PLx Pharma Inc.
Q4 2021 Earnings Call Transcript
Published:
- Operator:
- Ladies and gentlemen, thank you for standing by, and welcome to the PLx Pharma's Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. Following the presentation, there will be a question-and-answer session. Please be advised that todayβs conference call may be recorded. I would now like to hand the conference over to, Janet Barth, PLx's Vice President of Investor Relations. Please go ahead.
- Janet Barth:
- Thank you. It is my pleasure to welcome you to PLx's Fiscal 2021 fourth quarter earnings conference call. Joining today's call are President and CEO, Natasha Giordano, and Chief Financial Officer and Head of Manufacturing and Supply Chain, Rita OβConnor. Before we begin, let me remind you that our full-year 2021 fourth quarter earnings release can be found in the Investor Relations section of our website at www.plxpharma.com and as exhibits to the Form 8-K we filed ahead of this call. This conference call may contain forward-looking statements, including statements about or references to our outlook regarding the company's performance, our internal models and our long-term objectives. All such statements are subject to risks and uncertainties that could cause actual results to differ materially from what we say during the call today. Please refer to our most recent periodic SEC filings for more detail on these risks and uncertainties, including the Risk Factors section in our annual report on Form 10-K. The company undertakes no obligation to update or revise any forward-looking statements. Additionally, the information we will discuss today contains certain financial measures that exclude amounts or are subject to adjustments that have the effect of excluding amounts that are included in the most directly comparable measure prepared in accordance with Generally Accepted Accounting Principles. For reconciliation to the most comparable measures presented in accordance with GAAP, please refer to the table in our earnings press release available on our website and included as an exhibit to our Form 8-K filed today. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on March 11, 2022. Since then, PLx may have made announcements related to the topics discussed. So, please refer to the company's most recent press releases and SEC filings. I will now turn the call over to Natasha.
- Natasha Giordano:
- Thank you, Janet. By the way, we're so happy you've joined the PLx team. So, welcome. Good morning, everyone. I know it's been a while since our last business update. We've been very focused on the launch of VAZALORE and we're delighted to speak with you today about our progress and building momentum for VAZALORE. Our plan is on track, and we're well positioned to grow sales substantially in 2022. 2021 was a pivotal year for our company in so many ways. In February, we received FDA approval of both sNDAs for VAZALORE 81 and 325 milligram doses. In August, we began to secure broad distribution and shelf space and launched into more than 30,000 chain drugstores, supermarkets, mass merchandisers nationwide, as well as e-commerce sites including Amazon. In August, we launched a national media campaign and deploy a cardiovascular care specialty field force. In November, we reported our first ever product sales which reflected the strong initial retail distribution. We've been executing a fully integrated, multichannel commercial strategy for VAZALORE, including a three-pronged approach focused on retailers, consumers, and healthcare professionals. Our research shows that the number one influencer for consumers is their own doctor, and second is brand familiarity. In measuring our progress, we look at the following key performance indicators. Retail consumption, with strong unit and dollar growth over the last several consecutive four-week periods β VAZALORE has become the number three brands in the heart health segment after a few short months β an effective TV campaign reaching more than 90% of our target audience with high frequency, a field force achieving reach and frequency with high volume targets; broadening our medical communication plans for healthcare professionals. All of these key indicators are positive and trending higher, which reinforces our confidence in the strategy and validates that we're building momentum for VAZALORE. We're pleased to see the effects of our integrated launch strategy taking hold and that the combined efforts of our national media campaign and our cardiovascular care specialist, medical communications, product display support are all yielding favorable results. Steps to create a successful brand are being executed as planned. This is more of a process than an event. First step, the product has to be shipped to retailers and available on shelf before you begin marketing to physicians and consumers. Next step is building awareness and driving trial, which we are in right now. That includes advertising and other marketing activities to inform and educate consumers and physicians about the product and driving trial use. Significant investments are typically made in advance of any meaningful product revenue, as awareness and consumption gradually builds to adoption. Then, the awareness moves to building advocacy and adoption amongst healthcare professionals. On average, it takes several visits by a sales rep before a physician may become an advocate for the brand and starts to recommend it to their patients. When this happens, it is the catalyst that can lead to meaningful sales growth. We are at this juncture right now. In terms of retail consumption, we're extremely encouraged by the most recent market data that shows VAZALORE continuing to gain momentum, with strong unit and dollar growth over the last several consecutive four-week periods. In fact, in recent meetings with top retailers, they reiterated their belief in the promise of VAZALORE as an innovation and have committed to continue our shelf placement through the end of the year. Actually, one of them said they want to win with us. As awareness grows and more consumers see our ads and talk with their doctors about VAZALORE, we expect consumption levels to increase. It is typically choppy at first, but we do expect to hit an inflection point with this brand where the base of consumption starts to compound and grow exponentially. This will happen as customers convert from trial to use, creating a base of recurring consumption and become sticky and more like a subscription based model. In the short time that VAZALORE has been on the market, it has gone from having zero consumer brand awareness to becoming the number three brand in the aspirin heart health segment on a dollar share basis. In fact, VAZALORE is growing while other aspirin brands are declining. Our integrated strategy, which focuses on the retailer, consumer and healthcare professional, is taking hold. And we're incredibly proud of the success of our national media campaign in helping to build an awareness base amongst all three of these stakeholders. Our TV campaign includes high visibility programming during national sporting events, like the NFL playoff games, plus coverage on a broad range of primetime shows, including CBS Evening News and 60 Minutes. Impressively, the campaign has delivered more than 3 billion impressions since launch, reaching more than 100 million adults 50 years and older with high frequency. Specifically to our target audience, our TV campaign has delivered more than 500 million impressions, reaching more than 90% of this audience, or nearly 15 million consumers with high frequency. We see the effect of TV advertising in driving online activity to our brand website and other ecommerce sites as consumers search the web for more information as the commercial airs. In fact, our data has shown regular surges of VAZALORE sales on Amazon within 30 minutes of the spot airing on TV. We also see the effectiveness of this campaign through direct consumer and physician feedback, as well as to call to our customer service center from health care professionals who saw the commercial and requested a meeting with one of our sales reps for to receive some samples. Before moving on, I want to confirm that we've implemented the national advertising division, the NAD, for recommendations associated with our television commercial in online advertising to healthcare professionals and consumers. The NAD closed its compliance proceeding for PLx in late January, and the FTC subsequently determined not to take additional action and we feel the changes make it even more clear of VAZALORE's novel innovation. Complementing our marketing efforts is our cardiovascular care specialists, coupled with medical communications support, all focused on building brand awareness and driving VAZALORE adoption. We're effectively targeting healthcare professionals affiliated with top 100 heart and stroke hospitals in the US and the surrounding high volume group practices using both personal and virtual tactics. Our team is effectively reaching about 85% of targets, including 98% of the top practices. While more than 80% of our business are being made in person, we've also established effective video capabilities for when in-person calls are not feasible due to COVID or other restrictions. We understand the importance of having both options to maintain our call value, which is averaging about seven to eight calls a day. In only a few short months, 22% of our targeted physicians we've reached are already actively recommending VAZALORE to patients. To leverage the sales reps' time in the field, we're expanding coverage to surrounding practices of cardiologist referral network to include other physicians, nurses, pharmacists, and advanced practice providers to optimize our reach. We're building the awareness base and the recommendation phase with healthcare professionals, and now we're embarking on the adoption phase. Next, we expect to see an inflection point of building widespread adoption. We're on the cusp of that timeframe with our call frequency at a little over five calls to targeted HCP. Keep in mind that we're introducing an innovative new brand into a category that hasn't seen any innovation in over 50 years. Our mission is to change the brand of aspirin used as the standard of care treatment for secondary prevention of heart attacks, for clot-related strokes, and it takes both reach and frequency with the healthcare professional to inform and to build to trial and adoption. The feedback from the field is positive. Remember the number one influencer for our targeted consumer is their doctor. Early adopters tell us that they value VAZALORE as an innovation and its potential to address a real unmet need in their practice. Some HCPs tell us that their patients who have tried VAZALORE are tolerating it well, and they're not hearing complaints and that both complete absorption and potential GI benefit are very important in their practice, and that VAZALORE was easy to swallow. Supplementing our local sales efforts, our medical communications team has been actively engaged in and building advocacy with more than 100 regional and national cardiovascular thought leaders across the US. These activities include continuing medical education programs. We're also leveraging virtual tools for outreach to broader audience. For example, in targeting pharmacists, we've initiated a comprehensive email campaign to more than 350,000 retail and hospital pharmacists. The analytics on this campaign show unique open rate of approximately 24% which is double the benchmark open rate of 12%, once again confirming their interest in a new aspirin therapy. In addition, the first wave of pharmacist email drove significant web traffic to vazalorehcp.com. We've also engaged internationally recognized interventional cardiologist, Drs. Gibson and Angiolillo to conduct live multiple broadcast interviews and townhall meetings to educate on the benefits of aspirin therapy and encouraging patients to talk to their doctors. We continue our commitment to advancing science surrounding aspirin therapy, in partnership with our esteemed Scientific Advisory Board, and further expanding our medical communication through presentations and publication of important scientific data supporting VAZALORE. A review paper titled Pharmacokinetic and Pharmacodynamic Profile of a Novel Phospholipid Aspirin Formulation was published online in January 22 in Clinical Pharmacokinetics. Our publication plan also includes the recently presented study further investigating the PK and PD parameters of the marketed 81 milligram dose of VAZALORE which was presented as a poster at the TCT conference in November. A manuscript of this study is being drafted now. And now, I will turn the call over to Rita O'Connor, CFO and Head of Manufacturing and Supply Chain, to further elaborate on those success indicators. Rita?
- Rita O'Connor:
- Thank you, Natasha. And good morning, everyone. Our fourth quarter financial results were largely as anticipated, including net sales of $1.6 million and operating expenses of $21.6 million. After last quarter's strong initial distribution to 30,000 retail stores, we've remained focused on creating awareness, driving trial, and building advocacy for VAZALORE, which is so critical in establishing a new brand. Due to the strong initial product stocking in the prior quarter, reorders from our retail customers were minimal in Q4, as expected. This is perfectly normal for a new OTC brand launch. We continue to expect more meaningful product reorders, as VAZALORE brand awareness grows and retail consumption gains traction. As Natasha explained earlier, building a brand from scratch takes time and we're very encouraged by the recent consumption data for VAZALORE that shows strong unit and dollar growth over the last several consecutive four-week periods, which gives us reason to believe that we are building momentum. Our priority at this time is to continue driving awareness and trial among consumers and healthcare professionals. We are confident that the inflection point in sales is coming soon as we build the stickiness with the customer in terms of repeat purchases, and like a subscription model, unit consumption will grow exponentially. Relationships with our retail partners are strong, and we have plans to further broaden our distribution this year to include more regional grocery chains with an in-store pharmacy. As its customary with OTC products, retailers evaluated category and each products performance about twice a year. This assessment could result in more or less shelf space, especially for new brands. We are so happy to say that, after some recent retailer category reviews, VAZALORE remains in distribution in all accounts. Our retail partners are committed to the brand and recognize the support we're putting behind it to further drive momentum. Feedback from retailers has been favorable, including "VAZALORE leads the aspirin assortment, and your marketing and packaging are breakthrough." In addition to our physical retail partners, ecommerce sites including Amazon have shown surprisingly good growth in VAZALORE as well. As Natasha already discussed, we have seen a strong correlation between our national media campaign and web traffic and ecommerce sales. One of our many market dynamics we have been navigating includes Amazon with its gating process that requires certain specifications or milestones to be met by all new products selling on its platform. For instance, initial quantities of all new products have established inventory storage limit until demand reaches a certain level. The good news is that VAZALORE demand quickly surpassed this milestone. However, during the process, our product detail page temporarily showed out of stock because Amazon had sold through those initial quantities. This was especially true for the 325 milligram dose, which has sold more online than we anticipated. So we quickly pivoted to increase supply of the higher dose and we are now in a much better position to meet demand. We have also been navigating a technical issue with Amazon recently, relating to documentation of our product packaging specifications. This has been a very high priority for us because, as you know, consumers don't just buy products on Amazon. They use it as a search engine to learn more information. For about two weeks or so, Amazon temporarily suppressed our product display pages until we provided that additional documentation. We are highly confident in our product packaging, which are both FDA approved and compliant. We are pleased to report that both dose strengths of VAZALORE are back on the Amazon website. Moving from sales to cost of sales and gross margin. Our gross margin of 44% for the fourth quarter was slightly higher on a sequential basis, reflecting a more favorable product mix of the 81 milligram dose, which represented 86% of total net sales in the fourth quarter. We are in the process of expanding our manufacturing capacity at Thermo Fisher's plant in Cincinnati to provide much larger batch sizes for the 325 milligram dose. We also expect consumers to trade up from the lower margin 12-count trial pack to the 81 milligrams 30-count size as we build the stickiness I referenced earlier. Together, these two factors should help drive improvement in our blended product margin rate by the end of 2022. Next, our operating expenses of $21.6 million were in line with the $20 million to $23 million range we previously provided, and primarily reflected increased promotional activities and expenses associated with the commercial launch of VAZALORE, which began during the third quarter. As expected, we've been heavily investing in advertising and other marketing activities during the awareness phase of our launch to inform consumers and healthcare professionals about our new brand and drive trial. We will continue to manage overall cost judiciously and then maintain flexibility with our investments in advertising to ensure the appropriate correlation with the expected sales growth. Our planned investments in the front half of 2022 to drive further awareness and trial are expected to yield strong sales growth in the latter part of the year. On a sequential basis, in Q1 of 2022, we are modeling slightly less operating expense than in Q4 of 2021. This is primarily due to a strategic shift from high visibility TV programming, like the NFL, to less expensive programming, such as network and cable news, which has strong viewership by our target audience. Looking at R&D, we are modeling full year 2022 R&D costs to be lower than 2021 as our manufacturing activities will move to expanding VAZALORE capacity in Cincinnati. Further development of our patent-protected PLxGuard platform technology remains a priority and we are currently screening compounds for possible development. We plan to provide a product pipeline update by the end of this year. Turning to selling, marketing and administrative expense. As anticipated, higher selling and marketing expenses in the fourth quarter were primarily driven by expenses associated with the launch activities for VAZALORE. We deployed our cardiovascular field force back in mid-July of 21. And in August, we launched our national media campaign. Our TV campaign includes high visibility programming, such as the NFL playoff games and the recent PGA Honda Classic and Daytona 500, plus coverage on a broad range of primetime shows, including CBS Evening News and 60 Minutes. Through the end of February 2022, we have incurred approximately $20 million in advertising expense, which is yielding very favorable results, as you heard from Natasha. Next, on a GAAP basis, we reported net income attributable to common shareholders of $3.6 million or net loss of $0.73 per diluted share compared to a net loss of $8.5 million or $0.87 per diluted share last year. Our GAAP reported net income in 2021 includes a non-cash gain of $24.4 million versus a loss of $4.2 million in 2020 related to the change in the fair value of our warrant liability due to the fluctuation of the company's stock price. And please refer to the Reg G table in our financial statements to reconcile the GAAP EPS to an adjusted non-GAAP number. Turning now to some balance sheet items. We ended the quarter with a cash balance of $69.4 million, reflecting a cash burn for the quarter of $13.2 million due to the higher level of sales and marketing activities, partially offset by the timing of receivables collected from sales of VAZALORE. As I said earlier, we're managing our cost judiciously. Significant marketing investments during the initial awareness phase of our launch were necessary and resulted in a significantly large portion of our target audience getting exposure to the brand. We will continue to complement these investments with the work of our cardiovascular care specialists in building our physician network and educating through direct visits. Over time, as the base of our loyal customers grow, we will adjust our spending accordingly. And we continue to believe we have enough cash to successfully launch VAZALORE into 2023. With that, I'll turn the call back to Natasha for some closing remarks.
- Natasha Giordano:
- Thanks, Rita. As you know, from our experience launching well-known brands and household names, we know what good looks like and we know what the success markers are. Momentum is building for VAZALORE. We're on track with our plan and well positioned for sales and market share growth in 2022. Our key performance measures and market feedback are positive and trending higher. VAZALORE has become the number three brand in the hearts health category. We secured key retail shelf space commitment through the end of the year, HCP adoption is growing, and we have the right team, the right strategy and the right tactics to make VAZALORE a winning brand. We are confident in our strategy and our execution of our launch plan focused on retailers, consumers and healthcare professionals. It is with this multi-channel approach that we believe that has the potential to transform the standard of care for secondary prevention. I'd like to thank our PLx team and our partners for their dedication, commitment, and teamwork, in support of advancing our strategic priorities and our mission of bringing the life-saving benefits of our innovative liquid filled aspirin capsule therapy VAZALORE to the millions of patients who need it. Operator, we can now open the call for questions.
- Operator:
- . Our first question comes from Jason Butler with JMP Securities.
- Jason Butler:
- Congrats on the progress. First of all for me, can you just maybe expand a little bit on your efforts with marketing with physicians, what you're hearing back from prescribers and how they're β in whom and how they're starting to recommend the drug be used?
- Natasha Giordano:
- The efforts with the HCP are extraordinary. And what we're hearing is extremely positive feedback. One, they're very interested in a new aspirin therapy since there's been no innovation in that category for decades. They also understand that the enteric-coated aspirin tablets provide for erratic absorption, which is so very important for a secondary prevention patient to achieve antiplatelet benefit in a very reliable and consistent way every day. So, what they're telling us it's the complete absorption in addition to the GI benefit that's very important to them. Also, with the HCPs that are in the adoption phase, they're telling us that they're not getting β some of them are telling us that they're not getting callbacks, that the patients are tolerating it well, that it works quickly, that it's easy to swallow. So, the feedback they're getting from their patients is very, very positive as well. We're getting that same kind of feedback, Jason, on reviews at Amazon. And so, we're really very encouraged because the product is doing what it was intended to do, provide good, reliable, complete absorption, and also reducing the risk of stomach injury. And so, as we move HCPs from their awareness and trial phase into adoption, which is starting to occur now, we're seeing a great interest in them recommending aspirin to their secondary prevention patients.
- Jason Butler:
- As we think about reorders and that RAM, based on the data that you have, can you give us any estimate of the proportion of the inventory build that has already been drawn down? Or how much inventory is still sitting from the initial build?
- Rita O'Connor:
- It's Rita. In terms of reorders, really aren't seeing as much of those since the fourth quarter was depressed, but the volume of consumption has picked up exponentially, especially after the big media campaign we did over the holidays, as well as in January for Heart Health Month. So, there will always remain a certain amount in the channel thinking about it. So, it will have the three phasings usually on the shelf, and then they'll reorder as the pull through comes in. And we're really starting to see that pick up. And so, the reorders are really imminent to come through, but there always will be something in the channel. So, we've shipped in over $8 million so far. So, a good chunk of that will remain. So, you should start to see reorders picking up now.
- Operator:
- Our next question comes from Hamed Khorsand with BWS Financial.
- Hamed Khorsand:
- Could you just expand upon your comments about the retailer relationships? Are you still in those 30,000 plus stores? Or has there been some variety as far as what stores you're in?
- Natasha Giordano:
- We're very proud of our partnerships with the retailers. Yes, we are in all 30,000 stores. And we've gained commitments from our top retailers through the end of the year. As you know, they evaluate the program systematically and cyclically. And so, when we have these meetings with them, this is where we're hearing from them how much they believe the product. They do believe that this is an innovation and that it's going to reinvigorate the product. They're seeing that VAZALORE is growing by their own data, right? And, honestly, to see VAZALORE growing in our initial stages of launch, while other aspirin brands are declining, is a tremendous key performance indicator for us to understand that the tactics that we're using are starting to take hold.
- Hamed Khorsand:
- Given that Q4 sales were where they are, that would imply something like a 26% reorder rate. Is that an adequate way to look at it? Or is there another way to look at how you're actually seeing this momentum?
- Rita O'Connor:
- The reorder rate was not as high in the fourth quarter because of the stocking. But now you start to see that pickup. And also, too, we're actually expanding our distribution, Hamed, to further regional grocery store chains this year, as well as they're also adding displays. You may have seen in a lot of the big retail stores, a big push on displays in January and February leading up to Heart Health Month. So, they're really β to reiterate the feedback, it's incredible feedback of knowing that we're supporting this brand, and not only putting it in the aspirin aisle, but putting it in the drive-through aisles passing through. These big blue displays are really eye catching. And so, the expansion is beyond just the aspirin category and it's expanding into displays.
- Natasha Giordano:
- It's interesting because Rita mentioned in her prepared remarks that our retailers are telling us that the packaging and the way that it sits in their stores is breakthrough and eye catching. And that's why they're investing in these displays. And it's showing progress in that way.
- Hamed Khorsand:
- And my last question was, at what point would you feel comfortable in actually providing some sort of sales guidance?
- Natasha Giordano:
- We've been talking about that. Of course, as you would imagine, I know that everybody's very interested in receiving that guidance. And at some point, we will absolutely share more data. The thing is, in these early stages, when you're building awareness and you're starting to get adoption and you're starting to see conversion from trial to chronic use, it's a process. And so, you'll see data that's choppy. But what we can say is that we've seen very strong growth four weeks consecutively, four weeks on four weeks. Over time, average the double digits. So, we're seeing that growth starting to occur. And so, the reason we aren't providing guidance or data at this point is because it's really not predictive of what we think is going to happen by the end of the year. We're investing now to get that conversion from awareness to adoption. And so, at some point, we know and we realize that everyone would like to see more data and we certainly appreciate that. But that's why we're kind of holding steady right now because we're in those initial days, and we're very encouraged by the key performance indicators that Rita and I spoke of.
- Rita O'Connor:
- We're waiting for the stickiness to kick in. So, then it's an annuity stream, right? It compounds on itself. So, as a new patient gets on VAZALORE, they're on it for the rest of their lives. So it's quite a great annuity stream for us. So each month as we add new patients, the existing patients are still on it every day for the rest of their lives.
- Operator:
- . Our next question comes from Elliot Wilbur with Raymond James.
- Elliot Wilbur:
- First question for Natasha. Can I just ask you to repeat what you had discussed with respect to the number of targeted physicians that are actively recommending VAZALORE? I think you said 22%. Just want to make sure that I have the denominator or the baseline correct in terms of what that number refers to because it seems like a rather extraordinary number.
- Natasha Giordano:
- We're pretty pleased with that number as well. It's 22% of the HCP targets that we've reached. And we've reached about 85% of our targets. We're calling on high volume β obviously, high volume cardiology, but we're also targeting top group practices across the country as well. So, we're pleased with the progress that we're making, as physicians start to move from awareness, understanding the product, trying it, going into the trial phase, seeing how their patients react to it, and then moving on to adoption, which is what we're starting to see right now.
- Elliot Wilbur:
- The classic pharma rule of thumb is that you need four to six primary details before you really start to see an influence in terms of physicians prescribing or recommendation behavior, but I'm assuming that you have not reached that level of frequency with these prescribers, which suggests maybe that you might see sort of better initial conversion rather than having to wait for four to six details, just kind of want to get your thoughts on that. And then, of those 22% that are actively recommending to patients, do you have any sense in terms of how those recommendations have influenced or translated into consumer behavior? Whatever gap there may be, how you can more effectively close that?
- Natasha Giordano:
- We go back to what we know and what we've studied through our market research. The number one influencer for our consumer is their doctor. And the number two is brand familiarity, which is something we need to build the brand's identity. But what we'd like to say we're everywhere our consumers shop. So, between those two things, that's where we invest our time and resources. So, the physician recommendation, it's really important to that consumer. And when you think about a secondary prevention patient, a patient that may have had a heart attack or a stroke, they're highly motivated to not have another heart attack or stroke that could be fatal. So, you put those things together, the stickiness that we like to talk about, is increased even further because, remember, these patients are going to be on aspirin therapy for the rest of their lives, average 9 to 13 years at least. I think that the formula of four to six details still holds true. And where it does take several calls, especially cardiologists, right, they're very data driven, they want to understand the clinical side of things, they want to understand the PK and the PD data, they want to understand the GI data, which is published, and so important that these studies are published in such high peer reviewed journals. These things are important to them, but you need to bring them through the process. And so, it does take several calls. But what we're looking for is to convert them to get to VAZALORE as their drug of choice for the secondary prevention patient because it provides for complete and reliable platelet inhibition, in addition to reducing stomach injuries. So, yes, it does take a couple of calls. And we're in that cycle now where we're just starting to see them convert to adoption.
- Elliot Wilbur:
- I know last call, you had mentioned plans to expand the reach of targeted cardiologists whether within existing referral networks or moving to additional practices and clinics, just wondering how you're thinking about that versus just upping current promotion levels on existing targeted cardiologists over the course of the year.
- Natasha Giordano:
- I liked this strategy because if you think and you understand how cardiologists practice, they depend on their referral networks. And so, typically, those referral networks are close by. And so, first, we target the top 100 heart and stroke hospitals. They're affiliated group practices and we've broadened our reach to include the referral network of those high volume targeted cardiologists. And so, that will allow us to broaden our reach, but also optimize the time of the reps in the field and tap on an influence network because the cardiologists really do drive the treatment and the recommendation for these types of patients. So, we've already expanded our universe of targets through approaching the market this way to optimize reach.
- Rita O'Connor:
- Not only that reach, Natasha, to doctors, the pharmacists as well. You talked about the expanded pharmacist targets via our email strategy. So that's an important role that we're getting a lot of reach to.
- Natasha Giordano:
- To build on that, Elliott, you have physicians, you have pharmacists, you have nurses, and you have the advanced practice providers. And advanced practice providers are key in these group practices. They do a lot of the management of these patients. And so, to broaden, our strategy is really based on the total office call, the total office conversion of β people to understand that what this product can do for these patients and to become advocates, and those programs are in place and starting to .
- Elliot Wilbur:
- A direct question to Rita. Just with respect to sort of additional ROI metrics on your various media efforts and promotional efforts, just curious where you may be seeing better-than-expected performance and where maybe things have not quite met your initial expectations in terms of return on some of the initial investment and how that may influence print and media strategies and various other direct promotional strategy over the balance of the year.
- Rita O'Connor:
- Great question because one of the things that was a little surprising was how much the doctors are actually consumers of television ourselves. We are getting so many calls to our customer service line from healthcare professionals wanting to either see a rep or get samples. So, that is one area that surprised me a lot. Also, our ecommerce sales are much higher than expected, even though it's out of stock on 325 mg. So that also was very surprisingly on the good side. So, the metrics of the TV advertising are very easy to measure, including our own website. We're actually able to track within the minute of when a new IP address comes to our website. And I was just blown away by β as soon as we had that NFL playoff game, it was like the β to our website and Amazon went through the roof. And even the Amazon Buy Box, which is how many you convert to actual sales, we also see that is tremendous. And that percentage of buys by just one click of a mouse is much better than expected. So, I feel really good anytime my marketing team wants to go, do you want to skimp on advertising? I'm saying no, we look at the metrics you're showing me. So, I'm very, very pleased with the ROI on our TV spend. And as Natasha was saying too, I'm also very pleased with the amount of the exposure that the reps are getting to doctors. When they first talked about it to me, I'm like, there's no way you're getting into see these guys. And over 80%, right, Natasha, of the visits are in person. So, in terms of ROI, I'm pretty excited about it. And as you know, Elliott, I've said multiple times, we're going to manage the expenses. And the beauty of that advertising is it really gains efficiencies as the years go on. I don't have to continue to spend all that money on the high visibility shows, like The Daytona 500. And we're going to really shift towards our target audience in more or less expensive programming and as we see that stickiness start to take hold.
- Elliot Wilbur:
- Maybe just two quick final questions for you, Rita, as well. Can you just talk about expected CapEx investments over the balance of the year as you expand production, capacity and capability, I guess, related to larger batch sizes. I think you mentioned that last call, just want to make sure that that is on schedule and everything is going according to plan there. And then, with respect to some of the metrics you referenced in the press release, specifically, the Nielsen metrics for month ended β or the four weeks ended late February, wonder if you can at least share with us, at a high level, sort of what those numbers are suggesting in terms of unit volume and/or growth rates.
- Rita O'Connor:
- I'll take the CapEx and start on Nielsen data. And Natasha can follow up on that. In terms of CapEx investments, we're all done. We're working with our partner, Thermo Fisher in Cincinnati, and they're already well on the way to starting expanding our 325 mg. As you know, always supply chain can kind of impede some of those and labor shortages. But I'm pleased with the progress. You always wish will be sooner. But you should see minimal CapEx investments because we have all the equipment we need for the expansion. What you will see and what I referred to kind of in R&D is really more the testing, the feasibility, engineering batches for that scale up that will occur throughout the year, but not any material CapEx investments are planned for 2022. And I think you mentioned the Nielsen data metrics on unit and dollar growth. It's interesting to see because you asked about what else surprised me, I was very excited that the actually β the consumers are trading up from the 12 count, which is we put in there as a trial size, up to the 30. So, it's showing that they're moving towards that subscription-like model much faster than we had thought. So, the units are also going up and not just the dollars and becoming the heart health β the number three heart health brand so quickly. And we're getting very close to the units as well on the number three brand. Natasha, do you want to add to that?
- Natasha Giordano:
- Well said. I think we're in the early stages. We're in the awareness stage. And we're building that consumption base as the foundation because, as Rita mentioned, that's how you start to grow to adoption and the patient becomes sticky, i.e. going from the trial pack to the 30 count. And that's what the trial was there for, to get us to adoption and the stickiness of a patient that stays on VAZALORE for the rest of their lives. Although you have some choppiness still week on week and month on month, we're really starting to see that transition going from awareness to adoption and from trial to 30 count. And on average, that's a double-digit growth that we're seeing. And as it starts to compound itself, it really does become a subscription business. So, we're pretty excited about how strong a foundation we're starting to build here.
- Operator:
- Our next question comes from Leland Gershell with Oppenheimer.
- Leland Gershell:
- Congrats on all the progress. Few questions from me. I'm wondering if you could share with us, when you did the initial stocking, was there a certain kind of evenness with respect to that stocking and the expected pull-through of the various retailers? And as we see reorders coming through in 4Q, does that kind of reflect maybe just a lag by certain retailers? Or was it the case that maybe there was heavier stocking initially and those may be slower to restock because of their higher inventories?
- Natasha Giordano:
- In terms of the choppiness, in terms of putting it in the channel, we're actually very pleased with how many retail stores β and it's across the country. So, it's interesting, because they put it in nearly all of their stores nationwide. So, putting that initial stock in was significant. And now we're starting to see the pull through. Now, the fourth quarter was really, as you know β we were kind of waiting for everybody to make sure it was on shelf. Our retailers had their own challenges in terms of COVID, supply chain, labor, trying to stock the shelves. So, it took them a little while, which is why we really didn't go heavy on the media until the fourth quarter. So, that's where it occurred where the pipeline went in, it took them a few weeks, months to get it on the shelves. And then, once we knew that it was on the shelves, the displays were out there, and then we turned on the TV campaign. And then, we're starting to see that pull through, as we speak. So, the reorders are going to be choppy going forward. However, we'd like to see that eventually in the next couple quarters, that kind of shipments, equal consumption, which is also very difficult to project with an OTC brand. But we're seeing an awful lot of growth in like the Southeast, Texas, Florida area, and a lot of our efforts from the physicians are coming out of those areas as well. So, that may lead to some choppiness because of just where the patients are. But we're pretty confident about our distribution, as well as the consumption that will pull that inventory down.
- Leland Gershell:
- You sort of touched on this a little bit in terms of geography. Wondering to what extent you have visibility on areas that may be higher consumers versus lower. Are we seeing more in maybe urban centers? Is it more even across the board? How should we thinking of the spread of demand across the country as you roll it out?
- Rita O'Connor:
- It's interesting because the demand is really coming around those top 100 heart and stroke hospitals where we put our field force. So, that's obviously concentrated in the southeast, as well as in the northeast. So I wouldn't necessarily say it was urban centers. However, it was more or less surrounding the hospitals that these patients that really need this reliable therapy.
- Natasha Giordano:
- Natasha, do you want to add anything to that?
- Natasha Giordano:
- We really look at the demographic of our patient and where they reside as well. And we also look at, when we think about the targeted efforts of field force, it's high volume cardiologists that sit in high volume practices and their associated rep referral network. So, that's what we're seeing drive some of this.
- Leland Gershell:
- My last question is, with respect to ecommerce, it sounds like you're getting good pick up there. I'm wondering to what extent you can β either your visibility on or maybe share with us the option that users may have to click on a subscription refill kind of setup versus a one-time order. And is it the case that maybe those who ordered kind of one to begin with have now begun to check off that kind of regular refill paradigm?
- Rita O'Connor:
- ecommerce sales, as I said earlier, are doing surprisingly well. Amazon, in particular, and that's why it was so important that we got that back up online because we're noticing a significant increase in our subscribe and save. Many of you know who shop on Amazon will know you get a discount if you sign up for a subscription. And we're very pleased to see the growth in that area. Now, ecommerce sales, while they're great on consumption, as you know, they're not a retailer. So, they don't have the stocking that the other retailers do, like Walmart, for example. So, Amazon is almost like ship to consumption way, but we're seeing a huge uptake in the subscribers and that give us β lead to that, the stickiness and for the 30 count, which is also great that they've moved beyond the trial and now really want to take it every month.
- Operator:
- There are no further questions. I'd like to turn the call back over to Janet for any closing remarks.
- Janet Barth:
- Thank you, Michelle. And thank you all for participating in our call today. Please feel free to contact me with any additional follow-up questions. Have a great day.
- Operator:
- This concludes the program. You may now disconnect.
Other PLx Pharma Inc. earnings call transcripts:
- Q3 (2022) PLXP earnings call transcript
- Q2 (2022) PLXP earnings call transcript
- Q1 (2022) PLXP earnings call transcript
- Q3 (2021) PLXP earnings call transcript
- Q2 (2021) PLXP earnings call transcript
- Q1 (2021) PLXP earnings call transcript
- Q4 (2020) PLXP earnings call transcript
- Q3 (2020) PLXP earnings call transcript
- Q2 (2020) PLXP earnings call transcript
- Q1 (2020) PLXP earnings call transcript