Business Context and Reporting Period
This Form 8-K Current Report was filed by TherapeuticsMD, Inc. on April 16, 2019, with the earliest event reported on April 16, 2019. The filing details a material definitive agreement for a new credit facility and the termination of an existing credit agreement. Additionally, the company announced the commercial availability of its product BIJUVA in the United States.
Key Financial Metrics and Agreements
- New Financing Facility: Entered into a Commitment Letter with TPG Sixth Street Partners (TSSP) for a $300 million first lien secured term loan.
- Tranche Structure:
- $200 million immediately available upon closing.
- $50 million contingent on FDA designation of ANNOVERA as a new birth control category by December 31, 2019.
- $50 million contingent on achieving $11 million in net revenues from IMVEXXY, BIJUVA, and ANNOVERA in Q4 2019.
- Interest Rate: 3-month LIBOR plus 7.75%, with a LIBOR floor of 2.70%.
- Repayment Terms: Principal payable in four equal quarterly installments beginning June 30, 2023, maturing March 31, 2024.
- Debt Repayment: Approximately $81 million from the initial tranche will be used to repay the existing MidCap Financial Trust agreement, including a 4% prepayment fee.
- Liquidity Covenants: Must maintain a minimum cash balance of $50 million (increasing to $60 million if second or third tranches are drawn).
Material Changes Versus Prior Period
The filing represents a significant shift in the company's capital structure. The company is terminating its existing Credit and Security Agreement with MidCap Financial Trust, dated May 1, 2018, concurrent with the closing of the new TSSP Facility. This transition replaces the prior debt obligation with a larger, tranche-based facility tied to specific regulatory and revenue milestones.
Guidance, Outlook, and Risks
- Closing Timeline: The company anticipates closing the TSSP Facility on or before May 10, 2019, subject to customary conditions.
- Break-up Fee: If the closing does not occur by a specified date despite TSSP's readiness, the company is obligated to pay a break-up fee equal to a specified percentage of the initial tranche.
- Revenue Covenants: The agreement requires the company to achieve certain minimum consolidated net revenue amounts from commercial sales beginning with the fiscal quarter ending December 31, 2020.
- Product Launch: BIJUVA, the first FDA-approved bio-identical hormone therapy combination for menopausal vasomotor symptoms, is now commercially available in the U.S.
- Risks: Access to the full $300 million is contingent on FDA regulatory actions and specific revenue targets. Failure to meet these conditions may limit available capital.
Investor Verification Checklist
- Verify the exact closing date of the TSSP Facility and whether the May 10, 2019 target is met.
- Confirm the specific percentage of the break-up fee if the deal fails to close.
- Monitor the FDA's decision regarding the ANNOVERA new category designation by December 31, 2019.
- Track Q4 2019 net revenue figures for IMVEXXY, BIJUVA, and ANNOVERA to determine eligibility for the third tranche.
- Review the final Financing Agreement for any changes to the covenants or interest rate floors mentioned in the Commitment Letter.