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Edited Transcript of TXMD earnings conference call or presentation 6-Aug-19 8:30pm GMT

Q2 2019 TherapeuticsMD Inc Earnings Call

Beverly Hills Oct 8, 2019 (Thomson StreetEvents) -- Edited Transcript of TherapeuticsMD Inc earnings conference call or presentation Tuesday, August 6, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Daniel Alan Cartwright

TherapeuticsMD, Inc. - CFO & Treasurer

* Dawn Halkuff

TherapeuticsMD, Inc. - Chief Commercial Officer

* Nichol L. Ochsner

TherapeuticsMD, Inc. - VP of IR

* Robert G. Finizio

TherapeuticsMD, Inc. - Co-Founder, CEO & Director

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Conference Call Participants

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* Annabel Eva Samimy

Stifel, Nicolaus & Company, Incorporated, Research Division - MD

* Jay Olson

Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst

* Louise Alesandra Chen

Cantor Fitzgerald & Co., Research Division - Senior Research Analyst & MD

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen. Thank you for joining us for the TherapeuticsMD Second Quarter 2019 Financial Results Conference Call. (Operator Instructions) I would now like to turn the call over to TherapeuticsMD's Vice President of Investor Relations, Nichol Ochsner. Nichol?

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Nichol L. Ochsner, TherapeuticsMD, Inc. - VP of IR [2]

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Good afternoon, everyone. Thank you for joining today's call to discuss our second quarter financial results and business update. This afternoon, TherapeuticsMD issued a press release announcing our second quarter financial results. The press release is available on the company's website, therapeuticsmd.com in the Investors & Media section.

On today's call from TherapeuticsMD are Chief Executive Officer, Robert Finizio; Chief Financial Officer, Daniel Cartwright; and Chief Commercial Officer, Dawn Halkuff.

I would like to remind everyone that certain statements made during today's conference call may contain forward-looking statements. Such forward-looking statements are based upon current expectations and there can be no assurance that 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 & 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 August 6, 2019.

With that, I'll turn the call over to TherapeuticsMD CEO, Rob Finizio.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [3]

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Thanks, Nichol. Good afternoon, everyone, and thank you for joining today's call.

We are pleased to report a solid quarter. As you can see on Slide 3, total net revenue for the second quarter of this year came in at approximately $6.1 million, above our guidance range of $4.5 million to $5.5 million. Net revenue for IMVEXXY came in at approximately $3.12 million, above our financial guidance range of $2.5 million to $3 million. IMVEXXY net revenue was up 55% in the second quarter as compared to the previous quarter of this year.

We launched BIJUVA on April 17 and recorded approximately $134,000 in BIJUVA net revenue for the partial quarter. Combined, our FDA-approved drugs came in at approximately $3.25 million in net revenue for the quarter.

Moving to prenatal vitamins. Net revenue came in at approximately $2.8 million for the second quarter, above our financial guidance in the range of $2 million to $2.5 million. Dan will review the financial results in more detail later in the presentation.

I would now like to turn the call over to Dawn Halkuff, our Chief Commercial Officer, to discuss performance in more detail. Dawn?

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Dawn Halkuff, TherapeuticsMD, Inc. - Chief Commercial Officer [4]

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Thank you, Rob. Let's start with our progress on IMVEXXY on Slide 4.

IMVEXXY growth continues with approximately 289,500 total prescriptions dispensed since launch through July 31, 2019. Total prescriptions for the month of July were approximately 45,500, which is an increase of 21% or 8,000 units over the month of June. This is a good start to the quarter given summer months are historically slower months for pharmaceuticals. We also continue to gain strength with average weekly volume crossing over 10,000 for the month of July.

Slide 5 shows that IMVEXXY continues to trend with the Vagifem launch curve which launched in 2000, a much less restrictive time for pharmaceutical launches. We also continue to outperform other more recent launches in the category. This volume translated to a market share in June of 9%. To provide some perspective on the strength of our launch trajectory, we not only continue to outpace the more recent launches in the category of Osphena and INTRAROSA , we are now outpacing them in real time with our volume more than approximately doubling each of those products in the month of June.

So what is achieving volume and share in the VVA market worth? To understand this, let's turn to Slide 6. Despite multiple generics entering the VVA market, in 2018 the market generated more than $1.7 billion in gross revenue. As a reminder, this revenue is with only 7% of the market being treated. This is a marketplace which holds significant potential for IMVEXXY.

Now moving to Slide 7. Along with unit volume, we continue to see growth and strength in our refill rate. IMVEXXY continues to demonstrate strong patient adherence. Women are trying IMVEXXY and staying on IMVEXXY. In the first year, we are seeing an average of over 3.7 fills per patient. In fact, for those women that started 1 year ago, they have averaged 7.8 fills out of a possible 13. For comparison, Vagifem had an average of 1.7 fills in their first year of launch, and as the product matured, topped out at an average of 3.5 fills per year. Vaginal creams topped out at an average of 1.5 fills per year.

Let's turn to Slide 8 to tie it all together on the potential for IMVEXXY in the marketplace based on key financial variables of number of fills per year, average net revenue per unit and market share achievement. If you look at the left-hand side of the slide, you can see in purple circles the difference between 4 fills, 5 fills or 6 fills per year. Moving to the right in blue, you can see 2 net revenue per unit estimates, and then further to the right, different market share percentages IMVEXXY may achieve over the next few years.

In our first year, we have already taken 9% market share. And assuming that we achieve 35% market penetration at an average net revenue per unit of $100, we would achieve a $322 million business at 4 fills per year. If you look at the next chart down with 5 fills per year with the same percent market share and $100 net per unit, the value of each additional fill per year is worth $80 million, bringing the total opportunity to $402 million. The refill lever is a key focus and one we are already well on our way towards optimizing.

Now how do we get to that peak opportunity? Increasing payer coverage is fundamental to that achievement. Turning to slide 9, on the commercial front we have 7 top payers adjudicating for IMVEXXY. There was no change in top payer coverage during the second quarter period. We expect coverage determination from CVS and Aetna during the third quarter. In addition, we are now in discussions with Kaiser.

Moving to Medicare Part D on Slide 10. The top 6 plans account for approximately 78% of all Part D pharmacy lives. As mentioned last quarter, IMVEXXY has preferred status with United. We have submitted preferred bids for the other 4 Medicare Part D large payers. Since copay cards cannot be used with Part D, if contracts are accepted at preferred, this would ensure a similar copay range of approximately $40. We expect remaining coverage decision in the third/fourth quarter time frame for the 2020 coverage cycle with adjudication to start on or before January 1.

Let's turn to adjudication rates for IMVEXXY by payer type on Slide 11. Chart 1 shows for the second quarter of '19, our overall adjudication rate for IMVEXXY increased from 27% in the first quarter to 34% in the second quarter with no additional top payers. Overall, adjudication progress is impacted by the IMVEXXY Medicare population, the area with the lowest coverage to date, being overweight versus the category. Moving forward to Chart 2, by securing our last few top commercial payers, and most importantly securing Part D payers in the third and fourth quarter of this year with adjudication to begin on or before January 1, we expect to see adjudication improve to approximately 70-plus percent once coverage has been fully established.

So what's next for IMVEXXY? Turning to Slide 12. As we look forward to the remainder of 2019, we have several events that we believe will support our volume growth as well as improve our net revenue per prescription. As mentioned, in the third quarter we expect to have commercial coverage determination from the remainder of the top commercial payers, and in the third and fourth quarters we expect to have coverage determinations from the remainder of the top Medicare Part D plans. We have also just launched direct-to-consumer marketing for IMVEXXY, an important milestone to drive IMVEXXY share and potential category growth.

In the fourth quarter, we will be highlighted as the premiere sponsor of the North American Menopause Society with publications supporting both BIJUVA and IMVEXXY. Also in the fourth quarter, we plan to begin optimization to our copay card program as by that time we anticipate we will have secured the majority of commercial coverage. These are just some of the initiatives we continue to focus on as we look to optimize top line and bottom line growth.

Let's move on to BIJUVA. Slide 14 outlines our launch pathway for BIJUVA, which started on April 17. During the second quarter, the sales force main focus was on IMVEXXY as we continued to build payer coverage for BIJUVA. For the initial phase of our launch, each sales representative was directed to focus on approximately 10 prescribers per territory for BIJUVA. In addition, once BIJUVA payer coverage has been established in the fourth quarter, we plan to further introduce BIJUVA into the compounding channel through our BIO-IGNITE partnerships.

Moving on to metrics on Slide 15. Prescriptions for BIJUVA total approximately 8,900 since launch. Through July 31, approximately 2,300 prescribers have written a prescription for BIJUVA, reaching a total of approximately 4,700 patients.

Now let's turn to Slide 16 for payer coverage for BIJUVA. As a reminder, BIJUVA is a much quicker payer process than IMVEXXY due to the younger patient population and therefore smaller Part D population. We are happy to announce United Healthcare and OptumRx began to adjudicate for BIJUVA on August 1. That brings our total to 4 of the top commercial payers now adjudicating for BIJUVA in our first quarter of launch. We are in discussions with the remaining top commercial payers and expect each payer listed on the slide will make the coverage decision by the end of the fourth quarter of 2019.

Let's turn to adjudication rates for BIJUVA by payer type on Slide 17. For the second quarter of 2019, our overall adjudication rate for BIJUVA was 34%, up from 25% in May of 2019. You can see that our adjudication rate is moving up more quickly with BIJUVA than IMVEXXY, given the majority of patients are commercial. As a reminder, we expect all payer coverage decisions in the fourth quarter of this year. We expect to see adjudication improve to approximately 70% once coverage has been fully established.

Let's move to Slide 18 to discuss our BIO-IGNITE program to partner with the community-based compounding pharmacies to access the 12 to 18 million annual compounded prescriptions in the E+ P market. BIO-IGNITE continues to be a critical part of our launch pathway for BIJUVA, given the volume of prescriptions in the channel as well as the trust established between the pharmacists and the women they support. We launched the BIO-IGNITE model with IMVEXXY and now have national reach with 74 accounts live, 129 in the contracting process and 52 in the vetting stage. In addition to increasing our distribution, we are seeing strong refill rates in BIO-IGNITE that match or exceed what we are seeing in our other channels. These early indicators with IMVEXXY provide us confidence that we are on the right track for the BIJUVA launch.

Slide 19 shows the potential of BIJUVA in net revenue. In a similar fashion to the IMVEXXY slide, you can see the net revenue per unit estimates on the left-hand side of the slide and the net revenue potential at different market share percentages as you move to the right. We calculated the net revenue estimates using a market size definition of only the FDA-approved separate estradiol and progesterone doses of 3.9 million scripts plus the low end of the estimated compounding market of 12 million scripts. As you can see, the range of peak values that BIJUVA can achieve by offering a best-in-class product with proven efficacy, safety and convenience when compared to off-label use of FDA-approved products or unapproved compounding products is significant.

Turn to Slide 20 for what's next for BIJUVA. We expect to complete the commercial coverage cycle in the fourth quarter of this year. We will also be highlighting BIJUVA data at the North American Menopause Society and importantly plan to expand the BIO-IGNITE program. Like with IMVEXXY, in the fourth quarter, we expect to begin to optimize our copay card program when commercial coverage accelerates and anticipate beginning direct-to-consumer in the first half of 2020.

Let's move to Slide 21 with ANNOVERA. Moving to Slide 22. ANNOVERA is an exciting innovation in the birth control category and overall for women's health. I am proud to announce that last month, the Galien Foundation announced ANNOVERA among the 2019 Annual Prix Galien USA Award Nominees in the Best Pharmaceutical Product category. We believe this nomination underscores the progress that ANNOVERA represents for women seeking choice in managing their fertility. We have highlighted several of the previous award winners across a variety of specialties. Across the board, it is clear that we are in good company, and that the innovation delivered by some of these past nominees and winners has translated to significant opportunities in their respective categories.

Turning to the value of the contraceptive category on Slide 23. This slide shows the value of the contraceptive market, which is the largest FDA-approved category in women's health valued at $5 billion. With ANNOVERA, for the first time, a woman can choose to have a long-term product and also choose to change her mind without the need to have an invasive procedure.

Moving to our launch approach and potential catalyst for ANNOVERA, turn to Slide 24. We have set the WAC price for ANNOVERA at $2,000 per unit, aligned with our responsible pricing strategy and at a slight discount to NuvaRing on an annual basis.

I am pleased to announce a key milestone for ANNOVERA. Our initial production batch is in the packaging stage, keeping us on track for our pre-launch activities. We have started our pre-launch activities, including discussions with the FDA on the potential for ANNOVERA to be designated a new 19th method of contraception and have started discussions with payers. In only a few short weeks since we have announced our price, as you can see on the slide, multiple payers have added us to their formularies including 2 of the most well-known in Massachusetts; Harvard Pilgrim and Blue Cross Blue Shield of Massachusetts.

Starting in the fourth quarter, we will being a test and learn market introduction, ramp manufacturing with up to 10,000 units available by year-end and will commence the official national launch in the first quarter of 2020. At full launch, our initial focus will be on prescriber targets that overlap with our menopause product as well as ramp of direct-to-consumer communication given the influence of the patient in this category.

Slide 25 outlines the large market opportunity for ANNOVERA, which is significant even if we only achieve a small portion of the addressable birth control market. On the left-hand side of the chart are different net revenue per unit achievements, and moving to the right, different market share ANNOVERA could achieve in the future. The top chart outlines the percent of the overall market for birth control. As you can see, if we achieve only a 1.5% of the 28 million annual new prescriptions for the overall market for birth control, it would be a $420 million to $735 million opportunity depending on the net revenue per unit. The bottom chart shows potential value of net revenue if we take the illustrated percentage of NuvaRing new prescription sales. We will present more information about ANNOVERA at the American Society for Reproductive Medicine being held in mid-October.

Let me now turn the call over to our Chief Financial Officer, Dan Cartwright, to review our second quarter financial results in more detail.

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Daniel Alan Cartwright, TherapeuticsMD, Inc. - CFO & Treasurer [5]

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Thanks, Dawn. Second quarter 2019 financial results are included in the press release issued today. Let me summarize a few key points. Please turn to Slide 27.

As Rob mentioned, net revenue from IMVEXXY was approximately $3.1 million for the quarter. The average WAC sales price of approximately $213.30 for the second quarter. The difference between WAC and net revenue is mostly driven by the cost of our copay assistance program. Once we have completed our payer contracting, we believe our IMVEXXY scripts will generate higher revenues per unit and drive significant net revenue acceleration.

We launched BIJUVA during the second quarter of this year. During our first partial quarter of commercialization, BIJUVA net revenue was approximately $134,000.

Our total FDA-approved product revenue for the second quarter was approximately $3.25 million, coming in above our second quarter 2019 financial guidance of $2.5 million to $3.0 million.

Net revenue from the company's prescription prenatal vitamin business was approximately $2.8 million for the second quarter of 2019, coming in above our second quarter 2019 guidance of $2 million to $2.5 million. Total revenues for the second quarter of 2019 were approximately $6.1 million, coming in above our second quarter 2019 financial guidance of $4.5 million to $5.5 million.

Total operating expenses for the second quarter of 2019 increased compared to second quarter of 2018. These changes primarily reflect a commercialization -- an increase in commercialization expenses for the launch of IMVEXXY and BIJUVA. This is reflected in SG&A expenses for the second quarter of 2019, which were approximately $41.4 million, compared with approximately $29.5 million for the prior year's quarter. This is primarily due to higher sales, marketing and personnel costs to support commercialization, including the expansion of our women's health sales force to support the launch of BIJUVA.

In the second quarter, nonoperating expenses included a one-time charge for extinguishment of debt of approximately $10.1 million as we refinanced our previous term loan into a more favorable facility with TPG Sixth Street Partners.

Turning to the bottom line, our net loss for the second quarter of 2019 was approximately $55.2 million or $0.20 (sic) [$0.23] per basic and diluted share. Excluding the one-time charge for extinguishment of debt, the net loss for the second quarter was approximately $45 million, or $0.19 per basic and diluted share, compared with approximately $33.2 million, or $0.15 per basic and diluted share for the second quarter of 2018.

As we move to Slide 28, we finished the second quarter of 2019 with approximately $183 million in cash compared with approximately $161.6 million at December 31, 2018. Our company has taken significant steps this year to raise additional nondilutive capital to support the commercialization of our 3 FDA-approved products.

In April, we closed on an upsized $300 million nondilutive term loan facility with TPG Sixth Street Partners. The initial funding was $200 million with additional funding available of $50 million upon the designation of ANNOVERA as a new category of contraception by the FDA on or prior to December 31, 2019. As well as another $50 million upon achieving $11 million in net revenue from IMVEXXY, ANNOVERA and BIJUVA for the fourth quarter of 2019. I would like to clarify a common question that these are draw triggers and not covenants. Our loan facility provides us with a favorable amortization profile with no repayment of principal scheduled until June 30, 2023.

In July, we closed our ex-U. S. license deal with Theramex, and yesterday we received the upfront payment of $15.5 million. We are also eligible to receive additional regulatory and sales milestone payments as well as a royalty on net sales. Combining these 2 debt tranches and the upfront payment received from Theramex, TherapeuticsMD will have the potential to access over $115 million of nondilutive capital over the coming 8 months.

Please turn to Slide 29 for our revised quarterly guidance. We are pleased with our net revenues results for the quarter. And as Rob stated, we have reiterated our quarterly guidance for our FDA-approved products and raised our third quarter guidance for the vitamin business to a range of $2.25 million to $2.5 million.

Our guidance for total TXMD net revenue for the third quarter will increase to $6.75 million to $9.0 million range. For the fourth quarter of 2019, we reiterated our previous stated financial guidance for our FDA-approved products and raised our guidance for the vitamins business to a range of $1.75 million to $2.25 million.

Our guidance for total TXMD revenue for the fourth quarter will move to $2.75 million (sic) [$12.75 million] to $15.25 million.

Slide 30 outlines the impact on full year 2019 guidance. Given our second quarter beat, we revised our year-end financial guidance for FDA-approved products to a range of $20.75 million to $24.75 million. Moving to full year guidance for our prenatal vitamin business, we are increasing our range to $8.75 million to $9.45 million.

Our guidance for total TXMD net revenue for the full year will move to $29.45 million to $34.2 million. This represents a net revenue increase of $1.7 million based on the revised guidance midpoint versus our previous guidance for the full year.

I would like to now turn the call back over to Rob for closing remarks.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [6]

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Thanks, Dan. On Slide 31 in closing, we're pleased with our quarterly results. This progress confirms our menopausal strategy is clearly working and execution has produced a solid market share adoption. At this point, we are confident that the payer contracting process will come to a positive completion for both menopausal products in Q3 and Q4 of 2019.

ANNOVERA is on time and will contribute revenue in Q4, positioning us with 3 revenue-producing products to meet our guidance and allow us to access another $50 million. This will also give us the time needed to discuss the 19th category with the FDA. And then turning to Slide 32 for an illustration of the overall opportunity, the value of this company is based on 3 FDA-approved products. As you can see when you look at the sum of the parts, there are multiple paths to get to a potential $1 billion of peak sales. In the next 60 days, TXMD will have transformed to a 3 product company and be well on its way to being the new leader in women's health care.

With that, I'd like to turn the call back over to the operator for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Louise Chen with Cantor Fitzgerald.

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Louise Alesandra Chen, Cantor Fitzgerald & Co., Research Division - Senior Research Analyst & MD [2]

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Congratulations on the quarter. So my first question is regarding the designation for ANNOVERA. When do you expect to hear regarding this? And then second question is are you covered by CVS for IMVEXXY on the commercial side? And then last question some people ask us is on the potential launch of generic NuvaRing and if that will impact your launch of ANNOVERA in any way.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [3]

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Louise, it's Rob. I'm going to tie together 1 and 3, and Dawn, if you have anything to add, please jump in. With the 19th category, the process is as follows. So we already have started the dialogue with the FDA. There is currently 18 methods of contraception, and they are separated by various reasons to be different methods. Let me give an example. A 30-day supply of birth control pills is one method, oral contraceptives. A 90-day supply of birth control pills that may even have the same progestin is considered a different method of contraception.

So we believe that given ANNOVERA is a 13-cycle long-acting ring versus the only other ring out in the market, which is a 3-week ring, NuvaRing, it clearly under the precedent and number of different ways constitutes a separate category. So we think the process that we are undertaking should be very positive, and the process is as follows. The Office of Women's Health runs this at the FDA. Once they make a determination, assuming they designate it the 19th category, all they have to do is literally change it on their website and all the payers nationally would have to follow it.

As you know, 19 states will have to cover this product. And as you can see, payers for the first time, I mean we just listed it and they're covering it in a number of states. We had a number of the big guys reach out to us as well. So we're very, very bullish on this product. We do not see the NuvaRing generic, since it is a different, not only different progestin, it's a different cycle. This is a long-acting birth control product. NuvaRing is a short-acting product. It's a different ingredient in it. And as you know, the market is going long-acting.

We don't see the NuvaRing generic having any impact on this product whatsoever. It certainly would not ever be generic equivalent. As far as CVS goes -- and Dawn, I'll ask you if you have any other comments on that -- as far as CVS goes, we expect to hear from them this quarter. We're very bullish on it. I can't guarantee that we'll get it, but CVS and Aetna are one. But we're very positive on it and we hope for the best.

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Dawn Halkuff, TherapeuticsMD, Inc. - Chief Commercial Officer [4]

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Nothing to add.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [5]

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Okay. Did that answer your questions?

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Louise Alesandra Chen, Cantor Fitzgerald & Co., Research Division - Senior Research Analyst & MD [6]

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Yes. Thank you very much.

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Operator [7]

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Our next question comes from the line of Annabel Samimy with Stifel.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [8]

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Great progress there. Just on IMVEXXY, regardless of CVS, do you expect to see some pretty meaningful step-ups in the adjudication given that I think we're at a point now that we're past some of these 6-month blocks and these payers should start processing the claims already. Then separately, affecting I guess the net price, have you seen any change in the mix of starter versus maintenance packs? Are you seeing more new starts? Are you seeing switches?

Then separately on BIJUVA, where are you seeing most prescriptions coming from at this point? Are you still seeing -- are you seeing it from off-label use of the separate E+ P or from compounded or synthetic products?

And then on ANNOVERA, I just want to understand the process here. I guess aside from your classification, I think you mentioned that you had a number of states that would have to cover it regardless. And I just want to -- I guess I didn't quickly count how many we're covering there, but is this an automatic pickup by a number of these states in these plans? And if you can just help us understand the process there.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [9]

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Absolutely. So Annabel, I'm going to...

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [10]

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That was a [separate question], sorry.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [11]

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No, no worries. We took -- I'm going to turn it over to Dawn for ANNOVERA. I'll take IMVEXXY and BIJUVA. So yes, we do expect continued step-up of adjudication in Q3, this quarter and next quarter. So we are -- we have 3 basic payers left on the commercial side. So CVS and Aetna, count them as 1 or 2, we expect to hear from them. We're bullish on it. We can't guarantee it. They could say no, but we're positive on it.

This quarter, we just opened dialogues with Kaiser. As you know, Kaiser is a closed system without access. Even though they cover it on Part D, they don't cover it commercially, and we've had some good progress there.

On the Part D side, we actually expect a couple decisions here in Q3. The rest will be in Q4. And again, we're bullish. We think we'll get most. We might not get every single one, but I think we'll get most. And I think you guys can hang your hat on that. We have enough color there.

In addition to that, as far as BIJUVA goes with the payers, we will be done with all of the commercial payers. As you can see, there's almost no Part D impact here as you can see by our adjudication stats in early Q4. So we will have a number of BIJUVA commercial decisions. We just got Optum and United, which is huge. And we'll get in Q3 another 3 or so and I believe the last 2 or 3 will come in October. And we will be done with the payer process in Q4 for BIJUVA and off to the races with full reimbursement.

Again, I think we'll get most. I don't know if we'll get all. But I think our shareholders will be proud is what I expect for the commercial and Part D coverage for both of these drugs. As far as where the prescriptions come from for BIJUVA, we've only gone after the 2-pill market and we've only allowed our sales reps up to Q3 to only call on 10 doctors per territory. There's a reason there. The reason is we only have, until we got United and Optum very recently the first of this month, we only had 17% coverage in that market.

So to go into the BIO-IGNITE channel and have the additional distribution expense will eat up all of your revenue and even into your IMVEXXY revenue. So we're holding off on that till Q4 till we have solid coverage. But with that being said, they're only going after 10 doctors per territory and only after the 2-pill FDA-approved market. And in fact, if you look at our adjudication for BIJUVA, it's actually 34% even though we only had 17% coverage. So it's just the situation where you happen to have more of the population that you're covered with getting these prescriptions coincidentally. So obviously both IMVEXXY and BIJUVA will even out that 70-plus percent in both Part D and commercial, and again, the next 5 months that will be completed.

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Dawn Halkuff, TherapeuticsMD, Inc. - Chief Commercial Officer [12]

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Okay. And just moving on then one more point on BIJUVA that I think's important is that 82% of the prescriptions are from writers -- or sorry, 83% of the writers are also IMVEXXY writers. And so so much of the overlap is playing out for us in where we're getting that volume. So the last question you had was on ANNOVERA and how to…

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [13]

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Starter versus maintenance.

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Dawn Halkuff, TherapeuticsMD, Inc. - Chief Commercial Officer [14]

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Can you repeat the question on starter versus maintenance?

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [15]

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Yes. There was -- I did have a question regarding whether you're seeing more starter patients or new patients rather than just the switches that would proceed to the maintenance pack and how that might affect the net price over time.

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Dawn Halkuff, TherapeuticsMD, Inc. - Chief Commercial Officer [16]

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So Annabel, because our refills are so strong, we obviously see a lot more of the maintenance than we see of the starter. I think we continue to see some market share that we are getting some switches from some of the creams and others, and I think we showed some of that data on the market share at Investor Day. But again, the majority of our mix will be the maintenance pack given the amount of refills that we have.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [17]

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And as the payers finish their cycle, the label says to start with a starter pack even if you're coming from another product. We'll have the reps really push that and hopefully up that amount of starters. And it's just the normal cycle until you get coverage. The discount you give to the channel is a raw percentage. So you're giving -- in essence losing money on a starter pack, whereas if there's no coverage you're making a little bit of money, and if there is coverage you're making good money, okay?

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [18]

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Got it. Got it. Okay.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [19]

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So that'll transition as we go forward here in Q3/Q4.

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Dawn Halkuff, TherapeuticsMD, Inc. - Chief Commercial Officer [20]

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So moving on to your question on ANNOVERA, how the process works for the 19 states and the automatic, I think what you're seeing thus far is there have been some automatic adds on some of the payers that we showed putting us on formulary immediately. The way it works, though, is that there is at the state level, there's regulation that they do have to cover us, some states with a copay, some states without a copay automatically. But that doesn't mean that we will get it automatically at approval. We still have to have the conversation with the big national payers, and then once we get through those clinical reviews over the course of a few months, they would make the decision whether to put ANNOVERA on nationally or cover just those lives in those states. But the regulation says they do have to cover it. So we just have to get through a process, but that process is just much shorter than BIJUVA and IMVEXXY. And the birth control category just holds a whole lot of leverage that gets us to the table.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [21]

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And from a population standpoint, you asked how many states. So it is 19 states that is mandated coverage without a generic equivalent, which obviously there is none here. I believe the copay-free population is 42 million women. And I believe the rest of the states outside of that is another 25 million women, which is approximately 45% to 47% of the women of this age in the country. So it's not quite half. Let's just say 40%, 45%. So it's great way to start really fast.

And the good thing is the national plans all play -- and these are big states: California, Washington, Maryland, Illinois. So you just get a lot of leverage with the payers walking in, especially with the 19th category, for the other states looming over their heads. Because those 19 states, this designation of the 19th method or category really will have no impact, but the other 31 states it would. So it really pushes the payers to a table to get something done quickly, and so we feel really bullish on it.

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Operator [22]

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(Operator Instructions) Our next question comes from the line of Jay Olson with Oppenheimer.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [23]

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I just wanted to follow up on comments you made regarding CVS and Aetna. On your July 9 update, you indicated that they were not covering the majority of their plan designs and that you were in negotiations for opportunities to increase access. And now here we are less than a month later, it seems like you may have made some significant progress there. So I was wondering if there was any comments or any color you could add to what's going on with CVS and Aetna and your indication that there may be a commercial coverage decision coming this quarter.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [24]

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Yes. Absolutely. It's just taking longer there, and we're trying to get to a situation where it's acceptable for both sides. They've been actually pretty good, and we like them. It's just taking a little bit longer than we thought. There's a lot going on over there with the mergers and stuff. They did their preferreds. We didn't want preferred in the commercial side. We do want preferred on Part D. And we on the commercial side are the next group to go for nonpreferred access. We do think we're in good shape there. I cannot guarantee we'll get it. I've had situations where we thought we were in great shape, and once before our phone rang and they decided not to go with us out of all of our payers. So it's not guaranteed, but we feel good about it. And we do believe that that decision will be made this quarter.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [25]

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Oh, great. Thank you for that color. And then also...

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [26]

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Thank you, Jay.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [27]

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I wanted to, if I could, just follow up on ANNOVERA. Merck reported second quarter sales of $240 million, which were significantly higher than expected for NuvaRing. And I was wondering if the resilience that NuvaRing showed in the second quarter changes your view of the opportunity for ANNOVERA.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [28]

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Jay, it's -- the beauty of that is vaginal rings are being accepted and significantly growing with women. Kind of the yuck factor that was there 10 years ago is really gone. If a woman's not using it herself, she has a friend that uses it, right? So now we're not for every vaginal ring user. Like we're not going to replace every IUD and every oral contraceptive. But we are for a cross-section of those women that have to have a long-acting option and want control over 13 cycles or a full year of their fertility and their menses.

And with that being said, I think we are positioned very well with NuvaRing's progress, kind of blazing the trail for us and getting this vaginal category accepted for birth control. And we hope the differentiator product, the differentiation of our product versus NuvaRing will attract a lot of those women over, but certainly not all of them. It's not for everybody. But as you can see with the numbers we put up, if you just got 1.5%, this is anywhere from a $400 million to a $700 million product per annum. And I tell you that's not very -- that's not that big of a piece of that category. Anything to add, Dawn?

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Dawn Halkuff, TherapeuticsMD, Inc. - Chief Commercial Officer [29]

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The only thing I would add is it doesn't necessarily change our outlook, but there are 2 places that I like to see and gives me confidence in the ANNOVERA opportunity. One is the acceptance of the ring category, which so I feel confident that they're continuing to see strong sales. And the second is the growth of the long-acting market and we continue to see that as well. And as Rob just mentioned, we sit right in the middle of that. So for me, it doesn't change the outlook. It just increases my confidence.

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Operator [30]

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Thank you. This concludes today's question-and-answer session. I would now like to turn the call back to Rob Finizio for closing remarks.

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Robert G. Finizio, TherapeuticsMD, Inc. - Co-Founder, CEO & Director [31]

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Thank you all for joining our Q2 call, and we look forward to following up with you next quarter. Thank you.

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Operator [32]

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