Agile Therapeutics Q3 2021 Earnings Call Transcript

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Provided by Quartr
November 1, 2021

There are 6 speakers on the call.

Operator

Good afternoon, and welcome to the Agile Therapeutics Third Quarter 2021 Financial Results Conference Call. Please note today's event is being recorded. I would now like to turn the conference over to Matt Reilly, Head of Investor Relations.

Speaker 1

Hello, everyone, and welcome to today's conference call to discuss our Q3 2021 financial results and corporate update. Before we start, let me remind you that today's call will include forward looking statements based on current expectations, including statements concerning our financial outlook for the future, Management's expectations for our future financial and operational performance, our business strategy and our assessment of the combined hormonal contraceptive market and the potential market share for Trello, among other factors, including our plans, prospects and expectations. Such statements represent our judgments as of today, are not promises or guarantees and may involve risks and uncertainties that may cause Actual results could differ from the results discussed in the forward looking statements. Please refer to our filings with the SEC, which are available through the Investor Relations section of our Web for information concerning risk factors that may affect the company. We undertake no obligation to update forward looking statements except as required by law.

Speaker 1

The information on today's call is not intended for promotional purposes and not sufficient for prescribing decisions. Joining me on today's call are Al Tomari, Agile Therapeutics' Chairman and Chief Executive Officer and Dennis Reilly, Chief Financial Officer. Following our prepared remarks, I will now turn the call over to Al.

Speaker 2

Thank you very much, Matt, and thank you all for Joining us this afternoon, in our Q3 2021, we once again saw growth in all key performance areas for Toralex. From the end of quarter 2, 2021 to the end of quarter 3, 2021, we saw the following. Total cycle dispense grew 61%. Total prescription or TRxs Grew 47%. New prescriptions or anorexes grew 25% and refills Grew 86%.

Speaker 2

We're encouraged by the double digit growth in our prescription demand, but we are not content. Our goal is to accelerate the growth of Swirilla brand and reduce our time to profitability. We believe we have the awareness And access programs in place to execute on our plans and intend to make meaningful investments in marketing to help increase demand. I'll delve into these initiatives later on this call. First, let me discuss what we believe are the key takeaways from these performance metrics.

Speaker 2

First, refill growth at 86% is a great sign. Our Head of Marketing, Amy Welsh, always reminds us That we believe this is a sign of a healthy brand because it tells us women who are on Twirla like Twirla And are staying on the product. In turn, this gives us the confidence in the longevity of the brand because new patient starts are translating to repeat customers. 2nd, we want to increase the rate of new prescription growth. When we consider the rate at which toilet prescriptions are being refilled, We believe more new patient starts can lead to more refills and greater overall brand growth.

Speaker 2

Part of the new prescription equation is also the prescriber count. The prescriber count grew 63 in the quarter to 3,394 total prescribers, and we continue to consistently pick up Approximately 100 new prescribers each week. 3rd, during quarter 3, we said toilet cycles or retail units We're expected to grow between 50% 56% higher than the retail units sold in quarter 2, 2021. We saw retail units actually grow at 61% this quarter. And again, we are pleased to see this growth, but are not content.

Speaker 2

We want more. I'd like also to address the guidance provided during quarter 3. During the Q3, We said we expect the quarter 3 2021 net sales to be in the range of 1,400,000 to 1,600,000 We came in slightly under our guidance as wholesalers reduced their channel inventory by approximately 8 days. The double digit growth in prescription demand Dennis will provide some additional commentary on revenues and inventory reserves for the quarter when I hand over the call We need to accelerate prescription growth which accelerates the revenue grants and that is our singular focus. We're executing on initiatives that We believe can help accomplish this goal.

Speaker 2

For this call, I'd like to discuss 3 of these initiatives, telehealth, Medi Cal and DTC and our influencer program. First, telehealth. In the Q3 2021, we announced a partnership with Pandia Health, a telehealth service provider which is now active. Pandya offers an additional point of access for Twirlik in the fast growing channel and represents the 1st telehealth alliance Our company and our product. We're excited to enter telehealth as its use in the contraceptive care has grown over the past several years and has come into the spotlight during the COVID-nineteen pandemic.

Speaker 2

We always believed telehealth was a priority channel for our target consumer prior to the pandemic and we believe it's even more so now. To that end, we continue to explore additional Telehealth partnership to maximize our footprint in this channel. Because Twirla became available on PSA at the very end of Q3, we expect to It's contribution to our TRxs as we progress through the Q4 of 2021 and into 2022. 2nd, Medi Cal. As we previously announced, the California Medicaid program placed Torla on the preferred drug formulary list effective October 1, 2021.

Speaker 2

This secured a preferred position for SwirlUp on the formulary for Medi Cal and its related programs, which provide healthcare to approximately 15,000,000 beneficiaries. This is significant for Trevala because Medi Cal is the largest Medicaid program in the U. S. And we believe roughly 1 third of the existing contraceptive patch market comes from Medicaid. Again, this just went into effect The beginning of the Q4 2021 and we expect to start seeing this contribution to our business as we progress through Q4 of 2021 and into 2022.

Speaker 2

3rd, DTC and our influencer program. We believe that our DTC advertising program Can perhaps have the biggest impact on NRx growth. We recently activated branded influenza programs To increase awareness of Twirla as birth control options and encourage women in our target markets to engage in open conversations about the product. We are focused on leveraging influencers via Instagram and ensuring this program focuses on Swarla through clinic storytelling, which further is supported by our paid social amplification to reach even a broader audience. Our influencers include individuals of varying tiers from micro to macro, which we believe will allow us to optimize unique benefits each level of influencer offers.

Speaker 2

We rolled out our first wave of activity in early October and are seeing the type of engagement We envision not just likes and impressions, but also in the comments and conversation. We are pleased with the First Wave influencers and the Post. We continue to focus here to reach our target market. We previously discussed our plans for DTE advertising And I'm pleased to announce that Twirla is the 1st prescription birth control brand to launch branded podcasts on Spotify. Swirla is also the 1st birth control brand to run branded content across Buzzfeed, leveraging their social handles across Facebook, Instagram and Snapchat.

Speaker 2

Finally and importantly, we are partnering with US Soccer star, Carly Lloyd as our corporate spokesperson. As corporate spokesperson, we believe she will help amplify the message of our commitment to women's health. As the partnership really kick starts later this year and throughout 2022, you can expect to see Carly Lloyd promoting Agile and submission on Instagram and Facebook where she has a combined 2,000,000 followers. These are important initiatives which we believe build our business. At the top of the call, I reported we saw growth on all our key brand performance metrics.

Speaker 2

This is without the contributions of any of the programs I just mentioned. As we continue to implement these programs, we believe they will contribute significantly to increased product awareness, Uptake and growth acceleration as we finish 2021 and enter 2022. I also want to review 2 other announcements in the 3rd quarter that we anticipate having positive impact on our overall business. First, the appointment of Josephine Torrente to our Board of Directors. Joe Simpson is a highly experienced regulatory expert who we believe can contribute to our growth of our company through her strategic will be useful as we evaluate our own pipeline and explore other ways to expand our business.

Speaker 2

2nd, the Patient Protection Affordable Care Act Or ACA established an important standard for coverage of contraceptives. Nearly all the commercial and Medicaid coverages are required to Cover the full range of female controlled contraceptives without cost sharing such as coinsurance, co payments or deductibles. Despite the ACA protection and the government's guidance on implementation, women around the country are not getting the Recently, Health Committee leaders, the National Women's Law Center At the Family Planning Council, all urge the Biden administration to clarify and enforce the regulation to ensure consumers access Full range of FDA approved contraceptives. We believe this issue has been an impediment to prescribing and the uptake of all New innovative contraceptive products including Porcelain that has been approved by the FDA since the ACA's passage. Kimberly Whalen leads our policy and advocacy and market access for Agile and is closely following this development for us.

Speaker 2

We hope to see the Biden administration Address this important issue and ensure all women have access to contraception that has been decided as medically appropriate Between the patient and their provider, we believe that we've been able to grow despite This passed those barriers, and we applaud the congressional chairs for urging enforcement. I'll now turn over the call to Dennis To provide you more clarity about the Q3 from a financial perspective, Dennis, take it over.

Speaker 3

Thank you, Al. My goal here is to highlight key financial areas related to our financial performance and our cash position, then move over to Q and A, so we can answer your questions. In the Q3 of 2021, we realized net product revenue of $1,300,000 on sales. As Al stated, this came in slightly under our guidance as our wholesalers reduced their channel inventory by approximately 8 days. The equivalent of $115,000 to $160,000 in net sales.

Speaker 3

In addition, we made some increases on our gross to net revenue allowances. Our cost of product revenue for Q3 2021 was 2,700,000 and included a $1,400,000 inventory obsolescence charge. This reflects our initial reserve That is not expected to be sold prior to its shelf life date, which is 12 months prior to expiry. Our operating expenses were $14,400,000 in Q3 2021 versus $14,700,000 in the same period a year ago. We remain focused on maintaining our Spending approach and making the right investments to encourage strategic growth and maximize shareholder value, While implementing what we believe to be impactful partnerships and agreements, We anticipate our quarterly spending for the Q4 2021 to be in the range of $15,000,000 to $18,000,000 With increases reflecting commercial spending on product sample batches and branded market.

Speaker 3

We closed out the Q3 of 2021 with a net loss of $16,800,000 or $0.18 per share compared to net loss of $15,500,000 Or $0.18 a share for the comparable period in 2020. As of September 30, 20 21, we had cash and cash equivalents of $14,700,000 compared to $31,100,000 of cash and cash equivalents at the end of the Q2 2021. Most recently, we raised an additional $21,100,000 of net proceeds in a public offering. We will require additional capital to achieve our goal of profitability. We anticipate that as we accelerate sales growth, Our optics on revenue will become clearer and allow us to better define the path and timeline to profitability.

Speaker 3

We continue to evaluate all options available to us to finance the company. We were thrilled to see Perceptive's advisors once again We currently have no plans to further leverage the company with debt and pull down additional funds under the Perceptive facility. We We're happy to expound on any of these areas discussed during today's call. And operator, you can now open up for questions.

Operator

Thank you. Your first question comes from the line of Leland Gershell from Oppenheimer. Please Proceed with your question.

Speaker 4

Good afternoon. Thank you very much

Speaker 1

for taking my question. Congratulations on the progress. Very encouraging to see the 86 Couple of questions from me. Wanted to ask first in terms of the inventory at wholesalers. Dennis, you'd mentioned that the 8 days scaling down.

Speaker 1

Just wondering if there's any expectations for any further shifts in inventory in the channel or if that should be stable From now on, also wanted to ask with respect to the recent initiatives by the NWLA and Congress, those letters With respect to the ACA coverage,

Speaker 3

I want to note, 1, if you

Speaker 1

can provide us with any, even if Qualitative feedback on to what extent Korla may have had challenges getting covered because of non compliance on the part of Our payers under the ACA guidelines and also on any outlook on when we may see action being taken I'm following those letters. Thanks very much.

Speaker 2

Thanks, Leland. Dennis, you want to take the first one and I'll take the ACA?

Speaker 3

Yes. I mean, we anticipate we're there on the wholesalers. We don't have control over them in any sense, but we do believe they're running pretty lean now. And so I we expect Our scripts and ultimately, our cycle sales, which is a month's supply to start to match up very closely in Q4 and going Forward with actually wholesaler sales. So I would say they're in sync going forward.

Speaker 2

Hey, Leland. My only other comment thank you for your questions. My only comment is like We thought they were at status. It took us down another 8 days, which a bit surprised us, but it wasn't swirl only. Really, they're just contracting.

Speaker 2

I mean, we've seen it across all the books of business. So we think we're at steady state, but we thought that before, but We'll continue to moderate, but at this point, I don't know how much more lower they can go. It's almost just in time inventory at this point, So about the Affordable Care Act, your second comment, Leland. Yes, so Calvin impacted Swireless. So just To re kind of lay this out for the listeners, there's 2 parts of the ACA when we talk about compliance.

Speaker 2

I think everybody knows now that there's 18 forms of contraceptive. There's this famous chart that they cite. There's this famous chart that they cite. And the plans are required to carry 1 of every product, including a patch. So that's part A, Leland.

Speaker 2

So I think part B is the one that we think and it's not as well discussed. But if a doctor Once a woman's be on Twirla, there's a form that you'll see in our website, twirla.com, called a letter of medical necessity. By law, it's not a prior auth. By law, if a doctor says, I want this woman on Twirla, the plan Cannot say no. The decision is up to the doctor.

Speaker 2

It's not a prior auth. It's not like anything else we've seen. It's a very unique aspect. We have seen A lot of denials for Twirla and a lot of the new brands. So it's just not us.

Speaker 2

So the insurance companies are basically And their PBMs are saying, now we're just going to deny it and doctors go away. So that's why we set up Sterling Drug and people That's not how it works. So it just creates a bit of a kind of a headwind with the doctor's mind that this drug is hard to get across the goal line. Now it's improving a lot, but It certainly held us back. And the interesting part, as any of you have read these documentations, which I would encourage you, this is not just in the commercial plans.

Speaker 2

Unfortunately, it's in Medicaid and it's also in the Their own books of business and their own employees aren't getting the access they deserve. Like I said, we really, really applaud all 3 organizations for stepping up. And it's the voice of Congress is the voice of the Women's Law Center who's been the person in the courts fighting a lot of these cases over the years about the ACA, and it's the women's group. So each one of them spoke with a pretty loud voice as we are, that this wasn't the way the law was intended. So we need to clarify this Again, it's been clarified before, and we'd encourage to if necessary to be enforcement.

Speaker 2

Something We've got to change. Despite that, we're proud to grow. I mean, to put up the growth we've done, as you might imagine, very proud of the So when does it get fixed, Leland? That's the question Mr. Riley asked me all the time.

Speaker 2

We just don't know. There was a short Turnaround time on the congressional letter, that was probably too short. So we are aware of some conversations that are going on at the highest levels, But we expect action. Now the action, what it will mean most likely, hopefully, they'll re clarify All this for the industry and if necessary, take enforcement action, but We think we still think we have our better days ahead of us on this. It just makes writing our drug a lot easier.

Speaker 2

And ideally, we'd love to be on One of the letters actually went as far as saying all the brands should be available. Every FDA product should be available. Why are we dealing with Chart, why don't make everybody available for no co pay because that really was the intent of the Act. So that's the home run. So if we can't get the home run, just to be able to get the prescriptions and the doctors wishes, could certainly be a win for us.

Speaker 2

And I have to Thank you for your comment about refills. I'm thrilled. It just speaks to this brand and the stickiness of this brand and women just liking this product. It just Makes us feel great and just gives a beachhead of volume every week to build off of Leland. So it's a nice day.

Speaker 1

Terrific, terrific. Thanks so much, Alan, Dennis. That's about the queue.

Speaker 2

Thanks, Lewin.

Operator

Thank you. The next question comes from the line of Oren Livnat from H. C. Wainwright. Please proceed with your question.

Operator

Thanks.

Speaker 5

I have a few, if you indulge me. Just quickly on the ACA management situation. How relevant is there that there is Azulane generic out there now. I mean, we know that they're not even living up to their promise probably of even covering one of every form under ACA. But even If they were to meet that low bar, do you think you would still have some challenges getting coverage in that regime Given Zulane and Zafemi or how you pronounce it are out there?

Speaker 5

And then I have

Speaker 2

a couple of follow ups. Yes, Oren, great question. So there's Kind of like Part A and Part B. So the best we can see, people are supposed to make, let's be specific about a patch, either us or Zuline or Zelfemin Available on the plans. The best we could see, it appears they've done that.

Speaker 2

So that's the Part A. So I think from a compliance perspective and following it will act or they seem to be in compliance there. The Part B of the act Let's use a situation that we're not on formulary. Zulane is on formulary in the zero co pay. So we could be on formulary on a non zero co It could be, let's say, dollars 40, $50 co pay.

Speaker 2

We're not getting the 0 or the preferred. So in that case, we can deploy our that's easy for us to handle. We can deploy some couponing and Let's say we're locked out, so we're off formulary. In that situation, you go to our website, you pull down that form, the doctor fills it out, And that script is supposed to walk not only the first time, Oren, but every time she goes in the field. She's on it.

Speaker 2

She's got a in the system. That's where we're seeing a lot of the resistance to comply with that part of the Affordable Care Act. So it's That's just again, doctor goes to trouble, fills us out for a woman, she gets denied again and they more than likely just want to go back to Zuline. That's the battles we're fighting. But now with that said, contextualize COVID for what we've been through with COVID and this resistance we're getting in some of the plans and Try to put our growth in perspective on that.

Speaker 2

So I do believe that if nothing else that these letters of medical necessity you just go through the system as intended. They should go through it in a very short amount of time and then the patient, by the time she gets to the pharmacy, should have that And then she should be freed up. So that's the way and in the simplest form it works. Okay.

Speaker 5

And then if I just A follow-up on that. You did mention in the quarter the gross to nets were up, I assume that means sequentially over 2Q. Is that Simply a reflection of just having to have increased patient assistance utilization in light of the challenges you've just covered? Or is that also potentially reflects an actual contracting, some economics that you've worked out to get Coverage on the payer side. And in the meantime, where you don't have coverage and you don't have ACA compliance, How are you making sure that doctors don't get frustrated and give up, so that they can continue to keep writing it And patients keep getting it one way or another, profitably or otherwise, so that down the road, you can convert all that into

Speaker 2

Yes, I'll do the second part and then Dennis, I'll comment and you can correct me if I'm wrong, I'm only grossing that. So the last part, your last question, The simplest way our reps do this is they just tele doc, just give us the script, transmit the script to Sterling, we're experts at processing those claims. We are seeing a lot more of our business Run through Sterling. So we just basically tell the docs, say, hey doc, like just send it to us, we'll adjudicate it, we'll do the insurance And we'll do this letter to medical necessity if we need to. And then the patient gets the choice, let's say everything goes through swimmingly and we get the patient across the goal line, What happens, Oren, we could say to the patient or the docs and we can ship the drug for our house or we could ship it to our local CVS.

Speaker 2

So it's a concierge service in effect that makes the doctor's life easier. So our best reps are the ones that just say, Hey, Dot, why work with this? Just give us. Now, if we know we're on a plan, like in a big area that we've got a lot of great coverage, We shouldn't have to do that. There are major books of business that we could just say, look, in Connecticut and Medicaid, it goes through.

Speaker 2

And Medi Cal is going to go through, you don't even need to do these gymnastics. So if we can point to big plans, Oren, it's a lot easier just to do it that way. And then I'll comment on the gross to net and Dennis could correct me if I'm over my skis. But look, we're seeing more of our business running through Medicaid. We would expect as we've signaled, that's an important part of our business.

Speaker 2

Remember, in the first and second quarter, we didn't have much Medicaid coverage. So we're seeing Medicaid becoming more parts. That's a little bite of the apple. And then I think the other one is copay cards generally. The more we're dealing with copays, copay utilization creeped up.

Speaker 2

But I think there's a lot of little that is, but I think are they the two headlines that I should remember?

Speaker 3

Yes, those are it and the co pay being the one that kind of Came up. Well, both came up a bit with co pay even a little bit more this quarter.

Speaker 5

Can you tell us what the gross to nets are sort of All in?

Speaker 3

We're still in like the low 30s On discounts, including the 12% from the wholesalers.

Speaker 2

Okay.

Operator

Thank you. For the next question, we have now the line of Tim Doug will go from William Blair. Please proceed with your question.

Speaker 4

Hi, team. This is John on for Tim. Thanks so much for taking our questions. Just two from us. So first I wanted to say congrats on the new marketing efforts.

Speaker 4

And I was wondering if you could give an update on your previously announced campaign such as your efforts on the dating app. Do you have any updates on how those campaigns are progressing? And do you have any insight into how they've been translating into script? And second, on previous calls, You noted that about half of your patients have been brand new to contraception, about a quarter of switches from pills and the remainder are mixed. Are those still the trends that you're Or is there any indication that mix is changing?

Speaker 4

Thanks.

Speaker 2

No, thank you for the questions. No, The mix, based on last time I looked at the data, it hasn't changed. So directionally, what you just quoted is still there. About half our business comes from what we believe is a new start. She could have been on drug before and maybe had a baby and reentered, but she looks like a new patient to us and about 25% From a pill.

Speaker 2

So that is our major source of volume. The dating apps, just in general, the marketing campaigns, we're encouraged by what we're seeing. I mean, When we just started heading up our spends, I think we mentioned in the second quarter, it was Pretty light spending in DTC in a relative basis. 3rd quarter is the first time we won at it, for the most part, full bore at the levels we thought we should. And we saw our, First of all, our website light up, which is very encouraging.

Speaker 2

So we're seeing like a tenfold increase in our hits to our .com. But equally as important or more important, we're seeing prescriptions. One of the things we look at is, we look at where our And we're starting to see prescriptions starting to show up in parts of the country that we don't have reps in. So I'd love to get my sales I didn't think it works in harmony in a perfect world. But we're starting to see a fair number of business coming from Pure, pure white space that we have not been in front of before, which is to me an indicator that it's working.

Speaker 2

So it works better if we have a rep there. And then the dating app specifically, every metric that we've seen or we would have expected, Basically, we're buying media. So we're saying we're buying eyeballs, right? So in that case, we're buying through the dating apps. We're off the charts in the execution.

Speaker 2

So we're just getting more visits, more continuity on these apps. And that seems to be our highest Performing media on the dating apps, which I know is obvious, but we actually rank them. We say it's like buying advertising. You say I bought advertising in 10 magazines in the old days Which one work better? We're actually able to tell which ones are getting the most traffic and the most pull through and the most eyeballs.

Speaker 2

And that's At the top of the list, I think the answer, if Amy was here, she would say she's thrilled with that idea because it's unique. It's Perfectly targeted, and it's actually outperformed all our metrics. But still early days. I mean, we still got to see our campaign run a little bit longer. It's only been

Speaker 4

All right. Thanks again for the update and congrats on the progress.

Speaker 2

Thank you.

Operator

There are no further questions in queue. I will now turn the call back to Al Autummied.

Speaker 2

First of all, thank you, operator. Thanks to Matt and Dennis also for your help on the call. So hopefully, you had a couple of takeaways tonight. Number 1, 1st and foremost, we need to remind ourselves we have an improved product that's growing in a very The large multi $1,000,000,000 market, we discussed tonight some of the challenges we faced that we pushed through, and particularly Some of the larger challenges that faced our company and our brand, but I'm ecstatic with the brand's performance and the potential of this brand. We have the cash What are business?

Speaker 2

And to that we anticipate that as sales grow, our optics on revenue become more and more clearer. It will be much easier for us to define our path to profitability because that's our singular quest in We believe that these initiatives have been effective that Helped expand Twirla's access, particularly our DTC programs that we think are aimed at accelerating our growth. We'll continue to explore and implement additional partnerships and keep you updated on those. We continue to look for other opportunities to expand the Brands and expand its reach. There's a lot more in the market that we still think we can get at.

Speaker 2

So I'm pleased with the progress. You should Expect more progress from us, and we'll keep you updated on future calls. But thank you, everybody, for joining the call tonight and keeping track of us and Keeping update on what's hoped is starting out to be a real exciting story. So thank you all, and everybody have a good night.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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