TherapeuticsMD, Inc. (TXMD) Q3 2020 Earnings Call Transcript

TherapeuticsMD, Inc. (TXMD -2.60%)
Q3 2020 Earnings Call
Nov 09, 2020, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen. Thank you for joining us for the TherapeuticsMD third-quarter 2020 financial results conference call. [Operator instructions] I would now like to turn the call over to TherapeuticsMD's vice president of investor relations, Nichol Ochsner. Nichol, please go ahead.

Nichol Ochsner -- Vice President, Investor Relations

Good morning, everyone. Thank you for joining today to discuss our third-quarter financial results and business update. This morning, TherapeuticsMD issued a press release announcing our third-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 are chief executive officer, Robert Finizio; chief financial officer, James D'Arecca; and chief commercial officer, Dawn Halkuff. I would like to remind everyone that certain statements made during this conference call may contain forward-looking statements. Such 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 on the 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 archived webcast, this call was held and recorded November 9th, 2020. With that, I'll turn the call over to TherapeuticsMD CEO, Rob Finizio.

Rob Finizio -- Chief Executive Officer

Good morning, and thank you for joining today's call. On today's call, we will review our third-quarter performance, our future commercial plans, as well as progress made on strengthening our capital structure. Presenting on the call will be James D'Arecca, our chief financial officer; and Dawn Halkuff, our chief commercial officer. Let's turn to Slide 4.

We delivered a strong third quarter of operational execution across our product portfolio that resulted in growth in prescriptions, improvement in net revenue per unit and an increased total product net revenue. Even in the face of challenges presented by COVID, we achieved $19.3 million in total net revenue in the third quarter, an increase of 80% over the second quarter. ANNOVERA had approximately 115% increase in total prescriptions dispensed over the second quarter. In addition, our menopausal products achieved double-digit growth in both new and total prescriptions in the third quarter over the previous quarter.

We also realized the results of swift actions we took to reduce our operating expense and cash burn. Turning to our intellectual property, we continue to fortify ANNOVERA's patent portfolio to provide lasting durability for our flagship product. We recently added two additional patents to the Orange Book for a total of three listed patents for ANNOVERA. The list provides patent exclusivity through 2039.

For the menopausal portfolio, we recently added one new patent for IMVEXXY and one new patent for BIJUVA, both Orange Book listable, expiring in 2033 and 2032, respectively. I will now turn the call over to James D'Arecca to review the financial performance in more detail. James?

James D'Arecca -- Chief Financial Officer

Thanks, Rob. Let's move to a review of our financial results and key metrics from the third quarter. Turning to Slide 6. Our overall net revenue for the third-quarter increased to $19.3 million, which included $2 million in licensing revenue from milestone payments from Knight Therapeutics due to the Canadian approvals of IMVEXXY and BIJUVA; and $17.3 million in net revenue from product sales to the wholesalers and pharmacies.

This was a 62% increase in product net revenue from the second quarter. This increase was driven most significantly by the 250% increase in net revenue from ANNOVERA, with the average net revenue per unit remaining consistent with prior quarters at $1,339. Additionally, as you can see on the chart, IMVEXXY and BIJUVA also increased by 35% and 22%, respectively, compared to the previous quarter on a revenue basis. The average net revenue per unit increased to $51 for IMVEXXY and $47 for BIJUVA.

I can also report that the trend in sales to wholesalers and pharmacies on a unit basis was consistent with the trends in the reported prescriptions filled by patients in the quarter. Moving on to Slide 7, let's review some key financial statement items. We saw a return to a more normalized gross margin of approximately 81% in the third quarter, which was an improvement of 22 percentage points over the second quarter. Recall that the second-quarter gross margin was adversely affected by the write-off related to BIJUVA inventory obsolescence.

The results of our previously announced cost savings initiatives and our focus on strict cost discipline allowed us to reduce operating expenses, excluding noncash items, by 11 million from $48.1 million for the second quarter to $37.1 million for the third quarter. This keeps us on track to achieve our goal of $80 million in operating expenses in the second half of 2020. However, depending on performance, we may pursue additional investments in SG&A to further drive growth and enhance employee retention. Our net loss improved by $19.3 million from $51.9 million for the second quarter to $32.6 million for the third quarter.

Net cash used in operating activities decreased by 22 million from $56 million for the second quarter down to $34 million for the third quarter, primarily as a result of increases in net revenues and the reduction of operating expenses as compared to the second quarter of 2020. Now I'd like to update you on progress we have made in improving our capital structure, Slide 8. We have identified a source of non-dilutive funding with a potential divestiture of our data and patient services hub called vitaCare Prescription Services. vitaCare makes a complex process of filling patient prescriptions simple, cost-effective and stress-free.

In recent months, COVID-19 has highlighted the value of pharmaceutical manufacturers being able to connect directly with patients. This, as well as the rise of interest and investment in both hub service and pharmacy service companies has sparked outside interest in vitaCare. We recently received numerous inbound inquiries from other pharmaceutical companies seeking to utilize vitaCare services, as well as inquiries from potential partners or sponsors looking to acquire a controlling interest in vitaCare. As a result of these discussions, we believe we can unlock substantial value for our shareholders by divesting vitaCare to a partner who can capitalize on the business and grow it considerably.

We have retained Greenhill & Co. as our advisor and are currently running a process to help us find the right partner for vitaCare that will capitalize and grow the business, continue to support our products and generate the most value for our shareholders. Based on the initial indications received so far, we believe the enterprise value of vitaCare with the right partner can be upwards of $100 million, and depending on the ultimate transaction structure, to generate at least $50 million in non-dilutive proceeds to the company, while also retaining an interest in the newly capitalized business. Our vitaCare team is working with interested manufacturers to develop a robust customer pipeline so that an independent vitaCare will have the focus and resources to capitalize on this innovative platform.

We believe this unique source of non-dilutive funding will help generate the additional capital necessary to further commercialize our products, while potentially retaining material upside in the vitaCare business for our shareholders. In addition, we continue to work through just concerns about our ongoing cash needs and the covenants with our lender. I'm pleased to announce that our lender has lowered the minimum cash balance requirement from 60 million to 45 million through December 31st, 2020. We believe the efforts [Audio gap] successful and provide the necessary capital for TherapeuticsMD to execute on its plans moving forward. I'd now like to turn the call over to Dawn to discuss our payer progress and commercial plans.

Dawn Halkuff -- Chief Commercial Officer

Thanks, James. I will start with a quick overview of payer status and then review the momentum seen across our product portfolio in this quarter. Let's start with payer access and updates on Slide 10. We have maintained all major payers across the product portfolio and continue to make progress.

Starting with ANNOVERA, Caremark added ANNOVERA at non-preferred status in August. We also made progress with Medicaid. West Virginia Medicaid has made ANNOVERA unrestricted as of October 9th, and Medi-Cal added ANNOVERA as of November 1st for fee-for-service. We had an additional win with Anthem, who has moved BIJUVA from non-preferred to preferred as of October 1.

BIJUVA insurance coverage is 71% for commercial. Let's move to Slide 11. Now that we have strong payer coverage for ANNOVERA, let's look at how the strong access combined with favorable state laws for birth control are supporting low out-of-pocket costs for our flagship product ANNOVERA. First, when looking at a cross-section of top commercial payers, the cost for ANNOVERA is the same or less than the generic NuvaRing on an annual basis.

In addition, our data is showing that 80% of patients pay zero out-of-pocket and 17% paid between $1 and $60 for the annual protection of ANNOVERA. We know this from the 1,800 patients that have utilized our patient care and data hub, vitaCare. We believe the patient out-of-pocket data is representative of all patients regardless of where they fill. Let's move to Slide 12.

I am also pleased to announce that we have gained preferred coverage for ANNOVERA with one of the top pharmaceutical benefit managers that will begin in January. The reason this is significant is that approximately 20% of commercial lives are managed by this payer. ANNOVERA will be the preferred and only branded contraceptive vaginal ring with this payer, which means key competitors will be removed. NuvaRing will be excluded from the PBM's 2021 formulary, which we believe provides an opportunity for a shift in market share to ANNOVERA.

Moving to Slide 13. IMVEXXY also gained preferred coverage with the same PBM, and as such, will be the only branded pharmaceutical on formulary for the VVA class. Premarin cream, Intrarosa, Osphena and Estring will all be excluded from the PBM's 2021 formulary. As the only branded pharmaceutical in the VVA class, this represents an opportunity for a shift in market share to IMVEXXY.

I would also like to remind you that Premarin had over 17% national market share in the third quarter. In addition, by being preferred, this will reduce utilization of our co-pay program for these patients. Switching gears, I'd like to provide some context of the continued impact of COVID-19 and how we are proactively navigating the changing environment. Turning to Slide 15.

COVID continues to impact us in two ways. First, patient visits into OB/GYN offices continue to be lower than pre-COVID levels. This results in less switching behavior to new brands. The second is more limited access for our sales force with our full prescriber base.

While access is increasing from its maximum impact in May, the chart shows that access to prescribers is still significantly down from pre-COVID levels. Despite this, we have had a record quarter for ANNOVERA, saw growth across the portfolio in Q3 and believe we'll continue to be on target for Q4. Turning to Slide 16. So how are we accomplishing growth in this environment? Essentially, across consumer and prescriber initiatives, we have adapted our plans in innovative ways to engage our customer base virtually both with educational programs and initiatives that allow patients to gain access to our products even if they are not seeing their provider in person.

Moving to ANNOVERA results on Slide 18. Quarterly total prescriptions filled by patients is on the left-hand side. As you can see, total prescriptions more than doubled over the second quarter, coming in at approximately 5,200 for the third quarter. These results reflect, for the first time, our full launch plan activated and in place in the third quarter with the Unapologetically ANNOVERA consumer campaigns.

In addition, during the quarter, our sales force access to prescribers increased from the second quarter, but was significantly down from pre-COVID levels. The improvement in access to prescribers allowed us to continue expansion of our writer base in both breadth and depth. Finally, as mentioned, ANNOVERA was added to CVS Caremark at non-preferred status in August, and net revenue per unit remained strong at $1,339. Turn to Slide 19.

Let's look at our writer base in more detail. Starting on the left-hand side of the slide, you can see the number of writers overall doubled in the third quarter over the second quarter. Moving to the right-hand side of the slide, not only did we double the number of writers, we also improved writer loyalty, a key trend we look for as an early indicator of growing brand opportunity and health. Turning to Slide 20.

To maximize uptake of ANNOVERA, we are placing an emphasis on activating the consumer to request ANNOVERA from their provider. You can see that the contraceptive market is unique with 60% of women in this category knowing the birth control method they want before seeing their prescriber. The chart on the right illustrates physician willingness to prescribe ANNOVERA to the majority of patients that ask for the product. This dynamic is why we have prioritized direct-to-consumer advertising as a key element to grow ANNOVERA.

Turn to Slide 21. Our first consumer campaign, Unapologetically ANNOVERA, launched on July 1st and is scheduled to continue into 2021. The next phase of the consumer rollout is our influencer campaign, including our celebrity spokesperson. This is an important initiative given the importance of peer-to-peer endorsement in the birth control category.

We will also continue to focus on telemedicine as the channel continues to grow for the industry and for ANNOVERA. Moving to Slide 22. In addition to the consumer campaign, we are focused on continuing to educate prescribers on the value of ANNOVERA. From a messaging perspective, we are heavily focused on helping the prescriber identify appropriate patient types through our key messaging.

Finally, with access to providers' challenge, we continue to press on medical education efforts which have proved valuable with 33 virtual speaker programs with over 500 attendees to date. Turning to Slide 23. Another significant driver for ANNOVERA is refills, which we believe will be significant for us in the out years as ANNOVERA volume grows. We are confident in the opportunity of refill due to the robust data we have on patient acceptability in a study of over 1,000 women conducted by the Population Council.

The next reason we are confident in refills is the very low out-of-pocket costs being experienced by our patients that I mentioned prior. Last, this is translating to actual refills that are starting to occur. Approximately 59% of patients that are eligible to refill this early in the quarter have done so. Moving to Slide 24.

Another catalyst for ANNOVERA is the growth of multiple channels. To grow across the multiple channels, we are working with the leading partners and distributors in each of the relevant segments, public health, the military and telemedicine. The public health and military channels have experienced a slowdown due to COVID, but we have continued to make progress with both access and pull-through as bases and clinics begin to open. Now let's review our menopausal products.

Moving to Slide 25. IMVEXXY quarterly total prescriptions filled by patients is on the left-hand side. The continued rebound of NRx is starting to drive total prescriptions, which increased 11% to 131,000. New prescriptions increased 32% for the third quarter over the second quarter.

Moving to the right-hand side, I would now like to review the performance drivers that resulted in our growth. First, in August, we activated our Sex Care is Self Care consumer campaign to drive top-of-mind awareness of IMVEXXY. In addition, we continue to expand our writer base, resulting in approximately 14% increase in the average number of new prescriptions per prescriber. Finally, net revenue per unit improved to $51.

Our goal is to improve the gross to net for IMVEXXY during 2021. We have several key levers to drive that improvement in net revenue per unit including the enhanced commercial coverage that we will receive in January and the changes to our co-pay card and cash programs. Turning to Slide 26. In addition, in the fourth quarter and into 2021, we plan to continue to focus on expanding our consumer campaign and other initiatives on social media to generate awareness of IMVEXXY.

We plan to deliver strong support on access messaging that reminds prescriber of our open access and co-pay support for patients. In addition, as stated, IMVEXXY will gain preferred access in one of the top PBMs in January. This will remove key competitors, including Premarin currently at 17% total prescription market share. I'd like to quickly touch on BIJUVA.

Turning to Slide 27. Even with our decision to deemphasize BIJUVA and with only seven sales representatives promoting BIJUVA in the field, we continued to see growth in both NRx and TRx for the quarter at 59 and 16%, respectively. We are continuing with this approach this quarter and anticipate a continued modest upward trend for the fourth quarter. During the third quarter, net revenue per unit improved to $47.

Moving to Slide 28. I want to mention that we continue to monitor the environment for the category including the National Academies of Science, Engineering and Medicine that is referred to as the NASEM Report, a report commissioned by the FDA on compounding practices, which articulates the need for increased regulation. We will continue to support our bio-ignite customers regardless of any changes. No meetings have been scheduled yet around this topic by the FDA.

I would now like to turn it over to Rob for closing remarks.

Rob Finizio -- Chief Executive Officer

Thanks, Dawn. Let's move to Slide 29. We're very proud of the hard work and results our team delivered in Q3, record growth, reduced operating expenses, improved payer coverage and reduced net loss by $19.3 million. Looking ahead, assuming COVID-19 does not disrupt our access to providers' offices, we are currently on track to meet our $20 million Q4 revenue covenant, making significant steps toward our goal of EBITDA breakeven in Q4 '21.

Although it will not address all our capital needs and we may need additional funding, we believe we have found a potentially significant source of non-dilutive capital through the carve out of vitaCare. The simplicity and transparency that vitaCare delivers can truly revolutionize prescription fulfillment, and we will be excited to watch that process unfold. In addition, one of the largest PBMs representing over 20% of the market or approximately 20% of the market will be excluding IMVEXXY and ANNOVERA's competitors from their formularies and providing a new opportunity to gain market share on January 1st. Thank you all for joining the call today, and we'll now open the call for questions.

Questions & Answers:

Operator

[Operator instructions] Your first question comes from Annabel Samimy from Stifel. Your line is open.

Nick Rubino -- Stifel Financial Corp. -- Analyst

Good morning everyone. This is Nick Rubino on for Annabel. Congrats on the progress this quarter. First, can you please help us frame what might happen if you miss any of the upcoming revenue requirements with the remaining $50 million debt tranche come off the table? Or would there be a different type of change in your relationship with TSSP? And then secondly, based on your IMVEXXY and ANNOVERA commercial campaign launches over the summer, how should we think about your upcoming inflections of the products? And then with the reduced cash requirement to $45 million, should we expect that you'll be utilizing that cash to invest further in those campaigns?

Rob Finizio -- Chief Executive Officer

Nick, this is Rob Finizio, and I'll go back and forth with James D'Arecca, our CFO here. We're clearly on track for Q4 to hit our minimum revenue covenant. So we're not concerned around that at all. So we feel pretty good there.

Our goal is to get to EBITDA breakeven in Q4 of next year, right? So I think when you see our reduced minimum cash on hand by our lender, that's a very cooperative statement by Sixth Street to give us a runway to get this non-dilutive options completed. Although I don't think that will be all the money we need to get to profitability, it takes a massive chunk off the table, right? So I think it's -- what you're seeing is a very cooperative lender, a great, great result by our new CFO and a lot of the things our previous CFO did to get our operating expenses down and the revenue way up. So I feel good that we're on track, we're on target, and we're going to hit our goals. And things look really good, right? So the real wildcard here is if COVID brings in another shutdown and delays things.

And then we're going to have to cross that bridge and could need a little bit more money. But other than that, I think we're in great shape. Did I address all your questions?

Nick Rubino -- Stifel Financial Corp. -- Analyst

Yes. I guess, just in terms of like with COVID and any given thing happening in terms of volume fluctuations through the next year, I guess, we're just on a level of like catastrophic to not really an issue at all. Just what the possibility would look like? Is it just a renegotiation that you would be looking at with your partner? It obviously seems like they're definitely cooperative.

Rob Finizio -- Chief Executive Officer

Probably. Yes, they're a great lender. Probably, I mean, look, we're doing better. If you track the 12 launches out since COVID's hit, we're doing as good as any of them, right? So it's realistic, a lot net margins, our nets are incredibly strong, our volumes are incredibly strong.

We have a great escalation starting on January 1st with one of the largest PBMs in the country. We're not so concerned that our lender, if you miss by a dollar, would go crazy. And I think that's what you're asking. I think they're very reasonable.

They are lenders though, with that being said, and I think we're in great shape. And I think we'll deliver. And we don't believe, if you missed it, to your point, a revenue covenant, because there was a COVID shutdown, they would come in and try to grab the company. They're just not in that business.

But then again, they are a lender, and they have all their rights.

Nick Rubino -- Stifel Financial Corp. -- Analyst

Great. Yes, that's perfect. Thank you.

Rob Finizio -- Chief Executive Officer

Yes, I'll tell you, and not to try to plug for the Sixth Street. They are very, very reasonable, very accommodating. And you've seen how they've worked with us so far. We highly would recommend them, highly.

Operator

Your next question comes from Louise Chen from Cantor Fitzgerald. Your line is open.

Carvey Leung -- Cantor Fitzgerald -- Analyst

Hi, good morning everyone. This is Carvey in for Louise today. Just a couple of questions here. When we think about ANNOVERA, BIJUVA, IMVEXXY, they target different age groups.

So how much synergy is there between these products through your sales force and marketing channels? Secondly -- I mean, second question here. What is the optimal gross-to-net target for ANNOVERA? And what is the strategy on getting to that level?

Rob Finizio -- Chief Executive Officer

You got it. Thank you. So I'll take a little bit, and I'll hand it off to Dawn, our chief commercial officer. So you're right.

So what basically you have here are OBs that are young in their career and they're delivering a lot of babies and doing a ton of contraception. And then as they get older in their career, they usually lean toward the GYN side, so they don't have to wake up in all hours of the night. They don't have the liability for delivering babies. But the beauty of what we're doing is they're all in the same office, right? The 20,000 OB/GYN targets that we have for ANNOVERA, which are over 60% of the prescriptions, we can reach with our current sales force, right? We don't need any additional people to get to them.

And that -- this is the largest prescription category in women's health, I believe, over $6 billion a year in sales. So to answer your question, there's a lot of scale of efficiency, and we are at the right number to get to those top 20,000 targets from a headcount standpoint on our side. So we don't see any growth needed on sales force with the current product portfolio that we have. From a gross-to-net standpoint, I'm glad you asked.

That's a good one. So we feel very good of what we put out going forward into 2021 that we would be somewhere between where we are today and $1,200. The reduce to $1,200 net would be -- and again, we're -- by the way, we're above what we've forecasted, I believe, at $1,339 for the quarter. That came in a good bit above.

But nonetheless, when the government does open up the military, we are the only long-acting product on the military's deployment formulary, which is brand new. So think about it. If you're being deployed, unfortunately, overseas, and you're a woman, if you had NuvaRing, you'd have to keep it in a refrigerator. It's not going to work in the Middle East or on a boat, right? And you'll put it in the Captain's refrigerator.

If you're being deployed with an oral contraceptive, which are the other options under the deployment formulary, and this is over a $1 billion opportunity for us, you're not going to get 12 packages of birth control pills. They typically just don't even dispense it that way. So ANNOVERA was put there, and I think it will do great. But the problem is, and although we're hitting our numbers in the military and public health side, most of these places aren't open yet due to COVID because they're trying to protect our soldiers and have less people on base.

So we are selling through there. We are hitting our numbers. But I think you're going to see significant growth once we can get on bases. And then on the same side, on public health, planned parenthood, universities, they're not into letting reps come in like they used to.

But as COVID lifts and as you heard today the great news from Pfizer, I think that's going to be a massive area of growth. The nets with the government are lower than what we're seeing on the commercial side. So it could pull it down $100 or so with some good volume. But if it does go down, that means our volume is way, way up, and it's great news.

And we don't see it going anything lower than what I just talked about in the next year. Dawn, anything to add?

Dawn Halkuff -- Chief Commercial Officer

Yes. Just I'll go back to the sales force side. And I think, Rob, you said it well. What I would add is that the top prescribers across the category overlap greatly.

And so as Rob said, we're able to hit those 20,000 targets very efficiently. The other piece of information that I can give you with actual results is just that what we see is a massive overlap in our writers across product categories, which sort of is -- the proof is in the pudding there that we're going after the right targets and it's efficient for us.

Rob Finizio -- Chief Executive Officer

Thanks for the questions, Carvey. And by the way, we do see great appreciation next year for IMVEXXY and BIJUVA in the menopause portfolio from a net standpoint as well.

Carvey Leung -- Cantor Fitzgerald -- Analyst

OK. Thank you so much.

Rob Finizio -- Chief Executive Officer

You got it. Thanks for the question.

Operator

Your next question comes from Stacy Ku from Cowen and Company. Your line is open.

Stacy Ku -- Cowen and Company -- Analyst

Good morning. Thanks for taking my questions and congrats on the quarter. So a few questions on ANNOVERA -- yes, no problem. So first, can you provide an update on the current COVID headwinds in terms of office volumes? I think, previously, you had said it's around 50% or so.

And then what's the breakdown in ANNOVERA scripts that are from telemedicine versus live clinic visits, which segment is growing ANNOVERA faster? And I have a follow-up question.

Rob Finizio -- Chief Executive Officer

Sure. So if you refer to our slide, 15. We did want to put this up for people to look at. And Stacy, I'm glad you brought this up.

So as you can see on Slide 15, we are significantly below the access we had. And what does access mean? Typically, in a year, 10 to 15% of women will be open to switching contraception. We believe that number is down through our research of to 4% or so. Why is that? Because they have to go to their doctor for an exam, and they have to be open to it.

And a lot of women, although the prescription volumes look like the news are continuing, a doctor is just calling in a new prescription for what they were already on and they're not going into the office. They're doing a telemedicine visit or making a call in until COVID lifts. Additionally, doctors are limiting reps that can come in -- or typically, when we hear our reps are out there. But the good news is we're way off of the lows that we were back in May, right? We kind of bottomed in May at that point.

And in spite of all these headwinds, we are putting up record numbers, right? And the way we're doing that is we've kind of reinvented the way we're doing speaker programs, educating doctors, using Zoom, remote processes, and we feel good that unless there is a significant shutdown or headwind with COVID, we'll continue. We're definitely on track for the quarter, and we can touch on that, if you want, and additionally, around the Symphony tracking and where we are with that. So with that being said, on telemedicine, and I'm going to turn it over to Dawn, telemedicine is approximately, I believe, 18 to 22% of our overall revenue, and it is growing. Dawn?

Dawn Halkuff -- Chief Commercial Officer

Correct. Yes. And just to add a couple of things, so back on the slide. So what you're looking at here on the slide is actually reach and frequency, reach being the amount of doctors you can get to, that's our breadth.

Frequency being the number of times you can see them. So back to your question about COVID headwinds, the headwind outside of the switching behavior with the number of switches down for patients that we're seeing is our ability to get in front of doctors, at least the full prescriber base. The good news is that where we can get in, we're seeing we can get in -- that we're a little less impacted on frequency. How we are solving for that is what I talked about earlier in terms of anything we can do virtually, as well as all the medical education that we're pushing on.

And then in terms of growth, the majority of what we have put up for ANNOVERA has been through the sales force. And so they're doing a great job despite the headwinds that are in front of them. And as Rob said, telemedicine is providing a significant percentage, about 20% of our volume, and we would expect that to continue to grow depending on the environment.

Stacy Ku -- Cowen and Company -- Analyst

So that's really helpful. And actually, on that Symphony, I think you had commented on the -- in the appendix that the menopause products are consistently understated. Should we be thinking about that as the same for ANNOVERA volume? Or is there going to be a lot of quarter-to-quarter variability?

Rob Finizio -- Chief Executive Officer

Yes. We'll have Mitch walk you through. What slide number is that?

Dawn Halkuff -- Chief Commercial Officer

32.

Mitch Krassan -- Chief Strategy and Performance Officer

32.

Rob Finizio -- Chief Executive Officer

If you can go to Slide 32, we put a slide out in the appendix just to help give some clarity as best we can around this. Go ahead, Mitch.

Mitch Krassan -- Chief Strategy and Performance Officer

Yes. So thank you for that question. To start with, currently, ANNOVERA represents only 0.01% of the weekly birth control reported by Symphony. So a very small fraction of what they see.

And understanding Symphony's projection methodology in combination with ANNOVERA's volume and the delivery of our channels we go through, the telemedicine and military and the like, we believe there's underreporting. As a guide, when we look at the menopause products historically, the volumes have been underreported by an average of 10% to 15%. So we believe that's a good guide going forward. What you can count on is the Symphony trends are accurately reflecting what is happening with our sales, which is they are increasing week-over-week in October and that we are on track to meet our fourth-quarter goals.

Rob Finizio -- Chief Executive Officer

So in particular, our $20 million revenue covenant.

Stacy Ku -- Cowen and Company -- Analyst

Got it. And just to also clarify -- yes, just to clarify that, the 10 to 15% underreporting, you're saying it's a good guide going forward for ANNOVERA as well? Just to confirm that.

Rob Finizio -- Chief Executive Officer

Yes, we really think so. And the trends are consistent. And it's just so small. I mean think about the volume of ANNOVERA, it's 0.01% of what they track.

So if we're off by 50 or we're up by 300, it's massive to us for 300, right? And it's just a rounding, rounding area for the folks like Symphony. But their trends are definitely in line, and we're doing pretty well, doing pretty well.

Stacy Ku -- Cowen and Company -- Analyst

OK. Thank you so much. Thanks guys.

Rob Finizio -- Chief Executive Officer

Great question Stacy. Thank you.

Operator

Your next question comes from Douglas Tsao from H.C. Wainwright. Your line is open.

Douglas Tsao -- H.C. Wainwright -- Analyst

Hi, good morning. A couple of questions for me. First, in terms of ANNOVERA, obviously, we've got some really great momentum for that product. Just curious, when we think about the progression from here, is there sort of any seasonality that we should be considering when we model, especially as we look to the first quarter of '21? I know there are so many dynamics and it gets particularly tricky when a product is sort of going through this sort of early growth phase.

But just as we think about reimbursement, co-pays, etc., is -- do we typically think about that first quarter maybe being sort of a step back or flat relative to what we seem to be on track for, for the fourth quarter? And then just in terms of IMVEXXY, it seems like reimbursement on the Part D side has still sort of been a little more challenging than what we hoped for. Just -- how close are you to making sort of tactical decisions in terms of the co-pay cards, etc., just to proactively sort of increase the gross to net from -- for that product?

Rob Finizio -- Chief Executive Officer

Doug, it's Rob. Great questions. I'm going to pass it around here. But as you brought up seasonality in birth control, if you go back to '19 and '20, September was way down over August -- compared to August.

So that is a good trend, and it's on the way up.

Dawn Halkuff -- Chief Commercial Officer

That's really back-to-school.

Rob Finizio -- Chief Executive Officer

Yes. We call it the back-to-school. The back-to-school trends, to put the point on. So from going into Q1 of next year, so it's going to be, we think, pretty good for ANNOVERA.

And let me tell you why. Because of the state laws that we have in place today and because of the federal law, and now we're up to 28 states that have NDC that have state laws in the books, if there is a co-pay with a payer, a letter of medical necessity for even high-deductible plans that could have a $2,000, which is net price, would eliminate that in both states and federally. So as you look back to our nets, which I believe, in Q1 were in the high $1,300s approximately. And now we're -- in Q3, we're at $1,339, it could step back a little bit.

I think the bigger thing that would pull it back is if the government gets going, as well as this large PBM contract, where the -- they're excluding and no longer covering NuvaRing. And I know we're a long-acting product and very different, but we would be the only branded ring agent on their formulary, and that's approximately 20% of the entire population of the U.S. So that is a strong catalyst. It's probably stronger for IMVEXXY there because they were so heavy with Premarin, Osphena is one of their biggest ones, Intrarosa, Estring.

So I think you'll see a bigger lift there on IMVEXXY. So as well to kind of dovetail into your next, yes, IMVEXXY is good, and I'm going to turn it over to Dawn in a second. But we do now have the visibility, and it will be a lot better next year, and we expect it to strengthen in Q4. We think our average will be a good bit higher than it is this year.

Dawn, anything to add?

Dawn Halkuff -- Chief Commercial Officer

I think the only thing to add, Doug, is your question was, are we being proactive? And I think the two things we can point to, one, is the preferred coverage that we talked about with the PBM. Again, I don't want to underrepresent the significance of all the other competitors, including Premarin alone being 17%, being removed. It's a really nice way to sell the product and should improve the nets because of the reduction in co-pay. The second question you asked is around our co-pay card program, and we're absolutely looking at shifts in January as our coverage gets better to maximize gross to net.

So we are being proactive about that.

Rob Finizio -- Chief Executive Officer

Does that cover it, Doug?

Douglas Tsao -- H.C. Wainwright -- Analyst

Yes, that did. Thank you so much.

Rob Finizio -- Chief Executive Officer

Great. Thank you.

Operator

[Operator instructions] Your next question comes from Dana Flanders from Guggenheim. Your line is open.

Dana Flanders -- Guggenheim Securities -- Analyst

Great, thank you very much for the questions. I just actually had a follow-up on the payer PBM strategy. And I know you just talked a little bit about the opportunity you have getting preferred status. Just wondering if that's a shift in strategy for you? And would you expect potentially more of that going forward? And then kind of what's the level of market share you think you can get in those plans? And then just a second quick follow-up.

Can you just give us the refill rate for IMVEXXY this quarter?

Dawn Halkuff -- Chief Commercial Officer

So I'll start with -- it's Dawn. I'll start with payer PBM strategy. So I think the first thing I want to say is that we look at every payer and PBM differently. And so we look at each individual.

So this is not an indicator of every single one going over to preferred. We knew that this PBM, this would be fruitful for us. But really, what you should take away is that our entire approach from the beginning about making sure that we made this affordable for patients and driving market share gave us the opportunity to get to preferred over the other products. And so this was a really big win for us that really dovetailed with the strategy we had from the beginning.

But as far as going to preferred for the rest, that's not an overall approach. We'll look at it payer by payer.

Rob Finizio -- Chief Executive Officer

Yes. Dana, the PBMs want to go where the growth is. And the growth from IMVEXXY grabbing 12%, albeit at low net margins, here's where the story changes, right? Because they're not going to go to a shrinking product. They're going to go to a growing product because that's the one product all their patients will be covered for.

So I think to Dawn's point, the market share potential here is significant. It's actually -- we're always out there pushing in the past. Now we'll have PBMs at the pharmacy level pulling for us, pulling scripts in. And we're hitting our biggest branded competitor right between the eyes with one of the largest PBMs at 20%.

IMVEXXY, I'm glad you brought that up. No one asked that. It's very important. We are at 6.5 fills per patient on average.

So it is a really strong number. And that's -- again, that's why they made these decisions, right? We're growing. It's the one branded agent they're going to have going forward, which is a change. And people are spending on product and they like it.

So the strategy that we had with the low out-of-pocket cost to launch, even though the nets were low, is really paying off here and you can see it because if we didn't have growth, we wouldn't have these contracts. And there could be more in the future.

Dana Flanders -- Guggenheim Securities -- Analyst

Great, thanks and congrats on all the progress.

Rob Finizio -- Chief Executive Officer

Thank you.

James D'Arecca -- Chief Financial Officer

Thank you.

Operator

There are no further questions at this time.

Rob Finizio -- Chief Executive Officer

Thank you, operator. Thank you, everyone, for the questions today, and I want to thank the TXMD team for a fantastic quarter and all the hard work to get the expenses down and the revenue up, and we will continue to deliver. Thank you.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Nichol Ochsner -- Vice President, Investor Relations

Rob Finizio -- Chief Executive Officer

James D'Arecca -- Chief Financial Officer

Dawn Halkuff -- Chief Commercial Officer

Nick Rubino -- Stifel Financial Corp. -- Analyst

Carvey Leung -- Cantor Fitzgerald -- Analyst

Stacy Ku -- Cowen and Company -- Analyst

Mitch Krassan -- Chief Strategy and Performance Officer

Douglas Tsao -- H.C. Wainwright -- Analyst

Dana Flanders -- Guggenheim Securities -- Analyst

James DArecca -- Chief Financial Officer

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