Petros Pharmaceuticals(US:PTPI)2021-03-31 20:30Licensing and Agreements - Petros entered into a License Agreement with Vivus for the commercialization of Stendra® for a one-time fee of $70 million, granting rights to sell in the U.S., Canada, South America, and India [206]. - Petros acquired an exclusive global license for the development of H100™, a topical formulation for treating Peyronie's disease, with initial payments totaling $350,000 and additional milestone payments scheduled [208][221]. - In December 2020, Vivus underwent a reorganization, with IEH Biopharma LLC assuming its contractual obligations, while Petros retains step-in rights with MTPC in case of termination of the MTPC License [219]. - The company acquired the exclusive license to H100™ for an initial fee of $100,000, with additional milestone payments and royalties based on net sales [266]. Sales and Marketing - The company has established its own internal sales and marketing functions for Stendra® after terminating an underperforming affiliate contractor in 2019, aiming for a strong multi-channel sales campaign in 2021 and beyond [207]. - The company has engaged in a national non-personal promotion campaign reaching nearly 30,000 healthcare professionals to enhance product awareness [207]. - Petros has reduced its sales representative headcount due to COVID-19 restrictions but maintains a core team for virtual engagement with healthcare professionals [210]. - The company is well-positioned for growth with a focus on expanding its product offerings and market presence in men's health therapeutics [207]. Financial Performance - Net sales for the year ended December 31, 2020 were $9,559,469, a decrease of 39% compared to $15,577,166 in 2019, primarily due to a $4,753,162 decrease in Stendra® sales and a $1,264,535 decrease in Medical Device sales [238][239][243]. - Gross profit for the year ended December 31, 2020 was $5,513,003, representing 58% of net sales, compared to $8,150,055 or 52% in 2019 [238][247]. - Total operating expenses for the year ended December 31, 2020 were $22,795,042, a decrease of 17% from $27,462,260 in 2019, driven by lower selling, general and administrative expenses [238][251]. - Selling, general and administrative expenses decreased by $4,052,255 or 21% during the year ended December 31, 2020, primarily due to reduced payroll and marketing expenses [248][251]. - The company recorded a net loss of $20,585,925 for the year ended December 31, 2020, compared to a net loss of $32,511,300 in 2019 [238]. - Adjusted EBITDA for 2020 was $(9,790,922), compared to $(10,402,740) in 2019, indicating a slight improvement in operational performance [307]. Expenses and Costs - Research and development expenses for the year ended December 31, 2020 were $459,636, with no expenses reported in 2019 [252][253]. - Cost of sales for the year ended December 31, 2020 was $4,046,466, a decrease of 46% from $7,427,111 in 2019, with cost of sales as a percentage of net sales decreasing from 48% to 42% [238][246]. - Depreciation and amortization expenses for the year ended December 31, 2019, were $5,291,107, with $4,145,833 from Prescription Medicines and $1,145,274 from Medical Devices [255]. - Interest expense for senior debt decreased by $1,104,840 or 45% to $1,323,424 for the year ended December 31, 2020, due to a pay down of $6.2 million of senior debt and a decreased weighted average interest rate [258]. Cash Flow and Capital - Cash and cash equivalents totaled $17,139,694 at December 31, 2020, significantly up from $2,145,812 at December 31, 2019 [261]. - The company expects to incur approximately $14 million in research and development expenses for H100™ over a four to six-year period prior to FDA approval [269]. - The company is exploring additional ways to raise capital, including public or private equity or debt financings, to support operations and business strategy [270]. - The Company reported a net cash used in operating activities of $15,305,325 for the year ended December 31, 2020, compared to a net cash provided of $2,532,479 in 2019 [295]. - The net cash provided by financing activities was $30,303,840 in 2020, primarily from net proceeds of $21,549,375 from mergers and $15,500,000 from subordinated related party term loans [300]. Inventory and Sales Quality - The company’s significant customer accounted for approximately 85% of total gross sales in 2020, down from 86% in 2019 [240]. - The company’s inventory is stated at the lower of cost or net realizable value, with adjustments for excess and obsolescence based on factors such as expiry date and inventory turnover [229]. - The company utilizes the expected value method for estimating variable consideration related to sales, which includes discounts, rebates, and returns [225][226]. - Product returns increased to $1,177,473 in 2020 from $8,726,460 in 2019, reflecting a change in customer behavior [312]. - Chargebacks rose sharply to $1,378,742 in 2020 compared to $161,730 in 2019, indicating potential issues with sales quality [312]. Other Financial Information - The Company issued 245,933 preferred units in a private placement, raising net proceeds of $2.7 million [291]. - The total principal balance of subordinated promissory notes and accrued PIK interest was $0 as of December 31, 2020, following their conversion into common stock [290]. - The Company recorded depreciation and amortization expense of $6,660,438 for 2020, up from $5,291,107 in 2019 [307]. - The Company had a net cash used in investing activities of $4,633 in 2020, a decrease from $71,540 in 2019 [298]. - The Company received $20,551 in proceeds from the exercise of warrants related to the private placement in November 2020 [293]. - The Company did not enter into any off-balance sheet financial guarantees or derivative contracts that are not reflected in its financial statements [302]. - The company is classified as a smaller reporting company and is not required to provide detailed market risk disclosures [313].