Veru Inc. · NASDAQ:VERU
Veru — Female Health Company — Q1 2016 Earnings Presentation
30 slides from Veru's earnings presentation, June 2016
Slide 1: Investor Presentation Q1 2016
NASDAQ: FHCO Investor Presentation Q1 2016
Slide 2: Female Health Company
Female Health Company Markets FC2 Female Condom Worldwide 519 Million Units Sold to Date Saves Lives and Reduces Healthcare Costs Improves Women’s Health Yellow shading shows distribution of FC2 2
Slide 3: FC2 Female Condom
FC2 Female Condom FC2 is the only product currently available: Approved by the FDA and cleared by the World Health Organization (WHO) Under a women’s control Which provides dual protection against: Unintended pregnancy Sexually transmitted infections (STIs), including HIV/AIDS and Zika Virus
Slide 4: At a Glance
At a Glance NASDAQ FHCO Core product FC2 Female Condom Gross margin ~66% Operating margin ~29% Total current assets $24 million no L/T debt at 12/31/15 Profitable Starting 2006 Debt Free $10M Unused Credit Facility 4
Slide 5: FC2 Market: Women's Health Issues
FC2 Market Women’s Health Issues HIV/AIDS • Leading cause of death globally for women age 15-44 • 80% of female cases contracted via 42% heterosexual transmission Male 58% • Male and female condoms are the only prevention Female products available • No near-term broad-use alternative prevention prod
Slide 6: Zika Virus: WHO Declares Global Emergency
Zika Virus (1) WHO Declares Global Emergency: Emerging Women’s Health Issue Babies Adults • Devastating birth defects • Possible link to Guillain-Barré Syndrome – Microcephaly – head and brain – Neurological disorder that can cause muscle abnormalities weakness, paralysis, and death Transmission Imp
Slide 7: UNAIDS Calls For 20 Billion Condoms A Year By 2020
UNAIDS Calls For 20 Billion Condoms A Year By 2020 (1) • Every day more than 1 million people acquire a sexually transmitted infection. • 80 million unintended pregnancies occur every year. • “UNAIDS is calling for increased investments by donors and governments for promotion and distribution of mal
Slide 8: The Condoms Markets
The Condoms Markets Consumer Global Public Sector Global Market Family Planning HIV/AIDS Global Condom Public Health $4 – 6 Billion $ 400 – 500 Million Units ~10 – 12 Billion Units ~10 Billion 8
Slide 9: FC2 Female Condom vs. Male Condom
FC2 Female Condom vs. Male Condom FC2 is an alternative to the male condom Found to be preferred by Material, nitrile polymer, is stronger than women and partners in many countries latex, reducing the probability of tearing, and is non-allergenic Allows the woman to take control of Transfers heat, w
Slide 10: FC2 Market Advocacy
FC2 Market Advocacy • One of few markets where independent groups advocate use of company’s product • Well organized and funded independent women’s groups – Advocate for gender equality – Through increased funding for/availability of female condoms worldwide • Examples – Center for Health and Gender
Slide 11: Market Changes and Potential Expansion Opportunities
Market Changes and Potential Expansion Opportunities • US Market Changes – Female condoms (FC2) reimbursable under Obamacare – Growing need for non-hormonal birth control – Role of social marketing to young women – Increasing online purchases of condoms • US Potential Opportunities – Direct-to-consu
Slide 12: Market Changes and Potential Expansion Opportunities
Market Changes and Potential Expansion Opportunities Worldwide Market Changes • Zika virus can be sexually transmitted – Can impact pregnant women and their babies with devastating birth defects – Microcephaly (babies) – Guillain-Barré Syndrome (adults) – Potential to become global epidemic (up to 4
Slide 13: Online Sales
Online Sales •ShopFemaleHealth.com •Amazon.com •Walgreens.com •CVS.com •Walmart.com •Kmart.com •MyQuestStore.com •Drugstore.com 13
Slide 14: Product Development: Consumer: What's Next
Product Development Consumer: What’s Next • Coming Soon: – Updated Branding – Updated Packaging – New Product Colors – submitted for appropriate quality approvals – Marketing campaign to target users • To include social media, PR, targeted advertising 14
Slide 15: Competitive Barriers To Entry
Competitive Barriers To Entry • Patents principally on use of nitrile and nitrile/design elements: — 39 patents in 52 countries; expiring in 2023 and 2024 • FDA approval/WHO clearance • FC2 proprietary material formulation • Worldwide product specific training and education • Country registration pr
Slide 16: Competition
Competition FC2 Cupid PATH – Women’s Condom Marketed Globally Marketed Outside U.S. Not Marketed Only one other female condom approved by WHO – Cupid – not approved by FDA 16
Slide 17: Competition
Competition FC2 Cupid PATH – Women’s Condom Nitrile Polymer Natural rubber latex Polyurethane 2 retention rings: Octagonal outer ring. Sponge to Large external ring: -External ring covers the lips of the anchor the device internally. -Tabs on the exterior of the device that vagina reportedly adhere
Slide 18: Competitive Impact on FHC
Competitive Impact on FHC • First competitive product cleared by WHO – June 2012 • After 3 years of competition achieved no significant market share • FHC remains market leader as demonstrated by 2015 results 18
Slide 19: FHC Strategy
FHC Strategy • Focus: return on investment/impact on shareholder value • Capitalize on: long-term female condom public sector growth; FHC’s position as market leader • FC2 product development/marketing • Pursue female condom market expansion opportunities – direct-to-consumer/online purchasing • Div
Slide 20: Key Project Status
Key Project Status • Direct to Consumer Promotion – 6 month study completed this quarter • Diversification of Product Line – Specific opportunities identified and under evaluation 20
Slide 21: Why FC2 Demand Will Continue To Grow
Why FC2 Demand Will Continue To Grow • Zika virus outbreak – Potential to become global epidemic • UNAIDS calls for 20 billion male and female condoms by 2020(1) • Continued Global Focus on HIV – Feminization of AIDS – leading cause of death women age 15-44 – 35 million persons living with AIDS, 2.3
Slide 22: Talented Management Team
Talented Management Team • O.B. Parrish – Chairman and Chief Executive Officer • Martin Tayler – Executive Vice President of Global Operations – Effective July 13, 2015 – Oversees Sales and Marketing – Effective September 15, 2014 – A FHCO founder – Previous Experience – Previous Experience • SSL In
Slide 23: State-of-the-Art Manufacturing
State-of-the-Art Manufacturing 100 million unit capacity, with ability to add up to an additional 100 million units. 23
Slide 24: Low Risk, Unique Business Model
Low Risk, Unique Business Model • Modest inventory level, production primarily against orders • Low foreign currency exchange risk, FHCO & Subs Report in $USD • Minimal credit risk, less than 1% bad debt in past five years • $10M unused credit facility • NOL carryforward: – UK: ~$62 M – No expiratio
Slide 25: Tax Loss Carryforward
Tax Loss Carryforward FHC: • No longer records P&L NOL benefit • Records tax charge • Continues to benefit from NOL cash impact • Example: Q1 FY2016 Tax Charge - $ 829,453 Taxes Paid - $ 69,856 Cash Saved - $ 759,597 25
Slide 26: FY 2016 – 2015 Results
FY 2016 – 2015 Results YTD 2016 YTD 2015 (millions, except EPS) (millions, except EPS) • Profitable starting in 2006 Units 15.4 12.2 • No debt Revenue $8.2 $6.7 • Brazil tender for up to 50 million units: 37 million Gross Margin $5.4 $3.8 units shipped Operating $2.4 $1.5 Income • Strategy to accele
Slide 27: Unit Sales
Unit Sales 100% sales of lower price, higher margin, Millions next generation FC2 CAGR 70 16 % 61.6 61.0 60 54.8 50 40.2 38.9 42.5 40 34.7 32.9 30 25.9 20 19.6 15.4 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 FC1 FC1 & FC2 FC2 27
Slide 28: Net Revenues
Net Revenues 100% sales of lower price, higher margin, $ in millions next generation FC2 40 35 $35.0 $32.6 $31.5 30 $27.5 $25.6 $24.5 25 $22.2 20 $19.3 $18.6 $14.8 15 10 $8.2 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 FC1 FC1 & FC2 FC2 28
Slide 29: Gross Margin
Gross Margin 100% sales of lower price, higher margin, next generation FC2 % of net revenue 60 58.2 58.9 58.2 65.6 53.1 55.6 53.6 49.1 50 41.9 40 37.0 37.0 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 FC1 FC1 & FC2 FC2 29
Slide 30: FHC Summary
FHC Summary • Stable, profitable company • New strategy focused on driving Company growth • Potential 10 billion unit condom market virtually untapped = opportunity for growth • Experienced leadership with track record of success 30
Female Health Company — Q1 2016 Earnings Presentation on 6ix