TherapeuticsMD, Inc.
Q1 2016 Earnings Call Transcript

Published: 4 May 2016

[Operator:]

Good day, ladies and gentlemen, thank you for joining us for the TherapeuticsMD First Quarter 2016 Results Conference Call. Following remarks from the Company, we will be opening the call for questions. I would now like to turn the call over to Ami Knoefler from Spark Biocomm, representing Investor Relations for the company. Ami?

[Ami Knoefler:]

Good afternoon everyone. Thank you for joining today to discuss our first quarter 2016 financial and business results. Following the market close, TherapeuticsMD issued a press release announcing first quarter results. Our press release is available on the company’s website ThepeuticsMD.com, in the Investors and media section. On today's call from TherapeuticsMD are Chief Executive Officer, Robert Finizio; Chief Financial Officer, Daniel Cartwright; Chief Medical Officer, Dr. Sebastian Mirkin; and Chief Product Officer, Julia Amadio. We are also pleased to welcome David Delucia, who recently joined the Company as Director of Investor Relations. Before turning over the call to the company, I would like to remind everyone that certain statements made during this conference call may be forward-looking statements. Such forward-looking statements are based upon current expectations and there can be no assurance that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release and our annual, quarterly and other reports filed with the SEC. These forward-looking statements are based on information available to TherapeuticsMD today, and the company assumes no obligation to update statements as circumstances change. An audio recording and webcast replay for today's conference call will also be available online in the investors and media section of the company's website. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on May 03, 2016. With that, I'll turn the call over to TherapeuticsMD CEO, Rob Finizio.

[Robert Finizio:]

Thanks Ami. And good afternoon everyone. During the first quarter, we successfully executed on our goals across the company. We presented detailed phase 3 data at multiple conferences to both the medical and investment communities for TX-04, our vaginal estradiol drug candidate for the treatment of dyspareunia. Based on these statistically significant and clinically meaningful data, we are preparing to file our NDA in June for Yuvvexy. The conditionally approved trade name for TX-04 moving forward is Yuvvexy. That’s Y-U-V-V-E-X-Y. Yuvvexy is the first of our two novel bio-identical hormone product candidates in development to treat menopause of women. We are targeting large and underserved market opportunities and we are also on track to present topline data late this year from the replenished trial for TX-01HR, which is our combination estradiol and progesterone candidate. We remain very optimistic about our pipeline and we believe our commercial infrastructure and the prescription prenatal vitamin arena provides a great platform to launch these new products as we establish TherapeuticsMD as the leader in women’s healthcare assuming approval. Now let me turn the call over to our team for some brief introductory comments before we open the call for Q&A. Dan?

[Daniel Cartwright:]

Thanks Rob. Our financial results for the quarter ended March 31, 2016 are included in the press release issued today. Let me review some highlights. Our prescription prenatal vitamins business grew year-over-year by approximately 10% with net revenues of approximately $4.9 million for the first quarter of 2016 compared to approximately $4.5 million for the first quarter of 2015. Revenue growth during the quarter was primarily driven by an increase in the number of units sold and the average net sales price of the company’s prenatal vitamin products. Partially offset by the impact of annual changes in insurance plans. These sales were generated by approximately 40 sales representatives calling on healthcare providers in the OBGYN market in major U.S. cities. We believe this team provides an established commercial footprint in the women’s health space to support the potential future launch of our pipeline products. Total operating expenses for the first quarter of 2016 were relatively flat, compared with the first quarter of 2015. R&D expenses during the first quarter of 2016 were approximately $15.1 million compared to approximately $18.2 million during the prior year’s quarter. This reflects the decline in clinical trial costs, partially offset by an increase in scale-up and manufacturing activities to support commercialization. SG&A expenses for the first quarter of 2016 were approximately $9.7 million compared with approximately $6.2 million for the prior year’s quarter; this increase was primarily due to non-cash share-based compensation. On the bottom line, the company’s net loss for the first quarter of 2016 was approximately $21 million or $0.11 per basic and diluted share compared with approximately $20.9 million or $0.13 per basic and diluted share for the first quarter of 2015. Turning to the balance sheet. We finished the first quarter with approximately $182.1 million in cash compared to approximately $64.7 million at the end of December 31, 2015. We believe that our cash position is solid and that we are positioned financially to execute on our goals. Now let me turn the call over to Sebastian for a clinical update.

[Sebastian Mirkin:]

Thanks Dan. I’m extremely pleased with the word clinical achievements during the first quarter for both, the Yuvvexy and TX-001 programs. The REJOICE Trial showed a statistical significant and clinically meaningful benefit with Yuvvexy for the three doses across all four co-primary endpoints. We believe that the managerial [ph] effect and statistical significance of these results support the approval of our product as a new treatment for dyspareunia. Additionally, the trial demonstrated a significant effect with Yuvvexy on the secondary endpoint of vaginal dryness, unlike, recently approved drugs for the same indication that did not show efficacy on the endpoint of vaginal dryness. We believe that the data on vaginal dryness as well as the early onset of action and easy insertion [ph] can clinically differentiate Yuvvexy from available treatments. Another important differentiator for Yuvvexy is a PK [ph] profile for all three doses. The data demonstrated negligible to very low systemic absorption of 17β-Estradiol with all three doses, reinforcing findings from earlier studies in which Yuvvexy demonstrated lower systemic exposure than [Indiscernible] that is currently available in the U.S. market. Looking ahead, we are finalizing the necessary work to submit the NDA filing for Yuvvexy for all three doses under the file for IV2 [ph]. As we said before, we believe that providing multiple doses with low systemic absorption gives physicians and the patient more options to treat dyspareunia. Based on the efficacy and PK profile of Yuvvexy we look forward to working with the FDA to possibly simplify levelling including the potential modification or removal of the Black box warnings in line with request from scientific and medical communities. Now, let’s review the phase 3 Replenish trial, evaluating TX-001, our combination of natural estradiol and natural progesterone for the treatment of moderate to severe vasomotor symptoms, due to menopause. The Replenish trial is evaluating four different doses of TX-001 in over 1,750 subjects in the United States. Each of these four doses represents a potential new lower effective dose for the combination of estradiol and progesterone delivered in a single ordered combination capsule. Currently, over 1,500 subjects have exited the trial and we are currently on drug to release top line results late in the fourth quarter of 2016. Let me also provide you a brief update on our transdermal pipeline. Two assets are being developed. TX-005, which is progesterone only cream and TX-006 which is estradiol and progesterone combination cream. I am pleased to announce the following positive discussion with the FDA which have a clear path forward for this two programs. We expect phase 1 data for both programs in the fourth quarter of this year. Now, let me turn the call over to Julia.

[Julia Amadio:]

Thanks Sebastian. We have been actively working to share the clinical findings and educate the medical community about the results of the REJOICE trial during the course of scientific exchange at various medical conferences. These activities include a poster presentation on vaginal dryness data at ISSWSH, two oral presentations at the International Society for Gynaecologic Endocrinology and two late breaking posters at the Endocrine Society Meeting which provided the detailed trial results and PK data. We are also happy to be presenting another poster at ACOG later this month in Washington DC which will summarize the positive findings on the female’s sexual function index, another secondary endpoint from the REJOICE trial. We believe the REJOICE trial results support the unique attributes of our Yuvvexy product candidate and its potential as differentiated therapy if approved. The data supports several unique features, including a new lower effective dose which could attract new patients to therapy. Negligible to very low systemic absorption, a fast onset of action based on evaluation of efficacy in the REJOICE trial at week two, strong efficacy across multiple symptoms of VVA including pain during sex and vaginal dryness. 95% of women found our product easy to use with no applicator or messiness, and no estrogenic side effects versus placebo. On the commercial planning front, we continue to conduct and compile market research about the most current trends in diagnosis and treatment of VVA and dyspareunia. So far these data reinforce the high unmet need of the millions of women who are suffering from VVA. They also further inform our approach to the potential market introduction of Yuvvexy. We look forward to completing our NDA filing in June and continue to prepare for this important product launch if approved. Now let me turn the call back to the operator for Q&A.

[Operator:]

Thank you, Julia. [Operator Instructions] Our first question comes from the line of Ken Cacciatore with Cowen and Company. Your line is now open, please go ahead.

[Ken Cacciatore:]

Great. Good afternoon guys. Just a question for you all as we think about the market opportunity and you mentioned that you could attract new patients with the lower dose the per microgram dose, can you talk about some of the work you’ve done to maybe try to size what the differentiating opportunity could be there. And then maybe give us some of those feedbacks from your regulatory consultants. It seems that roughly people would be and obvious given the results that you’d want to have that option available to women to see if they could actually in practise get the type of results they would want with the lowest minimum dose. It seems almost too obvious, so can you give us the arguments as to why that wouldn’t be the case and we’ve heard others pose arguments, but still little confused why we wouldn’t want that on the market and let women see if they could get affected than those higher? Thank you.

[Robert Finizio:]

Hey Ken, this is Rob. I think just in short that is the case and it is what the data supports and it has been the engrained mantra for prescribing of all hormones since the WHI. So I think you hit the nail spot on.

[Ken Cacciatore:]

Can you talk about maybe the increased market opportunity if you opened it up to even that lower dose?

[Robert Finizio:]

Absolutely. So, it’s a thing that we'll elaborate on. We have new slides and that will be release tomorrow, new public investor deck. So they are about uniquely in this class, about 30 million untreated women. One of every two postmenopausal women walking around in the U.S. today have moderate to severe dyspareunia or symptoms of VVA, if that obviously would have the sexual intercourse, dyspareunia, but moderate to severe VVA symptoms, and that is a chronic progressive disease that needs treatment. So it's certainly a significant issue. These is now one factor that prohibits about 30 million of the women from being treated with low dose estrogen therapy, it sort of amalgam of physical issues with the existing products and clinical issues with the existing products for both the patient and the provider. The way Dr. Burnett architected this product set or what we call a target profile was to eliminate the physical issues for the patients and the prescriber, and the clinical issues for the patient and the prescriber. And we think we've done a very, very good job. So we think we're in a great position to bring more people online from a product feature set both clinically and physically for providers and women. And to bring it together we also see a vary of the 30 million women that are not being treated, a little over half of those women might be using OTC, might be using different issues and now have shied away from hormone therapy and I think our attributes for both women and providers should be deemed attractive and hopefully we can grow that population significantly.

[Ken Cacciatore:]

Thank you.

[Robert Finizio:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Annabel Samimy with Stifel. Your line is now open. Please go ahead.

[Annabel Samimy:]

Hi, guys. Thanks for taking my questions. I want to talk about the potential label modification that you'll be seeking. I think it was more than just trying to modify the box warnings that could be about administration dosing, other warnings and how much do you think you can realistically change within the label to differentiate this and for delineated for physicians when you're marketing it. And then just as a follow-on to that, we have a lot more I guess there's has been quite a lot of resurgence focus on estrogen products of late and I'm just wondering what kind of investment commitment do you now need to make because that sort of change the calculation in terms of the commitment that you need to make? And I guess how do you gain share voices that going to be a much better marketing presence or do you have to sort of – do you essentially get to depend more on a differentiated label fail to do that, to penetrate that market volume?

[Robert Finizio:]

Annabel, it's Rob, so let me split that into a couple answers. So, from a label standpoint and a filing strategy standpoint, internally we’re planning around that and our best case scenario is if we were to get a class label we know we have enough physical differentiating characteristic regardless of the label, to differentiate our product from legacy therapies and capture a very strong piece of the market. In addition, we believe we have enough clinical characteristic that would not be massed by the class labelling if they were to have these standard class labelling that in place today to also differentiate our product and the clinical standpoint. So and that's enough to win. We strongly believe we can take our fair share of market here. Now our upside scenario would be a highly differentiated label with multiple doses being approved and we know that would led our data completely shine through both physically and clinically and that's an absolute game changer in this segment. So, from a label standpoint that's our base case in upside. We're in a great position. We feel very strong in a number of ways and lot of this will be reflected in the slide deck that's coming out. Now to launch, so to launch this we have articulated that will go to market initially with Yuvvexy before the combo comes, assuming approval with 150 reps. You will see a heat map of where the current prescriptions are coming today across the U.S. and you'll see that our vitaMedMD salesforce that is on to same prescribers writing for prescription prenatal, vitamins as well as the VVA solutions overlaps with that perfectly. And where there is not overlapped, you'll be able to see where we need to go to cover it. The one variable is what label do we get, what claims do we get and how much we put into advertisement, because we feel with the money we've raised we have enough to cover the sales personnel at this moment in time. So, that advertising budget is a big one. We have to wait and see what the label claim is before we make any indication on that, as well as any more details strategic launch specifics. That's not fully baked, so we don't want to comment it on that either. But I can guarantee you of the both comment.

[Annabel Samimy:]

Great; thanks.

[Operator:]

Thank you. Our next question comes from the line of Jay Olson with Goldman Sachs. Your line is now open. Please go ahead.

[Jay Olson:]

Hey, guys. Thanks for taking the questions and congrats on the data presentations. I had a couple of questions. First on Yuvvexy and then a follow-up on TX-001. With regard to the Yuvvexy data that was presented at ENDO and particular with regards to the PK data. Can you just walk us through what the sort of simplifications are that you might be looking at in terms of the black-box warnings in the label. I know you mentioned the best cases of class label and then you upside scenarios. Can you just give us some idea for what those upside scenarios look like in terms of simplification to the warning and how that may play out across the three doses??

[Robert Finizio:]

Hey, Jay. Thanks for joining. It’s great to have you. I would love to give color there, but it just really hard on the fly, maybe we can get a little bit of color there for you at another time. It's hard to shoot from the hip, specific to label, because you know the FDA is going to do what they want to do. The best thing we can do is we focus on what we can control and we will have a base case scenario ready to execute on. We'll have an upside scenario ready to execute on, and we need to get this application filed and get those negotiations going. And I'd hate to speculate on those scenarios and I think we've encompass every possibility with our internal clinic

[Jay Olson:]

Okay, totally understood. And just on TX 0057, recognizing that you've got topline slated for fourth quarter. Can you give an idea of what we should expect to learn from is it just going to be the primary endpoint? Are there secondary endpoints that you can share with us in the top line or will those be embargoed? Thank you.

[Robert Finizio:]

Excellent. So, I'm really looking forward to that data presentation. As you know and I'll let Sebastian to speak. This is Rob again. As you know Jay, we will deliver that data this year. As Sebastian mentioned there's over 1500 patients out of the trial. There is still no consensus, high proplysia in the trial. And as you know all of the efficacy is completely blinded, so we can see any of that. So, what we expect we'll probably be very similar and I'm glad you brought that up, so we can set expectations to what we did with Yuvvexy. So last year in 2015, December 2015 we presented Yuvvexy topline data which had primary efficacy and safety and well, I think we were able to get a little of secondary data out, as a small company with a very material milestone coming up like that. The second we have confirmed top-line data, we have to really say to the public. We're not like a bigger company that can hold it back and co-relate because it's so material to our market value, co-relate a lot of secondary data and then present it all at once. We would love to be able to do that, but I think it will be much more like Yuvvexy was. We'll have the primary topline out with this much colors as we can give. And then scientifically the same conferences are coming up and my guess is we'll get some color on the secondly endpoints on as well. And as far as the expectation goes and the way the doses are, I think Sebastian can comment on that.

[Sebastian Mirkin:]

Yes. Thank you, Rob. So, hey, guys, you are very aware, right. We are evaluating four different doses containing natural estradiol and natural progesterone. And these doses contain well known doses that show efficacy already for the treatment of vasomotor symptoms. In other words, the 1 milligram combination, the 0.5 million combination have been joined to work on [Indiscernible] in a single dose. So, the three higher doses will show efficacy and we don't know have any doubt that we're going to have the right efficacy to demonstrate the required effect. The lower dose 0.25 dose is a dose that maybe become a known effective dose. Therefore the low effective dose will be identified by the 0.5 dose combination. All right.

[Jay Olson:]

That's great. That's helpful. Thanks guys.

[Robert Finizio:]

Thanks for joining. It's great to have you on the team. I appreciate it.

[Operator:]

Thank you. Our next question comes from the line of Bill Tanner with Guggenheim Securities. Your line is now open. Please go ahead.

[Bill Tanner:]

Hi. Thanks. Just want to change topic a little bit, Sebastian you mentioned 005 and 006 data around the end of the year, maybe just give us a sense of what we could potentially see with half forward and then just where we see these products potentially fitting in?

[Sebastian Mirkin:]

Hey, Bill, great for having you. So, yes, so we'll start to click both drugs on the clinical program in which we're going to be showing head-to-head comparison versus they [Indiscernible]. So we're planning to do in agreement with the FDA for both programs, C05 and CO6, the head to head bio-equivalent study to demonstrate the absorption or the lack of absorption to say of estradiol or progesterone. So, with that we believe that we're going to have a very clear understanding of dose selection for the next step, which it could be Phase 2 within endometrial biopsies and follow-up by Phase 3 to show the required efficacy as well.

[Robert Finizio:]

So, its Rob. The one change to the plan here, this is now two studies, its progesterone alone and progesterone with estradiol. That has changed. Sebastian team had some pretty clear guidance from FDA very recently. We think that is the cost effective or protecting the shareholder value, the best way to go to those two first as oppose to one of those which up in the Phase 2. So little bit of change, but none the less we think a less risk, more value earning to strategy.

[Bill Tanner:]

Okay, great. Thanks very much.

[Robert Finizio:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] Our next comes from Nathan Cali with Noval Financial. Your line is now open. Please go ahead.

[Nathan Cali:]

Hey, guys good afternoon. Thanks for taking the question.

[Robert Finizio:]

You're welcome, Nathan. Thank you.

[Nathan Cali:]

So just a couple of follow-up questions on 005 and 006, I'm not sure if you have mentioned this or not. What would be the targeted indication for the progesterone on only product and then in the combination.

[Robert Finizio:]

Nathan, this is Rob again. So there's a number you can go after, so assuming we get the results for hoping to get, that we had in some of our earlier studies, progesterone has never been proven anywhere that we can find in any of the major markets to work transdermally. We hope we have that worked out. We’ll find out with these studies. But the indication we'll be going as obviously there's a vasomotor indication here when added with estradiol. The areas with progesterone by itself are some significant fertility indications, there are some other endometrial indications that are all very large and we believe underserved, I forget anything else.

[Sebastian Mirkin:]

Yes, you can even -- our first initial approach will be to develop progesterone only cream for the protection of the endometrial was use estrogen only, oral therapy as well. So there are series of -- buyers of -- that we can use for both programs being the estrogen plus progesterone with a clear path of vasomotor symptom indication due to menopause.

[Robert Finizio:]

And if I'm picking out of memory here, but I believe the top four markets we had indicated were all upwards of $750 million and growing and again somewhat underserved and not as competitive as maybe other segments that large, and very similar to the markets we're going after today. Thus this development pathway is specific with the two separate drugs, TX-05 and TX-06.

[Nathan Cali:]

And there is no topical progesterone bio-identical currently on the market today, correct?

[Sebastian Mirkin:]

There is no approved transdermal progesterone; there is only progestin or progestin with estrogen just like orals that FDA approved. The same challenges that you have with the bio availability of oral progesterone, food effect, variability, as well as a chemistry challenges of getting it to behave with other smaller molecules exist transdermally but now having at a whole another layer of challenges of trying to get it through the skin and its challenging. Now our early indications of the first two studies you guys have all seen it looks really good, it’s not showing up on the blood. It seems to be getting through the skin, its showing up in a couple of different compartments in the body and it’s very promising and that’s why we are investing in it. We think we can get it done but we won’t know until we have the data.

[Nathan Cali:]

And then just one quick follow up question on 001, what’s your thoughts around the high proplysia [ph] data that you are not showing that, are you getting some confidence that you are getting efficient serum delivery of both progesterone and estradiol concentrations that are efficient to an efficacy endpoint based upon what we develop at [Indiscernible] and the efficient use of these for reduction of hot flashes?

[Robert Finizio:]

Yes and I’m glad you brought that up and it’s kind of takes Sebastian’s comment further and I’ll turn it over to him, but as you know the 1 milligram, the 0.5 milligram doses of estradiol in separate studies, a number of separate studies seem to be effective at the week four, week twelve severity and frequency of hot flash endpoints which is what we are going after. And the question that we’ve always gotten from the experts is, have you been able for the first time to formulate progesterone so it actually works and opposes that estrogen and endometrium, and so far from a safety standpoint we look very good, very good. And given that Sebastian is an endometrial expert, I’ll ask if he has anything to add.

[Sebastian Mirkin:]

Yes Nathan thank you for your question, right. So as I indicated, as of today more than 1,500 patients have finished the clinical trial. We obtain a biopsy for each of these patients. Three [Indiscernible] shares grade each of these biopsies in a sequential way as required by the FDA and as of today we don’t have a single case of consensual hyperplasia, meaning no case of hyperplasia in the 1,500 patients that exited the trial.

[Nathan Cali:]

Would you say that that data is evenly distributed across the dosing regimens at this point?

[Sebastian Mirkin:]

It’s a blinded that as you will appreciate therefore we cannot make this assumption, but the rule from [Indiscernible] so you need to figure it out.

[Robert Finizio:]

Yes and that’s a good point. Just to be clear there one for the record. This data is completely blinded. The only thing any sponsor would have access to is safety issues you need to know so that data does come through and so far we don’t have any safety issues what so ever and let’s hope it holds.

[Nathan Cali:]

Right. Great, thanks a lot. Congrats on the progress.

[Robert Finizio:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] One moment for additional questions.

[Robert Finizio:]

Okay. So in closing, we had a very important quarter with a number of key achievements in our pipeline and progress towards the launch of Yuvvexy if approved. We look forward to filing the NDA in June and continue to prepare for launch. We are also eagerly awaiting the Replenish trial data for a combination product and we are reconfirming our forecast for that and late in Q4 and I want to thank everyone for joining the call today. Thank you.

[Operator:]

Ladies and gentlemen thank you for your participation on today’s call. This does conclude the program and you may all disconnect. Everybody have a wonderful day.