TherapeuticsMD, Inc.
Q2 2015 Earnings Call Transcript

Published: 7 Aug 2015

[Operator:]

Good day, ladies and gentlemen, thank you for joining us for the TherapeuticsMD Second Quarter 2015 Financial 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 us to discuss our second quarter 2015 financial and business results. Following the market close TherapeuticsMD issued a press release announcing the second quarter results. Our press release is available on the company’s website ThepeuticsMD.com, in the Investor 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 M. Amadio. 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 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 August 6, 2015. With that, I'll turn the call over to TherapeuticsMD CEO, Rob Finizio.

[Robert Finizio:]

Thanks Ami. And thank you everyone for joining the call today. We’ve made substantial progress in the last quarter towards our goal of becoming a leading specialty pharmaceutical company focused on women’s health. Let me start with some key highlights. We successfully completed enrolment in our Phase 3 REJOICE Trial, a lead Phase 3 candidate TX-004HR is in development for the treatment of moderate to severe Dyspareunia, which is a symptom of vulvar vaginal atrophy, also known as VVA due to menopause. Our top line results are anticipated in Q4 of this year. Our second product candidate is also advancing in Phase 3. TX-001HR is a combination natural estrogen and natural progesterone intended for the treatment of moderate to severe vasomotor symptoms, due to menopause. Here we have made significant progress enrolling patients and we expect the trial to be fully enrolled in the second half of this year. Sebastian will give you more details in his update. We’ve enhanced our relationship with key opinion leaders efficacy groups compound and pharmacies and the medical community worldwide. This includes forging a new alliance as a corporate member of the IACP that stands for the International Academy of compound and pharmacists, which we believe paves the way for future collaboration with this group. We see the compounding pharmacy is a very strong strategic distribution partner for both our VVA and combination product candidates. We continue to expand our IP portfolio through additional filings. Most recently, we announced the allowance of a patent for a VVA product candidate. This brings our IP portfolio to a current total of 111 patent filings. We have 14 US patterns granted. Last two items I’d like to briefly touch upon are the recent financings and the performance of our prescription prenatal vitamin business. The latter of which is enabling us to build relationships with key Ob/Gyn’s that will be advantageous for potential commercial launch of our two lead product candidates. We believe this infrastructure will serve as a cornerstone for our future growth. Now, the recent financing. In July, we announced the pricing of a common stock offering generating net proceeds of just over $32 million. The reason for this race was to put in place secondary manufacturing capabilities and ensure that we have sufficient quantities of products to meet projected demand for our product candidates if approved. Lastly, we see continued growth in our prescription prenatal vitamin business, expanding our reach with Ob/Gyn physicians in larger group practices, in other women's health specialists. We are pleased to see year-over-year revenue growth during the second quarter of approximately 29% in this business, one of the most competitive and generisize segments in the women's health space. I’ll now turn the call over to Dan so he can review the financials.

[Daniel Cartwright:]

Thanks Rob. Turning to financials, we've had a productive second quarter with continued execution on the pipeline and commercial fronts. For the three-month period ended June 30, 2015 revenue from our prescription prenatal vitamins was approximately $4.8 million, compared with approximately $3.8 million for the 2014 period. The increase is due to growth in sales of our prescription prenatal vitamin products and an increase in the average net sales price. Operating expenses for the second quarter of 2015 rose primarily due to increased R&D costs. R&D for the second quarter was approximately $24.2 million, compared with approximately $8.2 million for the prior year's quarter. The increase in R&D reflects our investment into tow Phase 3 clinical trials for our two novel hormone therapy product candidates, including the REJOICE Trial for which a 100% of the patients are now enrolled, and the Replenish trial, for which 93% of patients are now enrolled. R&D expenses also reflect scale up and manufacturing activities in anticipation of commercial launch. As we’ve mentioned previously, clinical costs for both of our Phase 3 clinical trials are frontloaded with patient enrolment. We anticipate a significant reduction in R&D next quarter. Now that the enrolment in the REJOICE is complete and we're nearing completion of enrolment in the Replenish trial. Sales, general and administrative expenses for the second quarter 2015 were approximately $6.9 million compared with approximately $5.5 million for the second quarter of 2014. This was primarily due to increased non-cash compensation, legal, direct and insurance expenses. Cost of goods sold for the second quarter increased to approximately $1 million from approximately $900,000 for the prior year period. For the second quarter 2015, the company's net operating loss was approximately $27.2 million or $0.16 per basic and diluted share, compared with approximately $10.9 million or $0.07 per basic or diluted share for the second quarter of 2014. We also continued to have a strong cash position. As of June 30, 2015, we had approximately $67.2 million in cash. This does not reflect net proceeds of approximately $32.2 million from the equity offered offering completed in July. As a reminder, we anticipate our cash resources will support completion of our two ongoing Phase 3 clinical trials. We have no current plans to conduct additional late stage clinical trials. Now, let me turn the call over to Sebastian for a clinical update.

[Sebastian Mirkin:]

Thanks Dan. And thank you everyone for joining. We're making important progress to advance our late stage pipeline. In the second quarter of 2015, we completed enrolment for the Phase 3 REJOICE Trial on scale. The REJOICE Trial evaluates three doses; 4, 10 and 25 micrograms or TX-004 also known as VagiCap in approximately 700 subjects. Two separated Phase 1 trials demonstrated that the TX-004 doses of 25 and 10 micrograms have lower systemic absorption when compared to the Osphena tablet of the same dosage. Also note that up for a two-week Phase 2 trial demonstrated by VagiCap 10 micrograms improved the vaginal epithelium and the vaginal pH Of particular interest 97% of the users indicated that VagiCap was easy to use. As Rob mentioned the top line results for the REJOICE Trial are expected to report during the fourth quarter of 2015 and if approved TX-004 will become a major advancement for the treatment of dyspareunia associated with menopause. I would like to recap the dilemmas for reporting the Rejoice top line results. As a reminder, we enroll our last patient in early June of this year. From the demonstration business subject undergo 12 week of treatment. We expect the last subject, the last reason to be in September. Then we will wait for the biopsy results and complete other steps to lock the database. The startup process including database lock and assessment of the top line data will take two to three months. We are very confident that we will report the top line data in the fourth quarter of this year. We anticipate that we will report a statistical analysis for each of the four core primary endpoints for three of the doses [indiscernible] namely 4, 10 and 25 micrograms versus placebo. As a reminder, the core primary endpoints being tested in a trial are the change from baseline in superficial and parabasal sales, the change from baseline in vaginal PH and the change from baseline in the severity of schizophrenia. During the second quarter, we also continued to enroll in the Replenish trial. In this trial, we are evaluating our combination of natural estrogen and natural progesterone product intended for the treatment of vasomotor symptoms due to menopause. The Replenish trial is projected to enroll 1,750 subjects at sites across the U.S. We have been encouraged about how this trial have been recruiting in recent month. It’s now 93% enrolled. There are currently 1,628 subjects enrolled with additional 280 subjects consented and currently in screening based on our historical conversion rate of 30%, [indiscernible] during the second half of this year. To summarize, our experience and diligent clinical team continue to advance both of our late stage clinical programs towards data readout and positive subsequent filings with the FDA. Julia will now summarize the market dynamics related to FDA and our progress on scientific communications.

[Julia Amadio:]

Thanks, Sebastian, and thank you everyone for joining today’s conference call. As we ramp up, precommercialization activities for our lead product candidate TX-004HR, we continue to characterize the VVA market dynamics. This market is vastly underserved. Currently, based on the revised survey, an estimated 32 million women in the U.S. are suffering from VVA symptoms. However, only 7% of those are being treated with the prescription therapy, about 2.2 million women. Despite the fact that VVA is a chronic condition with worsening symptoms overtime if left untreated, data show that 20% to 40% of women were found to have low satisfaction with currently available products due to messiness, inconvenience and leakage. These are all issues that our product candidate has been designed to eliminate. In the recent one year treatment persistent study using IMS claims data for over 30,000 women, those women currently being treated using vaginal creams use the product on average only 46 days. Women using vaginal tablets use the product for an average of 103 days. Further, 85% of cream users and 58% of tablet users discontinued therapy after the first prescription. Given this limited adherence and lack of satisfaction, there is a significant opportunity for novel convenient alternatives. Our TX-004HR product candidate has been specifically designed to address many of these issues. Our vaginal softgel capsule enables a clean easy delivery with no applicator and as Sebastian mentioned in our Phase 2 study, 97% of women founded easy to use. That study also showed a rapid onset of action with demonstrated effects in just two weeks. We believe the market dynamics and our product design characteristics will enable us if approved to drive a strong adoption at launch. For those women currently not being treated or using OTC products, the majority express concern over systemic estrogen in the body. We hope to be able if approved to offer three dosing options, all with lower systemic exposure. Since the majority express concern over systemic estrogen, we believe a subset of these 30 million patients not currently being treated and their physicians may be attracted to our product as a result. Women hesitate to raise these issues with physicians and/or consider that there is no real treatment in the marketplace. We see additional opportunity to improve education and drive market and product awareness. During this quarter, we continue to work diligently with select scientific leaders and women’s health efficacy groups such as the North American Menopause Society; the Endocrine Society; the society for women's health research, Red Hot Mamas and healthy women. Our work with these organizations and others emphasize patient and physician education around both VVA and vasomotor markets. Also as a reminder, in May, for the first time, we had a strong presence at EMAS, the European Menopause and Andropause Society conference. We hosted a symposium and presented three abstracts. The symposium highlighted our late-stage clinical programs for both our natural combination hormone product and our new vaginal therapy product and was well received. Many of the attendees noted the need for both of these new hormone therapy options. These activities and our further research on the European markets will help us develop our European commercial strategy. Now, let me turn the call back over to Rob.

[Robert Finizio:]

Thanks, Julia. I’d like to introduce a brand new concept today before we open up for Q&A. In June, TherapeuticsMD became a corporate member of the international academy of compounding pharmacies IACP. Let me take a moment to review this initiative and its significance. Non-sterile compounding pharmacies have a number of services in place today that support menopausal patients and physicians. They also have unfettered access to prescribers of bio-identical hormones and often have their own promotional efforts with patients and physicians. Our goal is to develop a clear and mutually beneficial partnership with these compounding pharmacies. We have contracted with a pioneer in the area of pharmaceutical compounding and distribution to design and implement the strategy. This partner is Gates Healthcare who has assembled the following team. Number one, Ernie Gates, Ernie is the CEO of Gates Healthcare and a bio-identical compounding pioneer. He is also a current board member of IACP. Next, Bill Nixon, Bill is a compounding pharmacy thought leader and Bill is the only sitting compound pharmacist on the FDA’s pharmacy compound advisory committee also known to a lot of you as demonstrably difficult to compound Adcom. In addition to that, Bill is also on the board of USPA 100. Next is Joe Cabaleiro. Joe is a compounding pharmacy pioneer who helps start PCAB which is a pharmacy compounding accreditation board. Joe was also the Executive Director of PCAB for a number of years. Last is Dr. Ken Speidel, Ken is a pharmacy expert on the topic of hormones and a former multi-term president of the National Home Infusion Association. Our goal is to develop programs starting with VVA and then with combo that leverage a unique model or partnership in collaboration with IACP in compounding pharmacies. We believe this will create a new model for pharmaceutical companies who are looking to improve patient experience and distribution to this compounding network. We remain highly committed to developing and commercializing best-in-class hormonal therapies and building a leading specialty pharmaceutical company focused exclusively on women’s health. Before opening up to questions, I’d just like to recap the quarter. As Julia mentioned, 32 million women experience VVA symptoms but only 2.2 million women used prescription therapy. Most users stop or which therapy every two to three months. Our product candidate the VagiCap has been specifically designed to address these reasons believed to cause this short duration of use. These unique dynamics create an opportunity for TX MD to gain market share assuming approval. In addition, since we expect all three doses, I repeat that, all three doses of our VVA product candidate to have new lower systemic exposure compared to currently marketed products, we may have a chance to attract the portion of the 30 million untreated women who are specifically concerned about systemic exposure to our product candidate. I would encourage you all to take a very close look at the market opportunity for VVA. It’s truly exciting. Turning to the VVA trial, we anticipate delivering top line data in Q4 of this year. Since the VVA trial has completed enrolment, the combo trial has picked back up. And as Sebastian said, we expect to complete enrolment in the combo of the trial in the second half of this year. In addition, our patent portfolio continues to grow in both strength and scope globally. From a cash perspective, we expect to drop R&D expenses once these trials are enrolled and then complete it. As of today, our trials have over 2,300 participants with only 120 patients remaining to enroll. We are very excited about our progress and our pipeline and overall business execution. Thanks for joining today, I’ll now turn it back to the operator, who will open up the line for questions.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Annabel Samimy from Stifel, your line is now open.

[Annabel Samimy:]

Hi thanks for taking my questions and congratulations on the progress. I had few questions. The first one is around the VVA program the different doses that you’ve got 4, 10, and 25, what’s your view on the potential use of the various doses in the marketplace given that, given the systemic exposure and given the certain doses that are missing for the marketplace and maybe you can, first talk about that and then I have got some follow-up questions.

[Robert Finizio:]

Sure. Annabel this is Rob. So, we expect all three doses to add new lower systemic levels compared to anything on the market today. And we're really excited about that. If you look at the market dynamics, premiers is an average only use of product for 46 days before discontinuing use or switching products and the specific reason for this and I’m citing the revised study, but there is also other papers people and can look up that all point to the same data. So, cream use are 46 days and they stop due to messiness, leakage in the applicator. If you look at the VagiCap and I’m sure most of the people on the phone are familiar with it, not only they all have new lower systemic levels, but they are specifically designed to not be messy or have leakage and they do not need – it will not need an applicator. So it’s specifically been designed to overcome the reasons that people stop using the creams. And if you look at the Vagifem or vaginal tablets the average use is only 103 days. So that’s about three months and the main reason cited for stopping is efficacy or lack of efficacy. And data shows our Phase 2 data has faster onset of action and with multiple dosing options we’re really excited about that. For a couple of reasons, number one, every 2 to 3 months of the 2.2 million users today they stop using, which is a great open door for us to step in and address their specific problems for not using it. Number two, there is 30 million over the counter or non-prescription estrogen users. And the main reason for those 30 million not using the drugs or estrogen drugs is because they are worried about systemic exposure. Again specifically and exactly what we address and as you’ve seen our 10 microgram has approximately 1 picogram above with endocrine society considers background estrogen or baseline estrogen. So, we're really excited about all the doses. I think they are all new lower effective doses from a systemic standpoint and if 2.2 million women equals $1.5 billion market, because you imagine if we could pull in 10% or 5% of the 30 million women that don't use anything, it is just really exciting for us, can't wait for data.

[Annabel Samimy:]

Okay great. And just on the market again right now it’s not generate there is some rumblings about generics being developed, have you heard anything about that and are you surprised, frankly I'm surprised that generics haven't been developed because there are plenty who have gone down the road of trying to analyze clinical endpoints to develop generics to large markets, so what’s your thought on that and some developments in the market.

[Robert Finizio:]

Sure. There has been is FDA guidance for cream and for vaginal tablets for a number of years out there. And it’s just the hard, really hard thing to do and it’s not the formulation, it is, basically have to do a very large trial, almost like a 505V2 to get there. So, can somebody get through, I’m sure some day someone can. We’ve heard that generics will be coming into this market. Since 2010, we haven't seen any get there. I think generic people at some point might try to do an authorized generic with the branded folks that are out there, but I am not aware of any generic approvals or any on the horizon. The most I would expect in any near-term future would be an authorized generic to the best of my knowledge.

[Annabel Samimy:]

Okay and then one last question on the finance side of the R&D expense of obviously has a huge pickup and we expected a lot of frontloading of that, so we're surprised to see it is still ticking up as much as it did, how much of that was related to manufacturing work that you are doing on the second source manufacturing?

[Robert Finizio:]

Sure. So let me walk you through the whole thing. So by the time we randomize a patient in the study 50% to 70% of that clinical R&D expenses is - comes out or spent, right. So, if you look at the combination trial we're 93% enrolled. So, there’s not much left to go, right. There is a 120 patients left to go. VVA is finished with all the recruitment and obviously that trial will be finishing up here very shortly as Sebastian mentioned. So, there is really no burden there left at all. Alright, the manufacturing cost, they basically broaden out between 6 to 8 quarters. It will never be a material impact and we've come out and clearly said that we expect our clinical R&D, which is vast majority of our spent here to go down starting next quarter. I think, if I quote in significantly and then continue to be reduced quarter-over-quarter after that.

[Operator:]

Thank you. Our next question comes from salaries from Sal Rais from Cowen and Company, your line is now open.

[Sal Rais:]

Hi guys, congrats on the continued progress, so with the data quickly approaching now can you just give us an overview again of the pain with sex clinical endpoints for 004, so specifically what efficacy did you see with 004 for that particular end point in the previous studies and what adjustments have you made in the Phase 3 to mitigate any risk of missing that portion of the co-primary endpoint in the Phase 3? Also then just a quick update on, any updates on the transdermal program, including selection of indications or timing of that data?

[Sebastian Mirkin:]

Hi, it is Sebastian Mirkin. So, thank you for your question it is a good one. So, I want to remind you right. The Phase 2 trial in which we evaluated the efficacy of VagiCap 10 micrograms over placebo was two weeks study, in which we used the same endpoints as they recognized and the same end points that we are utilizing in the Phase 3 clinical trials. In that Phase 2 trial, we randomized 50 patients, 25 to placebo and 25 to the active group. And in two weeks, we see a remarkable clinical significant efficacy in the three primary endpoints that we have recommended for approval of the trial. These are change in the percentage of superficial cells, change in the percentage of parabasal cells and change in the vaginal PH. We also two weeks observe a positive trend for improvement in all the symptoms that the patient report meaning dyspareunia improve, vaginal dryness improve, burning and itching improve and there was remarkable. For the first time, we showed these a two week point. With these data, we model to come out with power to the Phase 3 trial. Therefore, in the Phase 3 trial, we use the 10 microgram, 25 microgram and 4 microgram, and we use the same endpoints but the major difference here is that study sign goes to 12 weeks and each of these groups include 175 subjects overall. Therefore the power that we have in this study to show the same efficacy that we show in the Phase 2 is dramatically improved.

[Robert Finizio:]

So I will take the transdermal piece. We don’t have any updates for you now. We figure there is only so much we can put in script just to be honest with you. We are still on track for data Q1, Q2 maybe even Q4 this year and until there is an update there, I figure it didn’t make sense to talk much about it yet.

[Sal Rais:]

Okay. Thanks guys.

[Robert Finizio:]

Thanks for joining.

[Operator:]

Thank you. [Operator Instructions] And our next question comes from Fred Zaino from Millennium Partners. Your line is now open.

[Fred Zaino:]

Hey, Rob. How you are doing? I just wanted to maybe if you can elaborate a little bit more on TX-001 timeline a little bit – drilldown a little bit more towards just the second half. Can you give us a little bit more clarity?

[Robert Finizio:]

Sure, Fred. Thanks for joining. So we have 120 patients left and were 93% enrolled. As Sebastian said, there is 280 patients currently in screening and 30% if our historical trends, the whole trial hold true, we will get through and be randomized. So if you do the math, it looks like and again if that trend continues and you do the math, it looks like early October we should have last patient in and we plan to announce that event because it’s very material to us and we are in great shape. The last thing I want to say is since the VVA trial stopped recruiting and enrollment was complete, this trial picked right back up and we are in good shape – we are in very good shape, we are really excited about it. Does that answer your question?

[Fred Zaino:]

Yes. In early October, how long is that going to take destruct the data and give us the data?

[Robert Finizio:]

So, this is for the combo. So the combo is a one year trial. So about a year later, when last patient exit the trial, we said very similar to the VVA trial process. And if you want, I can walk you through that as well kind of hit two birds with one stone. So once the last patient, last visit hits in September for the VVA trial, the biopsy process starts and then there is a number of steps that you have to do to before you lock the database for collecting of data and the number of pieces there. And then once you lock the database, we go into data analysis mode. And after the last patient, last visit in September, we expect we should have that done in approximately two to three months after that. So we are definitely reconfirming Q4 top line data for VVA of this year whether that’s early or late in the quarter, we just don’t know, it’s the biopsy steps. Take couple of weeks, it can take lots of weeks, we just don’t know and the same thing will go for combo. So if we have last patient in an October, a year ago, that patient will leave the trial. It could be a couple of weeks later, it could be several weeks later, and so two months or three months as that could be somewhere in Q4 or very, very early in Q1 but we will know much - when we are closer, we will give you some very quick clarity on it okay?

[Fred Zaino:]

Okay guys. Thanks very much.

[Robert Finizio:]

Thanks for calling in today.

[Operator:]

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

[Nathan Cali:]

Hey, guys. Good afternoon. Thanks for taking the questions.

[Robert Finizio:]

Thanks, Nathan.

[Nathan Cali:]

Just want to get some clarity around the primary endpoints for the VVA product. What type of mean percentage change are you looking for around the 3 endpoints; superficial, parabasal, vaginal PH? Are you looking forward to achieve statistical significance in each one of the arms?

[Robert Finizio:]

Absolutely, Nathan. So we are following the FDA guidelines in which you test the 4 core primary endpoints with placebo. So we are planning to report the three doses 25, 10 and 4 micrograms versus baseline placebo for the full core primary endpoints. Given the data we observed in Phase 2 only with two weeks, we expect that four doses will be statistical significance over placebo. And certainly the attributes that we also serve in the Phase 1 trial, we’ll be replicated our Phase 2 trial. So just remember, early onset of action, our subset in Phase 2, global systemic extortion, easy to use less messiness leakage etc.

[Nathan Cali:]

Okay. And then just one, so in the Phase 2 dose for two weeks in this study, you’re going out further than that. The typical dosing of estradiol for this indication, would you see to ramp up in efficacy and then start to peak at some point. Is there a consistent level of efficacy that’s maintained as you continue dosing or how do you see that sort of looking – as you look at other data points from already approved agents.

[Sebastian Mirkin:]

Right. That’s a good question, Nathan. So let me try to walk you through how the molecular biology and pharmacology was here. So estradiol hits the vaginal cells receptor, the first thing will happen is estrogen receptor becomes a regulator. Therefore, estradiol had more estrogen receptor to volume and therefore this high activity. Around two weeks these kind of tool on the number of estrogen receptor we’re going to achieve in these vaginal cells, therefore you would expect to have efficacy already by this time point. In the next 10 weeks, we are testing VagiCap. Certainly it’s going to be an increase – we expect an increase in efficacy until approximately around 10 weeks. That’s the way they work. There is several papers and a lot of data showing how the efficacy of these products using two days every week maintain efficacy for at least 54 weeks a year.

[Nathan Cali:]

Okay. Great. So you can actually – you could potentially see a higher effect in this study compared to let’s say 35% increase in superficial cells that you saw in the Phase 2 study.

[Sebastian Mirkin:]

Certainly. That’s a potential scenario. Let me remind you that 25 micrograms, we expect to have a higher efficacy than 10 micrograms, the dosage points for sure there and certainly we expect it to have a higher efficacy or do we maintain the same efficacy week 12.

[Nathan Cali:]

Okay. Great. Thanks. And then just on the patent approval, could you just – is there details there that we should be aware of as far as the approval for the VVA that you just announced?

[Robert Finizio:]

Yes. Nathan, it’s Rob. We’re really excited about it. It’s a strong broad pattern for VVA. So we have blocked out the gel PACB or gelatin tabular, new cohesive space with all medium and long chain fatty assets and the lift rate is – the lift in cannibalizing and keeping it in solution as well as a posting technology we have in there is really the reason we think it’s faster and much less systematic and much easier to use than what’s out there today. And we have all that covered from one Mike, all the way up to 25 mgs. It’s just fantastic for us. We are really excited about it.

[Nathan Cali:]

Great. Thanks.

[Robert Finizio:]

One of those ones when you get it, you are really, really excited and this is one of the top 2 we’ve gotten, we are really excited.

[Nathan Cali:]

Okay. And will it standout to where now on the VVA stuff.

[Robert Finizio:]

I believe 2034, make to that, it might be 2032. We have a couple of different families at somewhere in that range and the earlier to be 2032.

[Julia Amadio:]

Nathan, did you have more question before we move on?

[Nathan Cali:]

No. That was it. Thanks.

[Julia Amadio:]

Okay, great. Thank you.

[Robert Finizio:]

Thanks for calling in Nathan.

[Nathan Cali:]

Sure.

[Operator:]

Thank you. Our next question comes from Bill Tanner from Guggenheim Securities. Your line is now open.

[Bill Tanner:]

Thanks for taking the question Rob. I guess sort of running the table on the VVA trial, just wondering if you could comment a little bit about, as you look at the various doses and obviously the 4 mg being potentially differentiated but how do you sort of think about what would be a good solid results as it relates to either the dose or hitting the dyspareunia. Go head sorry.

[Robert Finizio:]

So a couple of things you said in there. Let me give you two things and then go back to your question here. So we’ll present a slide here. I gotten a number of questions. Remember the strength of the dose is dictated by the systemic levels of exposure. So we expect all three products to differentiate with new lower systemic exposure. So we believe our 25 will be lower than 10. Our 10 will be either negligible or non-systemic in the four as well. So we think it’s really a shift during the market, specifically of people dive into the data and there is a lot out there on why people stop using these drugs and just churn between the different ones for different seasons every two to three months. I mean it’s great for us trying to penetrate the market. There is lots of open doors. Unlike the half flash market when you get stable or insulin market, you typically don’t switch off a drug for a number of years. It’s not like that in this market segment. Additionally, when Vagifem switched in 2009 from the 25 microgram and went to lower dose thinking it’s what the market went, they went to a 10 microgram. They lost a lot of market share and we will put together a slide on that for the street as well. So what we think is a multi dosing option is appropriate all with new lower systemic and definitely showing a much faster of action which is we’re talking about with the data is key, but it has to address the useable applicator issues, messiness with the creams and the lack of efficacy with the Vagifem 10 as well as what we personally are seeing in the revive, the reveal study, there is a new Kingsberg paper out that all document these, all of these studies we’ve had absolutely nothing to do with. And this is like IMS data for 30,000 women in these studies, it’s very comprehensive. So we will certainly be sharing that in these studies over the weeks that come with the street. So they can see how right this market is for change. Does that answer?

[Bill Tanner:]

I mean sort of. I guess I was thinking more on the lines of the spectrum of 4, 10 and 25, let’s say you saw the changes in the cells and an improvement in the PH. And so presumably those doses will be approvable based on that. And then just thinking about obviously the dyspareunia, so we had 4 mgs and you had low systemic obviously negligible or undetectable and it did improve cells in PH but not dysparenunia. How do you think about that potential profile?

[Robert Finizio:]

So if you look at the FDA’s approval of a number of the hormones recently specifically Activella, Enjuvia even look at the non-hormonal purchase like paroxetine that’s for half lashes but non-hormonal. None of them hit on their lowest dose, yet all were approved. So they slightly separated on one of the end points and didn’t necessarily fully separated like the higher doses did and the FDA approved all of them. Now, to be clear, we expect both 10 and 4 type negligible to systematic. We do expect all of them to separate and again we believe they are all new lower effective doses, all of them. And to be honest with you, if you look at the Vagifem data and you talk to the OB/GYNs, of the 2.2 million women that are getting treated today, they are going to go at the highest most applications dose. But to your point Bill, to pull new women into the space with the 30 million women that aren’t treated, think about you get 10% of that market, that’s bigger than the entire market today, a non-systemic or negligible systemic and no lower factor systemic. And that’s the number one reason that they come into prescription therapy. It’s exactly what is needed and it’s what we believe we have in all three doses.

[Bill Tanner:]

Okay. That’s helpful. And I had a question for Julia as it relates to women stopping their VVA treatments. I would imagine that there is got to be a lack of compliance perhaps. I mean if they are expected to recommended to dose daily and they skip for reasons of dislike of either the application or the leakage then one we think that the drug would be less effective. So, as you look at the data for how quickly patients move from drug to drug, how much of it is just the dislike of the application or how much of it is the dislike of the application leads to non-compliance, which is going to turn into suboptimal clinical outcome. How do people know that?

[Julia Amadio:]

I think…

[Robert Finizio:]

I think you can cite the Kingsburg paper, which says 20% to 40%.

[Julia Amadio:]

Yes. The 20% to 40% of women will stop because they don’t like what they are using and the most recent data that came out in that one-year treatment persistent study really shows that unfortunately there is even less satisfaction I would say and earlier discontinuation with creams than with the tablets. And that’s not surprising, I mean I can tell you a user, they are not very easy to use and you are supposed to be taking them twice weekly.

[Bill Tanner:]

Okay.

[Julia Amadio:]

So, you are absolutely right though. That’s key, if you really want to maintain efficacy you need to keep taking the product because it will, you know vaginal atrophy is a chronic condition and will get worse if you stop taking it. So, the key is both, having something that’s easy to use, but then also making sure they take it.

[Bill Tanner:]

Okay and then if I could squeeze in one last question, Rob as it relates to financing and you talked about another, some more manufacturing capacity, with what you have either on the ground now or what you are working with and what you plan to expand to, how far does that ultimately take you either with 04 or 001?

[Robert Finizio:]

When you mean how far does that take, give a little more color, what do you mean?

[Bill Tanner:]

Being capacity, just in terms of being able to, how much of the market could you meet with what you …

[Robert Finizio:]

So we see on the combo oral 30 scrips a year, we think we can exceed that and we are in a position to hopefully grow the VVA market today and we should be in great shape, as well as we are dual threaded, so God forbid when manufacturer had an issue you wouldn’t die in the line, which is very important. So, we really like making this decision. We did pull the trigger before the race to get that going. So, a lot of those expenses have been absorbed and Bill just from the expense standpoint with the round, it will take probably six quarters to finish this all up fully related to a number of the different things we are doing. So, I don’t expect this to have any material impact in earnings basically fill the gas tank back up, clinical R&D is vast majority of the expenses and that’s coming to an end. We only need a 120 more patients and so we are in good shape.

[Bill Tanner:]

Got it. Okay. Thank a lot.

[Robert Finizio:]

Thank you.

[Operator:]

And our next question comes from Annabel Samimy from Stifel, your line is now open.

[Annabel Samimy:]

Hi, just a quick follow-up. So, we talked a lot about the timing of the data releases. Can you talk about how quickly it can turn the data around into a filing and how we should think about timing of launch approvals what not?

[Robert Finizio:]

Annabel this is Rob, sure. So, typically it takes two to four months and as you can see there is some variability, we could have VVA top line data in October, it could also be in December. And for me to guess, I am giving you a window here right and typically it takes 2 months to 4 months to file. So, for me to give you a hard time line here wouldn’t do anybody any good, but we will certainly give a hard timeline when we present data, but I think what I just said should hopefully give you a scope. Definitely, first half of the year, hopefully earlier than later, again depending on data timing.

[Annabel Samimy:]

And at what point should we start thinking about ramping up the sales force in second half of 2016 probably and are you still pursuing the same type of commercial scale that you talked about in the past?

[Robert Finizio:]

The prenatal sales force is out there and highly effective as a – obviously an infrastructure play. We’re really excited about our partnership with the whole, about 3,500 to 4,000 compounding retail pharmacies that I don’t think the pharmaceutical industry leverages the way it could, as well as normal traditional retail channels and it is a 10 month PDFUA to answer your question. That 10 month PDFUA during that timeframe we would scale in less we decide to partner, if we partner either internationally, which is the plan today or domestically which is not the plan today, it would be somebody else’s heavy lifting. And until we have data we can articulate the value internationally or domestically to a partner and we look to have those conversations post data. So, I am trying to give you some clarity of what we are working on, but there is a lot of variables and it is about the best I can do right now.

[Annabel Samimy:]

Okay.

[Robert Finizio:]

But very, very soon I will be able to give you much more clarity.

[Annabel Samimy:]

Okay, but following on the compounding pharmacy arrangements you have, the relationships you have does that change the calculation in terms of the number of sales people you need, are they doing the heavy lifting for you is what I am asking?

[Robert Finizio:]

No, we think we need the same amount of sales people and as you can imagine our reps today have wrapped covers a 100 physicians and they are pretty effective in a very generalize commoditized space, the prescription pre-natal’s. I think the compounded pharmacy, they offer a lot of value and they do it. Compounding pharmacies what we’ve learned over the past few months have a different level of interaction with the physicians. They identify number of things. They often act as a liaison or a communicator between the physician and patients. They spend a lot of time educating patients and act as eyes and ears for the physician and there is a lot of services there, your typical retail pharmacies just don’t do. And in particular our space with 30 million women with VVA that don’t get treated that might be getting treated for hot flashes because most of them have VVA. To have a pharmacist being able to be a liaison and identify that is a huge value for you and communicate that to the physician. So, we just think there is a real strong untapped resource here with a number of services traditional retailers and time they don’t spend and you know they bring a great level of customer service. So, I just think it’s frosting on the cake for us and for them, hopefully.

[Annabel Samimy:]

Great, thank you.

[Robert Finizio:]

Thank you.

[Operator:]

Thank you. And this does conclude our question and answer session for today’s conference. I would now like to turn the call back over to Robert Finizio for any closing remarks.

[Robert Finizio:]

Thank you. So, I just want to thank everyone for joining today. In my opinion this is by far the strongest quarter we’ve ever had. We are right around the corner from data. We are right around the corner from wrapping up enrollment in our second trial. We have, we are garnering the support of the compounding industry. We look to educate the street with our new partners here in the very near future and look forward to updating you in early November on the next call. Thank you.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.