Good morning, ladies and gentlemen. Thank you for joining us for TherapeuticsMD First Quarter 2021 Financial Results Conference Call. Following prepared remarks from the company, we will open the call for questions. I would now like to turn the call over to TherapeuticsMD's Vice President of Investor Relations, Nichol Ochsner. Nichol?
Good morning, everyone. Thank you for joining today to discuss our first quarter financial results and business update. This morning, 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 and Media section. On today's call from TherapeuticsMD, our Chief Executive Officer, Robert Finizio, Chief Financial Officer, James D'Arecca, Chief Commercial Officer, Dawn Halkuff, and Chief Strategy and Performance Officer, Mitchell Krassan .
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, in our annual, quarterly, and other reports filed with the SEC.
These forward-looking statements are based on information available to TherapeuticsMD today, and the company assumes no obligation to update statements as circumstances change. An audio recording and webcast replay for today's conference call will also be available online in the Investors and Media section of the company's website. For the benefit of those who may be listening to the replay or archive webcast, this call was held and recorded May 6, 2021. With that, I'll turn the call over to TherapeuticsMD's CEO, Rob Finizio.
Good morning, and thank you for attending our Q1 call. This quarter, we had strong execution across the organization while investing in our most important assets to create shareholder value through revenue growth and continued protection of our assets. Let's begin on slide three. With the progress made on ANNOVERA, we have strong year-over-year growth and dominant share new strategies to overcome challenges that COVID-19 has created commercializing products. In addition, the patent estate for ANNOVERA has doubled, strengthening its durability and extending our exclusivity to June of 2039.
Moving on to our menopause franchise. We achieved record net revenue per units for both IMVEXXY and BIJUVA. I'm also happy to announce that we won our appeal for approval with the FDA for the new lower dose 0.5 mg/100 mg of BIJUVA, and have a meeting set in May to discuss next steps. The company continues the VitaCare divestiture process to unlock shareholder value. We are creating significant revenue opportunity with two new live customers, a third scheduled to launch in the fourth quarter, and a pipeline with approximately 20 potential new deals.
With this progress, VitaCare continues to build on its foundation to become a freestanding, rapidly growing entity in a new sector with no established leader. Most importantly, Q1 year-over-year financial improvement was significant. With increasing revenue growth while lowering operational expenses, all in the midst of a pandemic. I will now turn the call over to James to discuss more details. James?
Thanks, Rob, and good morning, everyone. Turning to slide five. Our net product revenue for the first quarter was $19.6 million, which satisfied our first quarter revenue covenant. This was a 60% increase in product net revenue from the first quarter of 2020 that was primarily driven by ANNOVERA, which had only just been launched. ANNOVERA net revenue per unit decreased to $1,071 because of increased rebates owed, resulting from a new payer contract becoming effective during the first quarter.
We expect net revenue per unit of ANNOVERA to approximate $1,100 per unit for 2021, although it will likely fluctuate over the next three quarters as the mix of payer reimbursement changes. Additionally, as you can see on the chart, IMVEXXY net revenue grew to $7 million, or 9.7% as compared to the first quarter of 2020. The average net revenue per unit increased to $61, the highest level for IMVEXXY since its launch. It was driven by the increase to $75 in our cash co-pay program, along with our new preferred payer contract.
BIJUVA net revenues for the quarter increased to $2.4 million. As of March 31st, 2021, inventory levels in the wholesaler and pharmacy channel for our products were within normal levels. Moving on to slide six, let's review some key financial statement items. Our product gross margin of 76% for the first quarter was adversely affected by production-related write-offs for ANNOVERA of $900,000. We continue to maintain our focus on strict cost discipline, which allowed us to reduce operating expenses to $44.5 million for the first quarter, a decrease of $16 million as compared to the first quarter of 2020.
While we plan to maintain an efficient cost base that can be leveraged as revenue grows, we expect to make investments this year to improve our supply chain, enhance marketing, and strengthen digital capabilities related to commercial initiatives. With these investments, we expect our highest spending occurring in the second quarter. Net cash used in operating activities was $38.4 million for the first quarter of 2021. Our debt balance decreased to $183.9 million, resulting from a $50 million principal repayment made during the first quarter.
Overall, I continue to be pleased with our financial performance and believe we are well-positioned to execute on our commercial plans to drive our growth in 2021. I'd now like to turn the call over to Dawn to discuss our commercial progress. Dawn?
Thank you, James. Let me start with ANNOVERA. Slide eight shows the continued growth of ANNOVERA this past year, even in the face of the constraints brought about by the pandemic. Year-over-year growth was 164%, and sequential TRx growth was 5%. The quarter-over-quarter growth is meaningful, given that historically, first quarter volume and net revenue per unit are lower than the fourth quarter levels as a result of high deductible plans and co-pay resets at the beginning of each new year. Net revenue per unit came in at approximately $1,100 as expected.
In addition to volume and net revenue growth, we saw a 17% increase in prescribers in the first quarter of 2021 versus the fourth quarter of 2020, another continued positive trend. Moving to slide nine. I am pleased to show you that ANNOVERA is gaining market share from across the spectrum of birth control product methods. More than half of ANNOVERA patients are new to rings. As you can see, with the growth from Q4 to Q1, the percentage of ANNOVERA patients who have switched from IUDs or implants is now at 18%.
We believe this data is compelling as it suggests an unmet need for a long-acting, procedure-free contraceptive, which ANNOVERA is now filling. Moving to the environment on slide 10. We continue to successfully grow ANNOVERA in the face of headwinds from both payers as well as COVID limiting access to prescribers. Recently, ESI announced that it has replaced branded contraceptives with generics on formulary and put branded products on the drug exclusion list, which led to ANNOVERA's commercial coverage at 57%.
Despite this change, we have confirmed that patients continue to receive ANNOVERA when their providers submit Letters of Medical Necessity through the protection of the Affordable Care Act. Moving to slide 11. The most significant headwind we are experiencing is the lack of access to prescribers. Current industry prescriber access is shown on the left, which is about one-third of the pre-COVID level. This is reflective of our first quarter data with 40% access to our targets. The good news is that access is expected to double over the next year, allowing our sales force to increase their productivity.
That said, many prescribers believe that in-person visits will remain below pre-COVID levels permanently, leaving a significant gap versus pre-COVID access. We intend to continue to address this issue with innovative solutions to complement and supplement the traditional sales force model to drive continued uptake of the brand. Moving to slide 12. The prescriber restrictions due to COVID are well documented across industry. The data in this chart shows many of the mass market pharma launches in the past 18 months.
The reason I am highlighting is that it shows the impact of the COVID restrictions on the launch brands shown, including birth control products, with the growth rates in 2021 year to date being only in the single digits. Typical launch brand trajectories were much higher in the pre-COVID world, but now are challenged to grow when using traditional approaches only. Turning to slide 13. Although the various constraints imposed by the pandemic have been challenging, they have also created an opportunity to focus more heavily on the consumer as the catalyst to drive demand.
As a company, we continue to adapt, accelerating our use of digital platforms such as social media, virtual public relations events, and telehealth to convert consumer interest in ANNOVERA to filled prescriptions in a virtual world. On slide 14, the funnel on the left shows the path from the initial interest we generate from our consumer campaigns to the eventual number of patients who fill a prescription through online or telemedicine channels.
The main takeaway here is that interest is high, but we have considerable opportunity to increase access to patients who want ANNOVERA at every piece of the funnel. Let's look at each piece of the funnel and how we plan to accomplish. Starting at the top of the funnel on slide 15. ANNOVERA messaging is impactful and relevant to consumers. We know this because we have achieved metrics that are above industry benchmarks for click-throughs to the website.
Most recently, we supported Vagina Appreciation Day, which resulted in a 380% increase in those searching for ANNOVERA online and boosted our daily website visits by 35%. Bottom line, we understand how to drive interest and plan to continue to do so throughout the year. Turning to slide 16. Now comes the opportunity to help women better access ANNOVERA. We know that of those who visit annovera.com, only about 2% start the process to access ANNOVERA online.
To move the needle on helping more women who want ANNOVERA receive it, we have launched additional options to increase access for patients who may not be able to visit their prescriber in person. Moving to slide 17. The next step, as shown in the funnel, is helping women who want ANNOVERA to receive a prescription. Right now, about 20% complete the process to receive a prescription for ANNOVERA. We believe that improving this percentage is about improving the process flow for women to make it easier to connect with a healthcare provider who can write the ANNOVERA prescription.
Finally, on slide 18, once the ANNOVERA prescription is written, we are actively working to increase access to help get the prescription filled. Our data shows that only 45% of women are able to successfully fill their prescription at this stage. We aim to help more women accomplish this step by utilizing patient assistance tools through VitaCare. Just last month, we launched an initiative to accelerate this effort for ANNOVERA. Moving to slide 19, which is a visual, once again, of the complete funnel.
We believe the small changes that I have described that we are making at each part of the funnel will drive significant increases in women's access to ANNOVERA throughout the year and the growth of the ANNOVERA brand. Turning to slide 20. As Rob mentioned, in the first quarter of 2021, three new ANNOVERA patents were issued and are now Orange Book-listed. We now have a total of six Orange Book-listed patents for ANNOVERA, strengthening the durability of the patent estate and extending the IP protection to June 2039.
Turning now to IMVEXXY on slide 22. We implemented our cash pay program change on January 1st, causing an expected TRx decline. I am happy to say we had a record net revenue per unit this quarter at $61 due to this change and delivered approximately six fills per patient annually, which continues to be above category averages. Moving to slide 23. As you can see, IMVEXXY is back to growth, increasing month-over-month throughout the quarter.
Turning to slide 24. As stated, we were able to increase the net price per unit for IMVEXXY. Year-over-year, there was a 39% improvement in net price. On a sequential quarter basis, IMVEXXY saw a 13% improvement in net price. Now that we have raised our net price per unit, I wanted to share that we launched a new consumer campaign for IMVEXXY called Long May She Reign, shown on slide 25. The campaign is compelling, and in its first week, drove significant increases in traffic to the website.
We believe this campaign will significantly raise the interest level for IMVEXXY, and the brand will have the same programs in place as ANNOVERA to keep access to patients high. We now turn to BIJUVA, the second product in our menopausal franchise. Sequential quarter TRx trends were impacted by the same change in the cash program as IMVEXXY. BIJUVA experienced year-over-year growth, as shown on slide 27, despite minimal investment in the brand throughout the year.
Turning to slide 28. We have made significant progress with our new lower 0.5, 100 BIJUVA dose. We recently won an appeal with the FDA for this new lower dose, and we have a meeting set with the FDA for May to discuss next steps. I would now like to turn the call over to Rob for closing remarks.
Thanks, Dawn. To close, let me highlight the following on slide 29. In Q1, we improved our cash position, lowered our debt, had strong revenue growth while lowering expenses, and set record net revenue per unit for our menopause franchise. In addition, VitaCare continues the divestiture process and has increased in value through acquisition of new customers and a significant pipeline in the works.
Results this quarter are in line with our 2021 operating plan, and we believe keep us on track for achieving EBITDA breakeven on a quarterly basis in the first half of 2022. I'd now like to open up the call for questions.
At this time, if you would like to ask a question, please press star then the number one on your telephone keypad. Again, that's star then the number one to ask your question. Your first question comes from the line of Dana Flanders with Guggenheim Partners.
Hi, this is Devin on for Dana. Congrats on the net price improvements. I just had a couple questions. First, what are you seeing as far as underlying trends for IMVEXXY net price that led you to increase the top end of guidance? I believe it was previously 70. Is it more attributed to the relative customer mix, meaning cash pay versus non-cash pay? I guess more favorable profitability across this mix?
Hey, Devin. It's Rob. Good question. When you say we raised guidance for IMVEXXY, can you give me a little more clarity on that?
I thought previously that the top end of the range for net price was $70. It looks like it's $70-$75 now.
No, it's still $65-$70.
Oh.
We have not changed that. To your point, we raised the cash pay price to $75. We expected two months of downward trends. We had about a month, and it turned around in February, and now we're seeing meaningful growth at much higher nets. We expect the blended average for the year of $65-$70. You're going to see it continue to appreciate throughout this year. That average of $65-$70 will stay. To your point, since we came in at $61, you should see a strong upward trend from here.
Yep. A great movement there, and it works. The large PBM contract is helping as well. We're working on others in that arena, other large PBM contracts for preferred position. We're feeling good about IMVEXXY, its net revenue per unit, and its volume going forward.
Okay. On ANNOVERA, what percent of total covered lives does ESI represent for ANNOVERA? Additionally, as far as the patents go, are they composition of matter patents, method of use? Just trying to get a sense of what's contained and what claims are in the patents.
I'll take the patent one, and then I will turn over to Dawn for the ESI portion. By the way, they're approximately 15%. Its strategic and its durability are really where we would hoped to get them, and are really proud of our team that's gotten that done. The extra five months are nice to have through 2039. Really, it's the strategic value of the types of IP we have and the placement of it, given the regulatory pathway that's there to protect our assets. Dawn, you want to comment on ESI?
Sure. Thanks, Devin, for the question. Again, as Rob mentioned, it's about 15%, but I just wanted to remind on a couple things with ESI. The first is that the decision was made at a class level, not a brand level, and it's actually happening in multiple classes. What we're really lucky with is that in the birth control class, we have the protection of the ACA, and ANNOVERA has been very successful with that, given the uniqueness of the product, which has allowed doctors to continue to provide ANNOVERA for those patients that want it through the letter of medical necessity. We haven't seen an impact.
Yeah, we have no impact from the ESI change at all because letters of medical necessity.
Yeah.
It's great.
Okay, great. One last one for me. Could you just remind me, have you given guidance on where you expect net price for BIJUVA to end for the year, going forward?
No, we haven't. I think this quarter is a little bit of an anomaly. It just got a little ahead of itself. I think it's comfortable to say it'll be in the 60s somewhere. Could be low 60s, could be high. It's not a focus, so we haven't been putting a lot of color there. It should trend somewhat similarly to IMVEXXY, in our opinion. That's about as far as we've gone. Does that help?
Yes. Thank you very much.
You got it. Thanks.
Your next question is from Louise Chen with Cantor Fitzgerald.
Hi, this is Jen for Louise. Thanks so much for taking our questions, and congrats on the quarter.
Thank you.
I have two questions here. I guess just to start, for the low dose BIJUVA, can you go more into detail on what you're looking to get out of the May meeting, and maybe what's the base case timeline for next steps? My next question is, I know during your remarks, you mentioned that the highest spending due to investments is expected to occur in the second quarter.
I just first want to confirm that you're talking about SG&A there, or is it just SG&A that you're talking about? How expensive is that increase expected to be? Related to that, is it fair to say that at least for the third quarter and fourth quarter then, what we saw in the first quarter is sort of a good example of what spend could look like? Thanks.
Sure. I'll take the BIJUVA expectations, and what we plan to get. Maybe Dawn, you might want to add something. You're closer to it than I am. We thought BIJUVA low dose should have been approved when we originally submitted it, and it wasn't. We filed an appeal, and that appeal was granted by the FDA very recently. We're going to go meet with them in May to look at the next steps there.
There's a very challenging division here at times, and we don't know whether they're going to want to move it forward really quick or it's going to move forward slowly. I don't want to set any expectations at all for that right now. The good news is that the office level thought it should have been approved originally. They made that pretty clear in the summary, and it's in good shape.
Yeah. Jen, it's Dawn. I think the only thing to add is as Rob said, the FDA agreed that the data originally submitted should've supported approval. As far as timing, I think you asked on a base case. We won't know that until we have the meeting in May, and when we have something to update, we will.
Hi, Jen. It's James D'Arecca to answer the questions on spending. The spending I'm talking about is our OPEX, our total OPEX line, excluding non-cash items. That's the same thing we've been giving guidance on, and consistent in the past. Last call, we indicated that we expected the average per quarter of our OPEX to be between $45 million and $48 million.
We're sticking to that for this year. In terms of this trend, as you know, with launch products, there is a lot of seasonality. Your point about using last year as a comparison, I think is a good one. I think last year you saw our expenses kind of peak towards the middle of the year and then ease out towards the end of the year, and we would expect a similar phenomenon this year.
Okay, great. If I could squeeze in one more question. I think previously you've mentioned that for ANNOVERA, your goal was to increase annual TRx per writer to 15. I'm just wondering, is that still the case?
For a certain type of writer, yes, absolutely. We have loyalists, sampling, stablers, different types. If you go back to our strategic operating plan, for 2021 that we shared at JPM, this quarter was exactly in line, but a little bit lower on the spend than what we had put out there, or a good bit lower on the spend. We're going to continue that plan.
We'll deliver. I think some of the new things that we've found that Dawn has talked about here, we think should really accelerate some growth in areas where we've had great growth so far in the pilot stage. We're implementing it to full bore in Q2 and Q3, and we're really excited about that related to ANNOVERA. Yes, to answer your question, for that type of provider, 15 is the goal.
Okay, great. That's super helpful. Thanks, everyone, and congrats again.
Thank you.
Again, if you would like to ask a question, please press star then the number one on your telephone keypad. That's star one. Your next question comes from Douglas Tsao with H.C. Wainwright.
Just really quickly, in terms of the ESI change, and I know it's been fairly recent, but just curious, how long is it taking to get the letters of medical necessity approved and sort of should we think of this, at least for just that group of patients, just sort of pushing out the curve? Do you have a sense of the success rate from when a physician wanted to initially prescribe that to getting the LMN done? What's the sort of pull-through rate that you've seen so far?
The pull-through rate is constant to what it was before. If anything, it's better for us, to be honest with you, Doug. So far it's been excellent. I don't know if you've seen, we've been growing since this has happened. The pull-through rate or the approval percentage that we have, it's been identical to what it was before. We feel really good.
Give ESI credit, they're following the letter of the law, right? They're doing a good job. ANNOVERA uniquely, not all birth control has this unique form. When the Letter of Medical Necessity goes through, it gets approved, unless there's certain religious exclusions and things like that. There's been zero impact, and we're growing.
Have you implemented any operational changes to support physicians just to ensure that that continues?
Yeah.
It sounds like you're-
Yes, we have. Sorry, Doug, I cut you off there. Yeah, we have. We obviously are driving some education around this whole process, related to LMNs, and it's pretty well understood out there already.
Yeah.
Okay.
Doug, what I was mentioning with VitaCare, how we are supporting an initiative to support patients to make sure expectations are set with the LMN process and really doesn't take that long, but just making sure that all the paperwork's complete, that the doctor submits, and again, setting those expectations with patients, and that really helps with the pull-through as well.
Okay. Great. Thank you so much.
You got it, Doug. Thank you. All right. I think that's the last question.
There are no additional questions at this time.
Thank you very much.
I'd like to turn it back over to Rob for closing.
Thank you very much for joining our Q1 call. We look forward to seeing you next quarter. Thank you.
Thank you. This concludes today's conference call. You may now disconnect.