TherapeuticsMD, Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended June 30, 2021. TherapeuticsMD is a women’s healthcare company selling ANNOVERA, IMVEXXY, BIJUVA, and prescription prenatal vitamins. Unless noted otherwise, financial amounts below are in U.S. dollars.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $23.0 million | $10.7 million | $42.9 million | $23.0 million |
| Gross profit | $18.9 million | $6.3 million | $34.0 million | $15.8 million |
| Operating expenses | $54.0 million | $51.3 million | $98.5 million | $111.8 million |
| Operating loss | $(35.2) million | $(45.0) million | $(64.5) million | $(96.0) million |
| Net loss | $(42.7) million | $(52.0) million | $(82.0) million | $(108.8) million |
| Basic and diluted loss per share | $(0.11) | $(0.19) | $(0.22) | $(0.40) |
- Q2 revenue increased 114.9% year over year; first-half revenue increased 86.8%. Growth was led by ANNOVERA and IMVEXXY. Q2 product gross margin was 82%, versus 59% a year earlier; first-half product gross margin was 79%, versus 69%.
- Q2 product revenue: ANNOVERA $9.6 million, IMVEXXY $9.8 million, BIJUVA $2.2 million, and prescription vitamins $1.5 million. First-half product revenue was $42.6 million, plus $0.2 million of license revenue.
- Cash was $111.4 million at June 30, compared with $80.5 million at December 31, 2020. Six-month operating cash use was $64.9 million, investing cash use $0.5 million, and financing cash provided $96.4 million.
- Debt principal was $200.0 million at June 30, following a $50.0 million repayment in Q1; reported debt net of deferred financing fees was $185.3 million, including $10.0 million classified as current. The term loan matures March 31, 2024.
- Current assets were $159.7 million and current liabilities $75.7 million. Total liabilities of $259.7 million exceeded total assets of $210.6 million; stockholders’ deficit was $49.1 million.
Material changes versus prior comparable period
- Q2 ANNOVERA revenue rose 420.7%, mainly on a 499.1% increase in sales volume, partly offset by a 13.1% lower average sale price. IMVEXXY revenue rose 93.4% and BIJUVA rose 59.5%; prescription vitamin revenue declined 40.2%.
- First-half operating expenses fell 11.9%, primarily due to lower selling and marketing and R&D costs. Q2 operating expenses instead rose 5.3%, including higher advertising and commercial support spending.
- First-half operating cash use improved by $30.2 million year over year. Net financing proceeds included $151.1 million from common-stock sales, partly offset by the $50.0 million debt repayment and financing fees.
- Common shares issued and outstanding were 395.0 million at June 30, versus 299.8 million at December 31, 2020. By August 4, 2021, 423.8 million shares were outstanding. After quarter-end, the company reported another $31.8 million of estimated net proceeds from ATM sales.
Outlook, risks, contingencies, and unusual items
- Management expects operating losses to continue in the near term and gives no numerical revenue or earnings guidance. It expects, based on current projections and potential ATM financing, to meet the $60.0 million minimum unrestricted-cash covenant and ordinary-course cash needs for 12 months from issuance of the statements.
- Management cautions that weaker or delayed commercialization, a worse-than-anticipated COVID-19 impact, or other adverse events could accelerate cash use and leave the company unable to meet liquidity needs or debt covenants. Covenant breaches could make some or all debt immediately payable. The company reported material compliance with covenants at June 30.
- Debt amendments reduced or revised minimum quarterly product-revenue requirements and changed repayment terms. The agreement includes scheduled principal payments beginning in 2022 and prepayment fees; the company paid a $5.0 million amendment fee and recorded interest prepayment fees.
- In July 2021, FDA advised that an ANNOVERA post-marketing commitment study conducted by Population Council was not completed to FDA’s satisfaction; certain other study reports were also late, though deadlines were extended. The company is working with Population Council to address the issues; FDA may impose further requirements or penalties.
- Generic challenges to IMVEXXY and BIJUVA patents remain pending. Proceedings were temporarily stayed; the IMVEXXY stay order’s terms were under seal, and no trial dates were set. The company capitalized $2.7 million of related legal costs, subject to expense recognition if it does not prevail.
- The FDA accepted the resubmitted application for a lower BIJUVA dose, with a target action date of March 21, 2022; approval is not assured. COVID-19-related uncertainty, third-party manufacturing and API dependence, customer concentration, reimbursement, and product commercialization remain material risks.
- The company expects to meet 2021 minimum purchase commitments for ANNOVERA, IMVEXXY, and BIJUVA in all material respects. It also disclosed that the lender consented to a framework for a potential vitaCare Prescription Services disposition; no completed sale is reported here.
Important facts for investors to verify
- Whether product growth and gross margins persist, including the effects of price, volume, copay programs, payer coverage, and prescription vitamin declines.
- Cash burn, ATM share sales and dilution, the $60.0 million cash covenant, quarterly revenue covenants, and scheduled debt repayments and prepayment costs.
- FDA’s response to the ANNOVERA post-marketing study deficiencies and the status of the BIJUVA lower-dose application.
- Developments in the IMVEXXY and BIJUVA patent litigation, including the implications of the temporary stays and the potential treatment of capitalized legal costs.
- Supply continuity and minimum-purchase obligations, as well as the status and terms of any proposed vitaCare disposition.