TherapeuticsMD(TXMD) - 2023 Q3 - Quarterly Report

Business Transition - TherapeuticsMD transitioned to a pharmaceutical royalty company in December 2022, ceasing research and development operations [108]. - The transition to a royalty-based business model has significantly reduced the company's operational costs and infrastructure requirements [165]. - The company has granted exclusive licenses for its products IMVEXXY, BIJUVA, and ANNOVERA to Mayne Pharma, impacting its revenue structure [134]. Financial Transactions - The company received a total consideration of $140 million in cash from Mayne Pharma for licensing and asset transactions, along with additional payments based on sales milestones [113]. - Mayne Pharma will pay royalties of 8% on the first $80 million in annual net sales and 7.5% on sales above that threshold for a period of 20 years [111]. - Minimum annual royalties of $3 million will be paid for 12 years, adjusted for inflation at 3% [111]. - Mayne Pharma will pay milestone payments of up to $30 million based on net sales thresholds, along with royalties of 8.0% on the first $80 million in annual net sales for 20 years [178]. - On June 29, 2023, the company issued 312,525 shares of common stock for gross proceeds of $1.15 million under a Subscription Agreement with Rubric Capital Management [131]. Financial Performance - For the third quarter of 2023, the company reported a net loss of $3.4 million, a significant decrease from a net loss of $29.0 million in the same period of 2022 [146]. - License and service revenue for the third quarter of 2023 was $(0.1) million, down from $0.4 million in the third quarter of 2022, primarily due to adjustments related to the Mayne License Agreement [148]. - Total operating expenses for the third quarter of 2023 were $1.7 million, a decrease of $12.8 million, or 88.2%, compared to the same quarter in 2022 [151]. - The company recorded a loss from operations of $1.8 million in the third quarter of 2023, compared to a loss of $14.5 million in the third quarter of 2022 [154]. - For the first nine months of 2023, the company reported a net loss of $9.4 million, compared to a net income of $34.3 million in the same period of 2022 [162]. - License revenue for the first nine months of 2023 was $0.8 million, down from $1.4 million in the same period of 2022 [163]. - Total operating expenses for the first nine months of 2023 were $7.7 million, a decrease of $39.5 million, or 83.7%, compared to the first nine months of 2022 [165]. - The company reported royalty revenue in excess of contractual minimums totaling approximately $1.0 million year-to-date [164]. - Loss from operations improved to $6.9 million for the first nine months of 2023, compared to a loss of $47.3 million for the same period in 2022, primarily due to decreased expenses from the business transition [169]. - Net loss from continuing operations was $6.2 million, or $0.60 per share, for the first nine months of 2023, significantly improved from a loss of $47.4 million, or $5.34 per share, for the same period in 2022 [171]. - Revenues from discontinued operations decreased by $68.2 million to $(0.8) million for the first nine months of 2023 compared to the same period in 2022 [172]. Employment and Operations - As of September 30, 2023, the company employed one full-time employee, having terminated its executive management team by December 31, 2022 [118]. - The company may need to raise additional capital to fund operations until cash flow positive, exploring various equity and debt financing options [128]. - The company is subject to risks related to the ongoing COVID-19 pandemic, which may impact financial condition and operations [123]. - The company has classified its discontinued operations related to commercial activities in its financial statements [115]. Cash Flow - Cash and cash equivalents totaled $10.2 million as of September 30, 2023, with no losses related to funds exceeding insured limits [174]. - Net cash used in operating activities was $18.1 million for the first nine months of 2023, a decrease of $2.8 million, or 13.2%, compared to $20.9 million for the same period in 2022 [184]. - Net cash provided by financing activities was $1.2 million for the first nine months of 2023, contrasting with net cash used of $123.3 million for the same period in 2022 [186].