TherapeuticsMD, Inc.
Q3 2015 Earnings Call Transcript

Published: 5 Nov 2015

[Operator:]

Good day, ladies and gentlemen. Thank you for joining us for the TherapeuticsMD Third 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 third quarter 2015 financial and business results. Following the market close TherapeuticsMD issued a press release announcing third 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 the call over 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 November 4, 2015. With that, I will turn the call over to TherapeuticsMD's CEO, Rob Finizio.

[Robert Finizio:]

Thanks Ami. As we pursue our mission to bring new treatments to women, we continue to see a unique confluence of factors evolving in the scientific, regulatory, legislative and commercial arenas. Our pipeline is progressing. We continue to execute on the commercial front and the potential environment for our product candidates have never been more favorable. First, I would like to speak about VVA. I would like to reiterate that we continue to anticipate top-line data from the Rejoice Trial, TX-04 this quarter. Also, on November 10th, the FDA is holding a public workshop to evaluate the relevance of the current systemic estrogen label, including the black box warning for low dose vaginal estrogen products. This would include our VVA drug candidate if approved. While this workshop is only the first step in a potential lengthy process, if the warning is modified, we believe, this would have a very positive impact on the market for TX-04. Sebastian and Julia will provide you with the details, but I want to simply highlight that this is an important step forward for supporting women. If the label is reconsidered, we would help them make an informed decision and potentially grow both, the prescriber and the patient base for TX-04. Turning to our combination program, as we announced last month, we have completed enrollment for the Replenish Trial, which is for our combination estradiol and progesterone candidate. In addition, new data continue to support our view of the domestic opportunity, growth of the compounded estradiol and progesterone market. This large and growing market is already estimated to be 30 million prescriptions and approximately 2.5 million women annually. Data supporting the benefits of hormone therapy are very strong. Several studies presented at the recent North American Menopause Society conference, point to the cardiovascular benefits for women who start early and stay on hormonal treatment. Finally on our pre-commercial activities and distribution, we continue to strengthen our relationship with payors, distributors, retail pharmacies and most importantly the International Academy of Compounding Pharmacists also known as IACP. This was done in an effort to achieve a fast adoption for both products if approved. Now, let us hear updates from Dan, Sebastian and Julia. Dan?

[Daniel Cartwright:]

Thanks Rob. Our financial results for the third reflect the advancement of our late-stage products from clinical trials towards commercialization. For the period ended September 30, 2015, revenue from our prescription prenatal vitamin business grew by 24% to approximately $5.2 million compared with $4.2 million for the 2014 period. Approximately 82% of this growth was driven by increased number of units sold and approximately 18% was due to product mix and average net sales price of our products. We continue to perform well in this highly competitive segment. R&D expenses for the third quarter of 2015 were approximately $16.4 million compared with approximately $14.9 million for the prior year's quarter. The year-over-year change in R&D was primarily due to an increase in scale up and manufacturing activities for the Company's phase 3 drug candidates, which was partially offset by lower clinical trial costs. We anticipate that our clinical trial costs will continue to decrease as we complete our phase 3 trials. SG&A expense for the third quarter of 2015 were approximately $7 million compared with approximately $6 million for the third quarter of 2014. This increase was primarily to higher human resource costs and professional fees, partially offset by a decrease in marketing costs. Cost of goods sold for the third quarter increased to approximately $1.2 million from approximately $1.1 million for the prior year period. For the third quarter 2015, the Company's net operating loss was approximate $19.5 million or $0.11 per basic and diluted share compared with a loss of approximately $17.8 million or $0.12 per basic and diluted share for the prior year's quarter. Before turning the call to Sebastian, I would like to point out that as expected, our R&D costs were significantly lower this quarter than in the first and second quarters of this year. This decline specifically reflects lower clinical trial cost, following the completion of our enrollment in our VVA trial offset by our continued investment in primary and secondary manufacturing and scale up. Finally, as we continue to have a strong cash position as of September 30, 2015, we had approximately $81.1 million in cash. Now, let me turn the call over to Sebastian for a clinical update.

[Sebastian Mirkin:]

Thanks Dan. It has been a very productive quarter with significant progress in both of our phase 3 clinical programs. First, let me comment on the Rejoice trial evaluating TX-004 for the treatment of Dyspareunia associated with VVA [ph]. As announced, we continue to expect the top-line data to be reported this quarter. We anticipate that the top-line report will include the statistic analysis of the four primary points of the three doses versus placebo. We continue to believe in the success of our program based on the following. Estrogen is a well-known well studied product with the proven efficacy and safety. Doses of estradiol are well established for this particular indication. Our trial includes well-defined endpoints used in many other clinical programs. Importantly, our phase 2 data show a meaningful efficacy in vaginal cytology or PH shifted co-primary endpoints also being evaluated where phase 3 trial. In addition, this phase 3 trial includes Dyspareunia - end point. We believe that our phase 3 Rejoice trial is properly powered to the more straight, a clinically meaningful improvement in Dyspareunia over placebo. I also want to remind you that these four primary endpoints and all interconnected histologicaly. As Rob also mentioned, the FDA's is hosting workshop in which the black box on low dose estrogens is being evaluated. I want to remind you that these three doses of VagiCap included in the Rejoice trial all fall in the FDA's current definition of a low dose. At this workshop, the FDA has specifically invited experts in the field, the public and sponsors to comment on labeling, estrogen expose [ph] PK be the relationship ability to low estrogen products for the treatment of VVA. As you are all aware, our product VagiCap has been specifically designed to provide low local those then we saw systemic estrogen they built by leveraging SYMBODA technology. Now, let me comment on the ongoing Replenish Trial for TX-001, our combination product candidate for the treatment of moderate to severe SYMBODA symptoms do to menopause. You want our combination growth that for the treatment of moderate to severe vasomotor symptoms due to menopause. We recently announced that the enrollment in the Replenish Trial was complete. The Replenish Trial has been designed to include four different doses of natural estrogen natural progesterone. Each of these doses being evaluated will reflect the new lower dose of estradiol and all progesterone if approve. We currently anticipate that by this time next three year, the trial will be fully completed. I also would like to remind you that we have a team with extensive experience in women health, who are well qualified to execute this trial with a highest standards. Now, let me pass the call to Julia for update.

[Julia Amadio:]

Thanks, Sebastian. Over $32 million women in the U.S. suffer from symptoms of VVA. These symptoms can include severe pain and discomfort. Currently, only 7% of these women are treated with prescription therapy. Based on the revised study, this is largely due to fear of the serious risks related to systemic estrogen exposure highlighted in the black box warning, which scares many women away from treatment. Our product candidate TX-004 was specifically designed to reduce systemic estrogen levels and enable a more simple user-friendly experience to addressed many of the short comings of current products. Now, in just one week, the FDA is having a scientific workshop to discuss the possibility of changing the label for current and development-stage low dose vaginal estrogen products. This effort is getting support from several medical societies and women's health efficacy groups. Let me highlight some of the top supporters. The North American menopause society, they also are filing a citizen petition requesting this label changes. The American College of Obstetrician and Gynecologists, The Society for Women's Health Research, The Endocrine Society, nurse practioners women's health, The American Medical Women's Association, The International Society for the Study of Women Sexual Health and The American Society for Reproductive Medicine. Along with a multiple women's efficacy groups such as Red Hot Mamas and healthy women and local groups, which can be seen on the FDA's public comment page, I encourage you to go to the FDA workshop webpage and review these very supportive comments for yourself. Let me just say that in my 30-plus years in the pharmaceutical industry and as a user of these products, I believe the potential removal of the black box warning is one of the most significant regulatory shifts since the original labeling changes from the women's health initiative in 2002. This upcoming workshop focuses on the pharmacokinetics and pharmacodynamics of lower dose estrogen products to treat symptoms of VVA. We have specifically designed our product candidate to address these needs by leveraging our Symboda technology. Turning to the environment of our combination product candidate, multiple studies presented NAMS highlight the benefits of early post menopausal therapy containing natural combination of estradiol and progesterone. First, a large epithelium logic Replenish study highlighted the benefits of hormone therapy to reduce the risk of cardiovascular death. Another update on the NIH sponsored-ELITE study early versus late intervention trial with estradiol showed the benefits of early hormone therapy, using estradiol and progesterone on cardiovascular disease. Our product if approved would be the first FDA approved combination of estradiol and progesterone, feeling the need for many women. Now let me turn the call back over to Rob.

[Robert Finizio:]

Thanks, Julia. In closing, I would like to step back and consider how many unique events have happened in the menopausal or hormone therapeutic areas over just the past few years. Now, several clinical studies including an NIH study showing decrease of cardiovascular risk when combined estradiol and progesterone therapy is used early in menopause. Another transformative event, the FDA is now considering relabeling or moving the black box warning for low dose estrogen products in the VVA category. In a similar fashion, the oral combination half flash market is going through a transformation. The Drug Quality and Security Act in the United States Pharmacopeia code 100 also known as USPA 100 are changing the compounding industry. This contacts we have developed a key lines with the International Academy of Compounding Pharmacist also known as IACP aimed at supporting both products assuming approval. In addition, the unmet need for both of our products is now very well articulated and characterized. The U.S. compounding estradiol and progesterone market for half flashes has 30 million prescriptions a year and is predicted to grow at 5% to 7% per year. Most importantly, we believe the market is positioned for transformation with the first and only FDA-approved combination estradiol and progesterone product. The VVA market is also going through a similar transformation, due to potential removal of the black box warning and/or relabeling. These trends align perfectly with our progress this quarter. Completing enrollment in both phase 3 trials during the past few months as well as top-line phase 3 data will be presented this quarter for TX-004 with the VagiCap. Lastly, our clinical trial cash burn has decrease significantly this quarter, allowing us to ship resources towards commercialization activities. These events are showing us into our next phase as a commercial stage women's health pharmaceutical company. Finally, we believe the positive external events in the regulatory, legislative and scientific arenas have uniquely aligned to expand the market potential for our product candidates. Most importantly, we look forward to sharing our top-line data for Rejoice TX- 004 later of this quarter. Operator, I will now open up the call for questions.

[Robert Finizio:]

Great. Let us wrap it up. Thank you, Operator. All right, well, thank you everyone for joining on our call today. It has been a very, very positive quarter for us and we are proud of our recent progress. We are looking forward to updating you on our top-line data for TX-04 to this quarter and continuing to advance the rest of our product pipeline forward. With that, I will end the call. Thank you very much.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.