TherapeuticsMD(TXMD) - 2021 Q1 - Quarterly Report

Part I – Financial Information Financial Statements (Unaudited) This section presents TherapeuticsMD, Inc.'s unaudited consolidated financial statements for Q1 2021, including balance sheets, income statements, equity statements, cash flows, and detailed accounting notes Consolidated Balance Sheets Total assets increased to $239.3 million by March 31, 2021, driven by higher cash, while liabilities decreased and stockholders' deficit significantly improved due to equity financing Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash | $137,617 | $80,486 | | Total current assets | $187,042 | $128,404 | | Total assets | $239,306 | $181,610 | | Liabilities & Equity | | | | Total current liabilities | $61,284 | $59,238 | | Long-term debt, net | $178,970 | $237,698 | | Total liabilities | $248,784 | $305,611 | | Total stockholders' deficit | $(9,478) | $(124,001) | Consolidated Statements of Operations Q1 2021 net revenue grew 62.2% to $19.9 million, narrowing operating loss to $(29.3) million and net loss to $(39.4) million due to higher gross profit and reduced expenses Q1 2021 vs Q1 2020 Statement of Operations (in thousands, except per share data) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Product revenue, net | $19,632 | $12,251 | | Total revenue, net | $19,866 | $12,251 | | Gross profit | $15,179 | $9,536 | | Total operating expenses | $44,457 | $60,458 | | Loss from operations | $(29,278) | $(50,922) | | Net loss | $(39,383) | $(56,849) | | Loss per common share | $(0.11) | $(0.21) | Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' deficit significantly improved to $(9.5) million in Q1 2021, driven by $150.9 million from 92.9 million common stock issuances, partially offset by net loss - The company issued 92.9 million shares for the sale of common stock, resulting in net proceeds of $150.9 million in Q1 2021[14] - The net loss of $39.4 million increased the accumulated deficit, partially offsetting the capital raised[14] Consolidated Statements of Cash Flows Q1 2021 saw net cash used in operations at $(38.4) million, while financing activities provided $95.9 million, leading to a $57.1 million net cash increase and a $137.6 million quarter-end balance Q1 2021 vs Q1 2020 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,380) | $(39,111) | | Net cash used in investing activities | $(438) | $(443) | | Net cash provided by financing activities | $95,949 | $48,822 | | Net increase in cash | $57,131 | $9,268 | | Cash, end of period | $137,617 | $170,098 | Notes to Unaudited Consolidated Financial Statements Notes detail the company's women's healthcare business, COVID-19 impacts, debt specifics, disaggregated revenue, and patent litigation for IMVEXXY and BIJUVA - The company is a women's healthcare company focused on commercializing products for pregnancy prevention through menopause, including IMVEXXY®, BIJUVA®, and ANNOVERA®[21] - The company continues to face risks from the COVID-19 pandemic but has implemented measures like virtual detailing and cost-saving initiatives to mitigate the impact. The full future impact remains uncertain[24][25][27] - The company is involved in patent infringement lawsuits against Teva and Amneal, who are seeking to market generic versions of IMVEXXY and BIJUVA, respectively[56][57] Disaggregated Revenue by Product (in thousands) | Product | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | ANNOVERA | $8,750 | $2,273 | | IMVEXXY | $7,012 | $6,392 | | BIJUVA | $2,445 | $1,112 | | Prescription vitamin | $1,425 | $2,474 | | Product revenue, net | $19,632 | $12,251 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2021 financial performance, noting a 62.2% revenue increase to $19.9 million, reduced operating loss, improved liquidity from equity offerings, and critical accounting estimates Business Overview and Product Portfolio TherapeuticsMD is a women's healthcare company commercializing products for contraception and menopause, including IMVEXXY, BIJUVA, and ANNOVERA, alongside prenatal vitamins - The company's mission is to create and commercialize innovative products for women's health, from pregnancy prevention through menopause[84] - Key pharmaceutical products being commercialized are: - IMVEXXY: For treatment of moderate-to-severe dyspareunia due to menopause - BIJUVA: The first FDA-approved bioidentical hormone therapy combination of estradiol and progesterone for moderate-to-severe vasomotor symptoms - ANNOVERA: A one-year, patient-controlled, reversible contraceptive vaginal system[87][90][95] Results of Operations Q1 2021 total revenue rose 62.2% to $19.9 million, driven by ANNOVERA sales, while operating expenses fell 26.5%, significantly reducing operating and net losses Q1 2021 vs Q1 2020 Revenue by Product (in thousands) | Product | Q1 2021 | Q1 2020 | Change (%) | | :--- | :--- | :--- | :--- | | ANNOVERA | $8,750 | $2,273 | +285.0% | | IMVEXXY | $7,012 | $6,392 | +9.7% | | BIJUVA | $2,445 | $1,112 | +119.9% | | Total Product Revenue | $19,632 | $12,251 | +60.2% | - Total operating expenses decreased by $16.0 million (26.5%) YoY, mainly due to a $15.9 million reduction in selling and marketing costs reflecting cost-cutting initiatives[110][112] - Net loss improved to $39.4 million in Q1 2021, compared to a net loss of $56.8 million in Q1 2020[119] Liquidity and Capital Resources The company ended Q1 2021 with $137.6 million cash, bolstered by $150.9 million from equity offerings, ensuring sufficient liquidity and debt covenant compliance - The company ended Q1 2021 with a cash balance of $137.6 million[120] - Significant capital was raised in Q1 2021: - 2020 ATM Program: Completed, raising a total of $47.3 million in net proceeds - February 2021 Public Offering: Raised $96.6 million in net proceeds - 2021 ATM Program: Initiated in March, raising $7.0 million in net proceeds through March 31, 2021[121][122][123] - The company is required to maintain a minimum unrestricted cash balance of $60.0 million under its Financing Agreement and was in compliance as of the filing date[131] Critical Accounting Estimates Critical accounting estimates primarily involve variable sales deductions like returns, rebates, and co-pay assistance, requiring significant judgment, especially for new products lacking historical data - The transaction price for products is variable due to deductions for returns, chargebacks, rebates, and coupons, which are estimated based on historical experience and other data[136] - For newly launched products, return estimates are based on industry data, sales information, and inventory levels in the distribution channel, as historical return data is not yet available[137] - Estimating the cost of the co-pay assistance program is a key challenge, as it is based on assumptions about patient utilization and insurance coverage, which are subject to change[139][141] Quantitative and Qualitative Disclosures about Market Risk Primary market risk is interest rate sensitivity on $200.0 million variable-rate debt; a 1.0% rate change impacts annual loss by $2.0 million, while cash investments are low-risk - The company's debt under the Financing Agreement accrues interest at a variable rate tied to LIBOR or the prime rate[143] - Based on the $200.0 million debt balance as of March 31, 2021, a 1.0% change in interest rates would result in an annual impact of $2.0 million to the loss before income taxes[143] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of the end of the period covered by the report, the company's disclosure controls and procedures were effective at a reasonable assurance level[145] - There were no changes in internal control over financial reporting during the first quarter of 2021 that materially affected, or are reasonably likely to materially affect, internal controls[148] Part II – Other Information Legal Proceedings The company is not involved in any material legal proceedings beyond the patent litigation for IMVEXXY and BIJUVA disclosed in Note 9 of the financial statements - The company is not involved in any material legal proceedings other than those disclosed in Note 9, which concern patent challenges from Teva and Amneal[149] Risk Factors No material changes to the company's risk factors have occurred since the 2020 Annual Report on Form 10-K filing - There have been no material changes to the Company's risk factors since the 2020 10-K Report[150] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2021, the company issued 563,000 common shares from warrant exercises, including a cash exercise for 205,000 shares yielding $50,000 for working capital, exempt from registration - During Q1 2021, warrants to purchase an aggregate of 563,000 shares of common stock were exercised. This included a cash exercise for 205,000 shares yielding $50,000 and a cashless exercise resulting in the issuance of 298,000 shares[151] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[152] Mine Safety Disclosures This item is not applicable to the company - Not applicable[153] Other Information The company reported no other information for this item - None[154] Exhibits This section lists exhibits filed with the Form 10-Q, including financing agreement amendments, equity offering sales agreements, and CEO/CFO certifications