Evofem Biosciences, Inc is a commercial stage biopharmaceutical company. It is engaged in developing and commercializing products to address unmet needs in women’s sexual and reproductive health, including hormone-free, woman-controlled contraception and protection from certain sexually transmitted infections (STIs). Its product, Phexxi (using the investigational name EVO 100) was FDA approved in May of 2020 for the prevention of pregnancy in females with reproductive potential. EVO 100 is currently undergoing Phase III clinical trials for two additional indications- the prevention of chlamydia and gonorrhea in women. EVO200 vaginal gel, its investigational candidate for the reduction of recurrent bacterial vaginosis (BV), uses the same vaginal pH modulator platform as Phexxi. It also focuses on developing Multipurpose Prevention Technology (MPT) vaginal gel for indications, including the prevention of human immunodeficiency virus (HIV) in women through Orion Biotechnology Canada Ltd. (Source: Refintiv)
Evofem Biosciences is an exciting company that offers a unique non-hormonal contraceptive option for females. The company reached net product sales of $3.5 million in Q4 of 2021 which was more than double their Q3 net product sales. In Q4, 32,386 Phexxi prescriptions were filled which is up 69% from Q3. Additionally, 22,659 new patients started using Phexxi in Q4 which is up 56% from Q3. The company is seeing very positive sales increases which is likely attributed to their large marketing campaign that was launched in February of 2021.
The U.S. Direct-to-Consumer Campaign called “Get Phexxi” was intended to broaden awareness of the non-hormonal, use as needed birth control method. The target audience was the 21 million women in the U.S. who are at risk for pregnancy and not using hormonal contraception. The marketing campaign consisted of a multipronged digital and social media plan that was spearheaded by influencer and Canadian screen star Annie Murphy. The campaign showed to be very successful gaining over 173 million views in just the first three weeks. There was a 35X increase in unpaid searches for “Phexxi” and a 180% increase in direct web traffic going to Phexxi.com. This increased traffic translated to increase sales as well. Following the campaign, there was a 73% increase in monthly factory sales of Phexxi and the number of healthcare providers prescribing Phexxi grew 25%.
The well-known CEO of Evofem, Saundra Pelletier, initiated this large marketing campaign. She has been a strong presence for the company since she is a passionate advocate for women’s wellness and empowerment. Her opinionated and outspoken nature has generated lots of attention surrounding Evofem. Although she has raised lots of awareness, her lofty projections have created doubt from many investors who feel she has overpromised and underdelivered. Additionally, she has raised significant amounts of capital that have diluted shareholders and left them angry. This dilution is a large reason for the decline of the stock price. Another reason for the declining stock price is the fact that their spending is greater than their sales.
Evofem currently has less than ideal cost management. They have high operating expenses which totaled $45.5 million in Q1 of 2021. Of this $45.5 million, $30.5 million went towards sales and marketing costs. Sales and marketing costs represent approximately 2/3 of the total operating expenses which is extremely high. Fortunately, Evofem has been taking steps in the right direction to correct its cost management. They reduced the net cash burn rate to approximately $17 million in the fourth quarter of 2021 versus $32 million in Q3. In order to be profitable long-term, Evofem must continue to decrease their spending while sustaining or increasing their sales growth. If they can accomplish this task, Evofem can become very successful and bring large returns for investors.
With nearly half of all pregnancies in the U.S. being unplanned, there is a huge need for effective non-hormonal contraceptives for women. Phexxi can meet this demand with its innovative product that is designed with the woman in mind. Since Phexxi is also subsidized by insurance, the insurance companies will cover most of the costs which makes the product more accessible for women and allows for high margins for Evofem. Additionally, Evofem plans to release top-line data in the second half of 2022 for the use of Phexxi for the prevention of chlamydia and gonorrhea. If Phexxi is approved for these two new indications, the market potential will increase significantly allowing for much more long-term revenue. Despite some issues with cost management, Evofem continues to grow its sales and shows a lot of promise with a 533% upside potential. Overall, Evofem has the potential to generate significant returns for investors.
PS. All my investments and portfolio are public. To join eToro please follow the link: https://bit.ly/3i7Yo3C
My Public Profile: https://www.etoro.com/people/mj_lux
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.