TherapeuticsMD(TXMD) - 2024 Q1 - Quarterly Report

Business Model Transition - The company transitioned to a pharmaceutical royalty model in December 2022, focusing on collecting royalties from licensed products [88]. - Mayne Pharma will pay the company 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 [89]. - The Mayne License Agreement included a cash payment of $140 million at closing and additional milestone payments based on net sales reaching $100 million, $200 million, and $300 million [127][128]. Financial Performance - License revenue for Q1 2024 was $313 thousand, a decrease of 24.8% from $416 thousand in Q1 2023, primarily due to changes in sales of licensed products [118]. - Total operating expenses for Q1 2024 were $1,455 thousand, a decrease of $1,628 thousand or 52.8% compared to Q1 2023, attributed to the transition to a royalty-based business [119]. - Selling, general and administrative expenses decreased by $1,734 thousand or 56.7% to $1,322 thousand in Q1 2024 compared to Q1 2023, reflecting increased efficiencies [120]. - Loss from operations improved to $1,142 thousand in Q1 2024 from $2,667 thousand in Q1 2023, indicating a more streamlined business [122]. - Net loss from continuing operations for Q1 2024 was $809 thousand, or $0.07 per share, compared to a net loss of $2,310 thousand, or $0.24 per share, in Q1 2023 [124]. - Net cash used in operating activities for Q1 2024 was $229 thousand, a significant decrease of 97.4% from $8,701 thousand in Q1 2023 [134]. - Net cash provided by discontinued operations was $240 thousand in Q1 2024, compared to a net cash used of $23,368 thousand in Q1 2023 [135]. - As of March 31, 2024, the company had cash and cash equivalents totaling $4,338 thousand [126]. Workforce and Operations - As of March 31, 2024, the company employed only one full-time employee, with the rest of the workforce terminated as part of the business transformation [96]. - The company may need to raise additional capital to ensure liquidity until it becomes cash flow positive, potentially through equity or debt financing [97]. - The company increased its working capital adjustment accrual from $3.5 million to $5.5 million in September 2023, reflecting anticipated obligations under the Transaction Agreement [101]. - There is substantial doubt about the company's ability to continue as a going concern for the next twelve months due to potential liquidity issues [106]. Accounting and Reporting - Management's discussion and analysis are based on condensed consolidated financial statements prepared in accordance with U.S. GAAP [142]. - Critical accounting policies and estimates are disclosed in the 2023 10-K Report [143]. - As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk [144]. Strategic Partnerships - The company has license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S., with commercialization efforts beginning in 2024 [95]. - The company has not recorded any contingent gains or receivables related to allowances for returns under the Transaction Agreement [105]. - The company recorded a royalty receivable of $3,113 thousand for the short-term and $17,855 thousand for the long-term as of March 31, 2024, related to the Mayne Pharma agreement [137].