TherapeuticsMD(TXMD) - 2023 Q2 - Quarterly Report

Part I – Financial Information Financial Statements (Unaudited) The unaudited financial statements for Q2 2023 reflect TherapeuticsMD's transformation into a pharmaceutical royalty company, with historical commercial operations reclassified as discontinued Condensed Consolidated Balance Sheets Total assets decreased to $53.7 million by June 30, 2023, from $90.5 million at year-end 2022, primarily due to reduced cash and reclassified assets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash | $13,729 | $38,067 | | Total current assets | $19,613 | $55,351 | | Royalty receivable, long term | $19,788 | $20,253 | | Total assets | $53,689 | $90,458 | | Liabilities & Equity | | | | Total current liabilities | $14,364 | $46,839 | | Total liabilities | $22,492 | $55,315 | | Total stockholders' equity | $31,197 | $35,143 | Condensed Consolidated Statements of Operations Net loss from continuing operations significantly improved in Q2 2023 to $2.4 million, driven by reduced operating expenses after the business model shift Statement of Operations Summary (in thousands) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenue, net | $437 | $348 | $853 | $1,043 | | Total operating expenses | $2,909 | $14,857 | $5,992 | $32,732 | | Loss from continuing operations | $(2,414) | $(14,873) | $(4,724) | $(32,748) | | Income (loss) from discontinued operations | $0 | $127,154 | $(1,293) | $96,008 | | Net income (loss) | $(2,414) | $112,281 | $(6,017) | $63,260 | Loss Per Share from Continuing Operations | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Loss per common share, basic and diluted | $(0.24) | $(1.70) | $(0.47) | $(3.77) | Condensed Consolidated Statements of Cash Flows Net cash used in continuing operating activities decreased to $12.1 million for the six months ended June 30, 2023, reflecting lower operating costs Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in continuing operating activities | $(12,093) | $(38,593) | | Net cash used in continuing investing activities | $0 | $(288) | | Net cash provided by (used in) continuing financing activities | $1,150 | $(125,000) | | Net cash provided by (used in) discontinued operations | $(24,645) | $125,062 | | Net decrease in cash | $(35,588) | $(38,819) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's transformation into a pharmaceutical royalty company, reclassifying historical operations as discontinued, and address going concern and litigation - In December 2022, the company transformed into a pharmaceutical royalty company by licensing its products (IMVEXXY, BIJUVA, ANNOVERA, and prenatal vitamins) to Mayne Pharma for the U.S. market[21] - The Mayne Pharma deal includes potential milestone payments up to $30 million based on sales targets and royalties of 7.5%-8.0% on U.S. net sales for 20 years, with a minimum annual royalty of $3.0 million for 12 years[23] - The company has identified a substantial doubt about its ability to continue as a going concern for the next twelve months due to its liquidity needs, despite a recent equity financing agreement with Rubric Capital[43] - The company is involved in patent infringement litigation with Teva Pharmaceuticals regarding a generic version of IMVEXXY, with Mayne Pharma assuming responsibility as of December 30, 2022[70][73] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A discusses the strategic shift to a pharmaceutical royalty model, resulting in reduced operating expenses and a lower net loss, while addressing liquidity and going concern - The company's business model changed in December 2022 from a commercial women's healthcare company to a pharmaceutical royalty company, primarily collecting royalties from licensees like Mayne Pharma[101] - The company's ability to continue as a going concern is in substantial doubt, as existing cash reserves may be insufficient to satisfy liquidity requirements over the next twelve months, prompting pursuit of additional financing[125] Comparison of Operations - Three Months Ended June 30 (in thousands) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | License and service revenue | $437 | $348 | +25.6% | | Total operating expenses | $2,909 | $14,857 | -80.4% | | Loss from continuing operations | $(2,414) | $(14,873) | -83.8% | Comparison of Operations - Six Months Ended June 30 (in thousands) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | License and service revenue | $853 | $1,043 | -18.2% | | Total operating expenses | $5,992 | $32,732 | -81.7% | | Loss from continuing operations | $(4,724) | $(32,748) | -85.6% | - As of June 30, 2023, the company had $13.7 million in cash, with its primary source of liquidity now royalties from licensing agreements and potential future financing[165] Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," the company is exempt from providing market risk disclosures - As a "smaller reporting company," TherapeuticsMD is exempt from providing quantitative and qualitative disclosures about market risk[184] Controls and Procedures Management concluded disclosure controls were effective, with significant changes to internal controls reflecting the new royalty business model and reliance on consultants - The Chief Executive Officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[186] - Significant changes were made to internal controls over financial reporting to align with the new business model as a royalty company, which includes reliance on external consultants for day-to-day operations[188] Part II – Other Information Legal Proceedings The company is not involved in any material legal proceedings beyond those disclosed in Note 7 of the financial statements - The company is not involved in any material legal proceedings other than those disclosed in Note 7 to the financial statements[189] Risk Factors No material changes to the company's risk factors have occurred since the 2022 Form 10-K filing - No material changes to the company's risk factors have occurred since the 2022 10-K Report was filed[190] Unregistered Sales of Equity Securities and Use of Proceeds No new unregistered equity securities were issued, nor were any equity securities repurchased during the period - No new unregistered equity securities were issued during the quarter beyond what was previously reported on Form 8-K[191] - The company did not repurchase any of its registered equity securities during the quarter[192] Defaults Upon Senior Securities The company reports no defaults upon senior securities - The company reports no defaults upon senior securities[193] Mine Safety Disclosures The company has no mine safety disclosures to report - The company has no mine safety disclosures to report[194] Other Information The company reports no other information under this item - The company reports no other information under this item[195] Exhibits This section lists exhibits filed with the Form 10-Q, including a subscription agreement and officer certifications - Exhibits filed include the Subscription Agreement with Rubric Capital Management LP and officer certifications[196]