Clarus Therapeutics Holdings, Inc.
Q1 2022 Earnings Call Transcript

Published: 16 May 2022

[Operator:]

Thank you for joining in the Clarus First Quarter 2022 Financial and Operating Results Conference Call. Today's call is being recorded and webcast live on the company's website at www.clarustherapeutics.com in the Investor Relations section, and it will be available for replay for 10 days following this live call. Please note that discussions today may include forward-looking statements. These forward-looking statements include statements regarding the market opportunity for JATENZO, the anticipated benefits of recent patient initiatives, and statements regarding the Clarus growth strategy, it's pipeline and IP portfolio among others. Forward-looking statements involve a number of risks, uncertainties, some of which are beyond Clarus control. Our other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to the risks associated with pharmaceutical development, risk associated with Clarus financial position, and those factors described under the heading Risk Factors in Clarus Annual Report on 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission, the SEC on March 31, 2022, and those that are included in any of Clarus future filings with SEC. These forward-looking statements speaks only as of the date of this call and Clarus disclaims any intent or obligation to update these forward-looking statements to reflect events or circumstances after the date of such statements except as may be required by law. Following the prepared remarks, Clarus will not be taking questions. At this time, I'd like to turn the call over to Dr. Bob Dudley, Founder, President and Chief Executive Officer of Clarus. Please go ahead, sir.

[Bob Dudley:]

Thank you. Good afternoon, everyone, and thanks for joining us today. We appreciate your interest in Clarus. With me today is our Chief Financial Officer, Ric Peterson; and our Chief Commercial Officer, Frank Jaeger. Now let's get started with our recent business highlights. We continue to see total prescription growth for JATENZO in the first quarter of 2022, with an increase of 12% sequentially, and 75% year-over-year, driven primarily by advertising and promotion, and an increase in payer coverage across all payer channels. We presented new data for JATENZO at the Androgens Society's 4th Annual Meeting and at the recently concluded 2022 American Urological Association Annual Meeting just concluded in New Orleans. We plan to submit new data to a peer reviewed publication -- peer -- I'm sorry peer reviewed medical journal publication in the near future. Notably, these meetings are the first in-person medical meetings where Clarus has been able to showcase JATENZO since the start of the COVID pandemic. And next month, we will have a significant presence at the Endocrine Society Annual Meeting in Atlanta. Again, also an in-person conference. We received a notice of allowance from the U.S. Patent and Trademark Office for patent claims covering JATENZO. Once issued, we expect this will be the eighth pattern for JATENZO, to be listed in the U.S. Food and Drug Administration's Orange Book. Also on the patent front, we received a notice of allowance from the USPTO for patent claims covering CLAR-121, a proprietary combination of testosterone plus anastrozole delivered by a subcutaneous implant for the treatment of androgen receptor-mediated inflammatory breast disease that occurs predominantly in women We also applied for Orphan Drug Designation from the FDA for CLAR-121 for the treatment of inflammatory periductal mastitis or PDM, again a condition largely expressed in women, and we expect FDA action in June. We also announced the close of an upsized $30 million underwritten public offering, enabling us to continue to promote JATENZO while extending cash runway into approximately September of 2022. And finally, as noted, we continue to explore strategic alternatives -- alternatives to maximize stockholder value. Now Ric Peterson, our Chief Financial Officer will discuss Clarus's financial status. Ric?

[Ric Peterson:]

Thank you, Bob. I'll go over the first quarter '22 financial results. In summary, first quarter revenue was $4 million, compared to $2.3 million in the same period last year. This represents significant growth to 72% attributed to JATENZO sales. Gross profit margins was 83% for the first quarter, compared to 84% for the prior period. First quarter operating expenses were $16.9 million, compared to $12.8 million in the same period last year. This represents an increase of 33%, driven by increased sales and marketing activity associated with the promotion of JATENZO and an increase in general and administrative expenses associated with increased headcount partially offset by a decrease in research and development expenses. So to break that down, first quarter sales and marketing expenses were $10.7 million, compared to $7.9 million in the same period last year. This represents an increase of 35% again, driven by the increase in advertising and promotional spend associated with JATENZO. General and administrative expenses were $5.3 million compared to $3.6 million in the same period last year. This represents an increase of 47% primarily attributable to higher personnel costs, and costs associated with being a public company. First quarter research and development expenses were $0.9 million compared to $1.2 million in the same period last year. This is a 27% decrease primarily attributable to just timing of clinical costs associated with JATENZO. Our cash and cash equivalents as of March 31, '22, were $9.1 million. And then, as Bob noted, we did close an upsized $30 million underwritten public offering on April 27, '22, which will fund our current operating plan into approximately September of '22. I will now turn it over to Frank, our Chief Commercial Officer. Frank?

[Frank Jaeger:]

Thanks, Ric. I am proud to announce that JATENZO has experienced several notable milestones in the first quarter as the brand continues to grow. Total prescription growth for JATENZO in the first quarter increased 12% sequentially, and 75% year-over-year driven primarily by advertising and promotional increase in payer coverage across all payer channels. So let's dig in specifically, our prescription growth has been driven by the following. First and foremost, we continue to receive positive feedback from health care providers and patients regarding their experience with JATENZO. Second, we are starting to see an impact of changes that are made in the fourth quarter of 2021 with our sales force. So recall that in the fourth quarter, we increased the number of sales representatives from 55 to 60. We optimize the sales territories to ensure that we have a national footprint, and we increased the overall TRT prescription volume coverage from 59% to approximately 80%. Next, we are seeing increased healthcare provider access with waning COVID concerns despite Omicron's presence in the fourth quarter. So specifically, we have been able to increase sales rep access to healthcare provider offices. In fact, nearly 90% of all of our healthcare provider calls are live calls. Additionally, we are seeing patient visits for hypogonadism return back to normal levels, which means more patients returning to healthcare provider offices. We expect to see both healthcare provider access and patient visits continuing to increase throughout the year. Additionally, another important growth driver for us is our launch of two new strategic partnerships with Vault Health and AssistRx. Both organizations are leaders in providing healthcare services to patients and both underscore Clarus's continued commitment to providing solutions for patients. Let me give you a brief overview of each. First, our partnership with Vault Health enables appropriate patients who may be suffering from hypogonadism to get clinical care from the comfort of their own home via telemedicine approach. Through our partnership, patients can access our telemedicine provider through a link on our website. And by the end of the session, get a visit scheduled with a provider with appropriate lab tests being ordered. And second, our partnership with AssistRx allows healthcare providers to take the administrative burden for their practice and have AssistRx do the heavy lifting for them. AssistRx integrates to healthcare providers EMR system, they will process the e-benefits verification, handle any prior authorizations, get patients started with JATENZO copay assistance, and even provide a 30-day starter prescription for non e-scripts. And for the patient, the offering gets even better as AssistRx is in constant communication with them seamlessly filling or refilling their prescription and shipping JATENZO straight to their home, thus taking a lot of the burden after the patient's play. It's important to understand that these two solutions work synergistically to provide better healthcare provider and patient support through a white glove service model to streamline and simplify the process from getting diagnosed, to putting pen to paper, to getting JATENZO. And finally, we have increased patient access to JATENZO. As for payer coverage in the first quarter of 2022, JATENZO has reached an all-time high and access and overall life covered. For those patients who have insurance coverage in the United States, JATENZO is accessible to 72% of them. This represents one of the best-in-class branded agents with access. And the story gets even better. When you look at the commercial channel where the bulk of the TRT prescriptions go through, we have even greater coverage there with 76% of all commercial plans now covering JATENZO. These are significant changes over the course of the year and now as mentioned, JATENZO is one of the best-in-class And as for patient assistance, we are seeing continued success and growth in our JATENZO copay assistance program. In January of 2022, we increased our annual support for out-of-pocket expenses from $2,000 to $2,400 per year. This is important as we are helping patients to an even greater extent to reduce the financial burden of copays, and their out-of-pocket expenses for JATENZO. It should be mentioned that this is significantly different in both amount and scope as compared to the competition. As we move forward through the rest of 2022, we believe JATENZO was poised to continue to accelerate growth. First, we expect that our overall payer coverage will continue to increase in 2022 and already in the second quarter of this year, we have seen an overall increase now to 72%. We believe that getting into the mid to upper 70s is possible. Second, we believe that when additional competition comes to the marketplace, it will only seek to increase the awareness and recognition for the treatment of hypogonadism and the awareness of oral therapy. We believe that this will increase our TRT market share and will raise the awareness of JATENZO as we are the only oral product that not only gets 87% of patients in the normal therapeutic range, but also has dosing flexibility to allow healthcare providers to find the right dose that works for their patients. To be clear, with JATENZO healthcare providers can go up or down on their treatment dose to dial in the exact therapy that a patient needs. Next, we expect the TRT market will continue to grow even larger. Currently, the market is about over 8.1 million prescriptions with over 2.2 million appropriate patients getting treated. These patients represent a key opportunity for JATENZO as these patients are currently on therapies that are associated with administrative challenges and JATENZO is as straightforward as taking their medication with two meals per day. Specifically, as I mentioned on our previous earnings call, we know that an independent survey study that we did in over 400 hypogonadism that nearly eight out of 10 patients are not satisfied with their current non-oral therapies. We also know that JATENZO overcomes those administration issues as an oral. In fact, 82% of the patients if they knew an oral existed, would want to learn more and would ask their doctor about JATENZO. And finally, we know that physicians would nearly always switch a patient to JATENZO if the patient requested the switch, even if the patient was therapeutic on their current product, it was not experiencing side effects. We have finalized our new integrated healthcare provider and consumer promotional campaign and have a focus consumer media plan in place to address and raise awareness of JATENZO to these targeted patients. Through vehicles like paid search, displayed advertising and through social channels like Facebook, Instagram and YouTube. And finally, we know that there is additional opportunity with the greater than 4 million patients who have either been diagnosed or have stopped treatment. These patients are ideal candidates for JATENZO as many patients stop therapy due to product specific issues. And as an oral, we believe that JATENZO may be an option for many of those patients. Besides the consumer media plan that I just mentioned, we are finalizing the production of a DTC TV commercial and plan to launch that DTC component in the coming months to the target -- to target the appropriate hypogonadal diagnosed and currently or previously treated patient. We currently expect that this is going to be a significant driver of JATENZO growth in the future. So as I close, I want to reemphasize that we are excited about the impact we're having in the market today with our current initiatives, and those that we have in place and we're excited about what lies ahead for us on the horizon. And now I'll turn it back over to Bob. Bob?

[Bob Dudley:]

Thank you, Frank. Let's talk a little about recent pipeline highlights and some updates around where we are headed from a pipeline perspective. With respect to JATENZO, we announced the initiation of screening for first patient in an investigator initiated Phase 4 clinical trial of JATENZO for the treatment of hypogonadal men with chronic kidney disease in March. We expect to announce the results of this trial in the first half of 2023. And we continue to work on several label expansion lifecycle management projects, also for JATENZO and all with potentially large markets. These include t therapy for female to male transgender individuals, or trans males, and another invest -- which would be another investigator initiated label expansion study that we anticipate starting as a Phase 4 study in the second half of 2022. As mentioned before, we still believe that there's the potential for a once daily oral to you product and we are looking at potential Phase 2 initiation in the second half of this year also subject to availability of funding. Regarding the R&D pipeline, we continue to advance both the CLAR-121 and the 222 projects. The CLAR-121 as a reminder, a combination of testosterone + anastrozole. We licensed from Havah Therapeutics in Australia for the treatment of inflammatory breast disease, most notably periductal mastitis and as potential adjunctive therapy in estrogen positive androgen receptor positive breast cancer. We project an initiation of a Phase 2 study for PDM in the late second half of 2022, again subject to availability of funding. With respect to CLAR-222, this is the combination of CoQ10 or Ubiquinone plus caspofungin. We in-licensed this technology from McGill University in September, and we project initiation of Phase 1 treatment for primary and secondary forms of CoQ10 deficiency and related mitochondrial dysfunction in the second half of 2022. Again, both of these projects -- both for PDM and for CoQ10 deficiency, subject to availability of funding. Relative to intellectual property highlights for JATENZO. As of the first quarter we had a total of 7 Orange Book listed patents. In the Orange Book for JATENZO providing a coverage to 2030. In April, we announced that the USPTO had issued an important notice of allowance covering additional claims for JATENZO, what's issue the anticipate this patent will be listed in the FDA's Orange Book as well. That's bringing the total number of Orange Book listed patents to 8. For CLAR-121, this is the combination of testosterone + anastrozole. Last week we announced the USPTO issued a notice of allowance covering claims for CLAR-121. And we have an active orphan drug designation application under review by FDA for the treatment of periductal mastitis, and we expect a response in the second quarter of this year. As noted in my earlier remarks, we have been active in attending medical conferences. Happily all of these have been in-person this year, starting with the Androgen Society in April in Orlando, the AUA with just completed in New Orleans, well attended and we had a significant interest there. We will be also presenting abstracts and have a booth at The Endocrine Society Annual Meeting live in Atlanta June 11 to the 14th. As we close I just want to give my sincere thanks to team Clarus. We are lean and mean and work very hard for all of our efforts towards JATENZO and our shareholders. We also thank our external partners for their hard work on our behalf. And we thank our shareholders and our directors for their support. We are excited about our future and look forward to providing continued positive news in the second quarter. And with that, this call will end after the operator has final comments. Thank you.

[Operator:]

This concludes today's conference call. You may now disconnect.

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