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[Starts Abruptly] for the Therapeutics MD's Second Quarter 2022 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 Investor Relations for TherapeuticsMD, Lisa Wilson. Lisa?
Thank you, operator. Good morning, everyone, and thank you for joining today to discuss our second quarter financial results and business update. This morning TherapeuticsMD issued a press release announcing its second quarter 2022 financial results. The press release and accompanying presentation are available on the company's website TherapeuticsMD in the Investors and Media section.
On today's call from TherapeuticsMD are Chief Executive Officer, Hugh O'Dowd; Interim Chief Financial Officer, Michael Donegan; and Chief Commercial Officer, Mark Glickman.
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 the 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 and our annual, quarterly and other reports filed with the SEC. These forward-looking statements are based upon information available to TherapeuticsMD as of today, and the company assumes no obligation to update these 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 maybe listening to the replay or archived webcast, this call was held and recorded on August 15, 2022.
With that, I'll turn the call over to Therapeutic MD's CEO, Hugh O'Dowd.
Thank you, Lisa. And thank you everyone for joining our call today. Today, I'd like to share our progress against our goals and highlight the key milestones met during the second quarter. Our total net revenue for the quarter was $28.6 million, an increase of 24% over the second quarter of 2021. At the same time, our total operating expenses during the quarter declined by $11.4 million or 21%, while gross profit rose by 26%. The second quarter of 2022 also saw us complete the divestiture of our vitaCare business unit. In just five weeks, our organization went from deal announcement to closing. With the proceeds from these efforts, the company has been able to repay $120 million of debt during the second quarter and TXMD is now a far more focused business, dedicated to advancing the health of women throughout all stages of their lives.
Our final accomplishment to note is the U. S. Food and Drug Administration’s approval of our supplemental new drug application for ANNOVERA, which increases our current and future supply. With this approval, we expect a significant reduction in manufacturing batch rejections and an increase in future product supply that will enable the company to better meet customer demand for ANNOVERA.
Now that I've discussed these achievements, I wish to spend a moment acknowledging another key event of the quarter. As you all know, in May, we entered into a definitive agreement to sell the company to EW Healthcare Partners. However, the transaction did not garner sufficient support from our shareholders. Our recent financing with Rubric Capital Management and accompanying maturity extension have provide us with additional runway such that our Board of Directors and management team remain forward-looking in evaluating all options, including seeking partners to refinance our current debt or pursuit of other strategic alternatives. All of this to enable us to serve our two primary constituencies: our patients and our shareholders.
And with that, I'll turn it over to our Interim Chief Financial Officer, Michael Donegan to discuss our financial results in greater detail. Michael?
Thanks, Hugh. On April 14, we completed the divestiture of vitaCare Prescription Services for $142.6 million net of transaction costs and recognized a gain of $143.4 point four million on the sale. Included in the net proceeds was $11.3 million of customary holdbacks, which are recorded as restricted cash on the balance sheet. We used $120 million of the proceeds to pay down our outstanding loan and may also receive up to an additional $7 million in earn out consideration contingent upon vitaCare's financial performance through 2023.
I'll now turn to our second quarter 2022 financial results. Our total revenue for the quarter was $28.6 million, an increase of $5.6 million or 24.2% compared to the second quarter 2021. For the quarter, sales of ANNOVERA were $18.3 million, an increase of $8.7 million or 91.2% compared to the second quarter of 2021. This increase was primarily due to an increase in sales volume, partially offset by a decrease in the average sales price.
Sales in IMVEXXY were $6.7 million for the quarter, a decrease of $3.2 million or 32.2% compared to the second quarter 2021. This was primarily due to decreases in sales volume, as well as average sales price. Sales at BIJUVA were $2.7 million for the second quarter, an increase of $0.5 million or 23.1% compared to the second quarter of 2021. The increase was a result of money received under the Theramex license agreement and an increase in overall sales volume, partially offset by a decrease in the average sales price.
Prescription vitamin sales were $0.9 million for the second quarter, a decrease of $0.5 million or 35.5% compared to the second quarter of 2021. This is due primarily to decreases in sales volume and average sales price. Gross profit for the second quarter of 2022 was $23.8 million, an increase of $5 million or 26.2% compared to the second quarter of 2021, and this is due primarily to the increase in product revenue. In addition, product gross margin improved overall as a result of a change to the sales mix with increased sales volume for ANNOVERA and BIJUVA and decreased sales of IMVEXXY.
Total operating expenses for the quarter were $42.7 million, a decrease of $11.4 million or 21.1% compared to the second quarter of 2021. This is driven mostly by the vitaCare divestiture, as well as companywide effort to reduce overall operating expenses. Selling and marketing costs were $23.7 million for the second quarter, a decrease of $8.5 million or 26.4% compared to the second quarter of 2021, due to lower brand spending for IMVEXXY and ANNOVERA, reduced compensation and employee benefit expense and lower consulting expenditures, partially offset by higher education, conference and software development costs.
General and administrative costs were $17.4 million for the quarter, a decrease of $2.5 million or 12.4% compared to the second quarter of 2021. This decrease was due primarily to lower costs associated with compensation and employee benefits, information technology and rent, partially offset by a net increase in overall professional and consulting fees. R&D costs were $1.6 million during quarter, a decrease of $0.4 million or 21.4% compared to the second quarter of 2021. And this is due to lower compensation and employee benefit expenses, partially offset by higher lab research costs. As we refocused our resources towards the continued commercialization of our pharmaceutical products, R&D expenditures have declined.
As mentioned earlier, we recognized a gain of $143.4 million on the sale of the vitaCare business during the second quarter of 2022. Other non-operating expenses totaled $11.7 million, an increase of $4.2 million or 56.7% compared to non-operating expenses of $7.5 million for the second quarter of 2021. This increase was a result of higher amortization of deferred financing costs, offset by lower interest expense due to lower average debt balance and lower interest prepayment fees due to the March 2022 amendment to our financing agreement. More details regarding the amendment and our debt and financing arrangements can be found in our 10-Q.
Net cash used in operating activities was $15.4 million for the second quarter, and as of June 30, 2022 we had $26.3 million in cash. In August, we announced a $15 million investment from Rubric Capital Management to fund near term operations. At the same time, we entered into an agreement with Sixth Street specialty lending to extend the maturity date of our debt to September 30, with the option to further extend the maturity date until October 31 and November 30, 2022, if we receive additional equity capital of $7 million per extension.
I'll now turn the call over to our Chief Commercial Officer, Mark Glickman to provide more detail around our commercial progress. Mark?
Thanks, Michael. As we disclosed earlier in the year, we managed to keep up with demand through a difficult period of sporadic inventory shortages. As you could see, the demand for ANNOVERA not only held up, but demonstrated strong growth when the product became more readily available. Now that we have ample inventory in stock, ANNOVERA hit an all-time high of 901 prescriptions in the last week of the quarter. Despite the inventory issues, ANNOVERA prescriptions grew 28% compared to the second quarter of 2021 [indiscernible] part by a strong June.
Due to the new targeting and field focus we mentioned last quarter, new prescribers grew at an accelerate a rate of 1,487 during the quarter and total prescribers have now surpassed 12,000. These are all signs of strong demand and the potential for growth. In addition, on July 28, President Biden issued an executive order to protect access to reproductive healthcare services. At the same time, the three agencies Health and Human Services, the Department of Labor and the Treasury Department took steps to clarify protections for birth control coverage under the Affordable Care Act, which guarantees coverage of women's preventative services, including among other things, hormonal methods like birth control rings and pills. With the current environment in the state of flux, this is great news for ANNOVERA and for women's health in general.
As the only long lasting procedure free patient controlled option for women, we continue to believe ANNOVERA is positioned to play a significant role in the contraceptive market. We are also starting to see the results of the revamped field force targeting and accountability focus initiatives we rolled out in quarter one.
On the next slide, you'll see that total prescriptions from IMVEXXY declined slightly during the quarter, in line with expectation as we shifted our targets and focus. We are, however, encouraged by what we believe are the early results of the new focus as evidenced by an uptake of prescriptions in June and we expect this course to continue. IMVEXXY also had quite a strong quarter regarding new prescribers by adding 1,606 New Rxers and exceeding 30,000 prescribers since launch.
With BIJUVA, we are excited with the early results of the targeting, and this slide reflects what we expected to see. During the quarter, BIJUVA prescriptions grew around 5% over Q1 2022, rebounding from a previously declining trend line. This slide here demonstrates accelerating month-over-month growth in New-to-Brand prescription, which is directly related to targeting and strategy changes. Market research indicated that BIJUVA with the correct targeting messaging and effort would be a highly sought after therapy for women with VMS symptoms and we are seeing the early successful signs of those efforts.
I'll now turn the call over back to our CEO, Hugh O'Dowd for concluding remarks.
Thank you, Mark. In summary, we delivered a solid quarter of operating performance amidst the backdrop of considerable ambiguity. While our focus remains steadfast on serving our patients and shareholders, on behalf of the management team and our Board of Directors, I wish to thank our employees for their dedication, spirit and incredible commitment to our mission of empowering women of all ages through better and affordable healthcare. Thank you.
Thank you. Ladies and gentlemen, we will now go into our question-and-answer session. [Operator Instructions] Our first question will come from Douglas Tsao with H. C. Wainwright. Please go ahead.
Hi, can you hear me?
Hey, Doug. It's loud and clear.
Okay. Great. Sorry, there's a little static. So you maybe as a starting point, obviously, you guys sort of use the word ambiguity. Just maybe can you talk to and I apologize you may be touched on it. I've just been bouncing from another call. That employee retention rates, especially in the sales force just given some of that uncertainty and certainly some of that still continues to persist?
Hey, Doug, let me start and I'll offer Mark a moment to amplify my response. But we remain encouraged and committed. And so even though in the presence of some level of ambiguity in 2Q, that strong operational performance where we delivered a solid quarter is on the back of our committed field force and really strong, revitalized and frankly transformed commercial effort. So I think with that backdrop, I just wish to acknowledge that our employees have really been fighting through a very fair amount of ambiguity given that we had a number of key events occur in the quarter inclusive of the tender process. So I think it's just clear to acknowledge that reality. Having said that, I think we remain confident in our team.
Mark, would you wish to offer more comments?
Yeah. Thank. Hi, Doug. So we're like you were aware of possibility, uncertain times that of turnover. So we're working hard on communication and various schemes to ensure that our -- incentive schemes to ensure that our field force stays engaged and that we give them the rationale to stay and be successful. As of right now, turnover is in a very reasonable rate and we hope to -- plan to continue that.
Okay, great. And then just on ANNOVERA, and I might have missed this, obviously, really strong performance from a revenue standpoint this quarter. Did that -- and obviously, we're seeing the scripts upturn, I mean, that's pretty transparent to us, but just curious how much do you think that this revenue performance is actually reflective of end demand? Is this sort of like a real base that we're going to continue to build off of? Or should -- was there some sort of dynamics in terms of inventory levels and shipments with the new rings becoming available that we should be aware of?
Thanks, Doug. It's Mark again. That was volume. The ANNOVERA number was volume. Obviously, we had the aspiratic inventory concerns. We obviously had to refill channels. We still are in that state. It feels and it looks weekly. Everything has settled down. There's ample inventory in the channel. And we are seeing a resumption of the demand that we expected to see prior to any inventory concerns.
As far as the quarter and the revenue, I do believe that the revenue was based on demand, there definitely is a restocking of the channels, because demand was actually running ahead of inventory for a while here. So we restocked the channels, but that was all demand based. There was -- and we do plan on seeing that moving forward. [Multiple Speakers]
What I would supplement those remarks is, if you really look at the monthly TRx’s in the fall and that was commencing the early days of the transformation work that Mark and his team had undertaken, we saw TRx’s respond. Then what happened? We had the challenge where we had supply issues. And that really for us was a Q4, Q1 event as we previously described. As we've been able to dig ourselves out and ultimately secured for us the SNDA, FDA approval, this then was a fundamental moment to pivot where we could return to proper supply levels and now you see TRx's once again retracting to that previous effort. So I believe Mark's answer is really on target and I just offer that data to supplement his remarks. Sorry, you had another question.
Yes -- no. And just -- and I know in some of the tendered documents, there was a reference to some concern that there were higher rejection rates. I saw that there was a slide in terms of -- you sort of commented on the TRICARE situation. Do you feel right now that you're going to sort of have a handle on that we're going to -- that shouldn't be an impact on sort of the -- not necessarily the short term results, but just the long term peak opportunity for the product?
Doug, can you clarify, we want to make sure we answer the right question. We didn't hear you well. You're pointing to a specific issue from the D-9? Or can you just [Multiple Speakers]
So in the kind of documents, I think there was a reference by one of the -- somebody looked at a party that was looking at -- you know, participating in the process, expressing concern around rejection rates. And I was just looking to understand where you feel right now specifically to ANNOVERA that they -- there was a comment that ANNOVERA rejection rates were somewhat higher, which was affecting their valuation of the company. And I just wanted to understand -- get your sense of where you feel rejection rates are and how that should affect our sort of long term assessment of the product opportunity for ANNOVERA, which based on the near term performance looks quite good?
That's very helpful. Mark, please share.
Yes. So -- and now -- what you're referring to. So rejection rates, A, were very high to ANNOVERIS since launch. And B had been the focus of the commercial team really going back into the last quarter of last year. ANNOVERA is -- the great news is ANNOVERA is an incredibly unique product that serves a place in the market. But that also -- that uniqueness in the pharmaceutical industry having a once a year retail solution for women's contraceptive needs really creates an issue within the retail and the pharmacy environment. We have addressed and found the root cause of those rejections. I won't get into too much detail but I can assure you it was not a coverage issue, it was not an intention of the managed care plans to reject the product, it was more around the idiosyncrasies of ANNOVERA being a once a year retail product. We can't find another analog that's like ANNOVERA and that's a good thing, but we did it, we found it, we knew we had a rejection issue when we looked at Symphony data, we found the root cause, we addressed it, we addressed it with our payer partners and we do not believe that's going to be an issue moving forward.
Okay. And then I just know you had conversations with some of the large shareholders and people are who are participating or have become more involved in the story about their sort of vision for the company? And can you maybe share some thoughts on that? Thank you.
So I think if you're referring to our time after the conclusion of the tender process, what can we say? I think we believe that the pipe, together with our financing agreement extension enables the company to maintain our operations, number one. And two, really meet the demand of our novel portfolio while our Board of Directors and our management team evaluate all options, the strength in the company's long term financial position, that's what we're setting you about doing right now. With respect to any details of the Rubric deal and the maturity extension, with six REIT we have ample discussion in our recent SEC filings. I'd encourage all investors to please read those.
Okay, great. Thank you very much. I'll hop out of the queue for now.
Doug, Thank you.
I'm showing no further questions in the queue at this time. I would now like to turn the call back over to management for any further remarks.
We'd like to say thank you for everyone joining our call today. We appreciate the opportunity to share with you our narrative and thank you for your time. Take care and have a great day.
This concludes today's conference call. Thank you for participating. You may now disconnect.