TherapeuticsMD(TXMD) - 2024 Q2 - Quarterly Report

Business Transition - TherapeuticsMD transitioned to a pharmaceutical royalty company, ceasing research and development and commercial operations as of December 30, 2022[75]. - The company transitioned from a manufacturing and commercialization business to a royalty-based business, impacting its financial performance and cash flow[119]. - The company has engaged external consultants to assist with financial, legal, and regulatory matters during its transformation process[128]. Licensing and Royalties - The company granted Mayne Pharma an exclusive license for IMVEXXY, BIJUVA, and ANNOVERA, with potential milestone payments of $5 million, $10 million, and $15 million based on annual net sales reaching $100 million, $200 million, and $300 million respectively[77]. - Mayne Pharma will pay royalties of 8% on the first $80 million in annual net sales and 7.5% on sales above that, with a minimum annual royalty of $3 million for 12 years, adjusted for inflation[77]. - The Mayne License Agreement included a cash payment of $140 million at closing and additional milestone payments based on net sales[113]. - Mayne Pharma will pay royalties on net sales at a rate of 8.0% on the first $80 million and 7.5% on sales above that for 20 years[114]. - As of June 30, 2024, the company had a royalty receivable of $2,778 thousand (short-term) and $17,224 thousand (long-term) from Mayne Pharma[121]. Financial Performance - License revenue for Q2 2024 was $234 thousand, a decrease of $203 thousand or 46.5% compared to Q2 2023 revenue of $437 thousand[102]. - Total operating expenses for Q2 2024 were $2,674 thousand, a decrease of $235 thousand or 8.1% compared to Q2 2023[102]. - Selling, general and administrative expenses for Q2 2024 were $1,233 thousand, a decrease of $1,548 thousand or 55.7% compared to Q2 2023[103]. - Net loss from continuing operations for Q2 2024 was $1,050 thousand, or $0.09 per share, compared to a net loss of $2,414 thousand, or $0.24 per share, for Q2 2023[106]. - License revenue for the first six months of 2024 was $547 thousand, a decrease of $306 thousand or 35.9% compared to $853 thousand in the first six months of 2023[109]. - Total operating expenses for the first six months of 2024 were $4,129 thousand, a decrease of $1,863 thousand or 31.1% compared to the first six months of 2023[109]. - Selling, general and administrative expenses for the first six months of 2024 were $2,555 thousand, a decrease of $3,282 thousand or 56.2% compared to the first six months of 2023[110]. - Net loss from continuing operations for the first six months of 2024 was $1,859 thousand, or $0.16 per share, compared to a net loss of $4,724 thousand, or $0.47 per share, for the first six months of 2023[111]. Capital and Financing - The total consideration from Mayne Pharma included a cash payment of $140 million at closing and approximately $12.1 million for net working capital[79]. - The company may need to raise additional capital to fund operations until cash flow positive, potentially through equity or debt financing[85]. - On June 29, 2023, the company issued 312,525 shares of common stock for gross proceeds of $1.15 million, and on November 15, 2023, it issued 877,192 shares for $2 million[87]. - The company entered into a Subscription Agreement with Rubric Capital Management LP to sell up to 5,000,000 shares of Common Stock for an aggregate purchase price of up to $5,000,000[115]. - The initial drawdown on June 29, 2023, resulted in the sale of 312,525 shares at $3.6797 per share, generating gross proceeds of $1.15 million[115]. - An additional drawdown on November 15, 2023, involved 877,192 shares sold at $2.2761 per share, yielding gross proceeds of $2.0 million[115]. Operational Adjustments - The company revised its working capital adjustment accrual from $3.5 million to $5.5 million in September 2023[90]. - If Mayne Pharma's sales of licensed products decline or if net working capital settlements exceed estimates, the company's cash reserves may be insufficient for liquidity requirements[93]. - The company has engaged external consultants to support relationships with partners and assist with financial, legal, and regulatory matters following the termination of its executive management team[84]. - A new ERP system was deployed in the first quarter of fiscal year 2024 to enhance operating and financial processes[129]. Going Concern - There is substantial doubt about the company's ability to continue as a going concern for the next twelve months from the issuance of the financial statements[116]. - As of June 30, 2024, the company believes no additional accrual is required for amounts owed under the allowance for returns[92]. - For the first six months of 2024, net cash provided by operating activities was $1,224 thousand, a significant improvement of $13,317 thousand or 110.1% compared to a net cash used of $12,093 thousand in the same period of 2023[119]. - Net cash used in discontinued operations decreased to $319 thousand in the first six months of 2024 from $24,645 thousand in the same period of 2023[120].