Good afternoon, ladies and gentlemen. Thank you for joining us for the TherapeuticsMD Third Quarter 2019 Financial Results Conference Call. Following prepared remarks from the company, we will open the call for questions I would now like to turn the call over to TherapeuticsMD's Vice President of Investor Relations, Nichol Ochsner. Nichol?

Good afternoon everyone. Thank you for joining today to discuss our third quarter financial results and business update. This afternoon TherapeuticsMD issued a press release announcing our third 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, Dan Cartwright; and Chief Commercial Officer, Dawn Halkuff. 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 such statements may be realized – that the results contemplated in these statements will be realized. Actual results may differ materially from 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 website. For the benefit of those, who may be listening to the replay or archived webcast this call was held and recorded November 6, 2019. With that, I'll turn the call over to TherapeuticsMD CEO, Rob Finizio.

Thanks Nichol. Good afternoon, everyone and thank you for joining today's call. We are pleased to report a strong third quarter with net revenues that came in at the upper end of our financial guidance. This is led by growth in product sales from our FDA approved products, reflecting continued successful commercial execution. Let me now turn the call over to our Chief Financial Officer, Dan Cartwright to review our Q3 financial results in more detail.

Thanks Rob. Third quarter 2019 financial results are included in the press release issued today. Turn now to Slide 3. I'm going to focus on sequential trends from our second to third quarters, which we believe is a better comparison as we discuss our performance. The combination of net revenue from product sales and licensing brings our overall net revenue for the third quarter to $23.7 million compared with $6.1 million for the previous quarter. Slide 4 shows our third quarter product revenue performance compared to our guidance. Third quarter net revenue of our FDA approved products was $5.7 million and at the upper end of our financial guidance. Net revenue from our prescription prenatal vitamin business was $2.25 million for the third quarter of 2019 coming in above our financial guidance. Total product net revenue came in at the upper end of our guidance at $8.2 million. Additionally, we had $15.5 million in revenue from an licensing agreement for IMVEXXY and BIJUVA from Theramex. We are also eligible to receive additional payments and royalties under this license in the future. The chart on Slide 5 shows that we continue to have strong growth for IMVEXXY. Net revenue for IMVEXXY was $4.8 million for the quarter which continued the trend of net revenue growing at a faster pace than growth in units. As you can see, IMVEXXY net revenue increased 53% third quarter over second quarter compared to a 27% increase in units over the same period. Turning to Slide 6, we continue to have strong growth for BIJUVA as well. Net revenue for BIJUVA was approximately $490,000 for the quarter in line with our expectations. We continue to see net revenue per unit which will be discussed later. Now move to Slide 7. We launched ANNOVERA late in the…

Thanks, Dan. Let's turn to Slide 13. Now that you've seen our achievements in Q3, I want to take you through how we're going to achieve our fourth quarter net revenue guidance of $11 million to $13 million for our FDA approved product. Let's move first to IMVEXXY on Slide 14. You can see on the right-hand side of the slide the adjudication rates shown in blue and the calculated net revenue per unit shown in green both continue to rise. What you can see is that as adjudication rates have gone up, the calculated net revenue per unit has moved on the same trend of adjudication rates demonstrating that adjudication rates continue to be a good indicator of growth of net revenue per unit. In October, we began our co-pay optimization process by moving our cash pay program from $35 to $50. We did this as we achieved our goal in Q3 of broad commercial coverage of approximately 70%. We are pleased with the results of the first month of transition and importantly, we are seeing the immediate impact on adjudication and calculated net revenue per unit. October shows adjudication rates at approximately 52%, which is a 14% increase over Q3. Based on the trends that we have already experienced in October, we anticipate calculated net revenue per unit to increase in the fourth quarter to a range of $48 to $52 per unit. Given this, even if TRxs were to stay relatively flat for the fourth quarter, IMVEXXY could produce a minimum of $7 million of revenue. For the remainder of the quarter, we will focus on the following growth drivers for IMVEXXY. First, hyper targeting of prescribers that are adopting IMVEXXY for their commercial patients and therefore pulling through where we have strong commercial coverage. Please turn…

Thanks Dawn. We've shared a lot of information today but I want you to take away a few key points. First, we had a solid Q3 and hit the upper end of our guidance. In addition, we reaffirmed our Q4 guidance and once achieved should enable additional $50 million in non-dilutive funding. We've opened a dialogue with TPG Sixth Street Partners on extending our draw trigger related to the 19th category and created significant momentum in the women's health marketplace that will take us into 2020 and beyond. I'd now like to open up the lines for questions.

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

Thanks for taking my questions and congratulations. I have several here. So, first on just the FDA classification, I think you mentioned that it was possibly delayed for the restructuring. I missed the first part of your comments so I apologize if I'm asking something you've already talked about. But have you actually had communication with FDA that lends you to believe that classification will be delayed or is it not happening at all? And I also understand that this restructuring is happening in February. So why is that impacting the decision? So that's the first question. Second question I have is, what kind of impact the move of going from a $35 to $50 copay – what has had – what kind of impact is that having on prescription fulfillment and walkaways? Is that level okay for patients? And then finally, just looking at BIJUVA the net was higher third quarter from second quarter, but only modestly and I guess not really in proportion with the increase in adjudication. So if you could provide some color there. And I guess I'll get back in the queue. I have more. Thanks.

Okay. Annabel, its Rob. So, 19th category. Yes, we are in contact with the FDA. We – the restructuring of the division is certainly changing a lot there. As I'm sure you're seeing with other companies there's a lot going on there. So we do believe the decision will push into next year and thus we – the financing. And we definitely still believe we qualify for the 19th category, but that is the FDA's decision. And we do think they will make it. They will make the decision either for us or against us. We do think we'll qualify it for though just to be clear. And I think that answers all your questions. On that I'm going to pass it to Dawn, if it's okay on the $50 for cash pay patients question.

Sure. Hi, Annabel.

Hi.

So the question you asked was what has been the impact of the $35 to $50? So, just to provide some context. We made that change on October 1. And just as a reminder just to go back the reason, we have the strategy we do is we have this open access program which drove – which we knew would unlock a lot of HCP prescribing early on before commercial coverage came on. And so the move to the $50 was timed with achieving that broad national commercial coverage. And so and really what we like to see are HCPs still prescribing our healthcare professionals still prescribing because that is where the end of the that's why we have the open access strategy. And the answer to that is yes. We're still going HCP prescribing. That said, we have seen some drop-off from the $35 to $50 of those patients where it did – where that wasn't an acceptable price for them. But the reality is those are the more unprofitable patients that don't have the coverage. And so what you're starting to see us do is shift to those more profitable patients. And again, because the health care professionals were still growing those prescribing, I'm very confident in that rebound in particular as we are also hyper targeting those that are adopting for commercial coverage. And we have direct-to-consumer advertising to support that growth. So we did see some drop-off. I do expect to see a rebound. And again, those that we're losing are the folks without coverage, which is where we set ourselves up for the long-term.

Yeah. Annabel, we only have 10% market share approximately. We're not done. We strongly believe we will continue to grow the market and our share of the market.

Okay. And just last question, on the BIJUVA net. So -- yeah sorry.

Your question Annabel was why isn't. Yeah. Go ahead.

Yeah. Just on BIJUVA, we didn't see much incremental increase in the gross to net but we saw a bigger step-up in the adjudication rates. So, what's this kind of mismatch was the proportionality there? So, just a little color would be great. Thanks.

Yeah. And they are because BIJUVA isn't yet in the place of where IMVEXXY was where is much higher coverage rate, so what we would expect is that the gross to net will catch up similar to IMVEXXY as that coverage rises.

Okay. Can I sneak in one more on, ANNOVERA.

Sure, of course, absolutely.

You mentioned that the ANNOVERA net price is, I think set to increase, I mean over time. I guess even for the fourth quarter you have $1,250 to $1,450. So with more payers getting onboard usually we see nets going down, but this are actually going up. So I guess maybe you can help us understand the dynamics there.

Yeah. I mean, it's just been a very pleasant surprise. I mean, as you can see as fast is BIJUVA is going which is much faster than IMVEXXY got coverage. ANNOVERA is like something nobody here has seen. So, about four weeks in 62-plus percent coverage and so many of the payers don't require copay, and that would -- obviously if we had to use copay cards would impact our nets. Given the type of drug it is. And how clearly, we believe it's a new method. The rebates are also -- are very few and far between. So, it's a $2,000 WAC price. Just to remind everyone it's about 5% less than a year worth of NuvaRing. So the nets that the company is experiencing in the rapid adoption of this coverage is -- in our opinion is staggering. So, we assume that will improve as we go forward. And it looks really, really healthy. So we're more than pleased. Is that addresses your question.

Yeah. That's great. Thank you.

Thank you.

Your next question comes from the line of Louise Chen of Cantor Fitzgerald. Your line is now open.

Hi. This is Sudan Naveen Loganathan in for Louise Chen. Thanks for taking my questions. I've got a couple here. So first I wanted to touch on the cash runway. I noticed that, you have $77 million that you're able to tap into. And then, have other tranches coming up forward, prior to hitting the $50 million tranche in 4Q 2019. And then, the second one, what is the cash runway currently for what you have now? And then secondly, on ANNOVERA, if you're able to gain the 19th amendment, I would -- in that case, is there ability to increase the price past the $1,400? Or is there any clarity in pricing that we can get, if it can go any higher or not?

Yes. Okay. So this is Rob and I'm going to pass a little bit to Dan as well, Dan Cartwright, our CFO. All right. So as far as the 19th category, what we are very happy to experience and try to make crystal clear in this call, is that the net -- we originally believed the 19th category designation would significantly improve our nets for a number of reasons. One is copays. With the 19th category, there would be no copays nationally. It would also help us get coverage quickly and also rebates. Given the pleasant surprise adoption, very few and far between, rebates and very few copays, the 19th category's value at this point would be for the $15 million loan draw from TPG Sixth Street Partners, more so than the impact of the 19th category would have on the net revenue per unit to the company. I just want people to realize that, if there is a copay, we plan on couponing it down to zero for patients, right? So that's our intent and we don't have to do much of that at all. There's a number of ways to get to a very strong robust net revenue per product with the 19th category, it was our belief. And we're kind of there without it. So it's just a real pleasant surprise. And so, I think, the takeaway I would have, if I were sitting in your seat, is basically the 19th category's value to us is the $50 million draw with TPG. And then, as far as cash goes, we've got -- with the raise, we had $155 million at the end of the quarter. With the $77 million in the raise, it gives us a total of $232 million. The potential -- and I think we've laid the numbers out, to show our confidence and reiterated the guidance. We affirmed our guidance for Q4, which would -- hitting that $11 million would give us the ability to draw another $50 million from our loan agreement with TPG Sixth Street Partners. And then, if the 19th category is designated then another $50 million there. We are in discussions with them as well as we stated, but I can't get into a lot of depth there until we get to end of job. Okay?

Okay, great. Thanks, guys.

Thank you.

[Operator Instructions] Your next question comes from the line of Chris Schott of JPMorgan. Your line is now open.

This is actually Ekaterina on for Chris. Thank you for taking our questions. And my first one is, can you talk about the uptick that you're seeing so far with BIJUVA specifically in the compounding channel and just your experience with the compounder so far? Has uptick been what you expected and how do you see it ramping in the coming quarters? And the second question is, can you talk about the traction you're seeing with your DTC campaign for IMVEXXY? Is this something that you're open to be putting more investment behind in 2020 and beyond? Thank you.

Sure, Ekaterina. So this is Rob and I'll hand it off to Dawn. So as far as BIO-IGNITE program goes, we are up to 142 pharmacies that are live and up on IMVEXXY. We have about half of those that were going into very quickly already on BIJUVA. But we're just starting that now that we've had this last couple payers come on in the last few weeks and we expect more in the future here -- in the near future by the way. So the whole idea with BIO-IGNITE is to make sure for this class of trade we had solid reimbursement in place, so we don't lose net revenue on any of those prescriptions. So I think you'll see throughout the quarter, we'll bring all those 142 live and hopefully we'll add additional pharmacies this quarter as well, and then have it fully operational towards the end of Q4. The next question I'm going to hand off on DTC to Dawn.

Thanks for the question Ekaterina. So your question was how is DTC going and are we going to invest in continued for 2020? And so we're early. We launched DTC at the end of August largely in print digital and social media. What we look at as early indicators are, are we getting the traffic to the website and I can tell you from early data that we're seeing significant growth on the website. So what that means to us is that the message is on target and there's significant interest, but we will need to wait a few months to see the ROIs of what we're putting out there. In terms of are we going to invest in 2020? The answer to that is yes. We're putting together our 2020 plans now. But we know we have a solid campaign, and we'll look to do IMVEXXY DTC throughout the year. But as we've always said with all of our consumer campaigns that we're building we do a test and learn strategy so we can get the optimal return on our investment, but yes, we will be continuing.

And I think you can intertwine that with the cash pay $35 raised to $50, right?

Yeah.

So what that's showing us is what -- number one that brings you into profitable patients you want for the people that are uninsured, but also helps the demographic of who's willing to pay here which you can intertwine with your direct-to-consumer targeting as well as your physicians right? And that's -- we're really, really pleased that a full month in to that improvement there's been a little bit of slowing. But the growth is not done and we have a number of ways to continue that growth. So -- but they'll just be much more profitable patients and we expect that this quarter. So the whole thing kind of intertwines as one plan as Dawn says between all products in this fashion except ANNOVERA where we're really happy that we're not using many copay cards at all.

Yeah.

Right. Correct. So we have less patient information and less immediate feedback on the units. But the upside is we have much higher net margins.

Great. Thank you.

Thank you.

[Operator Instructions] Your next question comes from the line of Douglas Tsao of HCW.

Good afternoon. Thanks for taking the question. Just I know we're awaiting the decision to run IMVEXXY for Part D. Rob just curious how important is Part D for that -- to sort of optimize or maximize that product opportunity?

Doug, thanks for joining and welcome. So we appreciate your support here with the company. So thank you. So Part D is important for the nets to get up to that $100 range we talked about for IMVEXXY. So we remain positive that we will get most. We may not get them all on the Part D side, but we really think we'll do well. And it is very important for that patient type. If you take a look -- close look at the slides, I think you'll see that we have improved our adjudication in the Part D segment significantly up. We're close to where it -- where our coverage is. So in essence we basically have United. We have Kaiser, but no access there and we're hoping to get access shortly there. But that 20% United has we have about 17% of that adjudicating and we expect that to continue to improve. And actually Doug, I'm glad you brought it up because that -- one thing my CFO asked me to mention here on the last question is we are at 100% adjudication for IMVEXXY, I'm sorry for ANNOVERA, not for IMVEXXY, I wish we were. So for ANNOVERA just answer the last question that's written down here. We're at 100% for ANNOVERA on adjudication. So anyways Doug to answer your question very important, we need Part D. That is -- as you know it's 31% of our total prescriptions approximately. And we have all of those bids in for the 2021 year which will start on January 1. And all of those decisions will be made good or bad for us before January 1 and we think we'll do pretty well. Anything you want to add?

Yes just for ANNOVERA as you're mentioning that 100% adjudication and the high revenues per unit. One thing we didn't mention is that as we're doing 2020 planning we are moving the ANNOVERA full launch with the 200 sales representatives up to the beginning of the first quarter in January given the results that we're seeing in that demand. So I think that will really put us in a good start to the beginning of the year.

And then just one follow-up question on ANNOVERA. I'm just curious in terms of the demand that you're seeing and the interest you're seeing from physicians today. What characteristics are they talking about or, sort of, seem to be gaining the most traction in the marketplace?

Yes. So I mean it's been -- we've been out there for about a month and it's been a really interesting start. So there is something that I haven't seen in my career with pharmaceutical launches in this space. One is because the product is so unique our sales representatives are getting the time to really describe the product, which is wonderful and it also just shows the uniqueness of the product and the unmet need that it's bringing. Where we're seeing sort of the features that are important is exactly what you would expect which is it is the only procedure-free reversible contraceptive in the category. And so because of that the health care professionals with that they have got the time for us to really discuss that. And in terms of the type of doctors that we're seeing health care professionals that we're seeing that are interested in the product, I mean it's across-the-board, but really one insight that's coming to us is not every physician inserts IUDs. And so because of that where we're seeing lower IUD usage or no IUD usage at all they're really seeing that this is the product that they can offer their patients and keep the patient in that office who wants a long-term option. So really good early results and we feel really bullish for the future.

Okay, great. Thank you.

Welcome.

At this time, I would like to turn the conference back to TherapeuticsMD's CEO, Rob Finizio for closing remarks.

I want to thank everybody for joining the conference call. And appreciate your time and we look forward to speaking with you again next quarter. Thank you.

Ladies and gentlemen, this concludes today's conference. Thank you for participation. You may now disconnect.