Edited Transcript of TXMD earnings conference call or presentation 6-May-20 12:30pm GMT

Beverly Hills May 26, 2020 (Thomson StreetEvents) — Edited Transcript of TherapeuticsMD Inc earnings conference call or presentation Wednesday, May 6, 2020 at 12:30:00pm GMT

TherapeuticsMD, Inc. – Chief Commercial Officer

* Mitchell L. Krassan

TherapeuticsMD, Inc. – Executive VP and Chief Strategy & Performance Officer

* Nichol L. Ochsner

TherapeuticsMD, Inc. – VP of IR

* Robert G. Finizio

TherapeuticsMD, Inc. – Co-Founder, CEO & Director

H.C. Wainwright & Co, LLC, Research Division – MD & Senior Healthcare Analyst

* Jennifer M. Kim

Good morning, ladies and gentlemen. Thank you for joining us for the TherapeuticsMD First Quarter 2020 Financial Results Conference Call. Following prepared remarks from the company, we will open the call for questions.

I would like to turn the conference over to our TherapeuticsMD’s Vice President of Investor Relations, Nichol Ochsner. Nichol?

Nichol L. Ochsner, TherapeuticsMD, Inc. – VP of IR [2]

Good morning, everyone. Thank you for joining today’s call to discuss our first quarter financial results and business update. This morning, TherapeuticsMD issued a press release announcing our first 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, Robert Finizio; Chief Commercial Officer, Dawn Halkuff; and Mitchell Krassan, our Chief Strategy and Performance Officer. Dan Cartwright, our Chief Financial Officer, is not able to attend this call due to travel limitations.

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 the archived webcast, this call was held and recorded on May 6, 2020.

With that, I’ll turn the call over to TherapeuticsMD’s CEO, Rob Finizio.

Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [3]

Thanks, Nichol. Good morning. And thank you for joining today’s call. On this morning’s call, I will start with a strategic overview, review Q1 financial results and performance metrics, our strategic plan to successfully navigate COVID-19 and our approach to return to our pre-COVID-19 revenue trajectory, putting us on the path to reach EBITDA breakeven in 2021.

Turning to Slide 3. Our approach is strategic, it’s highly focused and it’s achievable. Now that we have patient, provider and net revenue data on all 3 of our products, we have developed a path to reduce overall expenses and reallocate our resources. Next, we are positioned to capitalize on the emerging market trends that have been accelerated by COVID-19 to drive growth with our retail and online distribution channels. Last, in the short term, we have adjusted our strategy to be exclusively focused on ANNOVERA and IMVEXXY.

Turning to Slide 4. ANNOVERA will remain our primary focus because of the positive market reception and net revenue per unit results that are a full year ahead of our internal expectations. IMVEXXY is our second priority as it has gained traction amongst the prescribing population and is now the fastest-growing product in the VVA category. To fund these initiatives, we are going to pause the majority of BIJUVA-related promotional activities due to COVID-19. By pausing promotion and organizational support of BIJUVA, we have been able to reduce our costs considerably and develop a plan that continues to drive our revenue trajectory. I will cover our expected operating cost reductions for the rest of 2020 later in this presentation.

We have opened discussions with TPG Sixth Street Partners around COVID’s impact to our revenue for a potential adjustment to our minimum revenue covenants. I will cover this in more detail later in the presentation. And finally, we pride ourselves on being a nimble organization that recognizes emerging trends and adapts accordingly. COVID-19 has accelerated telehealth, online and retail pharmacies utilizing home delivery options. These are areas we’ve been developing relationships with the industry’s leaders and emerging technology companies, and therefore, we believe we are well positioned to capitalize on these accelerated trends.

In addition, given the job losses due to COVID-19, we believe the Medicaid population will significantly expand. As you’ll see today, we have gained significant Medicaid coverage for our portfolio this year. While the duration of the crisis is unknown, I believe that TherapeuticsMD is well positioned to navigate the challenge, pick up where we left off in late February, and emerge from this unprecedented global health prices to achieve our business goals of growing long-term shareholder value.

Now let’s move to the metrics for the first quarter. On Slide 7, total net revenue for the quarter ended at $12.3 million versus Wall Street consensus of $11.4 million. This is now the fourth consecutive quarter that we have beaten Wall Street consensus. I’m very proud of the team’s performance this quarter. As we previously guided, quarterly net revenue for the first quarter is down from the fourth quarter. As a reminder, in the fourth quarter, net revenue includes a build for the initial distribution of ANNOVERA as we prepared for the full-scale launch in the first quarter of 2020. We saw units sold to patients demand double from the fourth quarter, and this outpaced restocking into the channel for the first quarter. In fact, patient demand increased across all products compared to the fourth quarter and outperformed on revenue expectations even with the industry’s annual occurring insurance resets and the quarter heavily impacted by COVID-19 pandemic in March. For more details about the first quarter results and performance, please refer to our press release and our full Q1 2020 10-Q.

I’d now like to turn the call over to Mitch Krassan, our Chief Strategy Officer, to review some key metrics.

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Mitchell L. Krassan, TherapeuticsMD, Inc. – Executive VP and Chief Strategy & Performance Officer [4]

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Thank you, Rob. I would like now to review key metrics for each of our brands.

Let’s start with ANNOVERA on Slide 8. In this quarter, we delivered net revenue of $1,350 per unit, which was consistent with the fourth quarter, and we had an adjudication rate of approximately 100%. Additionally, 77% of ANNOVERA patients are paying 0 co-pay, and we had a total of 2,361 prescriptions to patients in the first quarter from 1,140 providers.

Please move to Slide 9. Our planned launch of ANNOVERA occurred in a quarter that was interrupted by COVID-19. As you can see on the slide, we achieved total unit growth during our soft launch in January and February. However, in March, we experienced restricted provider access and a lack of consumer mind share, prompting us to pause the full commercial launch. Moving to the right portion of the chart, you can see how this impacted March sales of ANNOVERA to patients. We believe the strong reception ANNOVERA received in January and February can be resumed when ANNOVERA’s consumer campaign and full provider engagement occur in early Q3.

Let’s move on to Slide 10. Despite COVID-19, IMVEXXY continued to grow during the first quarter as it has a more established base of business. Specifically, IMVEXXY achieved net revenue of $6.4 million with 134,000 total prescriptions sold to patients in the quarter. Calculated net revenue per unit of approximately $48 was slightly down from the fourth quarter due to insurance resets that impact the industry annually in the first quarter. The overall adjudication rate for IMVEXXY was 44%. In addition, we had 17,000 providers writing in the third quarter, a significant percentage of the targeted prescribing population. As we have done since the beginning of launch, we continue to focus on consumer refills. For those patients who started on IMVEXXY over 1 year ago, they have averaged over 6 fills since starting therapy. In 2019, our average fills per patient was 4.2 fills. This focus on refills ensures our acquisition dollars work harder as it increases the lifetime value of the patient.

Finally, let’s move to BIJUVA on Slide 11. In the first quarter, we achieved net revenue of approximately $1.1 million with total prescriptions to patients of approximately 26,000 units. This represents solid growth over the fourth quarter. The first quarter calculated net revenue per unit was $43, a decline from the fourth quarter, again caused by the impact of industry-wide insurance resets. The overall adjudication rate for BIJUVA was approximately 51% with 5,000 providers writing a prescription during the quarter.

I would now like to turn the call back over to Rob.

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [5]

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Thank you, Mitch. Moving to payer access on Slide 13. In the first quarter of 2020, ANNOVERA continued its fast uptake, passing IMVEXXY and BIJUVA progress in January of 2020 with payer coverage, adjudication and net revenue per unit. In addition, we are added to the Department of Defense formulary and are being sold to 92 military bases, and we will be available for Title X entities in early May. Our expectation is that universities will begin to adopt and prescribe in the fall of 2020.

Finally, we continue to make progress in Medicaid, which represents 15% of the market opportunity in the contraceptive space. I’m happy to say that ANNOVERA now has Medicaid coverage in 37 states. We believe ANNOVERA is well positioned for growth with 76% commercial coverage and a 0 co-pay — $0 co-pay for approximately 77% of patients, even without the 19th category. We continue to have positive discussions with the FDA about the 19th category.

Moving on to the menopause portfolio. On Slide 14, let’s start with IMVEXXY. IMVEXXY access remains at 72% for the commercial book of business. We did not gain any major Medicare Part D payer adds in Q1, but do still expect to gain 2 of the 3 major providers with preferred status. In addition, we understand that COVID-19 is further delaying Part D decisions, but we continue to explore options with these payers to see if we can still come to terms. Since January, IMVEXXY has added 21 states unrestricted and Medicaid access with a average co-pay of $5 or less.

Moving on to BIJUVA. Since January 1, we advanced Medicaid access with 21 states, now unrestricted with also a co-pay of $5 or less. BIJUVA commercial access remains at 54% unrestricted, and we are in discussions with a few remaining top payers.

Let’s turn to Slide 16. Given the impact to access to providers’ offices we’re seeing and the uncertainty around the length of COVID, we have adjusted our expense structure. Our approach was to look across the organization to decrease expenses related to BIJUVA and in areas not creating near-term revenue. This preserves funding for ANNOVERA and IMVEXXY post-COVID-19 and lowers our operating expenses for the year, keeping us on the path to EBITDA breakeven for 2021.

On Slide 17, we continue to believe strongly in the long-term trajectory of our portfolio. However, like others, we don’t have complete visibility on the impact in the short term. We have, however, made the following assumptions. First, access to providers’ offices will likely continue to be limited during May, and we expect to regain access to doctors’ offices in lockstep as the states reopen and returned to a more normal access level in the third quarter. Second, we currently plan to reactivate commercial plans early in the third quarter, including our launch of our consumer campaign called Unapologetically ANNOVERA. Accelerated consumer investment for IMVEXXY and reengagement of the sales force to a live model as access opens up around the country. In the near term, we expect a revenue impact in Q2 due to COVID-19 and regaining our growth trajectory in early Q3, in line with being able to have a full reengagement of our commercial plan.

Moving to Slide 18. Given the expected impact on net revenue, we have worked as mentioned to reduce our expenses for the remainder of the year. The first quarter operating expense of $57.5 million includes a onetime expense related to preparing for the ANNOVERA launch. We expect second quarter expenses to be $10 million to $12 million lower than the first quarter. Through deferment of marketing spend and other measures we took quickly to reduce costs. With the additional cost cuts we are making, we expect operating expenses in both the third and the fourth quarter to be approximately $40 million or less per quarter. We believe these actions will allow us to reduce our cash burn while still positioning us to become EBITDA breakeven in 2021.

On Slide 19. Due to the uncertainty created by COVID-19 and its impact on our business, TXMD has been in discussions with Sixth Street Partners regarding the revenue covenants in our loan document. We are working with Sixth Street to defer the scheduled start of our quarterly revenue covenants for 2 to 3 quarters to reflect the impact of COVID-19. Sixth Street has expressed preliminary support and understands the importance of flexibility for our company given the pandemic. We appreciate it for their continued support of our company.

I’d now like to turn the call over to Dawn to discuss our plans for the back half of the year. Dawn?

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Dawn Halkuff, TherapeuticsMD, Inc. – Chief Commercial Officer [6]

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Thank you, Rob. You have now seen our strong first quarter results and the strategic and cost changes due to COVID-19. Now I would like to discuss the path forward for each of our brands and why we believe we can pick up with the growth trajectory we saw in February before COVID-19.

Let’s start with ANNOVERA on Slide 21. We believe that once our plans are fully deployed, we will see fast uptake. Let’s walk through the why. Starting with the column on the left, ANNOVERA is in the contraception market, which is the largest U.S. women’s health category at $5 billion. Within that $5 billion are 500,000 prescribers and 18 million women. Stated simply, this is a market where small shares drive big gains.

Moving to the middle column. Although we have had limited time with ANNOVERA on the market, proof of success was seen in Q1, given the strong reception we had with the limited focus in January and February. In the first quarter, we had 1,140 prescribers writing ANNOVERA, leading to 2,361 total prescriptions. This result was with the COVID-19 impact and our sales representatives calling on only 10 providers and limited consumer spend. In the third quarter, we will see exponential growth in the number of providers each representative will focus on with ANNOVERA and expect to see the impact from that investment. Sales representatives will call on 125 to 150 providers with ANNOVERA as the primary focus. In addition, we plan to launch our consumer campaign called Unapologetically ANNOVERA, which is an impactful campaign that should quickly gain traction.

Moving to the third column over to the right. In addition to growth from our sales force efforts and our consumer media campaign, ANNOVERA will grow through multiple channels and partners. First is our widespread availability to large chains such as Walgreens, independent community pharmacies through our BIO-IGNITE program and online pharmacies like PillPack. Second, we are ensuring product access for patients on emerging online platforms such as the Pill Club and Simple Health that both prescribe and deliver birth control directly to patients. Telemedicine, including these platforms, is growing fast in the COVID-19 world, and contraception is an important category within telemedicine. We are well positioned to deliver patient access through this channel as it is a trend we saw and started working on in 2019. Third, public health, which includes universities; 340B, which includes Title X; Medicaid, with 37 states approved; and last, the military, ANNOVERA is available to order for women at 92 military bases. For all of these reasons, a large market, early proof of success in Q1 and a planned pickup of our launch in the third quarter, our ability to drive access and grow through multiple channels and partners, I believe we will be able to regain the trajectory we saw pre-COVID-19.

Turning to Slide 22. Another reason I believe we will accelerate growth is because I understand why ANNOVERA had a strong trajectory with limited focus, it is because it is a product that is well positioned with the needs of our provider and patient base now and post-COVID-19. Specifically, ANNOVERA offers 1 years’ worth of protection, is a good substitute for elective procedures for women that are unable to get a procedure during this time and want a long-lasting option or women who do not want a procedure. ANNOVERA also covers you for a year even if your insurance situation changes. The majority pay 0 out of pocket, and it can be delivered to your door.

Moving to Slide 23. We recently announced the first Orange Book listed patent for ANNOVERA. The O66 patent claims elements of the ANNOVERA label which a generic would need to copy. The issuance of this patent strengthens the intellectual property protection for ANNOVERA, providing Orange Book listed patent protection through 2039. As you can see on the slide, we have a multilayered patent approach that we believe will translate to robust protection through 2039.

Let’s move on to IMVEXXY on Slide 24. As you can see on the left-hand side of the chart, IMVEXXY is the fastest-growing product on the market. Share gains are at the expense of Premarin, and we ended March with 10.8% market share of total prescriptions. Our plan forward for IMVEXXY is to continue to focus on our high writers and expansion of the base of productive writers. In Q1, despite COVID-19, we had no drop-off in the number of writers, and 10% of our new prescriptions came from new writers to the brand. To support the goal of a breadth and depth of writing, we will continue to focus on activating the consumer to ask the provider about IMVEXXY. Our efforts have already yielded a proactive approach among women suffering from VVA with intent to ask a healthcare professional about IMVEXXY now at 66%. Consumer media activities will expand to support continued share gain in the back half of the year.

Finally, let’s turn to BIJUVA on Slide 25. BIJUVA had steady quarter-over-quarter growth. With our limited focus on BIJUVA, we will focus on maintaining the writer base through the remainder of 2020, supported by nonpersonal promotion. In addition, we will continue to support our BIO-IGNITE partner program as compounding pharmacists report they would recommend BIJUVA to 1/3 of their E+ P patients. We will continue to prepare for the potential 0.5/100 launch with internal resources in — for a launch in early 2021, if approved.

I would now like to turn the call back over to Rob.

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [7]

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Thanks, Dawn. Before we end, I’d like to welcome our 3 newest Board members, Gail Naughton, Paul Bisaro and Karen Ling. They are a diverse group of health care veterans that already have delivered significant value to the organization. I also want to thank the team for leading through a very difficult and challenging quarter due to this pandemic and adapting quickly and creating the great results we have discussed throughout this presentation.

To close, we’ve had positive revenue momentum and have developed a strategic cost containment plan that will lead us to our ultimate goal of profitability. We believe that our cost containment strategy, coupled with our TPG negotiations, will create the optionality needed to best create long-term shareholder value and a reflective capital structure. We believe the plans we have in place will continue the trend of consistent growth that we’ve been delivering over the past 4 quarters, leading to our goal of EBITDA breakeven in 2021.

Now I’d like to open the call up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question on the line of Louise Chen with Cantor Fitzgerald.

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Jennifer M. Kim, Cantor Fitzgerald & Co., Research Division – Analyst [2]

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This is Jennifer Kim on for Louise Chen. I have 2 questions. The first is, could you give any more color regarding your revenue covenants? I know you previously said that those were considered in the original revenue guidance. So I’m thinking if you’re deferring it by 2 to 3 quarters, does that imply the original $90 million to $110 million revenue range that could also be reached in 2 to 3 quarters later than anticipated? And then my second question is if you could give more color around your OpEx expectations for this year. I know you mentioned the $10 million of marketing spend is delayed in the second quarter, but it looks like you expect the full launch for ANNOVERA and support IMVEXXY in early third quarter. And I guess I’m wondering how that translates to total spend of $40 million or less? Is R&D expected to decrease as well? Or where are those reductions coming from?

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [3]

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Sure. So I’ll take the first one with TPG. And then there’s a number of facets to your second question, we’ll address them as best we can. So look, with TPG, as we discussed during the call, we’re in active discussions to defer the scheduled start of the quarterly revenue covenants into ’21. So given we have an open dialogue around that, we don’t want to get into any more detail other than that. And I hope you can understand, it’s an ongoing discussion, so to jump into any details, it just doesn’t make sense right now. As far as the OpEx, Mitch, do you want to take that?

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Mitchell L. Krassan, TherapeuticsMD, Inc. – Executive VP and Chief Strategy & Performance Officer [4]

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Sure. As we’ve discussed, we’re currently planning to reduce our overall operating structure by approximately 20%. To use a quick reference to how we got there, if you look at the first quarter total operating expenses, included in there was about $5 million of nonrecurring spend. And then we look at cutting about 20% of cost through the organization to get that down to roughly that $40 million number. We plan on doing this by staying very focused on IMVEXXY and ANNOVERA as the lead products, pulling some funds from BIJUVA, so we have ample dollars to meet our revenue trajectory goals.

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Operator [5]

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Our next question is from the line of Stacy Ku with Cowen and Company.

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Stacy Ku, Cowen and Company, LLC, Research Division – Equity Research Associate [6]

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Congratulations on the progress. Just some questions on COVID-19 and potential impact. First on telemedicine, for your existing patient base, what percentage has been converted over to telemedicine or is in the process of converting? And any commentary on the success? What are the advantages and disadvantages that your sales force have experienced so far? And I have a few follow up.

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [7]

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Yes. Sure. I’ll take some of that and Dawn might want to touch base with that. So there’s 2 ways you can look at this, right? We have been working, as we talked about, with online partners in the prescribing space as well as the pharmacy space for a number of quarters now. It just happened to be where that’s where a lot of growth is coming from. So I’m actually glad you asked that question. So our biz dev team that’s really pulled up and gotten Pill Club, PlushCare, Amazon — which is part of Amazon and a number of others, which Dawn can mention, they’re all growing, and they’re growing really, really quickly. ANNOVERA has done very well with them, and we think this is just a start of a shift. And as the access in the field with the physicians has become limited and places like New York and New Jersey, are really, really tight. Other areas like Arizona, South Florida and the States starting to open back up, reps are actually having face-to-face interactions again and doing launches, but it’s not to what it was before. In those situations, we’ve been staffed up and ready. We’re remote detailing and lunches are being done, where a rep can host a lunch remotely and still get the mind share of a doctor. Now it’s not as effective as face-to-face, but we have been, again, preparing for this for a long time and never expected COVID to hit. But we did have the infrastructure in place to keep things going. And we do, from an internal expectation standpoint, expect Q2 through the rest of May to stay pretty tight. I think June will start to be a warm-up month, and then reinitiating our trajectory with face-to-face as well as our Unapologetically ANNOVERA and IMVEXXY marketing campaigns in early July or early Q3. Does that help?

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Stacy Ku, Cowen and Company, LLC, Research Division – Equity Research Associate [8]

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That does. And then I guess one last question focusing on ANNOVERA. Have you gotten an idea of trends in terms of patients that are switching from other forms of birth control? What percentage, let’s say, are naive? Who’s coming from NuvaRing? Who’s coming from the pills? Just trying to get a better understanding of where the switches are coming from to better understand where you guys are going to focus your efforts.

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Dawn Halkuff, TherapeuticsMD, Inc. – Chief Commercial Officer [9]

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Sure. Hi, Stacy, it’s Dawn. So essentially, we are early on with ANNOVERA, as you know, the pill is the largest segment. And so we certainly are seeing that trend where we’re getting some people from pills less that are naive. We always knew that it was going to be people switching from other products likely than their first form but early on. And we’re also seeing actually that certain health care professionals that there are quite a few that are writing NuvaRing that are adopting this more quickly given their comfort with the ring form. So we’re taking advantage of all those opportunities.

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Operator [10]

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Your next question is from the line of Annabel Samimy with Stifel.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division – MD [11]

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So I am trying to understand, I guess, how some of these cuts might hamper your ability to sell. I know you’re leveraging alternative distribution channels through PillPack, PlushCare, et cetera. Could this potentially be a new model going forward? Is the cost structure different for accessing these channels? And can you just help us understand how you might leverage that? Then I have some follow-ups.

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [12]

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Yes, sure. I think it’d be a hybrid between Dawn and I to answer. Dawn, do you want to go first?

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Dawn Halkuff, TherapeuticsMD, Inc. – Chief Commercial Officer [13]

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Sure. I mean, maybe first, I will go to the sales force side. So first thing I wanted to mention, Annabel, is that these other channels exist with the sales force, right? So it’s just another way for patients to access their medication. So our only goal right now is to get to profitability, and ANNOVERA and IMVEXXY are a best way to get that. So with that, with the sales force, we’ll be going back to — as a reminder, we were talking about BIJUVA having its own sales force back in the fourth quarter. So we’re going to go back to one sales force focused on ANNOVERA and IMVEXXY, which allows a reduced size of about 130, which gets us to some of the cost effectiveness we’ve been talking about.

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [14]

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Well said. So Annabel, look at it as by pausing BIJUVA that creates resources to create this operating cost reduction and still fully funds IMVEXXY and ANNOVERA. So not just the sales force, but a lot of the other costs and support that goes with it around BIJUVA has also been paused. So that, by itself, is giving us the resources we need. Now the trade-off is, until we turn that back on, out years like year 2 and year 3, where BIJUVA would really pick up, we’re not going to have that until we turn it back on. But look, it will still be there in a year. We are definitely driving towards profitability or EBITDA breakeven in 2021. And this plan allows us to lower all of those operating expenses, costs and doesn’t really affect the revenue trajectory in the first year or so. So we think, although it’s the best of both worlds, it will get us to profitability as fast as possible.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division – MD [15]

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Okay. Great. And then can you talk about any coverage changes that you’ve had? So I missed the comments earlier. I don’t know if you made any progress with Medicare. If there’s been any changes to coverage there and if everything is status quo or improving versus status quo and declining.

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [16]

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Yes. So everything is improving. So we’ve done a lot. So starting with ANNOVERA, we’re up to 76% coverage and 77% of those patients have a 0 co-pay. So it’s just great, right? The growth — 15% of the market, which is given the size of the birth control market, 15% of that market is Medicaid and with ANNOVERA, we are going straight at that. We think that Medicaid market, due to COVID and all the job layoffs, is going to grow. So we have picked up, since we spoke last, 37 states in the Medicaid environment. So it’s full force ahead with ANNOVERA there. When you get to IMVEXXY, we did not add any Part D payers for IMVEXXY in the Part D category yet. COVID has really slowed that process or focus there down. We still feel good about 2 of the 3 payers being very positive for us when they do start adding again and are very clearly waiting for that to happen. And — but we are behind on the Part D for IMVEXXY. As far as the Medicaid access for IMVEXXY and BIJUVA, we’ve added 21 states at a co-pay of $5 or less. We’ve also added a number of smaller players, no big names that you’d probably know. So look, nothing is going backwards. Everything is moving forward, and we feel good about our products, we really do.

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Operator [17]

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(Operator Instructions) Your next question is from the line of Douglas Tsao with H.C. Wainwright.

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Douglas Dylan Tsao, H.C. Wainwright & Co, LLC, Research Division – MD & Senior Healthcare Analyst [18]

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Just maybe, Rob, could you maybe talk a little bit about some of the dynamics that you’re seeing in the ring market, just obviously given COVID-19, which I would think would enhance some of the characteristics of the type of product? But also just given the launch of the generics for NuvaRing at the end of last year and how that is potentially affecting the landscape?

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [19]

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Yes. Thanks. So the ring market was specifically to ANNOVERA around COVID and then around the overall market, including the generics of NuvaRing. The synergies line up pretty well. If you lose your job and you lose your insurance and you don’t want to pay for the pill every month, you can get ANNOVERA. Most patients get it for nothing, for free with their insurance. And now the Medicaid market as well, right, $5 or less and it lasts throughout a year. For doctors that can’t do elective surgeries and they want to put patients on something that is long-acting, it fits very well. So the trends are certainly in ANNOVERA’s favor with COVID. The generic ring, NuvaRing, we really don’t see is an impact. Everywhere we go, people really look at this as a long-acting option that lasts for 13 cycles as opposed to lasting for 3 weeks. And that seems to be where physicians and women now that we have a lot more data, it really resonates with them. It’s the control they have without having to have a surgical procedure that other rings just don’t offer because they’re disposable and short cycled. So we’ve got a number of NuvaRing users that have come in as well as IUD and which is a surprise, a number of pill users that are switching over. We expect in the next quarter or so to have a much stronger amount of data for The Street on the user types, the user experience and what is drawing them to try ANNOVERA. And then as we go further out, the continuation rate.

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Douglas Dylan Tsao, H.C. Wainwright & Co, LLC, Research Division – MD & Senior Healthcare Analyst [20]

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And then maybe, Rob, just as a follow-up. Just given sort of some of those things that you spoke about and how this product really works with telemedicine model, why necessarily sort of pause some of the consumer outreach or consumer marketing plans? Why not sort of press ahead on that front and maybe pull back in some other areas of the business?

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [21]

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Yes. 2 things. So myself and Dawn will answer that one. So great point. So what we found early on from our spend, from the company spend standpoint, getting mind share during the pandemic when the death rate was going up wasn’t in our best interests at the time, right, because it’s very expensive. But our partners, there’s a number of them, pill care — Pill Club, PlushCare, PillPack, they are definitely spending money, they’re definitely advertising and their user base is going way up. And there’s others as well, I don’t want to leave anybody left out here that are our partners. And what they spend to promote either our product or others is for their model and their company, and it doesn’t hit our bottom line. So it’s a real synergy for us. Dawn, do you want to add anything?

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Dawn Halkuff, TherapeuticsMD, Inc. – Chief Commercial Officer [22]

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Yes. I think the only thing to add is that when all of this first started, and we mentioned it here, we didn’t have complete visibility into the length of time that was going to last, and we wanted to make sure that the money we put out there, the spend we put out there would be consistent. And so as Rob said, given that we knew the mind share was elsewhere, given that we knew very little about it a couple of months ago, we made the decision to pause and be able to continue volumes through some of these other partners. It was a better use of spend. And when we do put it out there, it will be with the other commercial levers, including the sales force being able to go back to a live model, and that will just work harder for us.

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Operator [23]

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Your next question is from the line of Ahu Demir with NOBLE Capital.

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Ahu Demir, NOBLE Capital Markets, Inc., Research Division – Biotechnology Research Analyst [24]

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Congrats on the progress. I have 2 questions. First one, if you could provide some color on the second quarter sales and growth trajectory as we’ve seen a larger impact with the COVID restrictions. And my second question is on telehealth side, how much active users do you have? Did you see some growth? And what are the expectations going forward?

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [25]

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Yes. Ahu, this is Rob. Thank you. And I’m glad you asked that question. So as you could see by the clarity we put out on the monthly data of our volumes, we beat guidance with COVID. But if COVID had not happened, if you look at the reception for ANNOVERA in January and February, it was straight up. I want to remind everybody, you only had each sales rep calling on up to 10 doctors in their territories. In March, where we’re going to launch our full campaign of advertisement for the first time for both IMVEXXY and ANNOVERA and have each rep call on all 135 to 150 doctors in their territory, we think the reception would have gone straight up. We would have had even a stronger quarter. We had to — we can’t spend the money twice. So when we saw the COVID fear taking mind share and the office closing, exactly right after the national sales training, which was the last week of February. So by the second week of March, the offices — most offices were closed and only doing remote visits and dropping samples. So we had to put the pause on ANNOVERA. So when this opens up, which our expectation is early July, we can turn all of these back on and pick up that growth trajectory with all these additional resources that we left off in February, where, again, each rep is calling on 10 doctors, and the marketing channels really hadn’t started up.

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Dawn Halkuff, TherapeuticsMD, Inc. – Chief Commercial Officer [26]

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And maybe I’ll take the telehealth portion of that question. So a couple of things there. First of all, when we’re talking telemedicine, Rob mentioned the number of partners that we’re working with, but also what you need to understand is all doctors right now are using telehealth. And so the fact that ANNOVERA can be prescribed virtually, can be delivered to your door, so it’s driving a lot of our volume. Now while I can’t tell you the exact amount right now that’s going through these new emerging technology companies, I can tell you that we monitor it week-on-week and that the volume has been increasing. And so it’s definitely gaining traction. If you look at every industry report out there, and telemedicine, which was already moving, is certainly a wave that will continue to grow.

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Operator [27]

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Our next question is from the line of Dana Flanders with Guggenheim.

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Dana Carver Flanders, Guggenheim Securities, LLC, Research Division – Senior Analyst [28]

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I have a couple. My first one, and apologies if I missed this, but just on IMVEXXY, can you elaborate a little bit on just what the reason is for the delay on Part D? Is that IMVEXXY specific? Or are you seeing other drugs get impacted on timing for decisions as well?

My second question is on BIJUVA, just kind of what’s the deciding factor for when you decide to turn back the focus on that product? Is that when you reach kind of overall profitability? Is that when you see more progress in BIO-IGNITE? And just how do you balance what’s good for profitability near term versus what’s good for the product’s long-term outlook?

And then my third one, maybe you can just update us on how you’re thinking about the durability of IMVEXXY and ANNOVERA. I know you just had an Orange Book patent listed for ANNOVERA, and I was a little surprised to see a generic filer on IMVEXXY. So maybe you can just discuss kind of how you’re thinking about the overall patent state and durability of both of those franchises.

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [29]

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You got it, Dana. We sure will. So for the Part Ds, I would tell you the — with the folks, we’re confident in 2 of the 3 major ones that we feel good about, I’d tell you it’s COVID-related. From an estrogen perspective for the class, I haven’t seen any of the adds, there might have been nonestrogen adds, but I don’t see the estrogen changes at all. So it’s not specific to IMVEXXY or TXMD, and it’s not — it is, in my belief, having to do with COVID and focus. It’s just hard to get these plans to focus on something given all of the extreme circumstances that are out there right now. But look, that will loosen up as I think — as the offices open up. And we feel good or confident that we will get 2 of the 3 major Part D players. We have no reason not to think that. As far as BIJUVA goes in the pause, so it sounds like it makes sense to you why we did it and what the value that, that’s creating. When we turn it back on, there’s a couple of factors. So the first factor is the second dose, which has a PDUFA date in November, November 16, I believe, that’s 0.5/100, but also the growth trajectory and how fast we go and how long it takes us to get there. Look, we’re confident that ANNOVERA can pick up right where it left off. And putting these additional resources, in essence, reps calling on their entire territory as well as the marketing campaigns that go with this, we think it could drive significant growth. If the growth is overwhelming and we have the resources to do it, we certainly would launch BIJUVA sooner. If that goes slower, it could take a little bit longer. But EBITDA breakeven is the only goal in 2021, and we’ve got a clear path for these 2 products to get us there. As far as durability, and that’s the IP — or rather that protects our asset for ANNOVERA and IMVEXXY. ANNOVERA had its first Orange Book listed patent that gave us exclusivity under the Orange Book protection until 2039. The one thing I want to say on that, Dana, is it’s not just about that single patent that protects the label. We have another 6 Orange Book listable patents filed for and an additional utility patent. Those are all already working here with patent office on. So there’s a lot of protection. So I think that’s a very healthy situation, and we like that for the durability of ANNOVERA. As far as IMVEXXY goes, look, I think I can’t speak on any litigating matter at all. And there is a Paragraph IV filed on IMVEXXY. But look, it’s just a great product. I mean if I can just leave it at that. That’s where that comes so quickly. I think people outside of just the TXMD family and investors see the value of that. And I think that is a clear demonstration of the value of IMVEXXY, and some of which spend the money to try to overturn the patents and create a generic. Does that help?

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Dana Carver Flanders, Guggenheim Securities, LLC, Research Division – Senior Analyst [30]

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Yes.

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [31]

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Thank you.

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Operator [32]

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Thank you. And at this time, there are no further questions, I’ll turn the call back over to Rob.

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Robert G. Finizio, TherapeuticsMD, Inc. – Co-Founder, CEO & Director [33]

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I want to thank everybody for — the team for great work in a very difficult quarter. And I hope everyone out there stays safe during this challenging time. And we will get through it. And we’re hoping things warm up here in the summer. Thank you.

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Operator [34]

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Thank you. That does conclude today’s meeting, you may now disconnect.

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