Traders News Source Editor, Mark Roberts Interviews Evofem Biosciences, Inc. (NASDAQ: EVFM) CEO Saundra Pelletier
Evofem Biosciences, Inc. (EVFM)
Saundra Pelletier, CEO
Saundra Pelletier has served as Chief Executive Officer, President and Executive Director of Evofem Biosciences since February 2015, and as interim Chair of the Board since November 2021 following the resignation of our former Chair due to health reasons. Ms. Pelletier has been responsible for the company’s growth and evolution, and she led Evofem’s transition to the public market in January 2018 (NASDAQ:EVFM).
Ms. Pelletier has assembled an impressive team of seasoned pharmaceutical professionals that have a deep understanding of the women’s healthcare market and what women want, and she attracted new investor capital. She has also led multiple equity financing rounds which have raised over $491 million.
In her more than 25 years of experience in the pharmaceutical industry, Ms. Pelletier has launched pharmaceutical brands worldwide and expanded indications on female healthcare brands in multiple countries. Her experience includes a comprehensive range of women’s healthcare products, cardiovascular, pain management, sleep therapies and medical devices. She has had oversight and accountability for Sales, Marketing, Operations, Medical Affairs, Regulatory Affairs, Manufacturing, Customer Service, Business Development and Strategic Partnerships.
Previously, Ms. Pelletier served as Vice President, Pharmaceuticals at Women First Healthcare, where she raised $40 million in capital. Earlier in her career, Ms. Pelletier served as Corporate Vice President and Global Franchise Leader for G.D. Searle, where she managed a $250 million business unit, managed worldwide partnerships, negotiated cost saving licensing agreements, assessed country infrastructures, developed commercialization plans and hired full scale teams, including contract sales forces.
In March 2020, she joined the Board of Directors for TRACON Pharmaceuticals, Inc., a clinical stage biopharmaceutical company focused on the development and commercialization of novel targeted therapeutics for cancer. She serves as the chair of the Governance/Nomination Committee and is a member of the Audit Committee. She is also a published author, coveted keynote speaker and moderator at key healthcare and political conferences worldwide.
She has appeared at the Harvard School of Public Health, the Davos World Economic Forum, the Clinton Global Initiative, the MAKERS Conference, Women Deliver, the University of Virginia’s Darden School of Business, the University of Oregon’s Lundquist School of Business and the University of California, San Diego.
She is a trained Climate Reality Advocate and hosted a roundtable session at the International Conference on Climate Change, held in Reykjavik, Iceland. Ms. Pelletier has been profiled by The New York Times, Inc. Magazine, Cosmopolitan, Bustle, CNN, Glamour, Marie Claire, and Vogue. She was named as a New Champion for Reproductive Health by the United Nations Foundation, awarded the Athena San Diego’s Pinnacle Award for Life Sciences, named 2019 Business Woman of the Year by the San Diego Business Journal, and named to Inc. Magazine’s 2020 Female Founders 100 List.
Thank you for giving us your time to answer our questions.
Could you give us a brief overview and future vision for your company?
Evofem is a commercial stage biotech company delivering innovation in women’s healthcare – a market segment that has not seen real innovation in decades. We brought to market the first and only FDA-approved, non-hormonal birth control that women only use when they have sex. Unlike most contraceptives, Phexxi has no systemic activity and does not impact a woman’s ovaries in any way.
The U.S. contraceptive market is valued at $7.9 billion. In the U.S. alone, there are 42.2 million women in our addressable market. Of these, 23 million women do not want to get pregnant but will not use hormonal birth control, so there is a tremendous opportunity to deliver on unmet needs for women and their healthcare providers.
We aim to build Evofem into the premier women’s health company. Beyond the current contraception indication, we are currently evaluating Phexxi for the prevention of chlamydia and gonorrhea in women. This is a very near-term opportunity — we will report top-line data from our registrational Phase 3 clinical trial in October. Assuming positive outcomes, we will submit sNDAs in the first half of 2023 seeking FDA approval for these two potential new indications. With FDA approval, Phexxi will be the only prescription product approved for prevention of pregnancy, chlamydia and gonorrhea.
How does Phexxi work, and how effective is it at preventing pregnancy?
Phexxi is a vaginal pH modulator. It works by maintaining the normal, slightly acidic vaginal pH of 3.5 to 4.5, which is inhospitable to sperm as well as certain bacterial and viral pathogens including chlamydia and gonorrhea.
In practical terms, Phexxi is a colorless vaginal gel that comes in a convenient pre-filled applicator. Each box of Phexxi contains 12 Phexxi applicators. A woman inserts Phexxi into her vagina 0 to 60 minutes before sex. If she’s going to have sex again, she must insert another Phexxi beforehand.
In our Pivotal Phase 3 contraceptive trial, Phexxi prevented 99% of pregnancies on a per act of sex basis. This is based on 24,289 acts of intercourse in the study, and only 101 pregnancies.
Naysayers will flag that in the Phexxi label the typical use efficacy was 86%. What they don’t understand is that this calculation included pregnancies in women who enrolled but never once used Phexxi, and those who did not use Phexxi before having sex a second time. This is just one nuance of statistical analysis that we are overcoming with the irrefutable 99% pregnancy prevention rate. And that 99% data point is really resonating with healthcare providers and women alike.
Last week EVFM reiterated its guidance toward $30-35M in 2022 revenues. H122 produced $10.3 in revenue. What will generate a 100% revenue gain in H222 over H122?
To meet our guidance of $30 to $35 million Phexxi net product sales this year, we need to increase net sales approximately 40% quarter over quarter. We’re off to a strong start – Q2 net sales were up 42% as compared to Q1 – and we are confident in our ability to deliver ongoing growth.
We entered the second half of 2022 with recent market access wins that we anticipate will generate strong second half momentum and position Evofem to achieve our revenue guidance. For example, one of the largest Pharmacy Benefit Managers (PBMs) in the nation added Phexxi to its national template formularies with no restrictions effective July 1st. We secured coverage for Phexxi with numerous other payers at $0 copay and/or without prior authorizations.
Our market access team continues to work additional payers to increase Phexxi access, and the recent guidance from the U.S. government on contraceptive access strengthens our position in those conversations. Every new payer agreement means more women are able to fill and re-fill their Phexxi prescriptions, with drives further Phexxi growth.
The EVOGUARD clinical trial is ending. Should the data be positive, do you anticipate being able to label Phexxi as a deterrent to Chlamydia and Gonorrhea in 2023 and how would that impact sales?
Yes, positive data from this Phase 3 trial should enable us to submit regulatory applications to the FDA in the first half of 2023. These will be sNDA filings seeking to add prevention of chlamydia and gonorrhea to Phexxi’s label.
We have fast track designation for both potential new indications, which means the FDA should take action on the application with 6 months of the filing acceptance, versus 10 months under standard review. This translates to potential FDA approval of Phexxi for the prevention of chlamydia and gonorrhea in women by the end of 2023.
Regarding sales impact, we expect FDA approval would double the market opportunity at a minimum, because every sexually active woman is at risk for these sexually transmitted infections and there are
no FDA-approved, woman-controlled prophylactics to prevent them. The unmet need here is enormous.
20% of people in the U.S. had an STI on any given day in 2018. The CDC estimates that 4.0 million and 1.6 million new cases of chlamydia and gonorrhea, respectively, occurred that year. Infected people are often unaware of their infections. Almost 60% of women infected with chlamydia have no symptoms, so they don’t seek treatment. And chlamydia is one of the leading causes of infertility in the U.S. which is a real concern for younger women.
EVFM has advised that costs will be reduced by $50M this year and will achieve a neutral cash flow position by the end of FYE 2023. Will further cost cuts be necessary in 2023 to achieve that goal?
No. Our guidance is based on projected Phexxi revenue growth, ongoing gross-to-net improvements, and the sharp drop in R&D costs now that the EVOGUARD trial is complete. We remain confident that we will achieve cashflow breakeven on a quarterly basis by the end of 2023.”
The company has advised that gross-to-net is expected to be 40% or better this year. Will that level be sustainable into FYE 2023?
Absolutely. We expect gross-to-net will trend lower in 2022 and it should continue to improve in 2023. This is because on and after December 30, 2022, plans will have to cover Phexxi at $0 cost to women under the Affordable Care Act (ACA). This guidance has been made clear by multiple U.S. government agencies including HSRA and the Departments of HHS, Labor and the Treasury. Approximately half of our current gross-to-net is associated with various patient co-pay programs. So, when plans cover Phexxi at $0 cost to women, need for these co-pay programs will be far, far less and gross-to-net improves.
As a reminder, there are 42.2 million women in our addressable market. At our current WAC of $294 per box of 12 Phexxi applicators, at the Q2 gross-to-net of 40% we net $176.40 per box. If we are being conservative, and women get only 4 boxes of Phexxi per year, each 1% market share equals $298 million in Phexxi net sales. However, most providers write a 6-month prescription. When women get 6 boxes of Phexxi per year, each 1% market share equals $447 million in Phexxi net sales.
A lower gross-to-net percentage means more profit to us from every Phexxi prescription, so at 35% gross-to-net the economics are even more favorable, further increasing our net product sales.
Are there any roadblocks with insurers or pharmacy benefit managers precluding Phexxi to be available to any woman prescribed it?
We have made great progress with payers, and as a result our approved claim rate has continued to increase throughout 2022 to where more than 70% of Phexxi prescription claims are now being approved.
Federal guidelines state that most group health plans and health insurance issuers must cover contraceptives at no cost to individuals. However, there are still some payers that are not complying with these guidelines and continue deny Phexxi claims or require prior authorizations and step therapy. Our market access team continues to work with these payers to ensure they cover Phexxi at no cost to individuals, but it may take government enforcement for them to toe the line.
The good news is that in late July the U.S. Department of Health and Human Services, alongside the Departments of Labor and of the Treasury, clarified they will enforce the federal law on contraceptive coverage. We expect the forthcoming enforcement action will lead to more plans covering Phexxi with out-of-pocket cost to the woman, no prior authorizations and no step-edits, ensuring women access to our FDA-approved contraceptive as intended under the Affordable Care Act (ACA).
EVFM has reported a current cash position of $19M. How long of an operating runway will that cash cover?
We closed Q2 with $19.9 million in unrestricted cash and $1.6 million in restricted cash. Based on our current expected operations, we believe we have sufficient cash to fund operations into Q4. This does not include potential non-dilutive capital from commercial alternatives we are exploring and evaluating to enhance shareholder value, like U.S. co-marketing and co-promotion partnerships. This expectation also does not include cash that we received from warrants exercised since the Q2 call by certain warrant holders, or factor any cash we may receive from potential future warrant exercises.
How secure is the company’s IP protection covering the formulation of Phexxi?
We feel very confident in our IP protection. Phexxi’s formulation is protected by patents in the United States and the main markets in the rest of the world through 2033 and 2034, respectively. Recently, the U.S. Patent and Trademark Office issued Evofem a Notice of Allowance for our patent covering the composition of matter of Phexxi (lactic acid, citric acid, potassium bitartrate) which is expected to provide protection into at least 2033. With the issuance of this patent, in the U.S., Evofem will solely have the right to make, have made, market, and sell for any commercial purpose the composition of matter that comprises Phexxi. This is in addition to the Orange Book listed method of use patents.
Are you considering any new products/acquisitions over the next 18 months?
Yes, we are actively looking to co-market or co-promote additional women’s health products that have the identical call point as Phexxi. We have proven that we have the right messages, the right platform, and the right team to overcome obstacles and deliver results when many other companies have fallen short. Those same companies are now reaching out to Evofem so we can consider adding their product to our promotional activity. This will help cover the cost of our sales organization while we continue to grow Phexxi’s share of the $7.9 billion U.S. contraceptive market and prepare for the anticipated launch of this innovative product for the prevention of the two most pervasive STIs in the United States.
Another significant business development opportunity is licensing Phexxi for commercialization outside the U.S. This will deliver non-dilutive capital from the up-front payments as well as royalties and milestone payments through the life of the agreements.
The Traders News Team
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