THERAPEUTICSMD, INC. The following discussion should be read in conjunction with our 2021 Annual Report on Form 10-K ("2021 10-K Report"), and the consolidated financial statements and related notes in Item 1, Financial Statements, appearing elsewhere in this this Quarterly Report on Form 10-Q ("10-Q Report"). The following discussion may contain forward-looking statements, and our actual results may differ materially from the results suggested by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2021 10-K Report under the heading "Risk Factors," as updated and supplemented by Part II, Item 1A of this 10-Q Report. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law. Certain amounts in the following discussion may not add due to rounding, and all percentages have been calculated using unrounded amounts.
Forward-looking statements
This 10-Q Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve substantial risks and uncertainties. For example, statements regarding our operations, financial position, debt position, liquidity, business strategy, product development, and other plans and objectives for future operations, and assumptions and predictions about future product development and demand, cost reduction strategies, research and development ("R&D"), marketing, expenses and sales are all forward-looking statements. These statements are generally accompanied by words such as "intend," "anticipate," "believe," "estimate," "potential(ly)," "continue," "forecast," "predict," "plan," "may," "will," "could," "would," "should," "expect," or the negative of such terms or other comparable terminology.
We have based these forward-looking statements on our current expectations and
projections about future events. We believe that the assumptions and
expectations reflected in such forward-looking statements are reasonable, based
on information available to us on the date of this 10-Q Report, and but we
cannot assure you that these assumptions and expectations will prove to have
been correct or that we will take any action that we may presently be planning.
These forward-looking statements are inherently subject to known and unknown
risks and uncertainties. Actual results or experience may differ materially from
those expected or anticipated in the forward-looking statements. We do not
undertake to update any forward-looking statements or to publicly announce the
results of any revisions to any statements to reflect new information or future
events or developments, except as required by law or by the rules and
regulations of the
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of our control. Factors that could cause or contribute to such differences include, but are not limited to, our liquidity requirements, supply chain issues, management transitions, risks related to the Financing Agreement, market and general economic factors, and the other risks discussed in Part I, Item 1A of our 2021 10-K Report, as updated and supplemented by Part II, Item 1A of this 10-Q Report.
Business overview
We are a women's healthcare company with a mission of creating and
commercializing innovative products to support the lifespan of women from
pregnancy prevention through menopause. At
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vitaCare Divestiture
On
The Purchase Agreement contains customary representations and warranties, covenants and indemnities of the parties thereto. In addition, upon closing of the vitaCare divestiture, (i) we entered into a long-term services agreement with vitaCare to continue utilization of the vitaCare platform with respect to our products; and (ii) we and vitaCare entered into a transition services agreement for us to provide certain transition services to vitaCare for up to 12 months following the closing.
COVID-19
With multiple variant strains of the SARS-Cov-2 virus and the COVID-19 disease that it causes (collectively, "COVID-19") still circulating, we continue to be subject to risks and uncertainties in connection with the COVID-19 pandemic. The extent of the future impact of the COVID-19 pandemic on our business continues to be highly uncertain and difficult to predict. The ultimate global recovery from the pandemic will be dependent on, among other things, actions taken by governments and businesses to contain and combat the virus, including any variant strains, the speed and effectiveness of vaccine production and global distribution, as well as how quickly, and to what extent, normal economic and operating conditions can resume on a sustainable basis globally.
Since the early phase of the COVID-19 pandemic, we have been using substantial virtual options to ensure business continuity. We have also partnered with independent community pharmacies and multiple third-party online pharmacies and telemedicine providers that focus on contraception or menopause which provide patients real-time access to both diagnosis and treatment. We continue to support prescribers' needs with samples and product materials through our sales force. If access is restricted, we have mailing options in place for these materials. We also have business continuity plans and infrastructure in place that allows for live virtual e-detailing of our products.
As part of our response to the COVID-19 pandemic, we implemented measures to
reduce marketing expenses and implemented cost saving measures, which included
negotiating lower fees or suspending services from third-party vendors;
implementing a company-wide hiring restriction; delaying or cancelling
non-critical information technology projects; and eliminating non-essential
travel, entertainment, meeting, and event expenses. In addition, we implemented
a significant cost savings initiative that was designed to reduce our annual
operating costs in 2022, and we reduced the operating costs of the vitaCare
business with the completion of the vitaCare Divestiture on
The full impact of the COVID-19 pandemic continues to evolve. As of the date of issuance of these consolidated financial statements, the future extent to which the COVID-19 pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain. We are continuing to assess the effect of the COVID-19 pandemic on our operations by monitoring the spread of COVID-19 and the various actions implemented to combat the pandemic throughout the world. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.
While we currently believe that our COVID-19 contingency plan has the ability to mitigate many of the negative effects of the COVID-19 pandemic on our business, the severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the duration of "social distancing" orders, the ability of our sales force to access healthcare providers to promote our products, increases in unemployment, which could reduce access to commercial health insurance for our patients, thus limiting payer coverage for our products, and the impact of the pandemic on our global supply chain, all of which remain uncertain. Our future results of operations and liquidity could be materially adversely affected by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions, uncertain demand, and the impact of any initiatives or programs that we may undertake to address financial and operations challenges that we may face.
Going concern
We incurred a net loss of
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and debt financing and other alternatives, including the sale of vitaCare for
which we completed on
If we are unsuccessful with future financings and if the successful commercialization of ANNOVERA, IMVEXXY, or BIJUVA is delayed, or the continued impact of the COVID-19 pandemic or issues in our supply chains related to our third-party contract manufacturers on our business is worse than we anticipate, our existing cash reserves would be insufficient to repay the entire principal balance of the Financing Agreement or satisfy our liquidity needs. See Note 3, Inventory in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report, for additional information regarding risks associated with our contract manufacturers, particularly for ANNOVERA. The presence of these projected factors in conjunction with the uncertainty of the capital markets raises substantial doubt about the Company's ability to continue as a going concern for the next twelve months from the issuance of these financial statements.
The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Product portfolio
Our portfolio of products focused on women's health allows us to efficiently
leverage our sales and marketing plans to grow our pharmaceutical products. We
are focused on activities necessary for the continued commercialization of
IMVEXXY, commercially launched in the third quarter of 2018; BIJUVA,
commercially launched in the third quarter of 2019; and ANNOVERA, which we
started selling in the third quarter of 2019 and commercially launched in
ANNOVERA (segesterone acetate ("SA") and ethinyl estradiol ("EE") vaginal system)
This pharmaceutical product is a one-year, ring-shaped, contraceptive vaginal
system ("CVS") and the first and only patient-controlled, procedure-free,
reversible prescription contraceptive that can prevent pregnancy for up to a
total of 13 cycles (one year). ANNOVERA is commercially sold by us in the
In
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IMVEXXY (estradiol vaginal inserts), 4-?g and 10-?g
This pharmaceutical product is for the treatment of moderate-to-severe
dyspareunia (vaginal pain associated with sexual activity), a symptom of vulvar
and vaginal atrophy due to menopause. As part of
We market and sell IMVEXXY in the
BIJUVA (estradiol and progesterone) capsules, 1 mg/100 mg
This pharmaceutical product is the first and only FDA approved bioidentical
hormone therapy combination of estradiol and progesterone in a single, oral
capsule for the treatment of moderate-to-severe vasomotor symptoms (commonly
known as hot flashes or flushes) due to menopause in women with a uterus. We
market and sell BIJUVA in the
Prenatal vitamin products
We manufacture and distribute our prescription prenatal vitamin product lines under our vitaMedMD brand name and authorized generic formulations of some of our prescription prenatal vitamin products under our BocaGreenMD Prena1 name. We will continue to support the vitaMedMD and BocaGreenMD products as they are important products to our core customers and help provide us with continued access to sell our women's health portfolio.
Results of operations
Three months ended
Revenue. Our total revenue for the first quarter of 2022 was
Three Months Ended March 31,
2022 2021
Product revenue:
ANNOVERA $ 8,510 $ 8,750
IMVEXXY 6,969 7,012
BIJUVA 2,560 2,445
Prescription vitamin 875 1,425
Product revenue, net 18,914 19,632
License and service 419 234
Total revenue, net $ 19,333 $ 19,866 Our sales of ANNOVERA were
Our sales of IMVEXXY were
Our sales of BIJUVA were
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Agreement. Without the sales made through the Theramex License Agreement, our
sales of BIJUVA were
Sales of our products utilize copay assistance programs that allow eligible enrolled patients to access the products at a reasonable cost regardless of insurance coverage. These programs may change from time to time. We expect that our net product revenue will improve from changes in our copay card price in the long term and increases in commercial and Medicare payer coverage when we fully complete the process needed to adjudicate ANNOVERA, IMVEXXY, and BIJUVA prescriptions at pharmacies.
Our prescription vitamin sales were
On a consolidated basis, our total product sales were
We recorded service revenue related to pharmacy services provided by our
vitaCare business to pharmaceutical companies of
Gross profit. Our gross profit for the first quarter of 2022 was
Three Months Ended March 31,
2022 2021
Product $ 14,054 $ 14,945
License and service 419 234
Total gross profit $ 14,473 $ 15,179 The decrease in our gross profit was a result a 1.8% decrease in our product
gross margin to 74.3% for the first quarter of 2022 and a decrease of 3.7% in
product revenue. The decrease in product gross margins reflects the impact of
Operating expenses. Total operating expenses for the first quarter of 2022 were
Three Months Ended March 31,
2022 2021
Selling and marketing $ 18,895 $ 24,024
General and administrative 20,407 18,383
Research and development 1,400 2,050
Total operating expenses $ 40,702 $ 44,457 Our selling and marketing costs were
Our general and administrative costs were
Our R&D costs were
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R&D expenditures have declined over the last few years. We continue to deploy limited resources in the development of new products, to perform stability testing and validation on our pharmaceutical products, to develop and validate secondary manufacturers, to prepare regulatory submissions, and work with regulatory authorities on existing submissions.
Loss from operations. For the first quarter of 2022, we had a loss from
operations of
Other expense, net. For the first quarter of 2022, our non-operating expenses
were
Net Loss. For the first quarter of 2022, we had a net loss of
Liquidity and capital resources
Our primary use of cash is to fund the continued commercialization of our
hormone therapy and contraceptive products. We have funded our operations
primarily through public offerings of our common stock and private placements of
equity and debt securities. As of
On
See "Going Concern" above for further discussion related to our ability to generate and obtain adequate amounts of cash to meet our liquidity needs and our plans for to satisfy our such needs in the short-term and in the long-term.
Cash flows
The following table reflects the major categories of cash flows for each of the periods (in thousands).
Three Months Ended March 31,
2022 2021
Net cash used in operating activities $ (29,526 ) $ (38,380 ) Net cash used in investing activities
(212 ) (438 )
Net cash (used in) provided by financing
activities (5,000 ) 95,949
Net (decrease) increase in cash $ (34,738 ) $ 57,131
Operating Activities. The principal use of cash in operating activities was to
fund our current expenditures in support of our continued commercialization
activities for ANNOVERA, IMVEXXY, and BIJUVA, sales, marketing, scale-up and
manufacturing activities, adjusted for non-cash items. For the first three
months of 2022, net cash used in operating activities was
Investing Activities. For the first three months of 2022, net cash used in
investing activities was
Financing Activities. Financing activities have historically represented the
principal source of our cash flow. For the first three months of 2022, net cash
used in financing activities was
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For additional details, see the consolidated statements of cash flows in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report.
Other liquidity measures
Receivable. Our net days sales outstanding ("DSO") is calculated by dividing
average gross accounts receivable less the reserve for doubtful accounts,
chargebacks, and payment discounts by the average daily net product revenue
during the last four quarters for each respective quarterly period. Our net DSO
was 151 days as of
Inventory. We rely on third parties to manufacture our finished products, and we have entered into long-term supply agreements for the manufacture of ANNOVERA, IMVEXXY, and BIJUVA. We do not have a long-term supply agreement for the manufacture of our prescription vitamins. Additionally, we do not have long-term contracts for the supply of all the active pharmaceutical ingredients used in ANNOVERA and BIJUVA. For additional information, see Note 3, Inventory in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report.
Debt. We had
Contractual obligations, off-balance sheet arrangements and purchase commitments and employment agreements
Except for entering into Amendment No. 9 to the Financing Agreement in
Critical accounting policies and estimates
Management's discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements included
elsewhere in this 10Q Report, which has been prepared in accordance with
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