Evofem Biosciences, Inc.
Q1 2021 Earnings Call Transcript

Published: 6 May 2021

[Operator:]

Good day, and thank you for standing by. Welcome to the Evofem Biosciences First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Amy Raskopf. Please go ahead.

[Amy Raskopf:]

Thank you. Good afternoon, everyone. If you haven't done so already, I encourage you to access the press release we issued earlier today and the webcast presentation that accompanies this call, both of which are at evofem.com under the Investors tab.

[Saundra Pelletier:]

Thank you, Amy, and thank you to everyone for joining us today. The first quarter of 2021, Evofem delivered strong growth, driven by our Get Phexxi DTC campaign, which we launched nationwide on Valentine's Day. Due to the immediate success of this multi-channel marketing campaign and our sales forces' persistence during these challenging times to access healthcare providers, we reached new highs across all metrics, including Phexxi total brand awareness, total prescriptions, prescriber base growth and most importantly, revenues. We expect this campaign will continue to drive consumer awareness and utilization of Phexxi for the foreseeable future. In addition to launching a successful DTC campaign, we advanced several important initiatives during the quarter, including our drive to gain a new category for Phexxi as a vaginal pH modulator on the FDA's contraceptive categories chart, our collaboration with NCODA to raise awareness of Phexxi in the oncology community, gross-to-net improvement strategies that are already having a positive impact on our operating results and discussions with potential partners for commercialization of vaccines in multiple geographies outside of the United States. I'll discuss these initiatives and our expectations for Phexxi and our Phase 3 STI prevention clinical trial after our CFO, Jay File, reviews the financial results; and Russ Barrans, our Chief Commercial Officer, discusses DTC impact. Jay?

[Jay File:]

Thank you, Saundra, and good afternoon, everybody. Before I start, I want to point out that I'll be rounding all numbers in today's presentation. The first quarter of 2021 was our second full quarter of product sales and included 6 weeks of sales following the Get Phexxi DTC campaign launch. Compared to Q4 2020 levels, gross revenues increased 293% driven by strong growth in ex-factory units shipped. In factory - ex-factory unit sales surpassed full-year 2020 levels by 51%. Net product sales were $1.1 million compared to $170,000 in the fourth quarter of 2020. The increase reflects higher gross revenues and more favorable gross-to-net adjustments in the current period. We expect GTN adjustments to significantly improve around the remainder of the year, driven by a series of GTN improvement strategies that we began implementing in April as far as our overall strategy to build Phexxi trial usage and loyalty.

[Russ Barrans:]

Thank you, Jay. As Saundra mentioned, we launched our direct-to-consumer campaign, Get Phexxi on Valentine's Day and the impact has been significant. Overall, Phexxi brand awareness tripled to over 12% in March and we saw a 63% increase in women's interest in Phexxi between January, which was the last full month before the DTC campaign and March, our first full month after the Get Phexxi launch. In just a few short months, Phexxi's social media followership has surpassed that of other recent entries in the contraceptive category and now actually exceeds all contraceptive brands, including the very successful, Mirena family of IUDs. This validates what we told you previously, women are keenly interested in an innovative non-hormonal, in the moment contraception that stays in place during the active intercourse. Total prescriptions in Phexxi increased 83% from February to March. Phexxi has achieved a major milestone with more than 5,000 healthcare providers who have written a prescription for Phexxi since launch. We saw a 78% increase in Phexxi prescribers from February to March with nearly 1,400 new prescribers and first-time prescribers have - of Phexxi increased 98% in that same time period. Based on market research that was conducted in the March end, and let me say, this is really quite significant. 93% of women who discuss Phexxi with their HCP got a prescription for Phexxi. Those are tremendous results and I could not be more proud of how Phexxi is shaking up the contraceptive market.

[Saundra Pelletier:]

Thank you, Russ. I'm now going to focus my comments on 3 key areas of our business today, ACA, partnerships and our pipeline. We currently have Phexxi coverage for the 55% of commercial lives in 100% of the Medicaid population. Our Medicaid agreement took effect on January 1 and we're seeing growth in this segment as well as among commercially-insured patients. As we discussed on the call in March, we have purposely refrained from getting into long-term deeply discounted rebate contract with the PBM, because we are confident that we will succeed in gaining a new category for Phexxi as the vaginal pH modulator on the FDA's contraceptive categories chart. We feel very strongly that our ACA efforts are going in the right direction. In addition to working with lobbyist, Jeff Ricchetti, we have been aggressively pursuing and have received enthusiastic support from U.S. senators, state representatives and women's advocacy groups across the country. We have contacted and confirmed engagement on this matter with people and offices, including Senator Patty Murray, who serves as the Chair of the Senate HELP Committee, which is Health, Education, Labor and Pensions and is Chair of the Appropriations Subcommittee on Labor, Health and Human Services and Education; Senator Susan Collins, who also serves on the HELP Committee and on the Senate Appropriations Committee; Senator Tammy Baldwin, also serving on the HELP Committee and on the Senate Appropriations Committee; Senator Maggie Hassan, also serving on the HELP Committee; Senator Ben Cardin, who serves as the Senate Committee on Finance and the Subcommittee on Health Care and our own San Diego representative; Scott Peters, who serves on the HELP Budget Committee.

[Operator:]

Your first question comes from the line of Ram Selvaraju from H.C. Wainwright.

[Boobalan Pachaiyappan:]

This is Boobalan dialing in for Ram Selvaraju. And by the way, congrats for the quarter. So could you comment on the prescription trends for Phexxi that you expect for the year 2021? And moving forward, do you think this prescriptions will be initiated primarily by patients or to physicians or a combination of both?

[Russ Barrans:]

Yes. That's - so we expect that as we've already seen in the first quarter, we're going to continue to see the same type of uptake happen around our efforts in terms of prescriptions. As we have continued to grow them, we will see these times - of course, as we put out our DTC campaign, that there are times when there is little less of an uptick, but we don't see anything that would lead us to believe that we're going to have any change at all in the rapid update of the patients. We have been able to see for sure that we're getting not only commercial lives covered but we're also getting Medicaid lives covered and we're very pleased to see that we have access for Phexxi across almost all the platforms. So we have access for women who need to have this fundamental change in their contraceptive availability.

[Boobalan Pachaiyappan:]

Understood. So do you think your market research kind of suggests that the DTC campaign is favoring one target population over the other?

[Russ Barrans:]

So actually what we have really seen is that this campaign has been very effective at reaching across the spectrum. You saw that in our campaign, we had basically 3 different types of the profile that we looked at. We looked at the woman who is using a condom, we looked at the woman who is using the pill and we also looked at the woman who is doing the rhythm method. What we've discovered is that when we took a look at the people who are then first getting prescriptions, that it covers across the spectrum of both those who are currently using hormonal contraception, those who are - not been doing anything and those who have been using long-term methods of contraception are in the middle of transition. The good news for us is that makes the pool for Phexxi really quite large. And in our research that Saundra referenced, we saw that 75% of women who we went to market research with that are just of the contraceptive age said, if there was an acceptable form of non-hormonal that they would go to it. So we're pleased and excited to know that we have a really wide spectrum in terms of our segments.

[Boobalan Pachaiyappan:]

Understood. One final from me. So what changes are you seeing from a market flexibility standpoint as COVID restrictions are beginning to subside? And if you think - do you think this would contribute to any kind of tailwinds in 2H 2021?

[Russ Barrans:]

So one of the things that we have begun to definitely see is, as an example, we've had a request for a live speaker program for some doctors, actually up in the New York area, where they want to come together to discover more about Phexxi. And so, that's beginning to see that kind of change, you would expect to see that has traditionally been the opportunity to have face to face interactions with both. Our sales people have been very diligent about making sure they're getting in and getting access in all the right places, where there isn't access and moving to other places, so we're seeing this groundswell take place that has been very, very encouraging, and that Phexxi is in fact gaining that level of not just utilization, but also that measure of stickiness as you would expect to see as you move through this process of women beginning to make Phexxi as their method of contraception.

[Operator:]

Your next question comes from the line of Annabel Samimy from Stifel.

[Annabel Samimy:]

Congrats on getting some improving gross-to-net. It's actually been a strange quarter, we've seen a lot of our companies improving gross-to-nets this quarter and usually, they're seasonally low. So I guess, what are some of the tactics used to improve that and what do you expect to do going forward? How many levers do you have to pull to sort of control that before you may have to give up rebates to payers? So that's the first question.

[Russ Barrans:]

So the exciting part is, as we put our strategy into place even from launch till this point and we began to follow this pattern of us assuring that we first of all, drove demand and interest in Phexxi, and then as we started to put into place some of those things, we're confident that our strategy will continue to deliver the results that will improve our profitability. So some of the things that we have been able to do effectively as we've moved ourselves from a place where we are now asking that those offices through - assistance with a third-party that we've used to put these PAs or prior authorizations through prior to the script being filled, that has a tremendous impact on our ability to then assure we get that. Here is a really interesting statistic that, as I was talking with the Vice President of our Market Access that, we've got about 75% of lives we estimate are going to be covered by their plans. So that really puts us into a position where we're getting majority of those access and so that big changes has just allowed us to really increase the level of dollars that we're able to gain from that process, because we're no longer covering them irrespective of the PA going through.

[Annabel Samimy:]

Okay. And so, are you still following that typical pattern of giving the first prescription with 0 co-pay and subsequent prescriptions for $30? I'm just trying to understand the mechanics there.

[Russ Barrans:]

Yes. We still are currently doing that and so the mechanics of that - the primary thing that was more at effect - they had a bigger effect on the GTN was to allow women, who didn't have their PA or their prior authorization go through, get the product. That's how we end up with the biggest change in our GTN. When we put that change into effect, what it really does is, it gives us what is a much richer place and I've heard Jay say this before is that we're better off having 750 scripts at a 40% or 50% GTN than we are 1000 at 80% and that's what we've really implemented at this point. Now that we have enough traction with healthcare providers and women and their interest, we're be able to have - but the exciting part, Annabel, is as we've looked at the PA process, in almost all cases, it's really not very rigorous and physicians have been indicating that working together with the third-party that we put in place, one of which more than 80% say that's a familiar group of people to work with. They're really not resisting in fact, they understand that as Saundra had said, especially for those women in their practice and each one of them will have one of them that this year get diagnosed with a cancer is that they have to ensure that they are doing their job and their part to make sure this gets pinged at the payer level, so the payers recognize there is an unmet need and a large group of women who need to get this. So that's been a part of that strategy that we're doing to increase our GTN.

[Annabel Samimy:]

Got it. And are there any stats you can give us regarding patients who are going through the concierge services, and can you tell what the refill rates are overall? I guess we're at several quarters into this and at this point, we should have some idea of what the refills are.

[Russ Barrans:]

Well, one of the things that we've seen definitely and we call it the concierge experience, I'm going to call it the whole online medical, telemedicine portal is that through the DTC campaign, it has increased significantly, multiple times. And not only that, it's also increased the level of, what I would say, women who are coming to that portal who have a genuine interest because our fill rates are exceptionally high. Now, we really are focused at this stage in the game on our total prescriptions, because we think that's the most important thing. Phexxi is not a monthly method, a woman uses Phexxi when she needs it, she refills it and it's not - so that's not measured in the same monthly refill that you do with other things. So what we're really looking at it is, I can tell you that the Phexxi refills were significant in terms of what we expected but our data points - and I want to be very cautious about this, is the recognized - our data points are not going to be the same as you would expect to see as a monthly method, because it is an on-demand method. So we are still waiting as we gain significant ramp up in terms of our utilization to understand what the stickiness is in that respect. But we've, at the same time, conducted the market research to ask, what's the likelihood of continuation and we're seeing those numbers to be in the high-80s and even low-90s that say yes, my intention is to not only continue but also to share. And we think that's as important of an understanding of what the stickiness is as it is to see those scripts because as we have indicated, we know that there is a lag in understanding exactly what the frequency is when you're on-demand method and not a monthly method.

[Annabel Samimy:]

Got it. And one last question for me. I'm really intrigued by potential penetration into that cancer population, do you have any metrics around that and how successful you are on reaching those patients? And if you've seen - been seeing - starting to see prescriptions from those types of patients.

[Saundra Pelletier:]

Well, I would say two things and then Russ, you can jump in. So we really just began this initiative, meaning that we now have identified through NCODA what is the right way to educate, communicate and debate this community, and so we are - we want to be mindful, we want our sales force to continue to call an OB-GYN, but frankly when they are in those territories with the zip codes, where there are cancer clinics, we've actually had some very mindful conversations, we have actually some respite actually who have sold oncology products in their past. So the short answer is, is that we're beginning to see an uptake now, but I think based on the efforts that we're making with this PQI and the efforts that we are going to continue to drive with the sales force, I think you're going to see a lot of additional growth on top of the growth that we anticipated through the OB-GYN community. And the other thing that I would say is, when you look at the 800,000 women, I mean, the one thing that we keep saying is, let's remember about the women who were diagnosed last year and the year before, and the year before. So these are large numbers of women and the one thing that we can say is that our competitors can't is that this is the only product that they can use on-demand with no hormones, because their only alternative is a copper IUD. And in our conversations with oncologists, they continuously say to us that after women have been through those kinds of treatments that the last thing they want to do is give them a product that they can't control that they suffer from side effects. So the short answer is that we don't have any - very, very direct metrics at the moment, but on our next earning call, we do anticipate to be able to break that out much more crisply than we can now, because most of those initiatives are still underway.

[Russ Barrans:]

And the only thing I would add to that is, that we are looking to partner with the oncology GPOs and such to help educate their physicians as well. And just anecdotally, from being in the field, one of the nice things that I heard from an OB-GYN is that they say almost always they seem to be at odds with the oncologists and this is the first time that they feel like they're now going to be able to be on the same page for those women who are not only being treated at the oncology office that are - have been there - their patients and will continue to be their patients after they've got through their cancer treatment. So there is an excitement on the OB-GYN side as well about the fact that now even those patients that go to the oncologists are going to have something that they too can support.

[Operator:]

Your next question comes from the line of David Amsellem from Piper Sandler.

[David Amsellem:]

So I just got a couple and I joined late, so I apologize if you already addressed this, but on the unique pregnancy category, can you just talk about that in terms of where that stands? And then, I'm also interested in portion of covered lives that are now covered at 0 co-pay and where you expect that to be, say, by the end of 2021? So that's #1. And I wanted to ask, secondly, a longer-term question and maybe this is real early to ask the question, but you have commercial infrastructure in place, so as you get further into the Phexxi launch, do you start to keep a closer eye on opportunities to bring in another asset that can leverage your infrastructure? How much of that will be a priority as you get more and more into the launch and Phexxi has more of its foot in the marketplace?

[Saundra Pelletier:]

So one of the things - I want to start with your second question and then go back to your first, if that's all right. So I would tell you this that as a realist as our company is, we definitely recognize that the cost of the sales force is not nominal, the one thing though that we continue to be certain enough, without question, is having our own sales force completely committed to this asset and this launch being directed, being paid for and being incentivized by us is the right decision, no question. And we have our ability to train them and retrain them and re-motivate them in a way that is very continuous and ongoing and we still feel very bullish about that decision. However, we do recognize that the sales teams to get to a point where they want another asset. The strange part is that with COVID because now things are opening up, it's almost like now they're seeing offices where they weren't able to see before. So there is not a level of boredom yet, thank goodness. I mean, they are actually, continuing to grow their pace of people that they can see and impact. So we feel like we're going to continuously grow the Phexxi brand for the rest of this year. Now we do, as you know, forthcoming, with our addition of chlamydia and gonorrhea, feel like that's also going to continue to grow market share for Phexxi, right? All that's going to be able to do is build the base. So we feel good about that, but I guess the short answer is, yes. We most definitely are constantly looking at assets that would be a fit in the right call point. Two, the great thing is that I think people are recognizing that we have the right team, meaning, we understand how to market to these women, we understand how to talk to these physicians, we understand the managed care obstacles and pitfalls as well as ways to get around them, and so, we have opportunities to a lot of companies that maybe don't have the financial resources or they don't have the commercial expertise to build their own team. So we are very interested, we are continuing to look, we haven't yet identified that right product yet, but I can tell you that from a business development standpoint, that is a very assertive and ongoing process, and we'd love to right - add the right products in that now. Now as of your first question, I think - I'm assuming you're talking about ACA and getting the new category, so that we can have vaginal pH modulator, is that right, you want us to address that?

[David Amsellem:]

That's exactly right. Yes.

[Saundra Pelletier:]

Yes. So did you have a comment, Russ, you wanted to share or you want me to take it? Well, David, just so I'm clear, though, do you want to know what our expectations are or what the process is? Just so I answer your question directly.

[David Amsellem:]

Both.

[Russ Barrans:]

And then, were you online when Saundra talked about that, just so we don't do too much repeating on that, you might have missed that part as you suggested that you came on late.

[David Amsellem:]

Okay. So I guess, just maybe on the co-pay - on the co-pay front, I mean what portion of covered lives are at 0 co-pay? Just remind me again.

[Russ Barrans:]

Now, at 0 co-pay, we have, I think it's somewhere in the neighborhood of 8% and somewhere in that ballpark. But the more important thing is we've got roughly about 75% of all of our claims are going through unrestricted and so, that's probably the more key part of that potential. And then, as Saundra had said in terms of the ACA, there really has never been, I don't think, the same heavy lifted going on towards getting this category and that's largely, David, because every person - and I mean that with 100%. Every person that we have spoken with who are advocates for women have said, this should be its own category. Every politician that we've spoken with has said, this should be its own category. There hasn't been one exception to that of people who are really advocating for women who have said, well this is a Me too and they all recognize that there is nothing for these women and they believe that it should be out there. So we do hold a lot of hope and confidence that the efforts that we are taking will be fruitful and it won't be the same as others who would like to try to get a category of something that already exists in this market because ours doesn't.

[Saundra Pelletier:]

Well, and the one thing, David, as you probably know very well, is that when we're successful, it really is like a light switch. If we're successful, we have our own vaginal pH modulator category, then 1 product in every category is covered. We will obviously be the only product in that category. Now the tough part, I mean, we were approved last May. So we have been talking to the Office of Women's Health in a very professional and appropriate civilized way for - in the beginning, because we accepted that COVID was the priority for everybody, but in the call today, the reason that we wanted to share with everybody, all of the advocacy groups and all of the political people that we've talked to, including Erin Brockovich, is that we wanted everybody to understand that this - we are being very aggressive, far beyond assertive. And we are confident that those efforts are going to pay off. And the reason that we're confident, though, is that we've been very careful to say, this is about the vulnerable women who cannot use any other method and there are some plans by the way that say to women, they have to fail on 8 or 9 products before they are given access sometimes. And so once that information is shared, people are aghast by the way, and they come back and say, look the fact that this is a new innovation that women use on-demand with no hormone and there is nothing else like it, just for that cancer population alone or clinical contraindicated women is enough to get all of these people really pushing it. That's why we feel good, is that - now, by the way, we recognize that some of our - other companies that are in women's health, they also want their own category and we don't blame them. But the reason we think our chances are frankly better is, because we speak to a vulnerable population of women that no one else can speak to. That's why we feel confident we're going to be successful.

[Operator:]

Thank you. This concludes today's question-and-answers period. I will now turn the call back to Saundra Pelletier.

[Saundra Pelletier:]

Thank you. I want to thank everybody for joining the call today and for standing with Evofem as we continued successfully marketing Phexxi for hormone-free contraception. Also, as we develop EVO100 for the prevention of chlamydia and gonorrhea in women. And we're confident that we are very well positioned to achieve our goals and to build value for women and build value for shareholders alike. We look forward to sharing more information with you on our next call. And thank you, again. Have a great rest of your day.

[Operator:]

This concludes the conference call. Thank you for participating. You may now disconnect.