Thank you for standing by, and welcome to the Mayne Pharma Group Limited full year 2024 results. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Shawn Patrick O'Brien, CEO. Please go ahead.
Thank you, operator, and thank you all for joining. My name is Shawn Patrick O'Brien, and I am the CEO and Managing Director of Mayne Pharma. We are here to present our financial results for the twelve months ended thirtieth of June 2024 , namely FY 2024. Joining me on this call this morning is Mayne Pharma's CFO, Aaron Gray. On Slide two is an important disclaimer. Today's presentation contains forward-looking statements and non-IFRS financial measures, which I draw your attention to. All dollar amounts presented today are in AUD, unless otherwise noted. Now turning to our operating metrics on Slide three. I'm delighted to announce today that in FY 2024, Mayne Pharma has achieved 100% of our key operating metrics or goals we set for ourselves during the financial year and were previously communicated to the market at the start of FY 2024.
There were five key pillars underpinning this performance, namely, deliver positive direct contribution in all three segments, return the company to positive underlying EBITDA in FY 2024, optimize our cost base with reductions of greater than $10 million, achieve a break-even run rate for Nextstellis, and return the company to positive operating cash generation in FY 2024. We will discuss in detail each of these results in later slides, but to suffice to say, the FY 2024 performance is a significant improvement when compared to FY 2023 and historically over the last eight years. Posting strong growth in revenue, driving a positive underlying EBITDA performance through targeted cost-based reductions that have turned resulted in the generation of positive continuing operating cash flow for FY 2024, with positive free cash flow generation occurring in the second half of FY 2024, the first time reported free cash flow in several years.
Nextstellis was a key contributor to this growth. On Slide four, our financial highlights demonstrate in these tiles, reinforces simplification of our business model, combined with our strong operating and financial discipline, which has delivered a much improved set of financial results. Revenues increased 112% to AUD 388 million, driven by strong growth in our women's health and dermatology segments. Our gross margin expanded materially to 56.3%, representing a 24% improvement, and underlying EBITDA of AUD 22.9 million was up AUD 118.2 million from the negative AUD 95.3 million EBITDA in FY 2023. All segments delivered a positive direct contribution, which in total was $88.5 million versus a negative $41.8 million in FY 2023, representing a $130.3 million improvement overall.
We generated positive underlying operating cash flow from continuing operations of $8.1 million versus minus $51.5 million in FY 2023, an improvement of $59.6 million. We're pleased that our cash position remains strong, with cash and marketable securities of $149.3 million at June 30, up $2.5 million from December 31, 2023. Now, looking at Slide five on our operating highlights. For women's health, we achieved three new U.S. FDA Orange Book-listed Nextstellis patents expiring in June of 2036, which extends our runway of opportunity. Nextstellis achieved a break-even run rate from December 2023 and continued to deliver a positive contribution in the second half of FY 2024. This performance was a result of 85% growth in the demand cycles, driven by effective salesforce execution of targeted calls on key customers.
This sales force execution also drove 31% growth in total prescription demand for our licensed portfolio, namely Annovera, Imvexxy, and Bijuva. This execution by our sales force would not be possible, but for the first-in-class women's health portfolio that meets the needs of women's health community. For dermatology, during the financial year, we completed an asset purchase agreement to acquire the global rights to Rhofade from Novan, Inc. and EPI Health, LLC. We are very pleased with the results of this acquisition, in that Rhofade generated $29.6 million in revenue in the first nine months to June thirtieth, 2024.
The gross margin we retrieved was three times that of the $8 million purchase price. In addition to the Rhofade launch, new product launches during the year included Wynzora, Soolantra, generic Accutane, and the previous launch of authorized generic Oracea, were the key drivers to growth delivered in the dermatology franchise in FY 2024. As we will discuss later, our channel strategy, into which we have spent considerable effort, has been validated throughout FY 2024, and we are moving to scale this opportunity further. The revenue shift towards products with more favorable gross to net profiles, such as Rhofade, has also assisted in the performance that we've seen in the dermatology segment in FY 2024. On the international front, we are pleased with the growth of Nextstellis, oxycodone, in Europe and Australia.
Our investments in the modernization of our facility is enabling the growth of our opioid substitution product, Kapanol, in Europe and Canada. Last point I'd like to make, under the leadership of Grant Swart, the facility has improved every key performance indicator in FY 2024 over FY 2023. This efficiency and efficacy improvement results in higher customer satisfaction and facilitates future profitable growth. I would like to turn the presentation over to our CFO, Aaron Gray, who will walk investors and analysts through our financial results in more detail. Aaron?
Thank you, Shawn. As Shawn mentioned at the commencement of the presentation, we are presenting our audited results under IFRS accounting standards. Investors should be aware that certain financial information, such as EBITDA, is a non-IFRS item, but is considered by directors to be a meaningful measure of performance. Our financial information is presented in Australian dollars, unless otherwise noted. The company has provided some additional financial information for investors and analysts as an appendix to today's discussion. These slides will not formally be discussed as part of the presentation, but may be referred to during today's question and answer session following the main presentation. Slide seven. Slide seven provides an overall summary of the company's financial results. For purposes of this slide, the words reported matches our statutory reporting.
The results will be discussed in more detail in later slides, but it is worth reiterating here what Shawn has already mentioned. Fiscal year 2024 marked a significant improvement in the business performance across the group. Group revenue growth of 112% was driven by strong performance from women's health and dermatology in particular. During the year, we focused on our cost base, which saw our operating expenditure growth moderate significantly, driving strong operational performance. Our reported contribution from our three segments showed a $130.3 million turnaround from fiscal year 2023 to $88.5 million in fiscal year 2024. Direct contribution represents the gross profit, less direct OpEx for each segment.
Underlying EBITDA, which excludes earn-out assessments, restructuring charges, class action settlement costs, derivative fair value adjustments, and certain litigation expense, improved by AUD 118.2 million in fiscal year 2024, and was AUD 22.9 million versus an underlying EBITDA loss of AUD 95.3 million in the PCP. In terms of conversion from underlying EBITDA to free cash flow, before our investment into growth initiatives, we were pleased to get to almost breakeven at the free cash flow level with a minus AUD 1 million free cash flow result. This reconciliation of these figures is demonstrated as an appendix on slide 33.
The reason I raised this point in the context of the strong improvement in underlying EBITDA is that we have made considerable inroads in fiscal year 2024 towards a sustainable business model that pre-cash investment into growth initiatives is now right-sized from a cash generation perspective over the longer term. Slide eight. Slide eight highlights the significant operating cost leverage the business has shown in fiscal year 2024 at the segment level. The 112% growth in revenue, when combined with cost containment measures that resulted in direct operating expenditure growth of just 4%, delivered a AUD 130.3 million improvement in direct contribution from −AUD 41.8 million in fiscal 2023 to AUD 88.5 million in fiscal 2024.
The cost containment measures executed in fiscal year 2024 were offset somewhat by inflation and certain incremental increases in variable costs, which are associated with revenue growth. This would include things such as samples, and distribution costs, in conjunction with investment in our R&D, medical and regulatory affairs activities, where costs did increase as a result of some required studies and our investment in medical education to increase scientific awareness of the advantages of the products. The reduction in our cost profile against the expansion of our top line in fiscal 2024 improved cost leverage, being the OpEx divided by revenue. Comparing fiscal 2023 to fiscal 2024, we did additionally see a translational difference in operating expense. FX deviation increased expense by $4.7 million.
When expressed in constant currency, removing that FX translational difference, admin and other expenses and employee costs declined 2% compared to the prior fiscal year. In summary, OpEx, as a percentage of revenue, fell to a more sustainable level at 33.5% in fiscal 2024 versus 68.2% in fiscal 2023. Slide nine shows a waterfall reconciliation between the company's cash and marketable securities position as at 30 June 2024 versus the prior financial year. Cash from continuing operations was positive AUD 8.1 million, reduced by earn out payments made during the year of AUD 10.1 million. Continuing operations with earn outs, therefore, resulted in 2.8% of overall net cash used for the year.
The 39.8% of net cash used in discontinued operations reflected earn out payments of $11.7 million and cash outflows for discontinued operations of $23.4 million, partially offset by a $6.9 million cash inflow, which was proceeds, a second payment of proceeds associated with the retail generics business. The sale of the retail generics business, rather. The majority of cash utilization for the period was attributable to investing and financing cash flows, which accounted for 57.3% of net cash used. This was the result of the acquisition of Rhofade, the payoff of a receivables facility equating to $10.9 million, the on-market share buyback, which also was $10.9 million, and other investing and financing cash outflows of $5.9 million.
At June 2024, Mayne Pharma holds cash deposits and marketable securities. The marketable securities consist of an investment in a money market fund, with underlying investments in short-term U.S. government debt and repurchase obligations. For purposes of statutory reporting, these marketable securities are not included as cash. However, given the nature of these securities, I combine the two for this slide. Total cash and marketable securities at 30 June 2024 were $149.3 million versus $220.1 million in fiscal 2023, noting that we reported $146.8 million at the first half. So the cash consumed in fiscal 2024 was effectively consumed in the first half. Our second half performance was therefore slightly cash generative, highlighting the progress we are making with our business initiatives. I will now hand it back to Shawn.
Thanks, Aaron. I will discuss the FY 2024 performance of our three segments, namely Women's Health, Dermatology, and International. And Aaron will be commenting on the financials for each of these three segments over the next few slides. Slide 11 provides a summary of the improvements observed in direct contributions from each of our segments at FY 2024. The benefits of scale in the business and the cost-based leverage through financial discipline is now being demonstrated with a $130.3 million turnaround in direct contribution, driven by Women's Health in red and Dermatology in blue, to $88.5 million, versus a loss of $41.8 million in the prior comparable period. Our portfolio of four branded Women's Health and six branded and 20+ generic dermatology products are performing well. Aaron?
Thank you. Turning to slide 12. This summarizes the financial performance of the segments versus the prior year and half on half. As investors will recall, the company acquired the license to the expanded women's health products at the beginning of our H2 in fiscal 2023. The reflected figures here are therefore comparable structurally. Our business transformation initiatives have delivered improved momentum and a strong positive contribution in 2024. Dermatology revenues were up 207%, Women's Health up 131%, and International up 9%. Total revenue growth of 112% was delivered against a backdrop of solid financial discipline over operating expenses, with total OpEx growth of 4%, comprised of 26% in Dermatology, minus 4% in Women's Health, and 3% growth in International.
The net effect was a 162% improvement in gross profit, including depreciation, to AUD 218.8 million versus AUD 83.5 million in the PCP. Shawn, back to you.
Thanks, Aaron. I'd now like to turn to specific trends we are seeing in the Women's Health and the financial performance of this segment. On slide 14, there are three major trends underpinning the attractive market growth in Women's Health today. Namely, the growing addressable women's health market, continued increases in awareness and education, and recent government initiatives to support the women's health market. The global menopause market reached $15.4 billion in 2021, and is projected to reach $24.4 billion by 2030, according to data from Grand View Research. Bijuva is the only available FDA-approved combination bioidentical treatment for vasomotor symptoms associated with menopause. Vasomotor symptoms include hot flashes and night sweats, which are often considered the cardinal symptoms of menopause and are experienced by the majority of women during menopause transition.
According to the National Institutes of Health, over 1.3 million new women enter menopause each year in the U.S. For the contraception market, there is now an increased need for contraception options for females in the United States as a direct result of the Roe v. Wade decision. Nexstellis and Annovera are Mayne Pharma's unique contraception solutions for this growing market. More recently, there has been greater emphasis on clinical education and training for obstetricians and gynecologists in the United States as it relates to menopause, where historically, just 31% of OBGYN specialists reported receiving menopause education in their curriculum during medical residency. There has been increased awareness of the impact of menopause, including numerous published articles and celebrities drawing awareness to the effects of menopause.
To leverage these industry tailwinds, Mayne Pharma has made additional investments in medical science liaison to raise product scientific awareness with clinicians, and we are supporting education programs on the use of hormones for both contraception and menopause. We have a dedicated sales team of 85 able to reach the target customers and grow sales and market penetration. Finally, we are seeing governments driving support and providing initiatives in the area of women's health. For example, under the Affordable Care Act in all 50 states, the ACA guarantees coverage of women's preventive services for all individuals and covered dependents. The US government has introduced a $2 billion investment in women's health research and education, with bipartisan support.
Mayne Pharma is actively participating in efforts to provide information and feedback to lawmakers on the ACA, and in parallel, we're working to develop programs that will benefit from the US $2 billion women's health program recently announced. Aaron, I will now give you a snapshot of the financials in the women's health area.
Slide 15 summarizes the women's health segment financial performance. In USD terms, fiscal year 2024 revenue was $93.7 million, up $52 million or 125% compared to fiscal year 2023. The revenue increase, 2024 versus 2023, was driven by improved leadership, improved sales performance of Nexstellis as a result of refreshed sales, leadership and marketing strategies, volume growth of all of the key women's health products, including Nexstellis , Annovera, Imvexxy, and Bijuva. And finally, of course, the full year impact of Annovera, Imvexxy, and Bijuva, recalling that the first six months of these assets under Mayne Pharma was the second half of fiscal year 2023. Direct OpEx decreases in each half of fiscal year 2024 versus second half fiscal 2023, was driven by territory optimization and realigned marketing spend.
The main driver to the slightly lower second half fiscal year 2024 revenue, noting that 2H fiscal 2024 declined 2% versus 1H fiscal 2024, was associated with legacy Annovera short product dating, leading to returns. This had a $7.2 million, or approximately AUD 11 million, negative impact to our revenue and gross profit. Mayne has taken steps related to this topic to minimize the risk of this recurring, including improvement on the shelf life of Annovera, management, more active management of inventory at wholesalers, and education of the channel on expiry of the product. Importantly, 2H fiscal year 2024 total prescription growth, or TRX for Annovera demand, was up 15% on 1H fiscal year 2024, reflecting growth in the underlying demand.
Second half revenues are also impacted by the seasonality of patient deductibles on the co-pay costs. Turning now to slide 16. The summary pie charts highlight the total revenue mix by product in US dollars. On a sequential basis, revenues grew 44.6% in first half fiscal 2024 versus second half fiscal 2023. I discussed the driver to the slightly lower revenue performance in 2H fiscal 2024 versus 1H fiscal 2024 on the previous slide. Nexstellis accounted for 35% of women's health revenues in the second half of fiscal 2024, up from 22% of total revenues in the PCP. Stratifying by half, the company recorded 2H fiscal 2024 gross margins of 78% versus 81% in the first half of fiscal 2024.
The lower second half gross margin was a function of the Annovera returns mentioned a couple of times on the prior slide. In response to which, we have made the changes mentioned to minimize the future risk. Discipline with OpEx spend is highlighted by direct OpEx falling $3.8 million from 2H fiscal 2023 to 1H fiscal 2024, a decline of 13%, with an additional $1.7 million decline in direct OpEx in the second half of fiscal 2024 versus the first half, equating to a 6% improvement. Turning to slide 17, which focuses on the performance of Nexstellis . Nexstellis remains the first and only FDA-approved contraceptive pill that contains E4, which is plant-derived and identical to human estrogen E4, that is found naturally in the body during pregnancy.
Mayne Pharma has a 20 year exclusive license and supply agreement in the U.S. and in Australia for Nexstellis . Nexstellis showed fiscal 2024 demand cycle growth of 85% on the PCP. I wanted to explain a little further the meaning of a demand cycle, for investors and analysts on today's webcast, as we've had a lot of questions around this. Demand cycles are units prescribed to patients. We determine demand and track demand by taking IQVIA total prescriptions or TRX data, converting that data to units interchangeable with cycles, and then adding volumes from non-reporting pharmacies, non-reporting to IQVIA, including Mayne Pharma's own distribution channel. TRX is converted to units by taking the number of pills in the TRX divided by 28 , the number of Nexstellis pills included in one month of therapy.
Nexstellis prescriptions can be prescribed in one month and three-month increments. On average, one TRX equals one point nine units or cycles. The strong Q4 fiscal year 2024 performance of 10.4% sequential growth and 55% PCP growth is attributable to the first full quarter with new sales leadership and improved sales force execution. Nexstellis net sales increased 113% to $30.1 million in fiscal 2024. The net selling price for Nexstellis was steady versus the PCP, with the continued volume growth coming through. Slide 18 examines our branded product performance, measured by demand volumes of our licensed portfolio from TherapeuticsMD. For the period from 1 January 2023, when Mayne Pharma started to sell these products, we follow an identical method to that used to track Nexstellis demand, i.e., what I just walked through on demand cycles.
The fiscal 2024 reporting period represents the first full year of sales performance since this portfolio was licensed from TXMD. Mayne saw solid total prescription demand growth for both Bijuva, Imvexxy, and Annovera, impacted by increased focus from the sales force. Imvexxy, Bijuva, and Annovera showed a combined 31% total prescription growth for the year versus the PCP. In terms of net sales, Annovera generated net sales in fiscal year 2024 of $30.6 million, followed by Imvexxy with $19.2 million, and Bijuva with net sales of $9.5 million. I will now hand it back to Shawn.
Thanks, Aaron. Turning now to the performance of our dermatology segment by first addressing the specific trends we are seeing in the dermatology market and then the financial performance of this segment with Aaron. On slide 20, talks to the key macro trends in dermatology and Mayne Pharma's positioning within the market. As investors will recall, in the U.S., Mayne Pharma can fill approximately one in three prescriptions written for a medical dermatology product currently. So we are in a position to participate in the inherent growth within this market. The key trends in dermatology relate to an expanding treatable population, a general retreat by big pharma from medical dermatology, and disintermediation of patient access for dermatology prescriptions. Within dermatology, there is a rising incidence of skin diseases and a growing awareness of increased spend on personal care.
For example, in the U.S., there are 50 million people living with acne, which is a large patient demographic overall. Despite this exciting macro theme, there's limited innovation occurring in the development of improved or novel treatments for common dermatological conditions. For Mayne Pharma, this means we have a good market access to patients with our existing approved dermatology product portfolio. Our portfolio of branded products, Rhofade, Doryx, Wynzora , Sorilux, Lexette, and Fabior, plus our 20-plus generic products, gives a focus and presence within dermatology writers in the market and solid points of difference for our sales reps. As the market success of Rhofade under our dermatology portfolio this year has demonstrated, we have ample opportunity to expand this portfolio in the near term via capital-light transactions.
We will talk to our disintermediation strategy in more detail shortly, but it's worthwhile pointing out that within dermatology, the design and structure of the healthcare insurance benefits in this segment has meant a large cost burden has shifted to the patients, which has impacted demand as patient co-pays have steadily grown over the years. As a result, large retailers often carry limited dermatological products due to high cost and often call back prescribers to switch patients to prescriptions that are older and cheaper options. By leveraging our existing 4,400 plus specialty pharmacies, which are very convenient for repeat prescriptions across the brands and generics, this will mean uninsured patients receive the prescribed product at a reasonable and predictable cost, with limited special assistance from their dermatologist required.
This is good for sales and is beneficial at the gross to net level, but even better for patients and their prescribers. Aaron will now summarize the dermatology financials.
Thank you. Our dermatology segment is delivering on new product launches and the effective implementation of the channel strategy in fiscal year 2024. Our fiscal 2024 dermatology revenue is up 199% in USD or $76.2 million compared to fiscal year 2023, driven by a number of factors. These included sales from Rhofade, additional new product launches, which included, as Shawn mentioned, Accutane, Soolantra, and Wynzora , and the effect of a full year of sales of authorized generic Oracea, which was launched in fiscal year 2023. Copay charges across the portfolio improved in fiscal year 2024 on a per unit basis compared to 2023. Generally, fiscal 2024 benefited from improvements and a product mix shifting towards products with more favorable gross to net profiles.
This drove a very strong improvement in gross margins to 48% from 19% in the prior comparable period. Slide 22 shows the revenue margin and contribution summary in fiscal 2024 versus 2023. Our top five products account for 80% of dermatology revenue, compared to 88%, the top five products in fiscal year 2023. As I mentioned, we saw a large improvement in gross margins across the segment. We made additional investments into direct OpEx, which grew $4.7 million to a total of $26 million. The direct contribution showed a sizable turnaround in performance to $29 million from a loss of $14 million, representing a $43.1 million overall improvement year on year. Back to Shawn.
Thanks, Aaron. Now turning to slide 23 on our channel strategy. I will provide further comment on our disintermediation strategy, which creates easy access for our patients to obtain our dermatology products. As investors will recall, Mayne Pharma is leveraging the inefficiencies in the dermatology value chain through new partnerships aimed at improving patient coverage, copay, inventory management, pharmacy stickiness, and higher patient switching costs. Our strategy involves reduced reliance on wholesalers, large retailers, and pharmacy benefit managers or PBMs, as they drive significant gross to net liabilities without patient or prescriber benefit. These are the middlemen. For example, in the U.S. market, a PBM is a third-party administrator of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, Federal Employees' Health Benefits program, and state government employee plans.
Today, PBMs are part of a large, vertically integrated organizations, which allow them to profit at multiple points along the pharmaceutical supply chain and gives them unprecedented control over what prescriptions are covered, what people will pay out of pocket, and what pharmacy patients can use. Removal of these middlemen allow Mayne Pharma to invest in gross to net or GTN savings into the patient assistance programs to the benefit of healthcare providers and their patients. The key highlights of our channel strategy execution in FY 2024 were: our specialty pharmacies additions now allow us to work with more than 400 specialty pharmacies across the US. Adelaide Apothecary, our mail-order pharmacy, currently represents less than 10% of our dermatology gross revenue in FY 2024.
However, during that period, we saw a tenfold increase in revenue over the previous year, and we see further opportunities ahead to grow this channel. In addition, we've seen improvements in gross to net savings. This strategy was a contributor to the dermatology margin improvement in FY 2024 compared to the prior comparable period, and product returns were lowered. This disintermediation refers to removing intermediary or wholesaler between Mayne Pharma and the manufacturer in the specialty pharmacy. This strategy has delivered excellent growth in FY 2024. This is enabled by GoodRx Prescription Services, AssistRx, Adelaide Apothecary, and others to deliver seamless prescription fulfillment at the lowest out-of-pocket cost for the patient. Approximately 75% of dermatology patients receive no insurance coverage for products on various dermatological diseases.
Dispensing via Adelaide Apothecary generates a significant improvement to Mayne Pharma margins that can be used to fund other patient savings programs or other investments in dermatology. So in summary, we have reduced the burden for both the prescriber and the patient, in that with our unique GoodRx, AssistRx platform, the prescriber can see within thirty seconds what the out-of-pocket expense will be for their patient and where the patient can get the prescription filled at the lowest cost to them. And if it's a full cash transaction for a prescription medical derm product, we can still make a profit through our mail order pharmacy, Adelaide Apothecary. Aaron?
Thank you. For me, the final segment is the international segment. Slide 25 provides the financial snapshot of international for the fiscal 2024 period. The key highlights for international were: fiscal 2024 revenue up $6 million or 9% compared to 2023, driven by growth of Nexstellis in Australia, which showed a 163% increase on fiscal 2023. Growth of oxycodone and Kapanol in Australia, and increased demand for Kapanol and Kadian in European and Canadian markets. The modernization project at Salisbury is progressing well, with a new encapsulator in commercial production, enabling launch of Kapanol 200 milligram during the 2024 financial year. We've been very pleased with the step change in sustainable operational performance that the Salisbury team has made.
Additionally, we partnered with Sandoz for distribution of oxycodone and metaraminol, which is used in the short-term management of acute hypotension in Australia. That concludes the discussion today on the financial performance for Mayne Pharma for fiscal 2024. Now handing back over to Shawn.
Thank you, Aaron. Let's look at slide 27. The company expects to improve shareholder value with continued growth at underlying EBITDA in FY 25, via revenue growth and continued cost leverage. We anticipate all three segments will make a positive direct contribution. Now, turning to each of the segments with our focus and our key drivers. For women's health, we're focused on delivering the profit potential inherent with this current asset portfolio and driving growth through sharpened focus on sales execution and targeting marketing efforts to deliver improved direct contribution. We will continue to raise product scientific awareness via medical science liaisons and key opinion leaders, and further our operating leverage to accelerate EBITDA growth in women's health. In dermatology, we're focused on differentiated channel solution we've built that enables a preferred solution for patients, prescribers, and partners and ensure our channel strategy processes are easy to use.
We expect to see growth from Rhofade with a full year of sales in FY 2025, and we will continue to evaluate capital efficient and creative business arrangements to drive growth in the revenue and margin. The continuous development of our channel strategy will leverage our ability to drive market share, access for patients and financial performance within dermatology moving forward. Finally, to international. We're focused on driving the profitability via new revenue streams and continuation of the modernization of the facility and leveraging our capacity created by these operational improvements I spoke of earlier, to grow and further operating leverage. In FY 2025, we expect to complete the modernization upgrade program in the Salisbury facility to improve our productivity and capabilities. Finally, we expect to continue to drive, especially in generic product sales, including driving growth in Nexstellis , domestically in Australia.
That concludes the formal part of today's presentation. Thank you, everybody, for taking the time to join us this morning during a busy reporting season. I'd like now to turn the call over to the operator for the Q&A period. Please go ahead, operator.
Thank you. If you wish to ask a question via the phones, you'll need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type it in the Ask a Question box. Your first question comes from Melissa Benson with Wilsons Advisory. Please go ahead.
Morning, Shawn and Aaron. I just had a question. First, a couple on women's health and then one on dermatology. With the Annovera impact and that $11 million channel impact, is it right to think that that might have been. Was that channel inventory that you acquired at the time of acquisition of TXMD? And I guess just remind us on, I guess, the shelf life of that Annovera product and why, you know, how, I guess, future planning to avoid that or if this is really a one-off.
Aaron?
Yep. Thanks, Melissa. This is Aaron. Yes, the products that were returned were inventory that we paid TXMD for. That's one of the challenges with the dating. Annovera has been a difficult product to manufacture, and so both TXMD and we have tended to hold a little more inventory on that product to ensure that we can continue to drive growth there, given the size of the market. It's so yes, it was related to inventory that we acquired from TXMD. What are we doing about this? Specifically, there's a few things. First of all, we've done some work with the FDA to increase the shelf life of the product from 18 months to 21 months, and we're doing some additional work to try and push that farther, which helps. We've,
I mentioned we did a little more hands-on management with the wholesalers. Fundamentally, what we do is we try to monitor with what dating the wholesalers have in stock, using some data analytics and some dashboarding techniques, when we decide which inventory to ship to which channel and how much to ship. And then, what was my third point? I forgot my third point. So it was the management of the inventory.
Educating.
Educating the channel. Sorry. So part of the challenge that we have with rings in general is that the wholesalers think of expiry like NuvaRing. NuvaRing has to be completed to use before the date of the product expires. Annovera is not structured the same way. Annovera has to be inserted for first use before the product expires. And given that it's a long-lived product, it's one of these things that we've had to write letters and explain to people and try and be a little bit more hands-on with respect to getting some of the folks in the channel. It's obviously the big three wholesalers to understand the difference in the products. And so, yeah, that is, that's where we're at.
Okay, excellent. Thank you. And then if I think about the half-on-half kind of revenue of the TxMD assets, I think you showed on slide 16. It's good to see obviously, the Annovera one makes sense. With Imvexxy and Bijuva, that was slightly lower in second half, is that kind of co-pay seasonality impact you were speaking to there?
That is a big piece of it, Melissa, yes. The co-pays reset. The company has increased out-of-pocket or increased out of bank account support for patients using those products after the December time period. That's exactly correct.
Okay, no problem. And then, a question I had just on the dermatology side of things. Obviously, you've seen some good gross margin lifts, and I think you explained that there was a much more favorable gross to net product mix that you were seeing. Maybe just some more color on that. Is it that they're the new launched products, or how could we expect that, you know, the three that you launched this year, is that really what's driving that, or?
There, there's a couple of things driving the gross to net overall. I think we've spoken previously about some partners and the ecosystem that we've assembled as part of the disintermediation strategy. We've got some analytics basically running around the co-pay cost per unit. The legacy portfolio performance improved as a product of some pricing changes. We made some price increases, and we made some adjustments to the co-pay support that we have around the products. And then additionally, we obviously saw a large amount of revenue from Rhofade, which has a favorable gross to net profile compared to the rest of the portfolio. Given that the $29.6 million that Shawn mentioned in Rhofade revenues with the higher margin profile or the better gross to net profile, that changed the overall mix.
As I mentioned, Melissa, we realized three times the price in direct contribution from Rhofade that we paid for it, of $8 million.
Yeah, okay, that makes sense. And maybe final one for me, just on the dermatology. You know, you had three launches this year. How should we think about. And obviously, Rhofade sitting there, which was launched in the prior year and still going strong. I mean, how should we think about, like, your forward pipeline for launches in FY 2025? I mean, are you expecting, you know, to have kind of these one to five launches per year, or it's to kind of keep that balance, or, or that's not necessarily required to continue the, the growth for dermatology?
I'll answer that in two parts. We'll see full effect of Rhofade growing in this year. And, you know, it's a significant, you know. You're gonna get at least 20%-25% more because of the one-quarter law, more of the opportunity. Against that backdrop, we've seen two launches of generic Oracea, which has decreased our opportunity there, but that is in the wholesale channel. And, what we're seeing in our specialty channel and what we're seeing in Adelaide Apothecary is holding quite nicely on that. So it's really eroded what we call the big retail box market for generic Oracea. And then, Wynzora , you know, these are not- and Soolantra are not large products like, what we see with Rhofade. But we all just recently did a deal to bring a Retin-A 0.8% product to the market.
We hope to have launched that early in the new calendar year, into January. And that was done on virtually no capital to bring that into the portfolio, and it's one of the key topical Retin products that our customers were looking for. So like we did last year, we'll continue to find opportunities where we can bring these assets in, but the team's really focused on growing Soolantra, growing generic Accutane, growing Oracea, and growing Rhofade and Doryx in the market.
Thank you. I'll let someone else ask this one.
Your next question comes from Elyse Shapiro with Canaccord. Please go ahead.
Hi, guys. Thanks for taking the question. Maybe just, you know, especially in women's health, looking at the resourcing that you have right now, you know, you've done a great job with the cost out. Would you say that the organization's now right-sized, or do you think you have to kind of add a few more heads, or capabilities to better cover the geography and the docs?
Yeah, it's really about taking this opportunity to leverage our cost base and driving that growth. As you know, we took costs out of the women's health last year, and we're still highly productive. We see, you know, this year, the sales team is out selling Annovera, out selling Nexstellis and Bijuva. And, you know, the menopause market has really lit up in the United States recently. A lot of celebrities are talking about menopause and getting proper treatment. So we see growth opportunities, and so there's investments required to penetrate those markets, but we're gonna remain disciplined as we go forward. But as far as increasing the sales force size, we have no desire at this point to increase the sales force to execute on the women's health plan.
Got it. And with Bijuva, are you starting to see a positive impact from having the low-dose offering, and then potentially having users kind of convert onto the high dose?
The low dose offering has certainly brought new patients to the opportunity, and physicians like the opportunity to adjust the dose according to the patient's profile and needs. That's proving to be a worthwhile introduction in the marketplace. Not everybody's gonna go from the low dose and escalate to the high dose, and we've had people go from the higher dose down to the lower dose since the product's been on the market, but not everybody goes from low to high.
Got it. And then, now that you're, you know, through the pilot of RiseRx and the disintermediation strategy, are you able to better quantify the impact of that kind of asset, now that you've more fully rolled it out?
So, yeah, let me to be clear, we have a platform with GoodRx and AssistRx. And GoodRx Pharmaceutical Services, in conjunction with AssistRx, is what the, y ou know, when a physician goes on the computer, pops up GoodRx, what's in the background as AssistRx, is they're able to adjudicate a claim, as I said, within thirty seconds, and determine what is the copay cost for that patient and where is the cheapest location or type of store for them to get that prescription. And if it's cash pay, it will always be out of Adelaide Apothecary. And that's resulted in us improving our margins by 14% using that channel strategy, for our products. So, that is helping.
RiseRx is more about making sure that our copay cards are used as intended, and also helping ensure that patients, once they get on a chronic therapy, they get the repeat scripts. So we're using the GoodRx and AssistRx to get them into our portfolio, and using RiseRx to make sure we adjudicate the proper use of our copay cards to benefit the company and benefit the patients.
Got it. Thanks.
Does that help? Okay.
Next question comes from Andrew [crosstalk]
Do you have another question, Elyse?
Please go ahead.
Thank you.
Thanks very much for taking my questions. Just sort of more around the sort of top line. You, I think at one point during the second half, you called out for some impact from Change Healthcare, and I think you might have ultimately said that was non-material, but do you think there's, or I guess has that passed, and do you think there's sort of any upside, I guess, into the next period that you're not having that impact?
Sure, Andrew. The Change Healthcare impacted a lot of companies, a lot of healthcare services and et cetera, in the b ut our impact was nominal, and I think that's something the market misunderstood how I communicated that, but it had almost virtually no effect on our dermatology franchise. And what we could equate on the impact that it had by looking at the demand cycles, is roughly $340,000 on Nexstellis .
Got it.
That is nominal compared to what I saw for some other products that were impacted by Change Healthcare. So, and that's just taking, you know, what was the dip in the curve against the slope of the line that existed at the time and where he ended up. And as Aaron has highlighted, that slope of the line changed in the last quarter, it's steeper now. So to answer your question twofold, we: one, it's nominal impact, $340K is what we could calculate. And two, we have a steeper curve now going for demand growth on Nexstellis under Tony's new leadership in the field.
Great, thank you. And, just onto Nexstellis . From what I can tell, Nexstellis manufacturing is now in the hands of Gedeon Richter, and I guess the, so is your contract. I just wondered whether this, how happy you are with that relationship or whether it's working well? And then secondly, whether there's an opportunity to reexamine or renegotiate, in the midst of, what's taking place there.
The quick answer to that, Andrew, is yes and yes. We are happy with our relationship with Gedeon Richter. They are committed professionals to run this, and in the position. We back in April, we did get our approval of the Gedeon Richter API, so we now have two approved sources of API for Nextstellis, so, and or the E4. Then from the manufacturing front, all that, you know, the full manufacturing front end has not changed as of yet. It wasn't manufactured by Mithra in the first place. And we see opportunity to work with our friends at Gedeon Richter to improve the manufacturing supply chain and the economics there, and we're working on that.
They talk about putting more effort into marketing globally. Is that gonna have any sort of tailwind for you, or is it just where they're the distributor?
Sorry, I didn't hear the first part of the question. They talk about what? I missed that.
Yeah, they seem to talk about promoting or you know promoting the product globally. I think it's-
Well, yeah, I mean
Comment.
Yeah.
Just whether it helps you.
So the relationship's the same. We're still the license holder for the United States. We're the NDA holder. And then Fuji has it for Japan, and so for them, having the global rights and global ownership of the Nexstellis and E4 franchise, including Donesta, they're correct in saying that they have this global, but it's through the partnerships of us and Fuji, that's how they penetrate the US and the Japanese market.
The final one, just from me, just obviously, the political landscape's a bit favorable at the moment. You mentioned Roe versus Wade. I guess, if anything was to change in the November elections, sort of what's, y ou know, do you think, you know, what side is gonna be more favorable for yourselves or do you see anything sort of change in that landscape?
The good thing on the $2 billion investment that's happening in NIH and education and all that was a bipartisan program, so I don't see a change in that. You know, the data, there was a report by McKinsey showing the real need to improve upon that. Secondly, on the Affordable Care Act, that's been a law since 2012. It's really on enforcement, and there's a lot of things happening on getting that enforcement in place. There would have to be a dramatic change if the Republicans did get into the power. You know, they still haven't articulated on the campaign trail, they actually have a plan for changing healthcare like they did in 2016. They thought they had a plan, but didn't have a plan.
So we don't see a short-term immediate risk to it and to the. And we see continued potential upside on the enforcement of ACA in the short term.
Great. Thank you.
Thank you, Andrew.
The next question is a follow-up question from Melissa Benson. Please go ahead.
Just another one for me, just finally on litigation. Obviously, the class action you've settled and closed out, but you know, you mentioned, I think in July, around a new patent infringement litigation against Sun. Just wondering if there's any, like, cost provisioning or anything for that that would be material in FY 2025.
Aaron, you wanna take that one?
Paragraph IV litigation is a normal occurrence in the U.S. branded pharmaceutical space. Basically, a generic drug manufacturer would file a challenge potentially to patents that we hold for our product. We filed a Paragraph IV suit to protect the IP, basically. Paragraph IV litigation can take anywhere from three to five years, and obviously that's highly subjective because, in some cases, Paragraph IV litigation might be settled and end very quickly, and in some cases it might be carried all the way through. But it can take anywhere from three to five years to come to a conclusion, that's if it goes to litigation, and it can cost anywhere from 5-10 million USD. Generally speaking, we have had the challenge against Imvexxy. We have filed the Paragraph IV and we,
Sorry, we filed to protect our rights. So fiscal 2025 will focus on preparing for cost to prepare for Paragraph IV litigation.
Okay, thanks.
Thank you. There are no further questions at this time. I'll hand back to Mr. O’Brien for closing remarks.
Thank you. Thank you very much, and everybody for joining us this morning. Our FY 2024 results have set the foundations for long-term sustainable growth in women's health and dermatology for Mayne Pharma. If you have any follow-up questions or comments, please feel free to contact our IR team, either Dr. Tom Duthie in Australia or Lisa Wilson in the US. We look forward to meeting with our investors in person at our upcoming annual general meeting in November. Thank you, everybody. Good morning, and have a great day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.