TherapeuticsMD, Inc. (TXMD) Q1 2019 Earnings Report, Transcript and Summary

Good afternoon ladies and gentlemen. Thank you for joining us for the TherapeuticsMD First 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 conference call over to Therapeutics' Vice President of Investor Relations Nichol Ochsner.

Good afternoon everyone. Thank you for joining today's call to discuss our first quarter financial results and business updates. This afternoon TherapeuticsMD issued a press release announcing our first 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 Financial Officer, (sic) [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 this conference call may be 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, 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 made available 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 May 6th, 2019. With that I'll turn the call over to TherapeuticsMD CEO, Rob Finizio.

Thanks Nichol. Good afternoon everyone and thanks for joining today's call. Let's discuss the model we've chosen for long-term success on slide 3. Our strategy for the launch of IMVEXXY was to provide an open access market with our $35 copay card for patients before commercial insurance coverage was established. We did this because of our belief that IMVEXXY is a product that provides a highly differentiated treatment experience that will convert providers and women to IMVEXXY from legacy products. Let me show you the data on the next two slides that demonstrates our strategy is working and that we believe will conclude with IMVEXXY being the market leader for VVA products. Turning to slide 4, you can see that our approach has jumpstarted our volume and our units continue to grow as insurance coverage is building. IMVEXXY continues to trend with Vagifem, we expect this momentum to continue with the expansion of our salesforce whose predominant focus will be on IMVEXXY, while we're building insurance coverage for BIJUVA. In March, we achieved 6% market share in just 10 months and believe our model is working. Now, let's turn to refills on slide 5. In just the first 10 months, we are already seeing an average of over three fills per patient. This is above our initial expectations and above the average in the VVA category. We believe it is clear from the data that women like IMVEXXY. This also puts us on a path to driving market expansion to treatment adherence. I'll discuss the value of fills per patient later in the presentation. Let's turn to our results for IMVEXXY on slide 6. In addition to volume and refills, we're increasing net revenue for IMVEXXY quarter-over-quarter. Everything is trending in the right direction with net revenue increasing at a faster rate than units due to payer coverage starting to take hold. We believe this trend will continue as more payers begin adjudicating. In the third quarter of 2019 we expect to have approximately 70% commercial payer cover contracted. And in Q4 of 2019 we anticipate the majority of Medicare Part D to be contracted. We believe this rise in coverage will be the major factor to us being able to achieve our normalized net revenue goal of $108 per unit in the third quarter of 2020 which is heavily weighted to our maintenance pack. As this insurance contracting completes this year we expect the majority of the gap from where we are today to the target goal of $108 net revenue per unit will be closed this year. A question that we've received is why our adjudication rates do not match our coverage lives. To answer this question let's review how this all comes together. Please turn to slide 7. What we're showing here in line one is a patient mix by payer type for the VVA category. For the VVA market, Medicare Part D is typically 25%. Commercial is typically approximately 66%, and cash pay is typically approximately 9%. If you move to line two, it shows IMVEXXY's patient mix by payer type. What you can see here is that our patient mix is over-weighted towards Medicare Part D, which is currently an area of our lowest coverage and utilization of insurance when filling a prescription. Now let's look at slide 8 for adjudication rates by payer type. As you can see, IMVEXXY -- for IMVEXXY, we have approximately 5% adjudication rate for Medicare Part D for the first quarter. For commercial plans, we had approximately a 41% adjudication rate. Together, this gave us an overall blended adjudication rate of 27%, which is 5% above what we expected and what we stated on our Q4 call. That transitions us nicely to slide 9. We are consistently seeing an improvement in adjudication rates. In just April, as the impact of copay card resets and high deductible plans lessened, the overall adjudication rates increased to 32%. Let's bring it all together on slide 10. Our gross to nets per unit will be primarily driven by increases in payer coverage across commercial and Medicare. So we expect the majority of that gap from where we are today to the target of $108 net revenue per unit will be closed this year. As we look forward to 2020, with all three of our products being launched, we anticipate that distribution costs will be significantly reduced. Likewise, in the first half of 2020, we expect to identify and optimize IMVEXXY's Copay Card program. We believe all this together will result in a normalization of $100 net revenue per unit in Q3 of 2020. Turning to slide 11, so why do we choose this model and what is this data suggest? With a very conservative assumption -- and we are assuming, we only achieved 25% to 30% market share, and assuming if you only -- if you take no price increases, and if you have no new patients enter the VVA marketplace with only three fills per patient, which we have already achieved, we could have approximately $225 million net business. The added value of each additional potential fill results in an additional $74 million of net revenue for IMVEXXY. Now, let me turn the call over to Dawn Halkuff, our Chief Commercial Officer to review our levers for growth.

Thank you, Rob. Let's turn to slide 12. To achieve or exceed the potential that Rob just reviewed, we are continuing to put pressure on each of the levers that we believe will help us achieve overall success in market leadership. In the first quarter, we added about 50 sales representatives to expand our reach to an additional 5,000 prescribers, which will support our growth in market share. In addition, we've launched BIO-IGNITE with IMVEXXY, and we plan to start our DTC campaign in the second half of the year to attract new menopausal women into the VVA space. Let's move to slide 13. Before we move on to BIJUVA, I want to spend a minute on what we are seeing with BIO-IGNITE. As a reminder, BIO-IGNITE is our program to partner with compounders to create a presence in VVA and to access the 12 million to 18 million annual compounded prescriptions in the E+P market. We have launched the model with IMVEXXY and now have 33 accounts live, 15 vetted accounts waiting for the first order, and 153 in the vetting and processing stage. Importantly, early indicators show that we are gaining steady volume from these initial accounts, hearing that the patients who are now on IMVEXXY are happy with the new product choice, and uncovering high-volume prescribers that we would not have otherwise targeted. These types of prescribers do not show up in the IMS or Symphony data, as the products they are prescribing are compounded and not FDA approved. Additionally, we are seeing strong refill rates in BIO-IGNITE that match 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. Let's move on to BIJUVA on slide 15. We announced the commercial availability of BIJUVA on April 17. We believe BIJUVA fills an unmet need for menopausal women and prescribers. Phase 1 of our launch will focus on the traditional prescribers who prior to BIJUVA have prescribed the off-label two product regimen of separate estradiol and separate progesterone products despite these not being approved to be used together and with two separate copays. Since there is little to no promotion in the FDA-approved hot flash category, TherapeuticsMD with BIJUVA will be one of the only voices presenting an opportunity to reshape this category and reinvigorate this therapeutic area. We plan to launch BIJUVA into the BIO-IGNITE network, once payer coverage has been established, which is expected in the fourth quarter of 2019. Turning to slide 16. BIJUVA will follow a similar commercialization path to IMVEXXY that starts with prescriber education, while building payer coverage. Our 200 person sales force will be focused predominantly on IMVEXXY, while BIJUVA payer coverage is building. The overlap of prescribers for IMVEXXY and BIJUVA provides a portfolio advantage. BIJUVA also gives us an opportunity to connect with menopausal women early in the treatment paradigm that may allow for the transition from BIJUVA to IMVEXXY based on their symptoms. Our sales force is promoting with a powerful prescriber marketing campaign as shown on the right-hand side of the slide. The campaign focuses on the science of BIJUVA that led to the FDA approval of the first and only FDA-approved bioidentical combination of E+P. Let's move to slide 17. Our strategy for BIJUVA is simple. Just like IMVEXXY, it is focused on prescriber education and launched with an early experience program called Keep Cool. We have the same $35 copay program, so prescribers and patients can access the product as insurance coverage builds. As we build prescriber, patient and payer uptake, we will then move into the next phase of the launch similar to what we did for IMVEXXY. Now moving on to ANNOVERA. Please turn to slide 19. We view ANNOVERA as a potential game changer in the contraceptive market, which is the largest FDA-approved market in women's healthcare at $5 billion. We conducted a recent market research survey to a panel of 200 physicians comprising OB/GYNs and primary care providers, that showed near universal acceptance to prescribe ANNOVERA. As a woman, let me explain to you why this product is so exciting to me. To receive a long-acting product like an IUD, a woman has to make a long-term commitment of five to seven years regarding her fertility. And then have a procedure to have it inserted and then another procedure if she wants to have it removed. With ANNOVERA for the first time women can choose to have a long-term product and also choose to change her mind without the need to have an invasive procedure. To me, that is game changing. Moving to launch. In the third quarter, we plan to do a soft launch to meet incoming demand. We expect to be manufacturing at scale in the fourth quarter of this year with the full launch in the first quarter of 2020. The initial focus will be on the OB/GYN target overlap with our menopause products. Now let me explain how the payer market for contraceptive is different than the HRT market. Under the Affordable Care Act, or ACA, insurance companies must cover at least one contraceptive product in each of the FDA's 18 categories of birth control with no copay. We believe ANNOVERA will become the 19th method of contraception, that decision process will start when we launch and be determined by the FDA. Turn now to slide 20. Now that you understand the ACA national laws, here is what you may not be aware of, the state laws. Certain states require immediate coverage regardless of the ACA mandate. Approximately eight to 10 states comprising 42 million women mandate coverage with no copay regardless of the ACA decision. This is meaningful, because although they will likely do a clinical review it may shorten our time to coverage. Let's move to slide 21. Slide 21 shows an additional nine states that require coverage, but could require a copay. We believe these state mandates will shorten the time line to payer coverage and net revenue stabilization per unit. I would like to remind you once again that contraceptives represent the largest FDA-approved market in women's health care. We anticipate the WAC price will be $1,800 to $2,000 per unit aligned with our responsible pricing strategy and price lower than NuvaRing on an annual basis. Now, I would like to turn the call over to our CFO, Dan Cartwright to review the financials.

Thanks, Dawn. First quarter 2019 financial results are included in the press release issued today. Let me summarize a few key points. Please turn to slide 23. For the first quarter, approximately 75,000 units of IMVEXXY were dispensed by pharmacists and paid for by patients compared with approximately 47,500 units in the fourth quarter. The average WAC sales price was approximately $202 for the first quarter. The difference between WAC and net revenue is mostly driven by the cost of our copay assistance program as discussed earlier, which we expect to continue to lessen as payer coverage increases. As such, in line with our expectations, net revenue for IMVEXXY was approximately $2 million for the quarter, which is an increase of approximately 122% over the fourth quarter. We expect net revenue to increase substantially over the next few quarters. We continue to contract with insurance companies to reimburse for IMVEXXY. At March 31, 2019, we have contracted with seven of the 10 largest commercial payers in the VVA market. Our goal is to continue the contracting process with the remaining payers in the commercial space. Once completed, we believe our IMVEXXY scripts will translate into higher revenue as more insurance companies begin to pay for IMVEXXY through the adjudication process. Net revenue from the company's prescription prenatal vitamin business was approximately $1.9 million for the first quarter of 2019 compared with approximately $3.8 million for the first quarter of 2018. A portion of the lower revenue was created by a price increase in the first quarter of 2019, which caused some customers to increase purchases of the company's prescription prenatal vitamins in the fourth quarter of 2018. Total operating expenses for the first quarter of 2019 increased compared with the first quarter of 2018. These changes primarily reflect an increase in commercialization expenses for the launch of IMVEXXY and BIJUVA. This is reflected in the SG&A expenses for the first quarter of 2019, which were approximately $34.9 million compared with approximately $20.8 million for the prior year's quarter. This is primarily due to higher sales, marketing and personnel costs to support the commercialization including the expansion of our women's health sales force from a 150 to approximately 200 to support the launch of BIJUVA. Turning to the bottom line. Our net loss for the first quarter of 2019 was approximately $39.5 million or $0.16 per basic and diluted share compared with approximately $24.4 million or $0.11 per basic and diluted share for the first quarter of 2018. Move to slide 24. Last month, we entered into a financing agreement for a $300 million non-dilutive term loan facility with TPG Sixth Street Partners also known as TSSP. The initial funding was $200 million with additional funding available at $50 million upon the designation of ANNOVERA as a new category of contraception by the U.S. Food and Drug Administration on or prior to December 31 2019. And another $50 million upon achieving $11 million in net revenue from IMVEXXY, ANNOVERA and BIJUVA for the fourth quarter of 2019. As you can see in this comparison slide of the differences between our TSSP and MidCap debt facilities we see that under the TSSP facility interest is payable quarterly as shown on the amortization line. The outstanding principal amount of the term loan facility will be payable in four equal quarterly installments beginning on June 30, 2023 with the term loan facility maturing on March 31, 2024. While under the MidCap facility, we started amortizing the loan in the third quarter of 2020 and the -- we finished the first quarter of 2019 with approximately $122.8 billion in cash compared with approximately $161.6 million at December 31, 2018. And as we discussed above we subsequently closed on the TSSP facility. Cash burn was approximately $38.8 million in the first quarter. Now let me turn the call back to Rob for closing remarks.

Thanks Dan. On today's call, we've talked a lot about IMVEXXY, but I'd like to remind everyone that the value this company is based on three FDA-approved products not just one. And in conclusion of today's presentation, let me remind you of the overall opportunity the company represents as outlined on slide 26. When you look at the some of the parts the total addressable markets are large at $1.5 billion for IMVEXXY, $2 billion to $4.5 billion for BIJUVA and $5 billion for ANNOVERA that will all be launched this year with very little promotion or competition. With that being said I'd like to turn the call over to the operator for Q&A.

[Operator Instructions] And our first question coming from the line of Louise Chen with Cantor Fitzgerald. Your line is now open.

Hi, thanks for taking my questions here. I had a few. So one question that we got from investors is on the covenants for your new debt piece, just curious if you could outline anything important there? And then secondly, I know you've talked through this but just curious on more specifics if you could give the growth to net for IMVEXXY where it is now? Where it's going? Where do you expect by the end of the year? And then do you owe any royalties on any of your products? And then last thing is have you thought about strategically if the vitamins business is the core asset for you? Thank you.

This is Dan. How you're going today?

Good.

Your first -- I'm sorry. Your first question on covenants. I think the most important covenant that's in the agreement is, we get if we reach $11 million in revenue from all three of our products in the fourth quarter we can get another $15 million. As far as the debt agreement itself, we will file that with our third -- our second quarter 10-Q in August.

So the gross to nets -- so our -- it depends on how you want to look at that. So our target is $108 heavily, heavily biased on maintenance packs because that seems to be quite the trend right now. The gap between where we are today and that $108 that we'll get to in Q3 of 2020, we think majority of that gap will close this year in Q4 So if you think about it, the thing that makes that close is just finishing your payer contracting. In essence, we'll finish commercial Q3 and we'll finish Part D in Q4 of this year. All right? And as you've seen in April the reduction in the headwinds with high deductible plans and copay resets, we've already gone up 5% adjudication to approximately 32%. And we haven't had any new additional payer coverages. So we expect that to continue to accelerate. A majority of that gap between here and $108 will close this year and then will finish it off in 2020. Go ahead Dan.

And then as far as royalties today there aren't any royalties, the only royalties we have to pay would be on our ANNOVERA product when we start to sell that which we expect to come as early as third quarter. So at that point those royalties will vary. It's disclosed in the 10-Q in the footnotes that lays them up very clearly in a table.

Louise, last question. vitamins. So the vitamins are in essence a feeder for ANNOVERA, right? So we have 60,000 to 70,000 new patients coming on that we connect with -- to our copay assistance program. And a high, high percentage of them will go on contraception after they're done breast-feeding or having a baby. So we think even though that market is being shunned by payers, we think keeping it and having the connection with those patients will pay huge dividends with ANNOVERA and that's the intent for that business, if that answers your question.

It does. Thank you very much.

Thank you.

Our next question is coming from the line of Ken Cacciatore with Cowen. Your line is open.

Thanks, guys. Just a few questions. First Rob, a lot of detail on the normalization of pricing for IMVEXXY, just wondering is this the pattern or the timing that you expected? And if not what has changed and maybe what learnings can we apply to BIJUVA? And then Dawn, maybe you can give us any thoughts on anything on IMVEXXY that's been surprising to you either more difficult or a little bit easy. And then just lastly, just wondering when are you going to be able to report to IQVIA or the other databases? So we can see on a weekly basis and kind of go ahead and track the prescriptions and make it a bit easier on us. Thanks so much.

Yes. Good questions, Ken. So look so as far as the timing goes, so I think it's pretty much in line with what we stated from an insurance standpoint. So if you look at the model, the good news is there's enough data there. It's working. Think about it. Volumes accelerating significantly in this space, so winning over women, we're winning over doctors, but the risk that we always heard from investors is as insurance companies come on, step edits come in, co-pays change you're going to slow down. You can't keep this rate up well guess what? We're -- what 32% adjudication and it's just speeding up as we go. And adherence or the fills rates are already above the industry average here in just the 10th month. So the game here is to finish the contracts. We only need CVS and Caremark to get to that 70% on the commercial side and we will definitely get that done in Q3. And then all we have to do is get the majority of the Part D which we've said in Q4 all along. We said post October, right? October 1 is when those things happen. And I know we got United early, but we'll get there. Remember, we've achieved 6% market share. So just do the math, right from where we are today, 6% market share shows such an unmet need for a new vaginal estrogen and women are already exceeding compliance of all the other products with ours. So it's really, really attractive at over three fills. In addition to that, the data that we've seen, I'm going to pass it over to Dawn here is that Symphony already is very close to where we are. I would -- IQVIA and IMS, we've tried to work with them and hopefully they'll get more accurate. But I think you could look at Symphony weekly and be pretty close.

Hi Ken. It's Dawn. So to answer to your question which was around what has been more difficult or what has been easier since the launch of IMVEXXY. I think what we knew or anticipated would be difficult to serve with a lot of a entrenched behavior in this marketplace. These products have been around for a long time which is why we took the approach we did of providing the $35 open access. And so what I've been very pleasantly surprised by is how providing that as an opening has led to very fast volume growth. In fact that volume growth trending with Vagifem and really beating by multiples, some of the newer launches and the category. So again it's what we anticipate it will be difficult, but that's why we took the approach we did and now that's paying dividends with a lot more doctors adopting us over time.

That's the big thing to take away from today's call. You can do the math as payers come on that will fix itself. The payer adjudication will come on and these net revenue per unit will normalize at that rate. And you can see there is enough data there to see that it's not slowing down with good 32% adjudication and compliance is growing so women like it. So the model is working and I'm glad we did it as opposed to some of the previous launches that have been out there with heavy DTC, heavy big spends and things like that. This is a very cost effective way to build a product and its working.

Great. Thanks so much.

Thanks Ken.

And our next question coming from the line of Jay Olson with Oppenheimer. Your line is open.

Hi, thanks for taking my questions. I had a few on IMVEXXY and one for ANNOVERA. With regards to the $108 net price that you're targeting for the third quarter of next year, I guess that gets you to your 60% goal for the $108 maintenance packs but assuming that your product mix has a few starter packs in there, does that mean that it could be greater than $108 net price per script when we include some starter packs? And then I think the same question for IMVEXXY is in your time line on slide 6, you didn't mention any metrics for the second quarter of this year. I was wondering if you could perhaps share your thoughts on what we should expect in the second quarter for IMVEXXY net revenues per unit. And then finally for ANNOVERA, can you just talk about the FDA designation as a new contraceptive category what exactly is the process there and the time line for that? Thank you.

All right, Jay. Last here. Let me try to go through each one and if I don't cover it all. Let me know. All right. So the $108 net in Q3 is a very conservative number. You're right. And the reason we did that is so we have some upside. So let me walk you through that. It is heavily, heavily biased on maintenance packs. As you can see through our numbers is where a vast, vast majority of scripts are coming from. What does that mean to everyone? That means when a new woman comes in and choose atrophic, she would start on a starter pack, which is a therapy everyday for two weeks and then twice a week from there on after. That WAC is at $405. While when you're already stable on another product even though the label says to start with a starter pack on the new product, most doctors are just switching them over to maintenance packs. So for the label that's one area we can really improve in. And if we do to that, it will improve on that number from $108 and I think there is some upside that we can get there. But remember my job is to be conservative here. In addition to that that also shows such a pent-up demand here for something that is physically different than what's out there today. And I think the numbers are showing and the model is working. Does that answer your question?

Yes that's helpful. Thank you very much.

The other thing is remember, every additional refill is another $74 million net to the bottom line. Assuming very conservative assumptions I read off before. 25% to 30% market share, no price increases, assuming no new women there's all these very, very conservative assumptions there we just want to articulate the value that a better-received product that's used more often can deliver. And that's why we're showing every single month on compliance to show you how well this is received and how fast these scripts are going up. And I'll tell you every single question I have ever received on this is, hey once you guys pull 25%, 30%, 35%, 40% adjudication and step edits kick in and the copay cards don't work like you've seen with other launches, is that going to slow you down or stop you? And it's not. They're all accelerating. So the model works, we got 10 months of data and we cut 6% market share, right? We're just starting it's only our first products. So we're going to keep going here. So on slide 6, you're asking are we are going to tell you what we think we can do for Q2 in net revenue. So what we're saying is already in April we've seen a 5% uptick in adjudication without any new plans coming on. And that's basically the high deductible and copay resets headwinds going away. We can't give our numbers for Q2, obviously, but what we can do is we can tell you that the majority of the gap between where we are now and when we get to that $108 will happen this year. That makes sense? So by Q4, I don't care if you're on Part D or commercial, I'm going to have a lot of coverage. And they're going to get a lot of adjudication and I don't care what the population is. I just need customer’s right. I just need to continue to drive this model and take market share. Okay?

Okay.

All right. And then last, last is ACA. So what's the process? So the Affordable Care Act is -- has -- currently has18 what they call methods or types of contraception and the ANNOVERA in our opinion from what we have understood with development of the drug with Population Council really does not fit into the current 18 methods. Let me give an example, if you are a 90-day pack of birth controls versus a 30-day or 28-day pack, those are different methods, because you don't want to confuse it. They're the currently monthly vaginal ring, but to make sure that's never confused for an annular ring, especially with the different active in it, there would be a separate method or category created. Once we launch that in Q3, the FDA will start that decision, and when they officially list it on their website, it will be adopted by payers across the country. The new news today is that, you've got 42 million women in almost 10 states, that the day we launched this once they go through the therapeutic review, which should be lot faster in the six-month block, which is new news here, there will be new copay for those 42 million women in those 10 states. In fact, there is another nine states that can do a therapeutic review and can have a copay, but also will be a very accelerated adoption given there is no six-month block just a therapeutic review. So this whole situation here with revenue coming from ANNOVERA, we think is taking a great step forward here.

So the clock for designating ANNOVERA as a new contraceptive category starts at launch?

You got it. So what -- we have a lot of inbound demands on a weekly, it used to be on a daily basis still from lots of different types of organizations. So as soon as we get some product, we want to help meet that demand and start that clock. And that will be Q3. Okay?

All right. Thank you very much.

Thank you.

And our next question is coming from the line of Annabel Samimy with Stifel. Your line is open.

Hey, thanks for taking my question. Just back on IMVEXXY, I know that you're getting a little bit more adjudication. So to what extend is some of this being dragged down by the deductibles? And do you have a sense if that's going to drag into Q2? And whether there are any of these plans to use copay accumulators that could potentially extend this deductible, where you'll have to continue covering the prescription? And then on BIJUVA, so just in terms of coverage, do you feel that you're in a better position with these payers, because now you have two products to work with and adjudication may go faster? I know that you have a few that's -- that are presumably already going to be adjudicating upfront. And are you considering doing anything differently with the copay card? I know you said you've got $35, but it seems like it's taking a long time to sort of get those going, and meanwhile, you're covering a lot of the cost of these prescriptions. And then finally, on ANNOVERA, I think I just missed it, but when the clock starts, what is the time from when the clock starts that you actually get the classification as I said schedule? Thank you.

That's a lot Annabel. Let me start from the top, if I miss anything let me know. All right. So copay accumulators, would they affect us? No. That's in specialty that is not in our category at all. High deductible. Yes, high deductible plans, copay resets, huge impact across the industry Q1 that was my statement as to in April adjudication is already up 5% or 6% with no additional new plans coming on. And that we believe that's the reduction in the high deductible plans and things like that. So we expect the net revenue per product to continue to accelerate throughout the rest of Q2 and Q3 and Q4, right? Does that answer your question on high deductible?

Yes. Well, the fact that you have no copay accumulators already is helpful. So that's good.

Yes. So here is the beauty of our portfolio. The speed of coverage. So, Part D, as you can see is a massive portion of IMVEXXY and it's where we're weakest, that will fix itself. I -- we will cover the plans and we'll get majority of Part D and commercial in Q3, Q4, we just got to keep growing market, because all of those scripts will cash in. So don't worry about that. But the beauty of BIJUVA is the Part D coverage is insignificant, it's like 10% or 12%, it's not a meaningful population, and it's a cash pay market we're going into with a copay card of $35, where women are used to paying $50 or two generic copays that can easily be $40. And it's a great, great step in our direction. So as you're seeing a six-quarter process for IMVEXXY because of a Part D contracting time line that is very slow that is significantly reduced by a quarter or two for BIJUVA. And then when you get to ANNOVERA you've got 20 states where they can just do a therapeutic review and have to pay right away, regardless of ACA and 42 million women will have no out-of-pocket regardless of ACA. And in addition to answer your question on ACA, the clock starts the day we launch it, I can only look at historically there is no guideline to tell them when they have to give us the decision the FDA. But I can tell you that in the past, when it first came out some products were done in just a couple of months some took up to six months. So that would be the range, I would give you. But I want to emphasize that 10 states and 42 million women where we're going first have no out-of-pocket. Okay. So every product will accelerate by a quarter or two to coverage the normalize.

Okay. And if I can just ask couple of follow-ups. On the Part D plans, your adjudication is low. Didn't Medicare – doesn't Medicare have to legislatively cover these products? And I guess why is adjudication still slow on the Part D plans? And then – go ahead I'll just follow-up with something else.

It's exactly what I said it would be on every single earnings call. We got United early and I always said, it would be October before we were going to get anything meaningful in Part D and that's Q4. And I'm sticking with it, all right? So commercials move quickly. We only have one more big – to get to get to that 70-plus percent, which is Aetna/Caremark. And on the Part D side, it's just the way the clock works. There's also a lot of instability in that market with potential legislative changes as well, which isn't driving them to move quick. But if you go back and look at what we've said, we've always said Part D is a October 1st, when the plans reset start time for us. Okay?

Okay. And just quickly on some of the legislative changes on ANNOVERA, there is I guess, the recent – it's a little bit of a complex issue, but when it comes to the recent declarations by the administration of declaring religious freedom is there any chance that there are going to be any entities that refuse to cover this? Or any payers that refuse to cover this and how that might affect you going forward?

Well, remember there is federal law like you said ACA and then there are state laws. So 20 state laws, there is no declaration. The other 30, if they decided to it could. I believe the total number is six employer groups today that have that right and have been excluded. I don't think that's new. They could expand that potentially. But let me tell you something contraception and the cost of unwanted pregnancy is something, because we've pretty well – we understand politics well on our Board given the makeup of it. Across the aisle on both sides, contraception and women's rights are something that both sides believe in. And I don't think the ACA mandate around contraception will change, I could be wrong, but if it does you still have the other 20 states in state law that cannot change okay, unless, they do it one by one. So I think we're in great shape with ANNOVERA.

Great. Thank you.

Thank you.

And our next question coming from the line of Chris Schott with JPMorgan. Your line is now open.

Great. Thanks very much. Just a couple of quick ones here. First on BIJUVA, any update on how you're thinking about normalized price per unit there given some of the experiences with IMVEXXY so far and is there any change in the thinking at all on that front? My second question the comment about 70% coverage on the commercial side by 3Q does that mean we should expect that adjudication number in commercial to get to 70% by the time we get to the end of 3Q or is there any type of lag between coverage and adjudication as we think about that ramp I guess in price per unit? And then my final one is just – sorry, do those two and I'll do a follow-up after that.

Could you say that one – sorry, you broke up a little bit here I got the BIJUVA question on what's it going to be like. But what was the second question?

The second one is the 70% commercial coverage by 3Q. Should that – does that mean basically we should be getting to about 70% adjudication in commercial by 3Q or is there any type of lag between coverage and adjudication?

Absolutely. So to answer your second question first, 70% contracted we're one contract away from that in essence. Once it's done. It does take some time for employer plans and different pieces to get it going. You got a great bump right upfront, don't get me wrong. You'll see it move the needle, but there'll be a lot of let's say employer plans that do it a little bit slower and you have to call them and things like that that we find out as you go. But the biggest headwinds you're seeing in Q1 isn't that. The biggest headwinds in Q1 we believe are more of the high deductible copay resets. And our biggest plan came out in March right, that was our first big pick up. So we will get to that 70%. It does not mean you'll have 70% commercial adjudication. There will be some lag there, but I don't think it will be that significant, especially, at the end of the year as a copay resets are gone. And then the question on BIJUVA yes, we still think it's still pretty much in line with IMVEXXY from a potential standpoint of trending on volume and/or similar to IMVEXXY and pick up once we get again, commercial coverage and can really push it. Okay?

Right. Great. And then the final just follow-up. Just -- I think one of the charts showed that you were kind of overweight at this point Medicare Part D versus commercial plans. Just give me a little -- what exactly is going on there and is that something we should think about normalizing over time?

Absolutely. Great question. It shows and I'll turn it over to Dawn here as well, it shows just a huge pent-up demand. Remember, if you're in Part D you're typically a little bit of an older age and it's showing that women want a new estrogen product and they're staying on the product. That problem of it being overweight on the Part D side is actually a high-quality problem, it doesn't look good today because we don't have the coverage there, but that coverage will come in and it will fix itself and will keep that market share. Dawn, do you have anything to add there?

The only thing to add there is when you look at the refills that we're getting, what that suggests is that this is a product that's providing a good experience. And remember that the major gap in the market and why IMVEXXY was designed the way it was, was to provide the patient satisfaction needed versus the other experiences on the claims that were out there in the marketplace. And so as Rob said, the fact that we are overweight in the Medicare older population suggests these are women coming from the other products in the marketplace where there wasn't as good experience we expect that to normalize over time.

Thank you.

Thank you.

[Operator Instructions] And our next question is coming from the line of Chris Howerton with Jefferies. Your line is now open.

Hey, thanks for taking the questions. I think a lot of the questions were asked already. But I was just I think from an operational perspective, just be curious to know kind of what the different components are of the copay assistance program? Kind of how does that work from a patient experience perspective, and what services specifically, does vitaCare Prescription Services add to that process?

So give me that question one more time. So copay assistance what components are there – I couldn’t used?

Yes. So just think from a patient experience perspective, how does that work?

I see. I see. Okay. Okay, so with a patient you just …

Yes, go ahead.

Sorry, Chris to cut you off. Was it more?

And then I just we noticed that on some of the copay assistance flash pages there is something called vitaCare Prescription Services. So just curious what that was about so that was the question. So that was the…

Absolutely. So our copay assistance card is from RelayHealth and Truveris, all right? Those are the two big companies we use. And when the patient opts into that that allows us to contact that patient. As we've always said like the prenatals, we are in touch with a high, high percentage of our patients, which is the absolute key to being in touch with this whole compliance or non-branded education piece depending on what's important. So they opt in when they use our copay card and that's what vitaCare is.

Okay. So it's basically just an assistance program to kind of get them to the process and so that you can know them a little better. Is that a fair characterization?

Very.

Okay. All right. Great. And then when you think about the patients that are utilizing the copay assistance program relative to the overall numbers that you're seeing is there any differences in terms of what the patient or payer mix is?

No, not at all. It's exactly what we put up on the board. It's exactly what we put up there. So let me give you an example so we had I believe 37% Part D, yet the overall percentage was 24% or 23% for the markets were overweighted there right?

Yeah.

Our cash pay was low. And our commercial pay was a little bit lower than where we should be, and overweighted on Part D. So, just more Part D, women happen to want to get an IMVEXXY script filled. And we just got to get those payers onboard which we will do. If we're going to have problems here guys I'd be telling you right now. We are one contract away from getting that commercial thing rounded out to -- our commercial coverage rounded out to 70 -- approximately 70%. And then, we just got to get here to Q4 to get the contracts done on the Part D side. We'll deliver it.

Okay. Great and maybe just one last clarification with respect to that program for the cash pay payment -- patients. And it looks like Medicare as well they may not be fully eligible for the $35 total out-of-pocket. What would be the maximum that a patient would expect to pay using those services?

It depends on their plan, but there is somewhere for what I understand between $40 to $50, typically $45 or $40 per Part D copay for VVA products.

Got it.

We only have remembered -- we only have United and then, employer groups could be designed a little bit different. But it's typically very close to what our commercial copay card is at $35.

Got it. Okay. And then the last one Dawn was kind of describing a little bit around the ANNOVERA launch that it would a clinically "soft launch" in the third quarter and that there would be additional kind of CMC work that needs to be done. Could you provide any more color on exactly what has to happen to kind of get to full scale?

We will be at scale here in Q3.

Got it.

So, the reason we're launching it soft. So let me be really crystal clear. Q3 is the goal for scale. We're going to build inventory in Q4. But the whole idea is there is a lot of inbound demand. And if we can meet that demand in these states with these state laws and that is -- you haven't heard us talked about this before on last earnings. It is quite an opportunity with no copay, mandated coverage in 20 states in this -- in the country mandated coverage in 10 of those and 42 million women, have a no out-of-pocket expense without ACA. So we want to try to meet that demand. We want to start that payer clock as we build inventory for -- of national launch, right? So, kind of as that ACA clock is ticking. We're building inventory for the national launch. And meeting the demands where we can get coverage out of the gate, in those first 20 states. That makes sense how it comes together?

Yeah. Yeah it makes sense.

Kind of taking the payer -- the payer gift we're getting here in the 20 states. And matching that with our initial inventory, as we build bigger inventory and the ACA decision comes for a national launch.

Got it, okay. And actually…

We don’t expect…

Oh! Yeah, go ahead Rob. I'm sorry.

We don't expect any manufacturing capacity issues at all.

Fantastic, okay, great and I'm sorry there was just one last question on the IMVEXXY revenue where you -- are you able to split that out in terms of new patient prescriptions relative to refills?

Absolutely, I believe -- did Symphony do that? I believe Symphony has it somewhat accurately today. It's pretty accurate if you take a look.

Okay.

So I believe that news are consistently low right now. And they're working on getting those corrected. And that's why we'll continue to give monthly updates. Once Symphony gets that perfected we'll probably pull back to quarterly updates. But it's getting pretty close. The only portion of it that's off is the news. And I believe they're showing up now they're just a little bit low.

Got it, so from like to -- got it. So the extrapolation seems pretty good in terms of what they're showing on a relative basis but there could be an underestimate of new patient adds basically?

That's exactly it. The news are a little bit low but they'll get -- listen they're good. They're working on it they're working with us. They've been wonderful.

Okay. Got it well thank you very much for taking my questions, I appreciate it.

All right, everyone. Thank you.

At this time, I'm showing no further questions.

So I'd like to end the call – sorry, operator. I'd like to end the call today. And remind everyone of our Investor Day in New York City on June 10. And we look forward to giving everyone a very deep update on all of our progress the strategies going forward. Thank you.

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