Evofem Biosciences, Inc. (EVFM) CEO Saundra Pelletier on Q2 2022 Results - Earnings Call Transcript

Aug. 04, 2022 11:27 PM ETEvofem Biosciences, Inc. (EVFM)
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Evofem Biosciences, Inc. (OTCQB:EVFM) Q2 2022 Earnings Conference Call August 4, 2022 5:00 PM ET

Company Participants

Amy Raskopf - Vice President-Investor Relations

Saundra Pelletier - Chief Executive Officer, President and Executive Director

Jay File - Chief Financial Officer

Katherine Atkinson - Chief Commercial Officer

Conference Call Participants

David Amsellem - Piper Sandler

Yale Jen - Laidlaw and Company

Stacy Lee - Stifel

Ram Selvaraju - H.C. Wainwright


Good afternoon. Now, I'll turn the call over to Amy Raskopf, Evofem Biosciences' Vice President of Investor Relations. Please go ahead.

Amy Raskopf

Thank you, Larry. Good afternoon, everyone, and welcome to the Evofem Biosciences’ results call for the second quarter of 2022. If you haven't done so already, I encourage you to access the presentation that accompanies this call and the press release we issued after market close, both of which may be found at evofem.com under the Investors tab.

Before we begin, I would like to remind you that remarks made on this call will contain forward-looking statements, which are made only as of today, August 4, 2022. For a more detailed description of important risk factors that could cause our actual results to differ materially, please refer to our annual report on Form 10-K and our most recently filed 10-Q.

Also, we will discuss estimates and other statistical data made by independent parties and by company relating to the market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates.

With that, I'll turn the call over to Evofem's CEO, Saundra Pelletier.

Saundra Pelletier

Thank you, Amy. And thank you to everyone for joining us today. Today we are reporting another strong quarter of improved operating results, highlighted by a 42% increase in Phexxi net product sales. We reduced our total operating expenses by 8%. We narrowed our loss from operations by 16%. And we expect further growth in Q3 and beyond driven by ongoing penetration of the $7.9 billion U.S. contraceptive market. For those of you that are new Evofem and as an important reminder, our innovative non-hormonal contraceptive product Phexxi is the first and the only FDA approved women controlled product that does not impact a woman's ovaries in any way. Nor does it prevent implantation of a fertilized egg. With the growing awareness of Phexxi and the concerns amongst women about sustainable access to contraception, Evofem is poised to capitalize on the current environment.

With that, I will ask our CFO, Jay File to review the financial results. Jay?

Jay File

Thank you, Saundra. Today, I'm going to focus on the second quarter of 2022 results relative to the first quarter of 2022. Net product sales increased 42% to $6 million driven by higher ex-factory sales. And gross to net was 40% for the second quarter of 2022 and we continue to expect GTN will remain about this level or better. Total operating expenses decreased 8% to $30.5 million. This was mainly driven by lower R&D costs, which were $7.7 million in Q2. The decrease reflects lower costs of the Phase 3 EVOGUARD trial as participants completed and exited the study.

We expect R&D costs to come down in the third quarter since the last patient visit was completed in late July. R&D costs should be significantly lower in Q4 and beyond. Selling and marketing costs were $400,000 lower in Q2, while G&A costs were up $100,000 due to legal fees. As a result of a higher revenue and lower operating expenses, our loss from operations improved 16% to $24.4 million.

We continue to expect 2022 net product sales will be in the range of $30 million to $35 million, with momentum building in the second half of the year. This represents 264% to 325% growth year-over-year. We expect gross to net will be 40% or better, trending lower in the second half of the year. We remain on track to reduce costs by $50 million in 2022. Our total operating expenses were $25.3 million lower in the first half of the year versus the same period of 2021. Finally, we still expect to be cash flow breakeven on a quarterly basis, no later than the end of 2023.

During the second quarter, we raised net proceeds of $18.1 million from an underwritten public offering and $2 million from our equity line of credit which we terminated in May. Through August 3, 2022, we received $22.4 million from exercise of common warrants that were issued in the main public offering.

At the close of Q2, we had $19.9 million in unrestricted cash and $1.6 million in restricted cash. Based on our current expected operations, we believe we have sufficient cash to fund operations into Q4. This does not include potential non-dilutive capital. For commercial alternatives, we are exploring and evaluating to an end shareholder value like U.S. co-marketing and co-promotion partnerships.

We continue our efforts to regain compliance with the NASDAQ Capital Market minimum bid requirements. In May we closed above $1 for 10 consecutive trading days as required by the NASDAQ listing term. However, the panel took the unexpected step of disregarding Evofem's achievement of this compliance milestone. Ultimately, the panel granted our request for continued listing of our shares on the NASDAQ Capital Market, without requiring a second reverse stock split, provided the company is able to evidence a closing bid price of at least $1 per share or at least 10 consecutive trading days by August 22nd. Given our solid Q2 results, we hope for strong support from investors who see our ongoing growth in the $7.9 billion contraceptive market and the upside opportunity in STI prevention, I believe Evofem is a smart investment, especially at the current share price.

And with that, I'll turn it back over to Saundra.

Saundra Pelletier

Building on what Jay said. Since April 1st, we have announced 16 positive developments that will all favorably impact our go forward business and enhance our ability to deliver long-term shareholder value. We have presented and published four new datasets on Phexxi to the medical community. The most important of these was data demonstrating that Phexxi prevented 99% of pregnancies per active sex in the Phase 3 AMPOWER clinical trial, which is resonating with healthcare providers and women alike. This should increase uptake, translating into prescription growth.

As an organization, we proactively developed and launched a new educational birth control chart covering all available methods to assist providers in patient contraceptive counseling. It replaces a far outdated chart many OB-GYN still had on their wall, which was developed before new contraceptive methods like Phexxi came to the market. It assists healthcare providers to deliver patient centered care. Better and more informed counseling should increase utilization, translating to prescription growth of Phexxi.

Media coverage of Evofem and Phexxi spiked dramatically since June, including features in People Magazine, NBC News, CNN and more. We partnered with A360 Media placing Phexxi branded content in their widely read entertainment and lifestyle magazines on every shelf, as well as online media. Moving forward the Phexxi manufacturing partnership is expected to decrease our cost of goods up to 45%. The FDA extended Phexxi shelf life to four years. A new patent was allowed covering Phexxi’s Composition of Matter and providing protection through at least 2033. And we also strengthened our leadership team and our Board of Directors.

We continue to secure coverage for Phexxi with payers. Our largest win is a long-term contract with one of the largest PBMs in the nation that added Phexxi to its national template formulary with no restrictions. This is significant, and we look forward to increase Phexxi prescriptions among this PBM's 28 million participants. This agreement is also expected to save us upwards of $1 million a year by removing prior authorizations from Phexxi prescriptions for this PBM. Each prior authorization was costing us $35 to process and we're delighted to remove this cost from our operating expense. Our approved claim rate has continued to increase through 2022 and currently more than 70% of Phexxi prescription claims are being approved. Every new agreement means more women are able to fill and refill their Phexxi prescriptions and we look forward to the positive impact this will have on Phexxi growth.

The biggest catalyst that the market responded to was the Supreme Court ruling on Roe versus Wade on June 24. The media focus on contraception in the wake of this decision provided a tailwind to Evofem by increasing visibility among investors, as well as consumers. This has created a tremendous opportunity for our company.

Many of you who are new to the stock since that day, I want to welcome those of you. And for those of you that have been with us for a while, I want to thank you for your continued support as we build on these accomplishments. Q2 was another consecutive quarter of increasing net product sales and improved operating loss. We are consistently delivering growth quarter-over-quarter. This directly reflects the heightened recognition of Phexxi’s innovative attributes among women and prescribers and growing traction with insurers. We expect another strong quarter in Q3. Based on the current trends and the indicators, and as Jay mentioned, we remain on track to achieve our 2022 revenue guidance of $30 million to $35 million.

Last week, following President Biden's executive order on ensuring access to reproductive healthcare, the U.S. Departments of Health and Human Services, Labor and the Treasury released guidance clarifying that group health plans at insurers must cover contraceptives at no cost to individuals.

The ACA guarantees coverage of women's preventive services, including free birth control and contraceptive counseling for all individuals and covered dependents with reproductive capacity. This encompasses all contraceptives like Phexxi that are approved, granted or cleared by the FDA. So what does this mean for Evofem? It means more plans covering Phexxi at no cost to women, and it means them doing that sooner with no restrictions. It means less money that goes to copay programs that increases our profitability of every Phexxi prescription.

Evofem's market access team is having renewed discussions with insurers and PBMs that were previously non-compliant with these guidelines to advance the removal of impermissible barriers, such as step edits, claim denials, and prior authorization letters to ensure that women have access to Phexxi at no out of pocket costs. As a reminder, there are 42.2 million potential Phexxi users in the United States.

The total contraceptive market is estimated to be $7.9 billion. Every 1% market share of the 42.4 million women in our addressable market represents significant net product sales for Evofem. Those of you who are looking at this slide, it is one of my favorite. At our current WAC of $294 per box of 12 Phexxi applicators, applying the Q2 gross to net of 40%, we net a $176.40 per box. If we're being conservative, and women only get four boxes of Phexxi per year, each 1% market share equals $298 million in Phexxi sales.

However, the reality is that most providers write a six month prescription. So when women get six boxes of Phexxi per year, each 1% market share equals $447 million in Phexxi net sales. And when our gross to net improves to 35%, the economics are even more favorable. And we also know a number of women are getting far beyond six month prescription. Contraception is a profitable business. Especially though for a company with an FDA approved proprietary product with no generic competition or equivalent.

Moving on to the program that we expect to double our market opportunity, providing significant upside for shareholders and women is our EVOGUARD study, because every sexually active woman is at risk for STI infection. On Monday of this week, we announced the last patient visit in our registrational Phase 3 clinical trial evaluating Phexxi for the prevention of chlamydia and gonorrhea in women. Success in STI prevention would expand our market opportunity beyond women in their reproductive years. Research has indicated that two thirds of current lubricant users would replace their lubricant with Phexxi is approved for the prevention of chlamydia and gonorrhea. An additional study found that 49 million Americans use personal lubricants in 2022.

20% of people in the United States had an STI on any given day in 2018. The CDC estimates 4 million and 1.6 million new cases of chlamydia and gonorrhea respectively, and all of those occurred last year. Infected people are often unaware of and don't seek treatment for their infections. Chlamydia is the most frequently reported bacterial infection in the U.S. Almost 60% of women infected with chlamydia have no symptoms. Yet it's one of the leading causes of infertility in the U.S., which we know is emotionally and financially daunting.

There are no FDA approved women controlled prophylactics to prevent these STIs. The CDC states that all sexually active people are at risk. The need here is enormous. Regardless of the contraceptive product women are choosing, they are still at risk. This widens the market opportunity for shareholders and women significantly.

We're on track to report our top line Phase 3 study data in October. We expect positive outcomes would enable us to submit regulatory applications to the FDA in the first half of 2023. These will be sNDA filings seeking to add prevention of chlamydia and gonorrhea in women to Phexxi’s label. We have Fast Track designation for both potential and new indications, so we could receive FDA approval for these indications in 2023.

I'd like to point out that we believe our current valuation does not reflect the opportunity we are addressing with Phexxi in the $7.9 billion U.S. contraceptive market. It does not factor in the near term upside potential in STI prevention. We believe this presents an incredible opportunity for the right investor. And we hope that we can count on your support.

With that operator, please open the call to questions.

Question-and-Answer Session


[Operator Instructions] And we do have question coming in now. The first one is from David Amsellem, Piper Sandler.

David Amsellem

So, I joined late, but I -- so you may have addressed this Saundra. But the first question I had is, since the overturning of Roe v. Wade, what are you hearing in the field in terms of just level of interest and not just from practitioners, but also from patients? That's number one.

And then number two, different question, this is on the gross to net, which I feel like I always ask but I need to, and that is, with the contracting and with the environment being what it is, for the better, of course, how should we think about steady state beyond this year?

Saundra Pelletier

So I will start, and then I will have Jay to talk about gross to net. So here's what we're hearing in the field. I mean, as you would expect, there is a heightened sense of urgency since the Supreme Court decision on abortion. We are hearing more and more interest from healthcare providers in wanting to meet with our sales team and wanting to know and understand the entire offerings that Evofem has. We also are actually having a lot of HCPs, depending on their state, talking about what might end up being less choices that they will have available to offer to women.

And so rolling out this educational birth control chart -- and I don't know if you were on at that point, David, but one of the things that's happened for more than 10 years, there has been no update to this patient counseling chart. And when you're in a waiting room, and you're frankly nude from the waist down waiting for your doctor to come in, and you're staring at the wall or the ceiling, oftentimes, these charts really show women what are their choices, what is the myriad of choices, and what choice is best for them?

So we took proactively upon ourselves. In fact, our Chief Commercial Officer was into the field and repeatedly saying that, “Look, these are outdated charts. If anybody wants to counsel a woman, they're so busy in their day. Isn't it better?” So the charts have been ineffective. As an example, we have reps calling in and saying that they brought in one or two charts, we have offices calling us constantly saying we have eight exam rooms, we need at least eight charts.

So we're hearing that counseling women has become much more pervasive than before. We really want to -- of course, some doctors, counsel patients, but now even the ones that weren't counseling as much are counseling more, because women are nervous, and they want to know about sustainable access. We've heard a lot of people coming in saying they're worried about maybe what they're using might not be available, and should they start to switch to something else.

But one of the biggest things that we have heard is that, as physicians understand that our product does not do anything to negatively impact a woman's ovaries, there has been an interesting focus. The doctors who are writing Phexxi perhaps for breastfeeding women, or for cancer patients, or for women who just can't use hormones are now expanding their mind to say, “You know what I need to broaden who I think the Phexxi woman is” And the biggest lever for that was this analysis we did that showed that on -- based on per active sex that 99% of the time Phexxi prevented pregnancy.

So I would say that, for us, it is bittersweet. I mean, come on, I run a women's healthcare company. Obviously, this kind of decision was tough. We expected it though. But I would tell you that the increase in interest for Phexxi has been very significant. And so that's what we're hearing.

But the final thing I would say is that we are hearing though a lot of trepidations, depending on where the states are, where some of these representatives are, where people are starting to brace themselves. They're hoping that it doesn't go further than just the decision on abortion. But people are already starting to brace themselves and be skeptical about what might be next. You want to talk about GTN?

Jay File

Sure. To follow-up on your GTN question, still always valid, so go keep on asking it. We were very pleased obviously to see GTN maintain its consistency as we believed it would at the end of Q1 in that 40% range. We are reaffirming guidance that we do anticipate that continuing through the end of the year and a very strong possibility to see it lower as the year goes on. That is largely attributable to not only the new PBM contract but some of the other wins that you saw reported on some of our press releases obviously during the quarter. And then we have summarized here.

Why those are important is because you start seeing them come through with less little utilization of our copay programs. And why that is so significant is, of that 40%, a little less than half of that is attributable to our copay programs. So anytime you can obviously start chipping away of that, that's going to have a direct benefit to our net revenue number on every sale of Phexxi as it goes forward.

Now, there's always going to be costs associated with distributor, and other administrative costs that flow through, those are never going to go away. But we -- with volume increases, in the next few year, we do anticipate we could probably negotiate down some distributor costs. But in lieu of that, we do know that ultimately a good 20% to 25% is probably here to stay for the timebeing as a cost of doing business. But we do think that ultimately over the next few years, we can get down to 35%. And 30% is a reality at some point in the near future. And then some of it -- I do expect us to give updated guidance at the time next year when we see full ACA mandate coming through, we get a little bit of headwind and actuals coming through and see just how significant that impact is.

We'll always have public, private mix. We'll always have plans that are exempt from ACA, that's always going to be there. But we don't think those will have a negative impact on GTN and we do see continued improvement as well.

Saundra Pelletier

Does that address your questions, David?


All right. We do have another question coming in from Yale Jen, Laidlaw and Company.

Yale Jen

Good afternoon, and thanks for taking the questions. The first question is that, it's certainly a great quarter, last quarter. Are you guys going to review some -- what's the script numbers in the last quarter? And then I have follow-up questions.

Saundra Pelletier

Well, here's what we can tell you. We can tell you that we have had -- quarter-over-quarter, we have seen a 11% and 12% growth. So we've seen an increase. And one of the things that we have done as we shared on the call, is for example, when we rolled out the A360 Media rollout, it drove a 16% spike in demand just after the initial two weeks. And so what we have been seeing is that we are seeing growth, we have actually seen a lot of people and distributors and wholesalers getting ready for the rollout that just happened. We did a whole series of interviews with Annie Murphy, that's gotten a lot of media attention. There's a lot more media rollout to come as a result of those interviews. So particularly also July 1st was the day that this largest PBM came on board with no restrictions. So we really feel like we're actually now not just continuing growth, but you'll see I think much more growth and momentum as time goes on over the next few weeks.

Yale Jen

And one more question here is that the third quarter, already a roughly a month and few days. And you anticipate -- and you've probably seen that the revenue growth increasing. Any colors you can sort of share for this brief month outcomes or any kind of trends you can indicate?

Jay File

I will take that.

Saundra Pelletier

Okay, okay.

Jay File

Yes. So I won't give you too much insight, obviously, just we might give you too much guidance going forward in the details. But what -- kind of to reiterate the guidance we gave, obviously, 30 million to 35 million, we are still firmly holding on to this for guidance for the year. That means some sequential growth quarter-over-quarter, obviously, as it gets there. Second half of the year, we always knew that was going to be the stronger half of our year, just building on the first half. And things are falling into place very nicely as far as getting this large PBM win and having ACA mandate coming on, both of those we believe are going to be strong headwinds heading into the second half of the year. So I would look to see some good sequential growth, as we've shown already quarter-over-quarter for the first half of the year, continue through the second and we'll fall in between that 30 million and 35 million when we get to year-end.

Yale Jen

Okay. Maybe squeezing one more question, which you mentioned about the GTN improvement, and would do you see that the reason ACA regulation will be mandated. And would that be any impact you could see change over the second half of this year, or even small changes on the GTN?

Jay File

Yes. I don't know, if you saw the press release we put out, two -- was that last week? You can find just about the very recent final push where basically implies that you need to follow ACA. It can be interpreted as immediately. Guidance earlier in the year came out, this is January 1. So there's a bit of question as to [indiscernible] were done hearing complaints, you guys need to comply immediately. But that's why we think the timing of it will continue to roll out as the second half of the year goes on. And we will start to see those continued improvement in the copay utilizations program.

And ultimately, it will come down to enforcement from the government agencies that have direct oversight over the payers and PBMs. And we think the current administration and the key members on committees are taking this extremely seriously. Coupled with Saundra's continued relentless pursuit of them, I can't say I’d blame them, they're fortunate…

Saundra Pelletier

Well, and the one thing Yale just to add is that we have heard from a lot of these offices that we have consistently been talking to and reaching out that there is a huge push from certainly the Democratic side to make sure that they're leaning in and stepping up for women. And in the past, although they didn't want to know specifics, all of these offices of Congress people and senators are now asking us for specific examples of women are getting denied. So they can reach out directly and hope that they will be seen as the halo effect of being the ones that are advocating for and standing up for women.

So, what's been refreshing is that we have seen the kind of action should have happened sooner, but we are seeing very serious and deliberate action, i.e., enforcement occurring. And it's optimistic. So at least when women are being denied safe access to abortion, they will get more and more readily get access to contraception.


Our next question is coming from Annabel Samimy of Stifel.

Stacy Lee

Hi, this is Stacy calling in for Annabel. Congrats on a really great quarter. Just two questions on our end. Can you give us some metrics around the VitaCare partnership and how that's been helping with prescription fulfillment? And secondly, we're really excited to see the last visit having occurred for the EVOGUARD trial. In light of the latest development with Roe versus Wade being repealed and the increased focus in contraception, more than need to protect it, is there any further thought to how you will treat the STI profile of EVO100 is successful? Is it protective as an addition? Or is it better to remain its own product? I know, the last iteration was that it would be a profile enhancer to contraception.

Saundra Pelletier

Yes, thanks for the question. Jay you want to start and I will jump in for the second one.

Jay File

Yes, I'll jump in on VitaCare. So just a little bit of specifics for the quarterly activities, we did do a pilot style rollout with them. And it was extremely successful right from the get go. We are very happy to see that. Obviously, a fairly complex process with the new platform going out. So we wanted to make sure that the pilot program was effective and well received and any kinks were worked out. Subsequent to that we've actually rolled that out fully to the field starting August 1st. And we're already seeing our exits come in from that process. Feedback from the sales reps, doctors' office, all across the board and patient experiences have been extremely favorable. And as a reminder, this is -- we're still on the term white-glove, but really, this is truly what this experience is. And beyond that, and really integrating patients with a service that really follows them through the entire process, all the way through ensuring that they get their refills on a timely basis, the process itself is it's fully integrated, and it doesn't come in from multiple sources and other multiple vendors. So this is truly a one-stop shopping porthole for us to really fall back on and our patients to us. And we're extremely excited about the initial results. And I think for sure, we'll have definitely much more insight as to how it’s been rolled out from the initial launch on August 1st, when we talk for Q3 results.

Saundra Pelletier

And you know, our Chief Commercial Officer Katherine Atkinson is also with us on the line. Katherine, is there anything you want to add just to fully color the VitaCare situation?

Katherine Atkinson

Yes, we've seen some great success. So as Jay said, we kind of beta tested it and slowly rolled it out. Of all the prescriptions that came in which were many, we've had 53% already approved and VitaCare continues to work on the remainder. We’ve rolled it out to the field on August 1st. We had about 20 already go in. And so we're really excited about it. So we'll have far more color coming after this quarter for you. But really great performance up to that point and in our previous programs we were below the 50% and we're not even finished with those first ones that came in. So already off the bat really great numbers.

Saundra Pelletier

And then I want to address your question regarding EVOGUARD and the STI indication. And I just want to make sure that the question. So can you just frame it again? So you want to know whether or not the -- expanding the label we think will be as advantageous as being a separate product?

Stacy Lee

Yes, that's correct.

Saundra Pelletier

Okay. So one thing. So in the work that we have done around diligence with providers and diligence with payers, we're looking at a couple of different things. And the short answer is expanding the label we have concluded will allow us the same opportunity as if it were a separate NDA. The financial positive is that the sNDA submission will be no cost to us, which is fabulous from a financial standpoint. But even if there was a cost, and we thought it was going to be better for shareholders and women, we certainly would have incurred that cost.

Where we are now is when you look at a product that as you may or may not remember those of you on the call, we were able to actually get a publication in a sexual satisfaction journal. When you look at a product that has lubricating properties, and you have a product that will prevent pregnancy with no systemic activity and no hormones and that negatively impacting your ovaries or your ability to get pregnant down the road and prevent from chlamydia and gonorrhea. I will tell you that in all of my years, I've been in women's health my entire life, we used to do these think tanks, where we would say to global leaders, women, all kinds of influencers, let's just talk about nirvana. What would be the most amazing product? And consistently people would say something that you wouldn't suffer from side effects, something that you only used when you needed it, and something that would protect you from getting sexually transmitted infection. Well, let me introduce you to Phexxi. And I mean that and of course, I would say that as the CEO of this company, but I was attracted to this company because of this asset. After spending my whole life looking at me-too products in crowded categories, understanding that when generics come to a market they erode a brand by 50% to 60% but recognizing, most importantly, that women don't have sex every day, and men have had condoms for 150 years. And it is far time that women have a product, where they can have sex on demand, with pleasure without hormonal side effects, the timing could not be better for Phexxi.

And it is really important to know that how our product works as the vaginal pH modulator. Women intuitively understand it. Doctors intuitively understand it. And so it's simple and it's easy to use, and women feel really good about it.

And so the short answer is, is we feel very good that this NDA submission and expanding this label -- now, down the road, we may decide with this sort of trifecta of all of these wonderful things that, maybe we want to do a relaunch down the road. But what I would tell you is we feel that the market opportunity is so significant. Because as we said, whether you're on a pill, a patch, or an IUD, you are still at risk. And chlamydia is now so pervasive, 4 million cases.

And final comment I want to say is, after being in women's health my whole life, I have to shamefully admit that I didn't even recognize that chlamydia was one of the top reasons for infertility. And when we start to talk to young women, they're already thinking about their ability to get pregnant when they want to, even though it might be five or six or 10 years down the road. So if you're protecting yourself from getting pregnant, and you're also worried about your ability to get pregnant, why would you not use a product like Phexxi?


Your next question is coming from Ram Selvaraju of H.C. Wainwright.

Ram Selvaraju

Thanks very much for taking my questions, just three relatively quick ones. First of all, I was wondering if you could comment at all on any emerging trends you're seeing in sort of private pay, or non-reimbursed demand for Phexxi, particularly in the wake of the Supreme Court ruling? Secondly, I was wondering if you have sort of an updated take on returning to the concept that was mooted early in Phexxi's commercial trajectory regarding the population of women who are undergoing cancer treatment of specific categories that would lead them to be ineligible for hormonal forms of birth control? And then lastly, I was wondering if you have updated thoughts on, assuming positive readouts in STI prevention, how you would go about strategically optimizing the value of the drug in that indications, and whether that would involve any kind of business development activity, particularly in the context of the U.S. commercial opportunity? Thanks.

Saundra Pelletier

Thank you, Ram, very much for your questions. I’d like to start backwards, if that's all right. I'm going to start with the last one, meaning the STI opportunities. And the short answer is, definitely. And why I'm saying definitely is that when we expand the label to add on prevention of chlamydia and gonorrhea, we want to provide much broader access to a much wider population. And so we -- as you heard from Jay’s comments, we are looking at co-promotion and co-marketing partners. We believe that yes, certainly OB-GYNs will be the top prescribers, but we do think that it will expand beyond that frankly.

So we are trying to be very strategic and wise about finding a partner that has a footprint. And that is looking for another opportunity to tell an additional story. So we're actively doing that right now. I will tell you that I know, those of you who've been with us for a while, when we talk about business development, we are a little trepidatious because we could get a distribution agreement tomorrow. Yes, we have waited so that we can get the right partners. But for STI, the strategic partnerships are multiple, and our Head of Business Development, full time 100% focused on these partnerships has said that now with Roe versus Wade, what's been fascinating is that the people contacting us is so constant and continuous.

So we are going to look to align with somebody in the U.S. to expand our reach. Still obviously controlling the branding and the messaging, but to see if there's an appropriate partner. And we are continuing our efforts outside of the U.S. to bring in non-dilutive capital.

Then your second question…

Jay File


Saundra Pelletier

Yes, NCODA. So, one of the things that we have tried to see if we can identify, out of the 800,000 women that are cancer patients is, is there a way to see if there are carveouts that we can identify you know who they are.

What I will tell you, is from feedback from our sales organization and we also have our Head of Sales, a gentleman who spent his career in oncology by the way. He's the one that helped us align with NCODA, but it's important relationship that we have. What's happening is that as time passes, and even though Roe versus Wade and you would think what does that have to do with cancer patients? What has been extraordinary to see is that regardless of the physician type, but oncologists are continuing to open their eyes up that, one, they certainly don't want their cancer patients to become pregnant during treatment, they don't want estrogen cancers to grow. And the only other product which is a copper IUD has side effects that are oftentimes far too challenging for these patients in a vulnerable state. Phexxi is the obvious choice. So we have been seeing being asked to continuously go and provide products to hospitals to do all kinds of Grand Rounds conversations to continue to elevate and escalate the conversation.

So I would say that it is growing, we have not had a way to actually segment that specific population. However, when we're talking to doctors, they are part of bigger practices. And so we are always making sure that our sales organizations, some of whom are cancer survivors themselves, by the way, are making a deliberate effort to go to those hospitals and talk to those clinics in those centers. And we think that's boosting our business.

The first question, I don't know if our Chief Commercial Officer or Jay File like to want to address it. Jay File, do you?

Jay File

Yes, no, we do -- okay, perfect. Go ahead, Katherine.

Katherine Atkinson

Well, I think, one thing that we could mention, and I think this could actually help is, in spite of whether some of these small private payers are moving this way, we are being, again, proactive in doing something that helps women. So we have a cash card program that we're going to be rolling out in the next few weeks. So even if payers aren't moving to increase access immediately, we're going to do what we can.

Saundra Pelletier

Ram, does that address your questions?

Ram Selvaraju

Yes, that was very helpful. But I think just to clarify, I was also asking about, those folks who are prepared to pay out of pocket, if you're seeing sort of an increased level of interest in doing that since the Supreme Court ruling or not?

Jay File

Yes. I think to expand on that, we are always about two weeks behind on script data. And to get into that level, obviously, it's just starting to come in. I will say that traditionally, the self-pay category as we trended is not a very significant number of our sales. It is there, which is why we also did implement that cash card program that Katherine is referring to. And that is just being -- we had recently rolled out, actually it was kind of great timing on our part, because we rolled that out in advance of Roe v. Wade decision coming out. But I think we'll get better clarity to see if that is truly an issue to that degree. But I think, ultimately speaking, anecdotally, I think the majority of the Phexxi prescriptions that are coming through, you're still going to see them either one come through. Some sort of payer assistance program, right, they've got their own insurance and/or a governmental support program that they'll have coverage through state or federal means. So a true uptake on someone who doesn't have either and is paying straight out of pocket, they'll definitely be there. We put in steps at a time to potentially assist them.

But I think we'll truly see -- we'll follow-up on that in Q3, I think we'll have much better visibility on that to see if truly is something that is trending on and something that we've timed right with our cash rebate card.


That's all the time that we have for today. I'll turn the call back over to Saundra Pelletier for closing remarks.

Saundra Pelletier

Thank you. We continue to grow Phexxi net product sales quarter-over-quarter in the multibillion dollar U.S. contraceptive market. We are on track to meet our guidance for 2022. With the Supreme Court ruling on Roe versus Wade in June, women are increasingly motivated to protect themselves from unintended pregnancies. The recent guidelines from the U.S. government on contraceptive access should catalyze access to Phexxi at zero cost to women with no barriers to access. Additionally, there is significant upside potential from our late stage program developing Phexxi for the prevention of chlamydia and gonorrhea in women.

In closing, I want to reiterate that we remain focused on execution of our business strategies to deliver long-term shareholder value. The time for Phexxi is now. The need is greater than ever, both for hormone free contraception, and for prevention of STIs. We are excited about our future. And we are very, very happy to have you on this journey with us. As you look to organizations that are delivering innovation, but continuing to execute, when I started this call, I said that since April, we have been able to share 16 value drivers to deliver on our business and deliver shareholder return, 16. Those were not announcements that were fluff. There wasn't a whole lot of gray in there. These are very deliberate, intentional milestones that we continue to deliver on to prove that this product deserves to not only grow, but the attributes of this in a time that we're in today, it makes it such an obvious investment. And the value inflection that's forthcoming in October when we share our readout for our STI study is very significant.

So I want to thank all of you that have been with us for a while and I'd love to again, welcome the people that are new, and I really want to thank you for your ongoing support. Have a great rest of your day.


Ladies and gentlemen, thank you for joining us. You may now disconnect.

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