Q2 2022 TherapeuticsMD Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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For the therapeutics.
Second quarter 2020 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 Therapeutics empty Lisa Wilson Lisa.
Thank you operator, good morning, everyone and thank you for joining today to discuss our second quarter financial results and business update.
This morning Therapeutics M D issued a press release announcing its second quarter 2022 financial results.
The press release and accompanying presentation.
Or are available on the company's website.
X M D and the investors and media section.
On today's call from Therapeutics M D, Our Chief Executive Officer Sue Odell.
Interim Chief Financial Officer, Michael Donigan.
Chief Commercial officer, Mark Glickman.
I'd 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 competence and played 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 therapeutics M D. As of today and the company assumes no obligation to update these 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.
Or the benefit of those who maybe listening to the replay or archived webcast. This call was held and recorded on August 15th 2022.
With that I'll turn the call over to Therapeutics M. D. C E O Q Oh doubt.
Thank you Lisa and thank you everyone for joining our call today.
Today, I'd like to share our progress against our goals and highlight the key milestones met during the second quarter.
Our total net revenue for the quarter was $28 6 million.
Kris a 24% over the second quarter of 2021.
At the same time.
Our total operating expenses during the quarter declined by $11 $4 million.
Or 21%.
Gross profit rose by 26%.
The second quarter 2022 also saw US complete the divestiture of our <unk> business unit in just five weeks our organization went from deal announcement to closing.
With the proceeds from these efforts the company has been able to repay $120 million of debt during the second quarter.
TX <unk> is now a far more focused business dedicated to advancing the health of women throughout all stages of their lives.
Our final accomplishment to note is the U S food and drug administration's approval of our supplemental new drug application for <unk>.
Which increases our current and future supply.
With this approval, we expect a significant reduction in manufacturing batch rejections and an increase in future product supply that will enable the company to better meet customer demand for <unk> <unk>.
Now that I discuss these achievements.
I wish to spend a moment acknowledging another key events of the quarter.
As you all know in May we entered into definitive agreement to sell the company to EW healthcare partners. However, the transaction did not garner sufficient support from our shareholders.
Our recent financing with rubric capital management.
And accompanying maturity extension have provide us with additional runway.
Such that our board of directors and management team remain forward looking and evaluating all options, including seeking partners to refinance our current debt or pursuit of other strategic alternatives. All of this to enable us to serve our two primary constituencies our patients.
And our shareholders and with that I'll turn it over to our interim Chief Financial Officer, Michael Donigan to discuss our financial results in greater detail Michael.
Thanks here on April 14th we completed the divestiture of vital care prescription services for $142 $6 million net of transaction costs and recognized the gain of $143 $4 million on the sale included in the net proceeds was $11 $3 million of customary hold backs which are.
Jordan as restricted cash on the balance sheet.
We used $120 million of the proceeds to pay down our outstanding loan in May also receive up to an additional $7 million in earn out consideration contingent upon <unk> financial performance through 2023.
I'll now turn to our second quarter 2022 financial results.
Our total revenue for the quarter was $28 $6 million, an increase of $5 6 million or 24, 2% compared to the second quarter of 2021.
For the quarter sales of <unk> were $18 3 million, an increase of $8 $7 million or <unk> 91, 2% compared to the second quarter of 2021.
This increase was primarily due to an increase in sales volume, partially offset by a decrease in the average sales price.
Sales of <unk> were $6 7 million for the quarter, a decrease of $3 2 million or 32, 2% compared to the second quarter of 2021. This was primarily due to decreases in sales volume as well as average sales price.
Sales of <unk> of over $2 7 million for the second quarter, an increase of <unk> 5 million or 23, 1% compared to the second quarter of 2021. The increase was a result of money received under the <unk> license agreement and an increase in overall sales volume, partially offset by a decrease in the average sales price.
Prescription vitamin sales were $1 9 million for the second quarter, a decrease of <unk> 5 million for.
For 35, 5% compared to the second quarter of 2021, and this is due primarily to decreases in sales volume and average sales price.
Gross profit for the second quarter of 2022 was $23 8 million, an increase of $5 million or 26, 2% compared to the second quarter of 2021, and this was due primarily to the increase in product revenue.
In addition product gross margin improved overall as a result of a change to the sales mix with increased sales volume for <unk> and by June and decreased sales of indexing.
Total operating expenses for the quarter were $42 7 million.
The decrease of $11 4 million or 21, 1% compared to the second quarter of 2021. This was driven mostly by the <unk> divestiture as well as company wide effort to reduce overall operating expenses.
Selling and marketing costs were $23 7 million for the second quarter, a decrease of $8 5 million or 26, 4% compared to the second quarter of 2021 due to lower brand spending for <unk> <unk>.
Reduced compensation and employee benefit expense and lower consulting expenditures, partially offset by higher education conference and software development costs.
General and administrative costs were $17 $4 million for the quarter, a decrease of $2 5 million or 12, 4% compared to the second quarter of 2021.
This decrease was due primarily to lower costs associated with compensation and employee benefits information technology and rent, partially offset by a net increase in overall professional and consulting fees.
R&D costs were $1 $6 million during the quarter, a decrease of <unk> 4 million or 21, 4% compared to the second quarter of 2021, and this was due to lower compensation and employee benefit expenses, partially offset by higher lab research costs as we've refocused our resources towards the continued commercialization of our pharmacy.
Utica products R&D expenditures have declined.
As mentioned earlier, we recognized a gain of $143 $4 million on the sale of the vital care business during the second quarter of 2022.
Other non operating expenses totaled $11 7 million, an increase of $4 2 million or 56, 7% compared to non operating expenses of $7 5 million for the second quarter of 2021.
This increase was a result of higher amortization of deferred financing costs offset by lower interest expense due to lower average debt balance and lower interest prepayment fees due to the March 2022 amendment to our financing agreement.
More details regarding the amendment and our debt and financing arrangements can be found in our 10-Q.
Net cash used in operating activities was $15 4 million for the second quarter and as of June 32022, we had $26 $3 million in cash.
In August we announced a $15 million investment from Rubric capital management to fund near term operations at the same time, we entered into an agreement with sixth Street specialty lending to extend the maturity date of our debt to September 30, but the option to further extend the maturity date.
October 31, and November 32022, if we receive additional equity capital of $7 million per extension.
I'll now turn the call over to our Chief commercial officer, Mark Glickman to provide more detail around our commercial progress Mark.
Thanks, Michael as we disclosed earlier in the year, we managed to keep up with demand through a difficult period of sporadic inventory shortages.
As you can see the demand for <unk>, not only held up but demonstrated strong growth when the product became more readily available now.
Now that we have ample inventory and stock and <unk> hit an all time high of 901 prescriptions in the last week of the quarter.
Despite the inventory issues and Advair prescriptions grew 28% compared to the second quarter of 2021 carrier Park by a strong June .
Due to the new targeting and field focus we mentioned last quarter, New prescribers grew at an accelerated rate of 1487 during the quarter and total prescribers have now surpassed 12000.
All signs of strong demand and the potential for growth.
In addition on July 28th President bite and issued an executive order to protect access to reproductive health care services.
At the same time, the three agencies health and human services, the department of Labor and the Treasury Department took steps to clarify protections for birth control coverage under the Affordable Care Act, which guarantees coverage of women's preventative services, including among other things hormonal methods like birth control rings.
Pills.
With the current environment and the state of box. This is great news for <unk> and for women's health in general.
As the only long lasting procedure free patient controlled option for women. We continue to believe anniversary is positioned to play a significant role in the contraceptive market.
We are also starting to see the result of the revamped field force targeting and accountability focused initiatives, we rolled out in quarter one.
On the next slide you'll see that total prescriptions and Becsey declined slightly during the quarter in line with expectations as we shifted our targets and focus.
We are however, encouraged by what we believe are the early result of the new focus as evidenced by an uptake of prescriptions in June and we expect this cost to continue in.
<unk> also had quite a strong quarter regarding new prescribers by adding 1606 peers and exceeding 30000 prescribers since launch.
With by Duva, we are excited with the early results of the targeting and this slide reflects what we expect to see during the quarter by Juba prescriptions grew around 5% over Q1 2022 rebounding from a previously declining trend line.
This slide here demonstrates accelerating month over month growth in new to brand prescriptions, which is directly related to targeting and strategy changes.
Research indicated that by <unk> with the correct targeting messaging and effort will be a highly sought after therapy for women with Vms symptoms and we are seeing the early successful signs of those efforts.
I'll now turn the call over back to our CEO Hugh Odowd for concluding remarks.
Thank you Mark in summary, we delivered a solid quarter of operating performance amidst the backdrop of considerable ambiguity.
Our focus remains steadfast on serving our patients and shareholders on behalf of the management team and our board of directors I wish to thank our employees for their dedication spirit and incredible commitment to our mission of empowering women of all ages through better and affordable health care.
Thank you.
Thank you ladies and gentlemen, we will now go into a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
Our first question will come from Douglas Tsao with H C. Wainwright. Please go ahead.
Hi can you hear me.
Hey, Doug Slogging clear, okay, great sorry, there's a little.
Static so.
Maybe as a starting point, obviously, you sort of you used the word ambiguity.
Can you talk to you and I apologize maybe touched on it.
Bouncing from another call.
About employee retention rates, especially in the sales force just given some of that uncertainty.
And certainly some of that still continues to persist.
Hey, Doug, let me start and I'll offer Mark a moment to amplify my response, but we remain encouraged and committed and so even though in the presence of some level of ambiguity into Q that strong operational performance, where we delivered a solid quarter is on the back of our.
<unk> field force and really strong revitalized and frankly transformed commercial effort.
With that backdrop I, just wish to acknowledge that our employees have really been fighting through a very fair amount of ambiguity given that we had a number of key events occur in the quarter inclusive of the tender process. So I think it's just clear to acknowledge that reality, having said that I think we remain.
We're confident in our team Mark would you wish to offer more comments, yes, Hey, Doug.
So we're.
Thank you well aware a possibility with the uncertain times that autonomous so we're working hard on communication and various schemes to ensure that our incentive schemes to ensure that our field force stays engaged and that we give them.
Yes.
The rationale to stay and be successful as right now turnover is at a very reasonable rate and we hope to plan to continue that.
Okay, Great and then just on an error and I might have missed this.
Obviously really strong performance from a revenue standpoint, this quarter did that.
Obviously, we're seeing the scripts up turn I mean, thats pretty transparent to us, but just curious how much do you think that this revenue performance is actually reflective of end demand.
Or is this sort of like real base that we're going to continue to build off of or.
Was there some sort of dynamics in terms of inventory levels and shipments with the with the new brand is becoming available that that we should be aware of.
Yes, Thanks, Doug It's Marc again.
Sure.
That was volume the <unk> number was volume the obviously, we had the sporadic inventory concerns.
Obviously had to refill channels, we still are in that state it feels and looks weekly everything has settled down and ample inventory in the channel and we are seeing a resumption of the demand that we expected to see prior to any inventory concerns as far as the quarter in revenue I do believe.
<unk> that the revenue was based on demand there definitely is a restocking to channels because demand was actually running ahead of inventory for a while here. So we restocked.
<unk>, but that was all demand base there was and.
And we do plan on seeing that moving forward.
Okay.
What I would supplement those remarks.
Is if you really look at the monthly tiara axis in the fall and that was commencing the early days of the transformation work that market and his team at undertaken we saw <unk> respond then what happened we had the challenge where we had supply issues and that really for us was a Q.
For Q1 event as we've previously described.
As we've been able to dig ourselves out and ultimately secured for us. The NDA FDA approval. This then was a fundamental moment to pivot where we could return to proper supply levels and now you see <unk> once again wreak tracking to that previous effort. So I believe.
<unk> marks answer is really on target and I just offer that data to supplement his remarks, sorry, you had another question, yes, no and just and I know in some of the tender documents there was a reference to.
Some concern.
That there were higher rejection rates I saw that there was a slide in terms of you sort of commented on the Tri care situation do you feel right now that youre going to sort of have a handle on that mortgage.
That shouldn't be an impact on sort of the.
Not necessary the short term results, but just a long term peak opportunity for the product.
Doug can you clarify we want to make sure we answer the right question. We didn't hear you well youre pointing to have specific data from the <unk> nine or can you just referred just wanted to so.
So in the tender documents I think there was a reference by one of the somebody looking at the party that we're looking at.
Participating in the process expressed some concern around rejection rates and I was just looking to understand where you feel right now.
And specifically Joanna Barra.
There was a comment that anadarko rejection rates for somewhat higher.
It was affecting their evaluation of the company and I was just wanted to understand and get your sense of where you feel rejection rates are and how that should or shouldnt affect the or our sort of long term assessment of the product opportunity for <unk>, which based on the near term performance looks quite good.
That's very helpful. Mark Please sure yes so.
I know, what you're referring to so.
Rejection rates.
<unk> very high for <unk> since launch and B have been the focus of the commercial team really going back into the last quarter of last year.
<unk>.
The Great News is <unk> is an incredibly unique product that serves a place in the market.
That also that uniqueness in the pharmaceutical industry, having a once a year.
Once a year retail solution for women's contraceptive needs.
Really creates an issue within the retail and the pharmacy environment, we have addressed and found the root cause of those rejections I won't get into too much detail here I can assure you. It was not a coverage issue. It was not an intention of the managed care plans to reject the product it was more around the idiosyncrasy of Anna.
<unk> being a once a year.
Retail product, we can't find another analog that's like an <unk> and that's a good thing, but we did it we found it we knew we had a rejection issue when we looked at Symphony data. We found the root cause we addressed it we address it with our payer partners and we do not believe that is going to be an issue moving forward.
Okay, and and then I just know.
You had conversations with some of the large shareholders of people participating.
Or have become more involved in the story about their sort of vision for the company and can you maybe share some thoughts on that thank you.
So I think if you.
You're referring to are.
Time after the conclusion of the tender process, what can we say I think we believe that the pipe.
Together with our financing agreement extension enables the company to maintain our operations number one.
And to really meet the demand of our novel portfolio.
While our board of directors and our management team evaluate all options to strengthen the company's long term financial position, that's what we're setting about doing right now.
With respect any details of the rubric deal and the maturity extension.
With sixth Street.
We have ample discussion in our recent SEC filings I encourage all investors to please read those.
Okay, great. Thank you very much I'll hop out of the queue for now.
Thank you.
I am showing no further questions in the queue at this time I would now like to turn the call back over to management for any further remarks.
We'd like to say thank you for everyone joining our call today, we appreciate the opportunity to share with you our narrative and thank you for your time take care and have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
Yeah.
The conference will begin shortly to raise Johan during Q&A, you can dial star one one.
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