frustrating because a lot of the physicians who are writing Betsy <unk>.
Vince but that is the right product for those patients so access.
Continuing to open up access this win in Hawaii. This win in Utah is win with Cvs I can tell you. If you were to go in the field with our sales force right. Now you would think that we said the mom happy pills, everyone is very excited and motivated also though I would tell you that we really are leaning into grassroots what I mean by that is that.
College campuses are open we are excited to forthcoming announced that we're going to do a Big College College campus initiative around sex education days, where we will have providers, writing prescriptions and really talking about sexuality in how bodies work, but more importantly.
Hormone free contraception, so we're going to lean into that which is a very cost effective way to build the base of users not only immediately but users who have a long time and their fertility years and hopefully be sexy users for a long time and then finally interestingly. We've also used grassroots to go to a lot of pregnancy meetings women.
Who are getting ready to deliver and concerned about what contraception form they will use <unk>.
And they obviously don't want to have hormones in their breath milk. So it's been a very interesting time for that as well.
Other thing too I want you to know is that.
A very very big positive that we have made so we have made some changes organizationally not just with the head of the commercial team, but within our marketing team and one of the things that we've done is made some serious shifts away from very expensive marketing agencies. So that we can be less reliance on them.
We brought in some people who by the way have a level of predate creativity, who have worked at agencies, who are saving us extraordinary amounts of money in coming out with new ways to deliver the message that its not only eyecatching, but it's very hard hitting so I would also tell you that at eight cause one way, we're going to keep growing script.
As with this new messaging.
POS data by the way was important because well one.
It's factual it's already part of our study results. It's just a new way to look at it. So when you look at pregnancies per active SaaS. It makes physicians much more comfortable to prescribe sexy and it helps them identify a broader base of who has the sexy woman. So we're also doing that so in the <unk>.
Final thing I want to say is that we have also made a concerted effort with our I T Department to move a lot of our commercial analytics in house away from outsourcing how does that help us build our base, while we now get more data quicker real time, and we can adjust we can adjust geographies.
We can adjust the way that we are pushing messaging. So one of the things when we knew we had to do this decrease spend rights, where silverly realistic around here and so we said look we have got to make sure that the base that we built that the investments that we made last year.
Not only do we maintain it but we've got to build on it. So I would tell you that we are being scrappy, we're being created but a lot of the things. We brought in house are really helping us move the needle real time and I know that was a long answer but it was required to give you all the things we're doing it's not just one thing it's a lot of things simultaneously to make.
Sure that we're building this brand.
Okay, and then can you just remind us about the.
Projected commercial window for the.
The products, specifically and prevention of Stis, given your Q IBP status. So once it gets commercialized what you anticipate the length of the commercial window to be.
Yes.
So right now we have coverage through 2033, so we will get five additional years exclusivity to 2038. So we feel confident that that gives us a very solid opportunity for world domination now too to really build on our base effects for cartridge.
<unk> and the one thing Ron I think that we've discussed this with you is that no matter, what contraception and women's on she is still at risk of getting chlamydia and gonorrhea. So it is our hope frankly that.
It's certainly it's actually not just our hope it's actually are.
Our thoughtful understanding that any woman no matter, what contraception cheese on will want to protect yourself from chlamydia and gonorrhea. So we feel like it's really going to be a huge base of opportunity, but the bottomline is five additional years to 2038.
And just lastly on that front you know assuming that you obtain label extension label expansion in the STI prevention domain upon positive data from the other guard study.
What kind of additional resources might be required maybe just describe them qualitatively to ensure appropriate and adequate promotional activity.
Additional indications.
Yeah.
So one thing that we do know is that we would like to increase the size of our sales force.
I wouldn't say dramatically, but I would tell you that on the high side 25 on the low side 15 and were doing an analysis to really make sure that we are going to be able to address all the appropriate targets.
Additional resources.
Also would say that I think Jay indicated a little bit and I want everybody listening to understand it's not like we're going to go Crazy. We don't think that we have money trees around here when the lottery, but it is going to be important because the clinical serious Smith of untreated chlamydia is something that a lot of people don't realize they don't.
No about it.
I would tell you that when I've talked to and we've already done diligence with doctors do IVF and they see the number one question. They asked women when they're having challenges to get pregnant is have they ever been treated for chlamydia, 60% of the time. It's asymptomatic. So we really want to make sure that we are educating young women.
If they are concerned about their ability to get pregnant when they want to that it is important to make sure that they are looking at all of the things that they're doing for their health. So we will invest a little bit on the education platform, we would like to grow the sales force and Jay is there anything else that you might have talked about that.
Missing no not necessarily.
It's just the standard obviously getting conversations ahead of launch with HCP.
Really developing exactly what the label expansion needs for these new indications and really developing the marketing story around it and how we deploy that as I had mentioned the huge benefit for us is that.
We're not starting from zero, we will already have a significant market penetration, we're not starting from zero with which patients. So we will have a great foot in the door. So it won't require as much spend as it did for the commercial launch in September of 2020.
And then just keep in mind too the other thing.
We've reiterated a couple of times now.
Currently anticipating breakeven by the end of 2023.
Just on contraception with us launching this extra indication on top of this it will take us to even further heights.
Thank you.
Thank you.
There are no further questions at this time I would like to turn the floor back over to Saundra Pelletier for closing comments.
Thank you so to close I just wanted to take a quick moment and I wanted to say, thank you to our shareholders.
When you look back at <unk> and you look at our journey you will see a dedicated team who took an idea through clinical trials to the FDA and finally to patients providing the first breakthrough in contraception in decades, we delivered innovation and we're filling a previously unmet need offering women control of the reproductive health and choices.
Is that they did not have before.
Our path to this point has not always been easy we continue to navigate obstacles that are common to innovative publicly traded pharmaceutical companies and for now you should know that this highly qualified capable and tenacious team is working to continue our success and all signs are that 2022 will be.
Our year.
We expect this call talking about our plans and expectations, but I want to summarize with five key points.
Reducing costs, we remain committed to reducing costs by $50 million in 2022, we're cutting burn at every turn with no fluff anywhere in our spin the decisions. We make are calculated and focused on wins that will increase and drive value.
Two increasing revenue redoing this by driving demand through our sales and marketing initiatives through our partnership with Baidu care and through ongoing GTS improvements three expanding fix the access we continue to work to win coverage from new payers, we will not stop until all women.
An obstructed access to FSC.
For driving our STI prevention program forward by completing the <unk> trial and gaining approval in taxi for different for the prevention of chlamydia and gonorrhea and five entering into licensing agreements to get facts the access to international markets.
We work tirelessly and proactively on these initiatives to make this company a success to build value for our shareholders and to bring innovation to women. We are on the precipice of change. We appreciate the continued support as we narrow the gap toward our goal of achieving cash flow breakeven no later than the <unk>.
End of next year and profitability thereafter.
And finally, I would be absolutely remiss, if I didn't address the recent new information about the viability about Roe versus Wade.
When women are denied safe legal abortion, the importance of access to FDA approved contraception is greater than it has ever been.
Thank you for standing with us as we continue to ensure that women's needs are met.
Great rest of your day, Thank you again.
Yeah.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference.
You may disconnect your lines and have a wonderful day.
Okay.
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