TherapeuticsMD, Inc.
Q1 2015 Earnings Call Transcript

Published: 6 May 2015

[Operator:]

Good day, ladies and gentlemen, thank you for joining us for the TherapeuticsMD First Quarter 2015 Financial Results Conference Call. Following remarks from the company, we will be opening the call for Q&A. I would now like to turn the call over to Ami Knoefler from Spark Biocomm representing Investor Relations for the company. Ami?

[Ami Knoefler:]

Thank you, operator and welcome to TherapeuticsMD's first quarter financial results conference call. Please note that a copy of the first quarter financial results press release was issued today after the close of market. It is available on the company's website, ThepeuticsMD.com, in the Investor section. On today's call from the company are Chief Executive Officer, Robert G. Finizio; Chief Financial Officer, Daniel A. Cartwright; Chief Medical Officer, Dr. Sebastian Mirkin; and Chief Product Officer, Julia M. Amadio. Before turning over the call to the company, we 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 Investor 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 5, 2015. With that, I'll turn the call over to TherapeuticsMD CEO, Rob Finizio.

[Robert Finizio:]

Thanks Ami. And thanks everyone for joining our call today. Our last call was less than two months ago. In that relatively short time, we’ve made great progress and we’re very excited about our future. Let me review some highlights from the first quarter. Our current prescription prenatal vitamin business has grown significantly with the year-over-year first quarter revenues increasing by 58%. Our two pivotal late stage Phase 3 trials are making great progress at enrolling patients. Sebastian will give you specific enrollment number shortly. Our IP pattern position continues to strengthen with additional filing and patterns being granted. We are now up to 102 patterns filed world-wide including 11 patterns issued in the U.S. alone. Our cash position is solid with 91.7 million at the end of the first quarter, as a result of the equity offering during the first quarter that generated approximately 59.1 million in net proceeds. And finally, we’ve appointed two new independent directors to our board who are highly experienced biopharmaceutical executives, Angus Russell formerly CEO of Shire PLC, and Martin Carroll, formerly CEO of Boehringer Ingelheim Corporation. Now Dan will review our financial results. Dan?

[Daniel Cartwright:]

Thanks Rob. We’ve had predicted first quarter with continued execution on the pipeline and commercial front. For the period ended March 31st, 2015 revenue from our prescription prenatal vitamin was approximately $4.5 million compared with approximately $2.8 million for the 2014 period. The increase is due to growth in sales of prescription prenatal vitamin products and increase in the average net sales price. We are pleased with the performance of our sales team in this highly competitive market. Operating expenses during the first quarter of 2015 increased primarily due to higher R&D cost. R&D for the first quarter was approximately $18.2 million compared with approximately $5.9 million for the prior year’s quarter. This reflects the company’s continued investment in two Phase 3 clinical trials for our novel hormone therapy programs, as well as scale up and manufacturing activities in anticipation of commercial launch. Sales, general and administrative expenses for the first quarter of 2015 were approximately $6.2 million compared with $5 million for 2014. This is primarily due to increased personal, legal and accounting costs. Cost of goods sold for 2015 period increased during the first quarter from approximately $830,000 to $1 million. For the first quarter 2015, the company’s net operating loss was approximately $20.9 million or $0.13 per basic and diluted share compared with approximately $9.2 million or $0.06 per basic and diluted share for the first quarter of 2014. We are also pleased to have strengthened our cash balance in the first quarter. As of March 31st, 2015 we had approximately $91.7 million in cash, this reflects net proceeds of approximately $59.1 million from an equity offering in February. As a reminder, we anticipate our cash resources will support completion of our two ongoing Phase 3 clinical trials as well as validation and prelaunch commercial scale up. Now let me turn the call over to Sebastian for a clinical update.

[Sebastian Mirkin:]

Thanks Dan and thanks everyone. We’re making important progress to advice our late stage pipeline and clinical development activities. Starting with the Replenish trial, the trial that evaluates our natural estrogen, natural progesterone candidate for vasomotor symptoms, due to menopause. As of today, we have 1,491 subjects enroll which is over 85% of our target of 1,750 subjects. Given these current figures, we will have recruitment we now push into the second half of the year. Turning now to Rejoice, our Phase 3 trial for the treatment of moderate to severe dyspareunia, enrolling this trial continues to go extremely well to our recruitment goal. We expect this trial will be fully enrolled by the end of June. Today, we are very excited to report that we are ahead of our original estimates. 518 subjects are enrolled which is 74% of the total of 700. Given our historical compression rate, we believe that we have already enough subject constant screening to complete enrollment by the end of June. To summarizes, I am very happy to announce that both trails are nearly enrolled. We have seen tremendous progress and we look forward to a dominant result of the result trial later this year. Now Julia will summarize our progress on scientific communications.

[Julia Amadio:]

Thanks Sebastian and thank you everyone for joining today’s conference call. I am also very excited about the recent progress we have made with scientific communications and publications related to our clinical trials and the market opportunity for our product candidate. In the first quarter, we participated in three major medical meetings, ISSWSH, ENDO and ACOG. Today at ACOG, two significant presentations took place discussing the wide spread use of Compounded Menopausal Bio-Identical Hormone Therapy in the U.S. One presentation, data from a physician survey show that the majority were confused about which hormone therapy options are FDA approved. The second, estimated between 22 million and 46 million prescriptions of non-FDA approved Compounded Menopausal Hormone Therapy are filled annually and that one million to two million women are taking them. As you know such data presentations play a key role to educate prescribers about the prevalence of women using compounded hormones and substantiate the need for an FDA approved combination bio-identical product. Later this month, we will also have a strong presence for the first time at the EMAS meeting which is the conference of European Menopause and Andropause Society. As our Phase 3 trials mature, we are looking to build scientific consensus and grow awareness of our company and product candidates in Europe. To help achieve this, three abstracts will be presented. One, regarding our Phase 2 VVA data which shows that VagiCap efficacy using histological measures and correlates to visual assortment. This is remarkable in only two weeks and supports an early onset of action for TX 12-004HR. Two additional abstracts address the current use of and attitudes towards hormone therapy by European women. We’re also hosting a symposium in which we will review the details of both of our Phase 3 protocols and how are two late stage product candidates can address global unmet market needs. In addition, EMAS has just published a manual script of the replenish trial protocol discussing the potential benefits of this natural hormone combination in their official journal Maturitas. All of these activities continued to build awareness of our product candidates and the unmet market needs they could fill. Rob?

[Robert Finizio:]

Thanks Julia. I am very pleased with the progress we’ve made this quarter and now that the tow late stage trials are wrapping up enrolment. I’d like to give some color for the first time on the next generation platform that applies a new technology for transdermal, estradiol and progesterone and a potential second wave of new products from TherapeuticsMD. Data from this program are on slide 27 and 28 in our current investor deck on our website, if you’d like follow-on with a visual reference. In early stage animal studies result shows our transdermal progesterone for TX 12-005HR opposes the effect of estradiol and the endometrium with low to undetectable levels of progesterone in the blood serum. These results confirm our early human PK studies of TX 12-005HR which also showed negligible blood serum levels with sustain lymphatic and capillary concentrations for over eight hour strip. So why is this exciting? First, these data suggest a possible first-in-class therapy with low to no blood serum levels potentially creating significant generic barriers. Based on this preliminary data, the efficacy of our transdermal progesterone appears to be the equivalent to injectable subcutaneous progesterone, which is the goal standard in PK studies and our active control arm in these studies. Second, we’ve identified five potential indications for TX 12-005HR with domestic market opportunities of approximately $500 million each, which are as follows; number one, preterm birth; number two, in fertility; number three, vasomotor symptoms; number four, endometriosis and fibroids; and number five, secondary amenorrhea. This also provides a creative new mechanism for TXMD to advance our IP portfolio in a new direction. Most importantly though, we recently mapped with the FDA and have a clear development path forward for the vasomotor indication for TX 12-005HR. With all that said, I’d like to highlight or conclude our first quarter call. The company lost $20.9 million, most importantly 18.2 of which is for clinical trials and research. Both of our late stage trials are nearing enrolment completion. I expect to be announcing the last patient enrolled in our REJOICE Trial before the end of June. For replenish which is the combination trial, we are over 85% enrolled which is currently about a month behind on enrolment, so this will push in the second half of the year. Our commercial business is performing very well offsetting a portion of our R&D investment and providing a built in commercial infrastructure. This portion of our business is positioned very well to add to the catalyst enabling a smooth transition to commercialization for the VagiCap and combination products. Scientific and competitive awareness the company is that in all time high and will continue to grow as we began our international strategy. Legislative tailwinds continued to strengthen our first mover advantage in the bio-identical hormone replacement market. It’s been an exciting quarter here at TXMD and we thank you for joining today. I’ll now ask the operator to open the call for your question before the closing remarks.

[Operator:]

[Operator Instructions] Our first question comes from the line of Annabel Samimy of Stifel. Your line is open.

[Annabel Samimy:]

Hi thanks for taking my questions. Just really quickly on the enrolment, just it’s obviously going very well but recently we’ve had a few clinical blowups in the space not in hormone space specifically but just in our sector, part of it seems to been related to something regarding enrolment, enrolling the wrong patients, too rapid enrolment cannot control, so how are you controlling I guess doing some quality control on the enrolment of the women that you are allowing into the trial. Can you sort of talk about that a little, so we can gain a little bit comfort that you are not going to have hang-ups due to too rapid enrolment? Thanks.

[Robert Finizio:]

Sure. So to get the right answers, Annabel and thanks a lot of joining today by the way. We got - that’s a right question, right? I didn’t want to say that but I am happy to have you, very happy. So we got right to ask the right answers, right? So as you see by our team here in both specific indications are going after, so whether it’s for vasomotor symptoms or for VVA, we have got a number of folks internally from the high levels like Sebastian or Sally or Ginger or Gina that have done a multitude of these study successfully over the past 20 years or so, know this division very well and know that they got are not just on study design but also recruitment and quality. So I think you’ll see today that we said our combination trial is about behind the bottom month and I’ll tell you I directly linked at the quality. We have to have 100% quality in trial at all times. And I can speak for Sebastian, he’s done seven or eight successful vasomotor symptom studies, he’s done over five vulvovaginal atrophy both domestically and internationally and we what quality looks like and we are not going to settle for anything else.

[Annabel Samimy:]

Okay, great, thanks for that. And just on the transdermal program, I just want to clear, is that transdermal estradiol and progesterone together or it’s just progesterone?

[Robert Finizio:]

Yes, so good question. So we have E plus P and we have P alone. And the key here is there in all 13 markets where we have IP filed globally, 13 are the major pharmaceutical markets in the world. There is no FDA approved progesterone anywhere in the world. As you know in the U.S. transdermal market share is about 20%, yet the Europe it’s between 50% and 60%. You got into Far East and it’s probably upwards of 80%. So we see this as a key development for us, number one. To be able to dominate this phase we plan hormones. Number two, as you can understand most all leaders recommend transdermal applications, but just like the oral progesterone there is no transdermal progesterone anywhere and we really think we’ve got that figured out. And uniquely our Phase 1 and Phase 2 will dictate this but so far our early stage human study and multiple animal studies show that it is looking to be affective in a very impressive way almost equivalent or equivalent to subcutaneous injected progesterone which is really impressive. But not but not least, it’s not showing up or it’s undetectable in blood serum which just gives it a very, very significant hedge. So you put all that together generic barriers, a new mechanism as well as a safer which considered a safer route of administration. We think it’s a real winner. And I’ll tell you there is a good five or six indications out there with large markets. So we’re really excited to get this going. Some of these will partner off and maybe one or two will do ourselves, but we’ve got to get through that Phase 2 data and then we’ll be in a position where we can really monetize it to its full value.

[Annabel Samimy:]

Okay, great. And a question Julia please on at the ACOG, I notice that you mentioned that there were about 22 million to 46 million prescriptions, in that a brand of the range seems a little bit higher than some of the calculations that we saw before, is that the case, is it actually higher than some of the other publishers says that come out here on 30 to 33, so just can you clarify that. And how is that that presented that data?

[Julia Amadio:]

Sure. Hi Annabel. Actually Dr. Arthur spoke about this is a poster, e-poster presentation and basically what he was showing was some data that was also initially the extrapolations were published or were presented some of them at ENDO. But yes the upper end of that new extrapolations on compounded bio-identical hormones is as high as the 40 million. It’s - when you look at the total number of independent pharmacies and those pharmacies that just you are compounding it actually can be that high.

[Annabel Samimy:]

Okay, great. Just if you don’t mind, a housekeeping question. On the R&D of 18 million, can you guys give us a trajectory for I imagine R&D is going to stay high for sometime but so we expect after the third quarter so it’s sort calash after you got the VVA program completed or is it something stay hard because of the E plus P program?

[Daniel Cartwright:]

No. Annabel, this Dan Cartwright. Thank you for the question. The - we believe it will start to fall off in the third quarter as you described as we get the VVA trial. When we talk about the most expensive part of these trials, it’s always getting the patient into the trial. So we feel good about since we are getting - going to have most of the patients are here into the trial in the next few months, we will then we will see the trial cost drop off. They will still run, as you know the E plus P is a 12 month trial, but we see that is the lower end of the burn will happen in those last 12 months. So we’re excited to get all the patients in.

[Robert Finizio:]

Annabel this is Rob, if I can add to that. I’ll give you a little bit - a few tools I use here. So obviously we don’t forecast, we’re not forecasting. But as you know we’ll have the last patient in by the end of June, the next 60 days for the VVA trial. 70% or more of our trial costs are frontloaded for that - once that patient is enrolled, right. We have enough patients in screening as well as already in the trial at our current screen fill rate to enroll with what we have already in screening today. I not sure if that was clear the way I said. Let me say it again. We have enough patients in screening to finish the trial for the VVA trial. And as you know to Dan’s point with all these front loaded costs, we anticipate these costs going down of $20.9 million, 18.2 was for R&D, so outside of our clinical research and development, we are not burning much money. So I hope that helps.

[Annabel Samimy:]

Yeah, it does. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Ken Cacciatore with Cowen & Company. Your line is open.

[Unidentified Analyst:]

Hey guys, this is Alan for Ken. Congrats on the continued progress. First question just for the transdermal program, can you just comment a little bit on how you are prioritizing these five indications as you think about going into the clinic? And then secondly, so as your first data readout approaches, are you seeing any more activity from companies might be interested in integrating your technology into their women’s health business?

[Robert Finizio:]

Great questions. So this is Rob. So let me take them in the order you gave them. So what Sebastian has been able to do is define a vasomotor symptom pathway forward for the transdermal estradiol and progesterone okay. So why do I say that? So what we want to show here in Phase 1 is that we are getting proper distribution of the progesterone, estradiol is pretty easy, it’s no scientific feed, right. So you really want to show that the progesterone is being distributed correctly. And what that allows you to do is go into a Phase 2 does ranging study, that Phase 2 will contain estrogen priming and endometrial biopsies which shows the actual progesterone reaching the target tissue which is to protecting any of these indications that we’ve mentioned, right? So ones you can definitively define that protected with the intellectual property because this is a very new mechanism for us. It gives you the ability to monetize that these indications and there is another five or seven out there that you can look it ones we mention, but those are the ones are very interested in. And it also allows you to protect yourself right from an IP standpoint and the entire portfolio products that contain progesterone. So that’s the through process of what we have and we do believe we’ll have in Q4, Q1the Phase 1 results. And then in Q1, Q2 of next year of ‘16 the Phase 2 results, right. So well as we get closer, we’ll give a little bit of a tighter timeline. And we are just really excited to see this all workout. It looks like some real good upside for successful. But I do want to warm everybody it is early, right, so we’ll see. With that being said, aren’t your answer question, there obviously these are large markets or underserved markets and growing markets and there is not much innovation here. So I am very comfortable to say some much larger companies are obviously taking note, interested and everything from international distribution, domestic distribution and anything else you could think of. But as you know, we’ve invested here, we’ve taken the dilution for trials, we are going to see these trials through and we have every intention of taking these trials to market unless something changes.

[Unidentified Analyst:]

Great, thank you.

[Robert Finizio:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Nathan Cali of Nobel Life Science Partners. Your line is open.

[Nathan Cali:]

Hey guys, good afternoon. Just one quick question on VVA, what type of data will you be reporting as top line and any expectations around one that would be in the third quarter?

[Robert Finizio:]

So Nathan, what we’ll do is when we enroll the last patient, we’ll give some more clarity around it. We have an early August earnings call, or I think Sebastian will be in a position to maybe give you some clarity. It’s just really hard to say that now and if I said it could be wrong, right. So you know what our key product profile is, you know what’s the end points for the trial are. I can’t tell you that we’ll tell you how we hit our end points or didn’t. I can’t go any further in that now because I just don’t know, to be honest with you. Do you have anything to add, Sebastian?

[Sebastian Mirkin:]

No that’s fine, Rob. That’s clear enough. Certainly we expect to make sure find this from the trial we created safety and efficacy.

[Nathan Cali:]

Okay, great, thanks.

[Robert Finizio:]

Thank you. Thanks for joining by the way, Nathan.

[Operator:]

Thank you. At this time I am showing no further question. I’d like to turn the call back over to Robert Finizio for any closing remarks.

[Robert Finizio:]

Everyone thank you for joining today. This has been if not our strongest one of our strongest quarterly calls and quarters to-date. If you look behind the scenes here TXMD is hitting on absolutely all cylinders. Our sales are strong, the early stage product development is very impressive. Our recruiting is just delivering on every single front, scientific publications and awareness could not be better. The regulatory tailwinds related to compounding enforcement of bio-identical as well as progesterone on women’s health is underway for the first time. It’s very exciting. Our IP and pattern development for lifecycle here these products has been very, very strong and robust. We’ve begun manufacturing infrastructure as well as our last patient in for the REJOICE. Trial will be less in 60 days from today which is very exciting. And we believe that replenish trial isn’t that far behind it. And we look forward to updating you on our next call, the first week of August or so. Thank you for joining.

[Operator:]

Ladies and gentlemen, thank you for your participation on today’s conference. This concludes the program. You may now disconnect.