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What changed in TherapeuticsMD, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TherapeuticsMD, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+346 added−512 removedSource: 10-K (2024-03-29) vs 10-K (2023-04-07)

Top changes in TherapeuticsMD, Inc.'s 2023 10-K

346 paragraphs added · 512 removed · 242 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

55 edited+39 added−112 removed63 unchanged
Biggest changeThis action represented a shift in our business and therefore, the related assets and liabilities associated with commercial operations are classified as discontinued operations on our consolidated balance sheets and the results of operations have been presented as discontinued operations within our consolidated statements of operations and comprehensive income (loss) for all periods presented. 2 See Note 2 - Discontinued Operations to the consolidated financial statements included in this Annual Report on Form 10-K for further details.
Biggest changeAs part of the transformation that included the Mayne License Agreement, historical results of commercial operations for all periods prior to the Closing Date have been reflected as discontinued operations in our consolidated financial statements. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in our consolidated balance sheets.
The healthcare laws and regulations that may affect our licensees’ ability to operate and our ability to receive licensing revenues include: • the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, soliciting, receiving or providing any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce either the referral of an individual or in return for the purchase, lease, or order of, or the arranging for, any good, facility item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs; • federal civil and criminal false claims laws and civil monetary penalty laws, including, for example, the federal civil False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; • the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payer (e.g., public or private), knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, which impose obligations on covered entities, including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the federal physician sunshine requirements under the ACA, which require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare or Medicaid to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value provided to physicians and teaching hospitals, 13 and ownership and investment interests held by physicians and their immediate family members.
The healthcare laws and regulations that may affect our licensees’ ability to operate and our ability to receive licensing revenues include: ● the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, soliciting, receiving or providing any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce either the referral of an individual or in return for the purchase, lease, or order of, or the arranging for, any good, facility item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs; ● federal civil and criminal false claims laws and civil monetary penalty laws, including, for example, the federal civil False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payer (e.g., public or private), knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, which impose obligations on covered entities, including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal physician sunshine requirements under the ACA, which require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare or Medicaid to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value provided to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.
In addition, Section 6004 of the ACA requires annual reporting of information about drug samples that manufacturers and authorized distributors provide to healthcare providers; • federal and state laws requiring pricing transparency or limiting price increases, which are in existence today or are anticipated to be in existence in the near future, may limit the ability to raise prices, require disclosure of price increases or require disclosure of the wholesale acquisition cost of pharmaceutical products to governmental agencies and consumers; and • state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers or even self-pay; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments that may be provided to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to healthcare providers or marketing expenditures; state laws requiring a license, registration or permit to engage in manufacturing and distribution of prescription products or to engage in the practice of pharmacy; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, Section 6004 of the ACA requires annual reporting of information about drug samples that manufacturers and authorized distributors provide to healthcare providers; ● federal and state laws requiring pricing transparency or limiting price increases, which are in existence today or are anticipated to be in existence in the near future, may limit the ability to raise prices, require disclosure of price increases or require disclosure of the wholesale acquisition cost of pharmaceutical products to governmental agencies and consumers; and 9 ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers or even self-pay; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments that may be provided to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to healthcare providers or marketing expenditures; state laws requiring a license, registration or permit to engage in manufacturing and distribution of prescription products or to engage in the practice of pharmacy; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
If the Section 505(b) NDA drug has one or more unexpired patents listed in the Orange Book, an ANDA or 505(b)(2) NDA must include either a “Paragraph III Certification” or a “Paragraph IV Certification.” A Paragraph III Certification identifies the expiration date of 12 the listed patent and requires FDA to withhold final approval until that patent has expired.
If the Section 505(b) NDA drug has one or more unexpired patents listed in the Orange Book, an ANDA or 505(b)(2) NDA must include either a “Paragraph III Certification” or a “Paragraph IV Certification.” A Paragraph III Certification identifies the expiration date of the listed patent and requires FDA to withhold final approval until that patent has expired.
See “– Pharmaceutical Regulation – Regulatory Exclusivity” below for information regarding our intellectual property and challenges to that intellectual property. While we seek broad coverage under our patent applications, there is always a risk that an alteration to the process may provide sufficient basis for a competitor to avoid infringement claims.
See “– Pharmaceutical Regulation – Regulatory Exclusivity” below for information regarding our intellectual property and challenges to that intellectual property. 6 While we seek broad coverage under our patent applications, there is always a risk that an alteration to the process may provide sufficient basis for a competitor to avoid infringement claims.
Accordingly, manufacturers must continue to expend time, money and effort in production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural, substantive, and record keeping requirements.
Accordingly, manufacturers must continue to expend time, money and effort in production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance. 7 The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural, substantive, and record keeping requirements.
Manufacturers and 11 other entities involved in the manufacture and distribution of approved products are, depending on the nature and scope of their activities, subject to FDA and certain state agency requirements relating to establishing and maintaining product quality.
Manufacturers and other entities involved in the manufacture and distribution of approved products are, depending on the nature and scope of their activities, subject to FDA and certain state agency requirements relating to establishing and maintaining product quality.
The total consideration from Mayne Pharma to the Company for the purchase of the Transferred Assets and the grant of the licenses under the Mayne License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment (as defined below) and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.
The total consideration from Mayne Pharma to TherapeuticsMD for the purchase of the Transferred Assets under the Transaction Agreement and the grant of the licenses under the Mayne License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment (as defined below) and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.
During this period, an Abbreviated New Drug Application (“ANDA”) or 505(b)(2) application for a drug containing the protected active ingredient of the NCE product generally cannot be submitted to FDA until the end of the five-year exclusivity period, except that such applications can be submitted at year four if the product is covered by an Orange Book listed patent and the ANDA or 505(b)(2) NDA includes a Paragraph IV Certification challenging such patent.
An Abbreviated New Drug Application (“ANDA”) or 505(b)(2) application for a drug containing the protected active ingredient of the NCE product generally cannot be submitted to FDA until the end of the five-year exclusivity period, except that such applications can be submitted at year four if the product is covered by an Orange Book listed patent and the ANDA or 505(b)(2) NDA includes a Paragraph IV Certification challenging such patent.
Item 1. Business Overview Throughout this Annual Report on Form 10-K (“2022 10-K Report”), the terms “we,” “us,” “our,” “TherapeuticsMD,” “the Company,” or “our company” refer to TherapeuticsMD, Inc., a Nevada corporation, and unless specified otherwise, include our wholly owned subsidiaries vitaMedMD, LLC, a Delaware limited liability company (“vitaMed”), and BocaGreenMD, Inc., a Nevada corporation (“BocaGreen”).
Item 1. Business Overview Throughout this Annual Report on Form 10-K (“2023 10-K Report”), the terms “we,” “us,” “our,” “TherapeuticsMD,” “the Company,” or “our company” refer to TherapeuticsMD, Inc., a Nevada corporation, and unless specified otherwise, include our wholly owned subsidiaries vitaMedMD, LLC, a Delaware limited liability company (“vitaMed”), and BocaGreenMD, Inc., a Nevada corporation (“BocaGreen”).
Solely for convenience, trademarks, trade names and service marks referred to in this 2022 10-K Report may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names, and service marks.
Solely for convenience, trademarks, trade names and service marks referred to in this 2023 10-K Report may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names, and service marks.
We have identified some of the important factors that could cause future events to differ from our current expectations and they are described in this 2022 10-K Report in the section entitled “Risk Factors” that you should review carefully. Please consider our forward-looking statements in light of those risks as you read this 2022 10-K Report.
We have identified some of the important factors that could cause future events to differ from our current expectations and they are described in this 2023 10-K Report in the section entitled “Risk Factors” that you should review carefully. Please consider our forward-looking statements in light of those risks as you read this 2023 10-K Report.
In contrast, Section 505(b)(2) of the FDCA provides a n alternative NDA process for approving a new drug that contains the same active ingredient as a previously approved product but allows sponsors to rely on clinical trials not conducted by or for the sponsor, as well as other clinical data or literature produced by other parties.
In contrast, Section 505(b)(2) of the FDCA provides an alternative NDA process for approving a new drug that contains the same active ingredient as a previously approved product but allows sponsors to rely on clinical trials not conducted by or for the sponsor, as well as other clinical data or literature produced by other parties.
We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to us on the date of this 2022 10-K Report, but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning.
We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to us on the date of this 2023 10-K Report, but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning.
In addition, this 2022 10-K Report includes market and industry data that we obtained from periodic industry publications, third-party studies and surveys, government-agency sources, filings of public companies in our industry, and internal-company surveys. Industry publications and surveys generally state that their information has been obtained from sources believed to be reliable.
In addition, this 2023 10-K Report includes market and industry data that we obtained from periodic industry publications, third-party studies and surveys, government-agency sources, filings of public companies in our industry, and internal-company surveys. Industry publications and surveys generally state that their information has been obtained from sources believed to be reliable.
Although we believe that the industry and market data below is reliable as of the date of this 2022 10-K Report, this information could prove to be inaccurate as a result of a variety of matters. Forward-looking statements This 2022 10-K Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Although we believe that the industry and market data below is reliable as of the date of this 2023 10-K Report, this information could prove to be inaccurate as a result of a variety of matters. Forward-looking statements This 2023 10-K Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Further, Mayne Pharma will pay to the Company royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date.
Further, Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80.0 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date.
On December 30, 2022 (the “Closing Date”), the Company completed a transaction (the “Mayne Transaction”) with Mayne Pharma LLC, a Delaware limited liability company (“Mayne Pharma”) and subsidiary of Mayne Pharma Group Limited, an Australian public company, pursuant to which the Company and its subsidiaries (i) granted Mayne Pharma an exclusive license to commercialize the Company’s IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD® and vitaMedMD® brands (collectively, the “Licensed Products”) in the United States and its possessions and territories, (ii) assigned to Mayne Pharma the Company’s exclusive license to commercialize ANNOVERA ® (together with the Licensed Products, collectively, the “Products”) in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith.
On December 30, 2022 (the “Closing Date”), we completed a transaction (the “Mayne Transaction”) with Mayne Pharma LLC, a Delaware limited liability company (“Mayne Pharma”) and subsidiary of Mayne Pharma Group Limited, an Australian public company, in which we and our subsidiaries (i) granted Mayne Pharma an exclusive license to commercialize our IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands (collectively, the “Licensed Products”) in the United States and its possessions and territories, (ii) assigned to Mayne Pharma our exclusive license to commercialize ANNOVERA® (together with the Licensed Products, collectively, the “Products”) in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith.
Mayne Pharma will pay to the Company minimum annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below (the “Minimum Annual Royalty”).
Mayne Pharma will pay us minimum annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below (the “Minimum Annual Royalty”).
In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries. In connection with the Company’s transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr.
In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries. Employees In connection with our transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr.
TherapeuticsMD owns or has rights to trademarks, service marks, or trade names that were previously used in connection with the operation of its business, or are now licensed by another party, including TherapeuticsMD ® , vitaMedMD ® , BocaGreenMD ® , vitaCare TM , BIJUVA ® , and IMVEXXY ® , which are protected under applicable intellectual property laws and are the property of the Company.
TherapeuticsMD owns or has rights to trademarks, service marks, or trade names that were previously used in connection with the operation of its business, or are now licensed by another party, including TherapeuticsMD®, vitaMedMD®, BocaGreenMD®, vitaCareTM, BIJUVA®, and IMVEXXY®, which are protected under applicable intellectual property laws and are the property of the Company.
The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. The commitments under a long-term services agreement related to vitaCare was transferred to Mayne Pharma as part of the Mayne Transaction.
The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. The commitments under a long-term services agreement related to vitaCare were transferred to Mayne Pharma as part of the Mayne Transaction.
These statements may be found in the items of this 2022 10-K Report entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in this 2022 10-K Report generally.
These statements may be found in the items of this 2023 10-K Report entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in this 2023 10-K Report generally.
Pursuant to a License Agreement, dated December 4, 2022, between the Company and Mayne Pharma (the “Mayne License Agreement”), the Company granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.
In a License Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Mayne License Agreement”), we granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.
Factors that could cause or contribute to such differences include, but are not limited to, competition from other businesses, market and general economic factors, and the other risks discussed in Item 1A of this 2022 10-K Report. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included in t his 2022 10-K Report .
Factors that could cause or contribute to such differences include, but are not limited to, competition from other businesses, market and general economic factors, and the other risks discussed in Item 1A of this 2023 10-K Report. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included in this 2023 10-K Report.
This 2022 10-K Report also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners.
This 2023 10-K Report also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners.
For example, Catalent, the CMO that contracted for the commercial supply of the BIJUVA and IMVEXXY hormone therapy drug products, was issued a Form FDA 483 in 2019 with respect to its softgel manufacturing plant. The observations and associated corrective actions related to the BIJUVA product was identified in Catalent’s response to the Form FDA 483.
For example, Catalent, the CMO that contracted for the commercial supply of the BIJUVA and IMVEXXY hormone therapy drug products, was issued a Form FDA 483 in 2019 with respect to its soft gel manufacturing plant. The observations and associated corrective actions related to the BIJUVA product were identified in Catalent’s response to the Form FDA 483.
On the Closing Date, the Company and Mayne Pharma entered into Amendment No. 1 to the Mayne License Agreement (the “Mayne License Agreement Amendment”). Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay the Company approximately $1.0 million in prepaid royalties on the Closing Date.
On the Closing Date, TherapeuticsMD and Mayne Pharma entered into Amendment No. 1 to the Mayne License Agreement (the “Mayne License Agreement Amendment”). Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay us approximately $1.0 million in prepaid royalties on the Closing Date.
Pursuant to the Mayne License Agreement, Mayne Pharma will make one-time, milestone payments to the Company of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million.
Under the Mayne License Agreement, Mayne Pharma will pay us one-time milestone payments of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million.
The prepaid royalties will reduce the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to $257,250 per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment is paid to the Company.
The prepaid royalties reduced the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to $257 thousand per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment was paid to us.
We believe our patents and trademarks are valuable and provide us certain benefits in marketing our products. 10 We intend to actively protect our intellectual property with patents, trademarks, trade secrets, or other legal avenues for the protection of intellectual property and to aggressively prosecute, enforce, and defend our patents, trademarks, and proprietary technology, including those licensed by Mayne Pharma, Knight and Theramex with our licensees to the extent permitted under their respective license agreements.
We intend to actively protect our intellectual property with patents, trademarks, trade secrets, or other legal avenues for the protection of intellectual property and to aggressively prosecute, enforce, and defend our patents, trademarks, and proprietary technology, including those licensed by Mayne Pharma, Knight and Theramex with our licensees to the extent permitted under their respective license agreements.
Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the 14 properties of certain products, additional or different labeling, additional scientific substantiation, additional personnel, or other new requirements.
Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, additional personnel, or other new requirements. Any such developments could have a material adverse effect on our business.
Pursuant to a Transaction Agreement, dated December 4, 2022, between the Company and Mayne Pharma (the “Transaction Agreement”), the Company sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize the Products in the United States, including the Company’s exclusive license from the Population Council to commercialize ANNOVERA (the “Transferred Assets”).
Under the Transaction Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Transaction Agreement”), we sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize the Products in the United States, including, with the Population Council’s consent, our exclusive license from the Population Council to commercialize ANNOVERA (the “Transferred Assets”).
We previously granted licenses to commercialize the Company’s IMVEXXY product outside of the United States to Theramex and Knight. As part of the FDA’s approval of IMVEXXY, we committed to conduct a post-approval observational study to evaluate the risk of endometrial cancer in post-menopausal women with a uterus who use a low-dose vaginal estrogen unopposed by a progestogen.
As part of the FDA’s approval of IMVEXXY, we committed to conduct a post-approval observational study to evaluate the risk of endometrial cancer in post-menopausal women with a uterus who use a low-dose vaginal estrogen unopposed by a progestogen.
Our licensed prenatal vitamin products On December 30, 2022, we granted an exclusive license to commercialize, in the United States and its possessions and territories, our prescription prenatal vitamin product lines under our vitaMedMD brand name and authorized generic formulations of some of our prescription prenatal vitamin products under our BocaGreenMD Prena1 name to Mayne Pharma.
Our obligations to perform the post-approval study have been transferred to Mayne Pharma as part of the Mayne License Agreement. 5 Prenatal vitamin products On December 30, 2022, we granted an exclusive license to commercialize, in the United States and its possessions and territories, our prescription prenatal vitamin product lines under our vitaMedMD brand name and authorized generic formulations of some of our prescription prenatal vitamin products under our BocaGreenMD prenatal name to Mayne Pharma.
In July 2018 we entered into the Knight License Agreement pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel. In June 2019, we entered into the Theramex License Agreement to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel.
We entered into the Knight License Agreement, with Knight pursuant to which, we granted Knight an exclusive license to commercialize IMVEXXY in Canada and Israel. We entered into the Theramex License Agreement with Theramex pursuant to which we granted Theramex an exclusive license to commercialize IMVEXXY for human use outside of the U.S., except for Canada and Israel.
We maintain a corporate website at www.therapeuticsmd.com as well as various product websites. The information contained on our websites or that can be accessed through our websites is not incorporated by reference into this 2022 10-K Report or in any other report or document we file with the SEC.
The information contained on our website or that can be accessed through our website is not incorporated by reference into this 2023 10-K Report or in any other report or document we file with the SEC. 10
Our intellectual property portfolio is one way we attempt to protect our competitive position. We rely primarily on a combination of know-how, trade secrets, patents, trademarks, and contractual restrictions to protect our products and to maintain our competitive position. We are diligently seeking ways to protect our intellectual property through various legal mechanisms in relevant jurisdictions.
We rely primarily on a combination of know-how, trade secrets, patents, trademarks, and contractual restrictions to protect our products and to maintain our competitive position. We are diligently seeking ways to protect our intellectual property through various legal mechanisms in relevant jurisdictions. Where permitted, patents for our hormone therapy drug products have been submitted to the Orange Book.
Additionally, we may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement. We will record the contingent consideration at the settlement amount when the consideration is realized or realizable.
Additionally, the Purchase Agreement provides that we may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement; however, we do not believe this earnout will be realized.
In February 2020, we received a Paragraph IV certification notice letter (the “IMVEXXY Notice Letter”) regarding an ANDA submitted to FDA by Teva Pharmaceuticals USA, Inc. (“Teva”). See Legal Proceedings in Item 3 of this 2022 10-K Report for additional information.
(“Teva”). See Legal Proceedings in Item 3 of this 2023 10-K Report for additional information. In March 2020, we received a Paragraph IV certification notice letter (the “BIJUVA Notice Letter”) regarding an ANDA submitted to FDA by Amneal Pharmaceuticals (“Amneal”). In April 2020, we filed a complaint for patent infringement against Amneal in the U.S.
Research and development As of December 30, 2022, we no longer conduct any research and development activities. Historically, our product development programs have been concentrated in advanced hormone therapy pharmaceutical products. Intellectual property Patents and trademarks Our success depends, in part, on our ability to obtain patents, maintain trade-secret protection, and operate without infringing the proprietary rights of others.
Historically, our product development programs were concentrated in advanced hormone therapy pharmaceutical products. Intellectual property Patents and trademarks Our success depends, in part, on our ability to obtain patents, maintain trade-secret protection, and operate without infringing the proprietary rights of others. Our intellectual property portfolio is one way we attempt to protect our competitive position.
The Company also has license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S. • In July 2018, we entered into a license and supply agreement (the “Knight License Agreement”) with Knight Therapeutics Inc.
See Note 2 - Discontinued Operations to the consolidated financial statements included in this Annual Report on Form 10-K for further details. The Company also has license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S. ● In July 2018, we entered into a license and supply agreement (the “Knight License Agreement”) with Knight Therapeutics Inc.
We have never experienced a major work stoppage, strike, or dispute. We consider our relationship with our employees to be good. Available information We are a Nevada corporation, and we maintain our principal executive offices at 951 Yamato Road, Suite 220, Boca Raton, Florida 33431. Our telephone number is (561) 961-1900.
Available information We are a Nevada corporation, and we maintain our principal executive offices at 951 Yamato Road, Suite 220, Boca Raton, Florida 33431. Our telephone number is (561) 961-1900. We maintain a corporate website at www.therapeuticsmd.com.
The FDA has also asked the sponsors of other vaginal estrogen products to participate in the observational study. In connection with the observational study, we would have been required to provide progress reports to the FDA on an annual basis. The obligation to conduct this study was transferred to Mayne Pharma as part of the License Agreement.
As of December 31, 2023, no IMVEXXY sales had been made through the Theramex and Knight licensing agreements. The FDA has also asked the sponsors of other vaginal estrogen products to participate in the observational study. In connection with the observational study, we would have been required to provide progress reports to the FDA on an annual basis.
Severance obligations for all employees other than executive officers were paid in full in the first quarter of 2023 and severance obligations for terminated executive officers will be paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 2022, we employed one full-time employee primarily engaged in an executive position.
Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 31, 2022. Severance obligations for all employees other than executive officers were paid in full in January 2023 and severance obligations for terminated executive officers were paid in accordance with their employment agreements and separation agreements as previously disclosed.
Generally, no more than one 30-month stay may be applied against any specific Paragraph IV ANDA or 505(b)(2) NDA. A 30-month stay can be terminated early, and the Paragraph IV application can be immediately approved, if the district court rules in favor of the Paragraph IV applicant that the patent is invalid, unenforceable, or would not be infringed.
A 30-month stay can be terminated early, and the Paragraph IV application can be immediately approved, if the district court rules in favor of the Paragraph IV applicant that the patent is invalid, unenforceable, or would not be infringed. 8 In February 2020, we received a Paragraph IV certification notice letter (the “IMVEXXY Notice Letter”) regarding an ANDA submitted to FDA by Teva Pharmaceuticals USA, Inc.
We have engaged external consultants, including certain former members of our management team, who support our relationship with current partners and assist with certain financial, legal and regulatory matters and the continued wind-down of our historical business operations. vitaCare divestiture On April 14, 2022, we completed the divestiture of vitaCare Prescription Services, Inc.
As of December 31, 2023, we employed one full-time employee primarily engaged in an executive position. We have engaged external consultants who support our relationship with current partners and assist with certain financial, legal, and regulatory matters and the continued wind-down of our historical business operations.
However, our license revenues for the first quarter of each year can be negatively affected by the annual reset of high-deductible commercial insurance plans. Manufacturing of our licensed products As of December 30, 2022, we were no longer responsible for any manufacturing and have no manufacturing contracts. All manufacturing responsibility has been transferred to Mayne Pharma.
Manufacturing of our licensed products As of December 30, 2022, we were no longer responsible for any manufacturing and have no manufacturing contracts. All manufacturing responsibility of our licensed products has been transferred to our licensees. Research and development As of December 30, 2022, we no longer conduct any research and development activities.
BIJUVA On December 30, 2022, we granted an exclusive license commercialize the Company’s BIJUVA in the United States and its possessions and territories to Mayne Pharma. BIJUVA offers the convenience of a single-capsule combination of two hormones (estradiol and progesterone), which may improve a user’s compliance.
On December 30, 2022, we granted an exclusive license to commercialize BIJUVA in the United States and its possessions and territories to Mayne Pharma. We also have entered into the Knight License Agreement with Knight pursuant to which we granted Knight an exclusive license to commercialize BIJUVA in Canada and Israel.
(“vitaCare”) with the sale of all vitaCare’s issued and outstanding capital stock (the “vitaCare Divestiture”). We received net proceeds of $142.6 million, net of transaction costs of $7.2 million, and we recognized a gain on sale of business of $143.4 million.
We received net proceeds of $142.6 million, after deducting transaction costs of $7.2 million, and we recognized a gain on sale of business of $143.4 million. Included in the net proceeds amount was $11.3 million of customary holdbacks as provided in the stock purchase agreement (the “Purchase Agreement”) which we received in 2023.
Our Licensed Menopause portfolio IMVEXXY On December 30, 2022, we granted an exclusive license to commercialize the Company’s IMVEXXY in the United States and its possessions and territories to Mayne Pharma. IMVEXXY is a small, digitally inserted, softgel vaginal insert that dissolves when inserted into the vagina.
On December 30, 2022, we granted an exclusive license to commercialize IMVEXXY in the United States and its possessions and territories to Mayne Pharma. We also have entered into licensing agreements with third parties to market and sell IMVEXXY outside of the U.S.
The Population Council License Agreement may also be terminated for certain breach and bankruptcy-related events and by Mayne Pharma on 180 days’ prior notice to the Population Council. Sales concentration Our business model is dependent on third parties achieving specified milestones and product sales. For information on the concentration of licenses of our products, see “Note 10.
Sales concentration Our business model is dependent on third parties achieving specified milestones and product sales. For information on the concentration of licenses of our products, see “Note 10. Revenue” to the consolidated financial statements included in this 2023 10-K Report. Currently, the Company collects license revenue from two licensees.
Our business model We changed our business in 2022, by out-licensing our products and collecting royalties, after granting an exclusive license to commercialize the Company’s IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD® and vitaMedMD® brands in the United States and its possessions and territories and assigning the Company’s exclusive license to commercialize ANNOVERA in the United States and its possessions and territories to Mayne Pharma. 3 The Company also has license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S.
On December 30, 2022, we granted an exclusive license to commercialize IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands and assigned our exclusive license to commercialize ANNOVERA to Mayne Pharma.
Where permitted, patents for our hormone therapy drug products have been submitted to the Orange Book. As of December 31, 2022, we have 54 issued domestic patents and 47 issued foreign patents as well as 60 pending patent applications (47 foreign and 13 domestic), including: • 22 issued domestic patents and 19 issued foreign patents that relate to BIJUVA.
As of December 31, 2023, we have many domestic and foreign patents that cover our licensed products, including many for each of BIJUVA and IMVEXXY that are Orange Book listed for the licensed products. We hold multiple U.S. trademark registrations and have numerous pending trademark applications.
In addition, the parties agreed that Mayne Pharma will reduce one quarterly royalty payment (other than the first quarterly royalty payment) otherwise payable to the Company by $1.5 million in consideration of Mayne Pharma assuming the Company’s obligations under a long-term services agreement, including the Company’s minimum payment obligations thereunder.
We and Mayne Pharma settled the $1.5 million of consideration due to Mayne Pharma for the assumed obligations under a long-term services agreement (see the section entitled “vitaCare divestiture” below for a discussion of the long-term services agreement), including our minimum payment obligations thereunder.
Removed
In December 2022, we changed our business to become a pharmaceutical royalty company, primarily collecting royalties from our licensees. Our Company is no longer engaging in research and development or commercial operations and is transforming to a virtual company with limited infrastructure.
Added
In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories.
Removed
The prepaid royalties will reduce the first four quarterly payments that would have otherwise be received pursuant to the Mayne License Agreement by an amount equal to $257,250 per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment is paid to the Company.
Added
As the parties agreed, Mayne Pharma reduced the second quarterly royalty payment otherwise payable to us by an additional $0.6 million, and in August 2023 we remitted the remaining consideration of $0.9 million.
Removed
Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 31, 2022.
Added
Mayne Pharma paid us approximately $12.1 million at closing on the Closing Date for the acquisition of net working capital, subject to certain adjustments as determined in accordance with the Transaction Agreement.
Removed
Included in the net proceeds amount was $11.3 million of customary holdbacks as provided in the stock purchase agreement (the “Purchase Agreement”), which is recorded as restricted cash in the consolidated balance sheets. The restricted cash was held by an escrow agent and was released to us in March 2023.
Added
While the Transaction Agreement calls for much of the net working capital to be trued-up shortly after the Closing Date in 2023, for a period of one year following the Closing Date in the case of payer rebates and wholesale distributor fees and two years following the Closing Date in the case for allowance for returns, net working capital amounts will be adjusted to arrive at final net working capital under the Transaction Agreement.
Removed
In addition, under the Mayne License Agreement Amendment, Mayne Pharma will reduce one quarterly royalty payment (other than the first quarterly royalty payment) otherwise payable to us by $1.5 million in consideration of Mayne Pharma assuming our obligations under the long-term services agreement related to vitaCare.
Added
In September 2023, we revised certain accrual estimates including increasing our working capital adjustment accrual from $3.5 million to $5.5 million for amounts anticipated to be owed under the Transaction Agreement.
Removed
The pre-divesture operations of vitaCare were reclassified to discontinued operations in December 2022 when the Company transitioned to becoming a royalty company and licensing its products to Mayne Pharma.
Added
In December 2023, we made a $5.5 million payment to Mayne Pharma to settle certain working capital amounts that were required to be trued-up shortly after the Closing Date, excluding the allowance for returns, allowance for payer rebates, and allowance for wholesale distributor fees. 2 In February 2024, the Company received Mayne Pharma’s calculation of allowance for payer rebates and wholesale distributor fees which differed significantly from the Company’s estimate of the allowances.
Removed
The impact of COVID-19 on our business With multiple variant strains of the SARS-Cov-2 virus and the COVID-19 disease that it causes (collectively, “COVID-19”) still circulating, we continue to be subject to risks and uncertainties in connection with the COVID-19 pandemic.
Added
The Company believes its estimated allowances for payer rebates and wholesale distributor fees are reasonable and intends to resolve this matter through the process outlined in the Transaction Agreement. Given the recent receipt of Mayne Pharma’s allowance calculation and the nature of the estimates involved, the outcome of this matter is uncertain at this point.
Removed
The extent of the future impact of the COVID-19 pandemic on our business continues to be highly uncertain and difficult to predict. As of the date of the filing of this Annual Report, the future extent to which the COVID-19 pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain and difficult to predict.
Added
As a result, the Company cannot reasonably estimate a range of loss, and accordingly, the Company has not accrued any additional liability associated with Mayne Pharma’s allowance calculation for payer rebates and wholesale distributor fees.
Removed
Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.
Added
As of December 31, 2023, the Company believes no additional accrual is required for amounts that may be owed for the allowance for returns under the Transaction Agreement. The Company has not recorded any contingent gains or receivables for any such allowances.
Removed
In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries. Currently, we collect royalties on sales of ANNOVERA, IMVEXXY, and BIJUVA under the TherapeuticsMD brand, prescription prenatal vitamins under our vitaMedMD brand name, and authorized generic formulations of our prescription prenatal vitamin products under BocaGreenMD brand name.
Added
Management continues to monitor the unresolved and pending net working capital items as changes to estimated amounts owed or amounts due from Mayne Pharma that may be material.
Removed
We expect that the primarily source of our future revenue will be based on payments we may receive for milestones and royalties related to these products. The Company no longer has research and development, commercial, manufacturing and finance infrastructure and operates as a virtual corporation with no material capital investment in fixed assets.
Added
On August 15, 2023, we entered into a master services agreement with JZ Advisory Group, pursuant to which Joseph Ziegler would serve as our Principal Financial and Accounting Officer. On August 17, 2023 Michael C.
Removed
Industry and market Women’s healthcare market According to BBC Research’s September 2020 report, “Pharmaceuticals for Women’s Health: Global Markets,” post-menopausal osteoporosis, pregnancy disorders and management, menopause, endometriosis, and polycystic ovary syndrome (PCOS) are the largest segments within the global market for women’s health therapeutics.
Added
Donegan notified us of his decision to resign from the positions of Principal Financial and Accounting Officer of our Company effective as of August 17, 2023. Mr. Ziegler succeeded Mr. Donegan as Principal Financial and Accounting Officer as of the date of Mr.
Removed
Women’s health therapeutics established a very strong presence in the global pharmaceutical market over the last few decades. The market is expected to grow moderately, mainly due to patent expirations of blockbuster drugs such as Evista, the Premarin family, Forteo, Mirena, Boniva, Actonel, Gonal-F and several other.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe following is a summary of the principal risk factors described in this section: • We currently derive all of our revenues from royalties related to sales of our products, and the failure of our licensees to maintain or increase sales of these products could have an adverse effect on our business, financial condition, results of operations, and growth prospects. • We have incurred net losses in the past and there are no assurances we will be able to maintain or increase profitability in the future. • There is substantial doubt about our ability to continue as a going concern. • We could be affected by transitions in our senior management team. • The dependence upon third parties for the manufacture and supply of our women’s healthcare products may cause delays in, or prevent our licensees from, successfully commercializing and marketing our products. • The commercial success of our products will depend upon gaining and retaining significant market acceptance of these products among physicians and payers. • Coverage and reimbursement may not be available for our products, which could make it difficult for our licensees to sell our products profitably. • Time and costs associated with winding down our general and administrative, commercial, and research and development activities may be significant. • Our future success depends on our ability to attract and retain qualified personnel. 15 • Our financial condition and results of operations for 2021 and 2022 were, and our financial condition and results of operations for 2023 and beyond may be, adversely affected by the ongoing COVID-19 (coronavirus) pandemic and any future pandemics or epidemics. • Licensing of intellectual property involves complex legal, business and scientific issues, and disputes could jeopardize our rights under such agreements. • Our products and our licensees are subject to extensive government regulation. • We must rely on Mayne Pharma to prosecute, file lawsuits or take other actions to protect or enforce our intellectual property and there can be no assurance they will be take such actions or be successful. • If our efforts to protect the proprietary nature of the intellectual property covering our hormone therapy pharmaceutical products and other products are not adequate, we may not be able to compete effectively in our market. • Our products face significant competition from branded and generic products, and our operating results will suffer if we fail to compete effectively. • Our success is tied to the distribution channels of our licensees. • Any failure of our licensees to adequately maintain a sales force will impede our growth. • Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our common stock.
Biggest changeThe following is a summary of the principal risk factors described in this section: ● We currently derive all of our revenues from royalties related to sales of our products, and the failure of our licensees to maintain or increase sales of these products could have an adverse effect on our business, financial condition, results of operations, and growth prospects. ● We have incurred net losses in the past and there are no assurances we will be able to maintain or increase profitability in the future. ● There is substantial doubt about our ability to continue as a going concern. ● We could be affected by transitions in our senior management team. ● The dependence upon third parties for the manufacture and supply of our women’s healthcare products may cause delays in, or prevent our licensees from, successfully commercializing and marketing our products. ● The commercial success of our products will depend upon gaining and retaining significant market acceptance of these products among physicians and payers. ● Coverage and reimbursement may not be available for our products, which could make it difficult for our licensees to sell our products profitably. ● Time and costs associated with winding down our general and administrative, commercial, and research and development activities may be significant. ● Licensing of intellectual property involves complex legal, business and scientific issues, and disputes could jeopardize our rights under such agreements. ● Our products and our licensees are subject to extensive government regulation. ● We must rely on Mayne Pharma to prosecute, file lawsuits, or take other actions to protect or enforce our intellectual property and there can be no assurance they will take such actions or be successful. ● If efforts to protect the proprietary nature of the intellectual property covering our hormone therapy pharmaceutical products and other products are not adequate, our licensees may not be able to compete effectively in the market, which would adversely affect our royalties. ● Our products face significant competition from branded and generic products, and our operating results will suffer if our products fail to compete effectively. ● Our success is tied to the distribution channels of our licensees. ● Any failure of our licensees to adequately maintain a sales force or effectively implement sales strategies will impede our growth. ● Our future success depends on our ability to attract and retain qualified personnel. ● Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our common stock. 11 Risks related to our business We currently derive all revenue from royalties related to sales of our licensed women’s healthcare products, and the failure of our licensees to maintain or increase sales of these products could have an adverse effect on our business, financial condition, results of operations, and growth prospects.
We have experienced turnover in our top executives and the replacement of these positions with new officers. In December 2022, following the Mayne Transaction, all of our top executives, except for our former General Counsel, were terminated, and our former General Counsel was appointed as Chief Executive Officer.
We have experienced turnover in our top executives and the replacement of these positions with new officers. In December 2022, following the Mayne Transaction, all our top executives, except for our former General Counsel, were terminated, and our former General Counsel was appointed as Chief Executive Officer.
Management transition is often difficult and inherently causes some loss of institutional knowledge, which could negatively affect our results of operations and financial condition. Our ability to execute our business strategies may be adversely affected by the uncertainty associated with these transitions and the time and attention of the board and management dedicated to management transitions could disrupt our business.
Management transition is often difficult and inherently causes some loss of institutional knowledge, which could negatively affect the results of operations and financial condition. Our ability to execute our business strategies may be adversely affected by the uncertainty associated with these transitions and the time and attention of the board and management dedicated to management transitions could disrupt our business.
If we, the Population Council, our licensees, or our strategic partners fail to obtain and maintain patent protection for our products, or our proprietary technologies and their uses, companies may be dissuaded from collaborating with us.
If we, the Population Council, our licensees, or our strategic partners fail to obtain and maintain patent protection for our products, or our proprietary technologies and their uses, companies may be dissuaded from collaborating with us or our licensees.
The release of such information or misappropriation of assets could have an adverse effect on our business, financial condition, and results of operations. Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading. We are exposed to the risk of employee fraud or other misconduct.
The release of such information or misappropriation of assets could have an adverse effect on our business, financial condition, and results of operations. Employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading. We are exposed to the risk of employee fraud or other misconduct.
If a third-party asserts that we infringe its patents or other proprietary rights, we could face many risks that could adversely affect our business, financial condition, results of operations, and prospects, including the following: • infringement and other intellectual property claims, which would be costly and time-consuming to defend, whether or not we are ultimately successful, which in turn could delay the regulatory approval process, consume our capital, and divert management’s attention from our business; • substantial damages for past infringement, which we may have to pay if a court determines that our products or technologies infringe a competitor’s patent or other proprietary rights; 38 • a court prohibiting us from selling or licensing our technologies or future products unless the third-party licenses its patents or other proprietary rights to us on commercially reasonable terms, which it is not required to do; • if a license is available from a third-party, we may have to pay substantial royalties or lump sum payments or grant cross licenses to our patents or other proprietary rights to obtain that license; or • redesigning our products so they do not infringe, which may not be possible or may require substantial monetary expenditures and time.
If a third-party asserts that we infringe its patents or other proprietary rights, we could face many risks that could adversely affect our business, financial condition, results of operations, and prospects, including the following: ● infringement and other intellectual property claims, which would be costly and time-consuming to defend, whether or not we are ultimately successful, which in turn could delay the regulatory approval process, consume our capital, and divert management’s attention from our business; ● substantial damages for past infringement, which we may have to pay if a court determines that our products or technologies infringe a competitor’s patent or other proprietary rights; ● a court prohibiting us from selling or licensing our technologies or future products unless the third-party licenses its patents or other proprietary rights to us on commercially reasonable terms, which it is not required to do; ● if a license is available from a third-party, we may have to pay substantial royalties or lump sum payments or grant cross licenses to our patents or other proprietary rights to obtain that license; or ● redesigning our products so they do not infringe, which may not be possible or may require substantial monetary expenditures and time.
Disputes may arise between us and any of these counterparties regarding intellectual property subject to and each parties’ obligations under such agreements, including: • the scope of rights granted under the agreement and other interpretation-related issues; • our or our licensees’ obligations to make milestone, royalty, or other payments under those agreements; • our or our licensees’ obligations to prosecute existing and new patent applications; • our or our licensees’ obligations to enforce infringement of our intellectual property; • whether and the extent to which the ANNOVERA technology and processes infringe on intellectual property of the Population Council that is not subject to the ANNOVERA license agreement; • the ownership of inventions and know-how arising under the agreement or resulting from the joint creation or use of intellectual property by our licensees and us and our partners; • our right, or the right of our licensees, to transfer or assign the license; and • the effects of termination.
Disputes may arise between us and any of these counterparties regarding intellectual property subject to and each parties’ obligations under such agreements, including: ● the scope of rights granted under the agreement and other interpretation-related issues; ● our or our licensees’ obligations to make milestone, royalty, or other payments under those agreements, or the amount of any such payments; ● our or our licensees’ obligations to prosecute existing and new patent applications; ● our or our licensees’ obligations to enforce infringement of our intellectual property; ● whether and the extent to which the ANNOVERA technology and processes infringe on intellectual property of the Population Council that is not subject to the ANNOVERA license agreement; ● the ownership of inventions and know-how arising under the agreement or resulting from the joint creation or use of intellectual property by our licensees and us and our partners; ● our right, or the right of our licensees, to transfer or assign the license; and ● the effects of termination.
Our stock price could be subject to wide fluctuations in response to a variety of factors, which include the following: • changes in laws or regulations applicable to our products; • unanticipated serious safety concerns related to the use of our products; • the inability for our licensees to obtain adequate supply for our products or the inability to do so at acceptable prices; • adverse regulatory decisions; • the introduction of new products or technologies offered by our competitors; • the effectiveness of our licensees’ commercialization efforts; • the perception of the pharmaceutical industry by the public, legislatures, regulators, and the investment community; • disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies; 39 • actual or anticipated variations in quarterly operating results; • the failure to meet or exceed the estimates and projections of the investment community; • the overall performance of the U.S. equity markets and general political and economic conditions; • announcements of significant acquisitions, strategic partnerships, joint ventures, or capital commitments by us or our competitors; • additions or departures of key management personnel; • adverse market reaction to any indebtedness we may incur or securities we may issue in the future; • sales of our common stock by us or our stockholders in the future; • significant lawsuits, including patent or stockholder litigation; • changes in the market valuations of similar companies; • the trading volume of our common stock; • increases in our common stock available for sale upon expiration of lock-up agreements; • effects of natural or man-made catastrophic events or other business interruptions; and • other events or factors, many of which are beyond our control.
Our stock price could be subject to wide fluctuations in response to a variety of factors, which include the following: ● changes in laws or regulations applicable to our products; ● unanticipated serious safety concerns related to the use of our products; ● the inability for our licensees to obtain adequate supply for our products or the inability to do so at acceptable prices; ● adverse regulatory decisions; ● the introduction of new products or technologies offered by our competitors; ● the effectiveness of our licensees’ commercialization efforts; 29 ● the perception of the pharmaceutical industry by the public, legislatures, regulators, and the investment community; ● disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies; ● actual or anticipated variations in quarterly operating results; ● the failure to meet or exceed the estimates and projections of the investment community; ● the overall performance of the U.S. equity markets and general political and economic conditions; ● announcements of significant acquisitions, strategic partnerships, joint ventures, or capital commitments by us or our competitors; ● additions or departures of key management personnel; ● adverse market reaction to any indebtedness we may incur or securities we may issue in the future; ● sales of our common stock by us or our stockholders in the future; ● significant lawsuits, including patent or stockholder litigation; ● changes in the market valuations of similar companies; ● the trading volume of our common stock; ● increases in our common stock available for sale upon expiration of lock-up agreements; ● effects of natural or man-made catastrophic events or other business interruptions; and ● other events or factors, many of which are beyond our control.
These provisions in our articles of incorporation and bylaws include the following: • authorizing the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; • prohibiting cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; and • advance notice provisions in connection with stockholder proposals that may prevent or hinder any attempt by our stockholders to bring business to be considered by our stockholders at a meeting or replace our board of directors.
These provisions in our articles of incorporation and bylaws include the following: ● authorizing the issuance of “blank check” preferred stock that could be issued by our board of directors (the “Board”) to increase the number of outstanding shares and thwart a takeover attempt; ● prohibiting cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; and ● advance notice provisions in connection with stockholder proposals that may prevent or hinder any attempt by our stockholders to bring business to be considered by our stockholders at a meeting or replace our board of directors.
Labeling approved by the FDA may not permit our licensees to promote our products as being superior to competing products, because the FDA applies a heightened level of scrutiny to comparative claims when applying its statutory standards for advertising and promotion, including with regard to its requirements for supporting data and that promotional labeling be truthful and not misleading, and there is potential for differing interpretations of whether certain communications are consistent with a product’s 18 FDA-required labeling.
Labeling approved by the FDA may not permit our licensees to promote our products as being superior to competing products, because the FDA applies a heightened level of scrutiny to comparative claims when applying its statutory standards for advertising and promotion, including with regard to its requirements for supporting data and that promotional labeling be truthful and not misleading, and there is potential for differing interpretations of whether certain communications are consistent with a product’s FDA-required labeling.
In addition, we cannot predict what additional ANDAs could be filed by Teva, or other potential generic competitors requesting approval to market generic forms of our products, which could require us to incur significant additional expense and result in distraction for our management team, and if approved, result in significant decreases in the revenue derived from sales of our marketed products and thereby harm our business and financial condition.
In addition, we cannot predict what additional ANDAs could be filed by Teva, or other potential generic competitors requesting approval to market generic forms of our products, which could require us or our licensees to incur significant additional expense and result in distraction for our management team, and if approved, result in significant decreases in the revenue derived from sales of our marketed products and thereby harm our business and financial condition.
In addition, loss of exclusivity may provide opportunity for competing products, particularly generics, to erode siphon off our consumers. In February 2020, we received a Paragraph IV certification notice letter (the “IMVEXXY Notice Letter”) regarding an ANDA submitted to the FDA by Teva Pharmaceuticals USA, Inc. (“Teva”).
In addition, loss of exclusivity may provide opportunity for competing products, particularly generics, to siphon off our consumers. In February 2020, we received a Paragraph IV certification notice letter (the “IMVEXXY Notice Letter”) regarding an ANDA submitted to the FDA by Teva Pharmaceuticals USA, Inc. (“Teva”).
These entities’ applications, patents, and other 32 intellectual property rights may conflict with patent applications to which we have rights and could prevent us from obtaining patents or could call into question the validity of any of our patents, if issued, or could otherwise adversely affect our ability to develop, manufacture, or commercialize our pharmaceutical products.
These entities’ applications, patents, and other intellectual property rights may conflict with patent applications to which we have rights and could prevent us from obtaining patents or could call into question the validity of any of our patents, if issued, or could otherwise adversely affect our ability to develop, manufacture, or commercialize our pharmaceutical products.
A failure to maintain optimal inventory levels to meet commercial demand for our products could harm our and out licensees’ reputation and subject us to financial losses. Our licensees' ability to maintain optimal inventory levels to meet commercial demand depends on the performance of third-party contract manufacturers. In some instances, our products have unique ingredients used under license arrangements.
A failure to maintain optimal inventory levels to meet commercial demand for our products could harm our and our licensees’ reputation and subject us to financial losses. Our licensees’ ability to maintain optimal inventory levels to meet commercial demand depends on the performance of third-party contract manufacturers. In some instances, our products have unique ingredients used under license arrangements.
There can be no assurances that we will be able to obtain a license to such patent on favorable terms or at all. Failure to obtain such license may have an adverse effect on our business. There is a substantial amount of litigation involving intellectual property in the pharmaceutical industry generally.
There can be no assurances that we will be able to obtain a license to such patent on favorable terms or at all. Failure to obtain such license may have an adverse effect on our business. 28 There is a substantial amount of litigation involving intellectual property in the pharmaceutical industry generally.
Similarly, if state government shutdowns were to occur, state payment 25 obligations may be delayed. If the federal or state governments fail to make payments under these programs on a timely basis, the ability of our licensees to sell our products to government payers may be limited, thereby reducing anticipated revenues and profitability.
Similarly, if state government shutdowns were to occur, state payment obligations may be delayed. If the federal or state governments fail to make payments under these programs on a timely basis, the ability of our licensees to sell our products to government payers may be limited, thereby reducing anticipated revenues and profitability.
Such guidelines or recommendations may lead to lower sales of our products. Manufacturers of pharmaceutical products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with the FDA’s cGMP regulations and other regulatory requirements, such as adverse event reporting.
Such guidelines or recommendations may lead to lower sales of our products. 18 Manufacturers of pharmaceutical products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with the FDA’s cGMP regulations and other regulatory requirements, such as adverse event reporting.
A recall, withdrawal, or seizure of any of our products could adversely affect consumer confidence in our brands and lead to decreased demand for our products, which could adversely affect our business, financial condition and results of operations. 35 Product liability lawsuits could divert our resources, result in substantial liabilities, and reduce the commercial potential of our products.
A recall, withdrawal, or seizure of any of our products could adversely affect consumer confidence in our brands and lead to decreased demand for our products, which could adversely affect our business, financial condition and results of operations. Product liability lawsuits could divert our resources, result in substantial liabilities, and reduce the commercial potential of our products.
Any material loss that we may experience in the future could have a material adverse effect on our financial condition and could materially impact our ability to pay our operational expenses or make other payments. Our products and our licensees are subject to extensive and costly government regulation.
Any material loss that we may experience in the future could have a material adverse effect on our financial condition and could materially impact our ability to pay our operational expenses or make other payments. 16 Our products and our licensees are subject to extensive and costly government regulation.
See “If the efforts of our licensees to protect the proprietary nature of the intellectual property covering our hormone therapy pharmaceutical products and other products are not adequate, we may not be able to compete effectively in our market” below for more information regarding the IMVEXXY Notice Letter.
See “If our efforts or the efforts of our licensees to protect the proprietary nature of the intellectual property covering our hormone therapy pharmaceutical products and other products are not adequate, we may not be able to compete effectively in our market” below for more information regarding the IMVEXXY Notice Letter.
Department of Justice; • costs to defend the related litigation; • a diversion of management’s time and our resources; • substantial monetary awards to trial participants or patients; • exhaustion of any available insurance and our capital resources; and • the obligation to indemnify our licensees that would be a diversion of managements time and resources; and • a decline in our stock price.
Department of Justice; ● costs to defend the related litigation; ● a diversion of management’s time and our resources; ● substantial monetary awards to trial participants or patients; ● exhaustion of any available insurance and our capital resources; ● the obligation to indemnify our licensees that would be a diversion of management’s time and resources; and ● a decline in our stock price.
If we are unable to improve our liquidity position, we may not be able to continue as a going concern. We have experienced significant turnover in our top executives, and our business could be adversely affected by these and other transitions in our senior management team.
If we are unable to improve our liquidity position, we may not be able to continue as a going concern. 12 We have experienced significant turnover in our top executives, and our business could be adversely affected by these and other transitions in our senior management team.
Moreover, we may not be able to prevent, alone or with our licensees, or the ANNOVERA licensor, misappropriation of our proprietary rights, particularly in countries in which the laws may not protect those rights as fully as in the U.S. 33 or in those countries in which we do not file national phase patent applications.
Moreover, we may not be able to prevent, alone or with our licensees, or the ANNOVERA licensor, misappropriation of our proprietary rights, particularly in countries in which the laws may not protect those rights as fully as in the U.S. or in those countries in which we do not file national phase patent applications.
Additionally, on March 2020, we received a Paragraph IV certification notice letter (the “BIJUVA Notice Letter”) regarding an ANDA submitted to FDA by Amneal 30 Pharmaceuticals . See Item 1. Business – Pharmaceutical Regulation – Regulatory Exclusivity for more information on the BIJUVA Notice Letter.
Additionally, on March 2020, we received a Paragraph IV certification notice letter (the “BIJUVA Notice Letter”) regarding an ANDA submitted to FDA by Amneal Pharmaceuticals. See Item 1. Business – Pharmaceutical Regulation – Regulatory Exclusivity for more information on the BIJUVA Notice Letter.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.
If any such actions are instituted against us or our licensees, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.
If we are unable to protect the confidentiality of certain information, the value of our products and technology could be adversely affected. We previously relied on trade secrets, know-how, and continuing technological advancement to develop and maintain our competitive position.
If we are unable to protect the confidentiality of certain information, the value of our products and technology could be adversely affected. We rely and previously relied on trade secrets, know-how, and continuing technological advancement to develop and maintain our competitive position.
If the manufacturers of our product cannot successfully manufacture material that conforms to specifications and the strict regulatory requirements of the FDA and any applicable foreign regulatory authority, regulatory submissions related to our products may be delayed or disapproved, and our marketed products may be affected.
If the manufacturers of our products cannot successfully manufacture material that conforms to specifications and the strict regulatory requirements of the FDA and any applicable foreign regulatory authority, regulatory submissions related to our products may be delayed or disapproved, and our marketed products may be affected.
We are uncertain of the impact or outcome of new legislation, regulation, Executive Orders, rescission of rules and policy statements, or new agency priorities, especially any relative impact on the healthcare regulatory and policy landscape, or the impact they may have on our business. 24 Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, additional personnel, or other new requirements.
We are uncertain of the impact or outcome of new legislation, regulation, Executive Orders, rescission of rules and policy statements, or new agency priorities, especially any relative impact on the healthcare regulatory and policy landscape, or the impact they may have on our business. 17 Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, additional personnel, or other new requirements.
We cannot guarantee that a government agency will agree with our interpretations, and it is possible that an enforcement authority may find that one or more of our business practices may not comply.
We cannot guarantee that a government agency will agree with our interpretations, and it is possible that an enforcement authority may find or we may discover that one or more of our business practices may not comply.
Management assessed the valuation allowance analyses with respect to our NOL carryforwards as affected by various aspects of the 2017 Tax Act and determined 31 that a full valuation allowance continues to be appropriate.
Management assessed the valuation allowance analyses with respect to our NOL carryforwards as affected by various aspects of the 2017 Tax Act and determined that a full valuation allowance continues to be appropriate.
In addition, government programs like Medicaid include substantial penalties for increasing commercial prices over the rate of inflation which can affect realization and return on investment. The cost of pharmaceuticals continues to generate substantial governmental and third-party payor interest and states have begun to take action to increase transparency in drug pricing through mandatory reporting requirements.
In addition, government programs like Medicaid include substantial penalties for increasing commercial prices over the rate of inflation which can affect realization and return on investment. The cost of pharmaceuticals continues to generate substantial governmental and third-party payer interest and states have begun to take action to increase transparency in drug pricing through mandatory reporting requirements.
A failure in or breach of our information systems because of cyber-attacks or other tactics could disrupt our business, result in the release or misuse of protected health information, or PHI, confidential or proprietary business information or financial loss, damage our reputation, increase our administrative expenses, and expose us to additional risk of liability to federal or state governments or individuals.
A failure in or breach of our information systems or those of our licensees because of cyber-attacks or other tactics could disrupt our business, result in the release or misuse of protected health information, or PHI, confidential or proprietary business information or financial loss, damage our reputation, increase our administrative expenses, and expose us to additional risk of liability to federal or state governments or individuals.
The CARES Act limits the NOL deduction in taxable years beginning in 2021 to the lesser of the NOL carryforward s or 80 % of the taxpayer's taxable income (after considering the deduction for NOL arising in tax years beginning before January 1, 2018), which may restrict our ability to offset future taxable income with NOL carryforwards and increase our future federal income taxes otherwise payable.
The CARES Act limits the NOL deduction in taxable years beginning in 2021 to the lesser of the NOL carryforwards or 80% of the taxpayer’s taxable income (after considering the deduction for NOL arising in tax years beginning before January 1, 2018), which may restrict our ability to offset future taxable income with NOL carryforwards and increase our future federal income taxes otherwise payable.
There are significant costs associated with winding down our normal historic operations, such as separation of employees, termination of contracts and engagement of external consultants, all of which have and may in the future reduce our cash resources and take up large portions of our employees’ and consultants’ time.
There are significant costs associated with winding down our normal historic operations, such as separation of employees, termination of contracts and engagement of external consultants, all of which have and in the future will reduce our cash resources and take up large portions of our employees’ and consultants’ time.
Item 1A. Risk factors Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, together with all of the information included in this 2022 10-K Report and our other filings with the SEC, before you decide to purchase shares of our common stock.
Item 1A. Risk factors Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, together with all of the information included in this 2023 10-K Report and our other filings with the SEC, before you decide to purchase shares of our common stock.
As a condition to granting marketing approval of a product, the FDA may require a company to conduct additional clinical trials. The results generated in these post-approval clinical trials could result in loss of marketing approval, changes in product labeling, or new or increased concerns about side effects or efficacy of a product.
As a condition to granting marketing approval of a product, the FDA may require additional clinical trials. The results generated in these post-approval clinical trials could result in loss of marketing approval, changes in product labeling, or new or increased concerns about side effects or efficacy of a product.
Risks related to our intellectual property If our efforts to protect the proprietary nature of the intellectual property covering our hormone therapy pharmaceutical products and other products are not adequate, we may not be able to compete effectively in our market.
Risks related to our intellectual property If our efforts or the efforts of our licensees to protect the proprietary nature of the intellectual property covering our hormone therapy pharmaceutical products and other products are not adequate, we may not be able to compete effectively in our market.
These risks include the possibility of the following: • the patent applications that we have filed to that our licensees may fail to result in issued patents in the U.S. or in foreign jurisdictions; • patents issued or licensed to us, or our partners, may be challenged or discovered to have been issued on the basis of insufficient, incomplete, or incorrect information, and thus held to be invalid or unenforceable; • the scope of any patent protection may be too narrow to exclude competitors from developing or designing around these patents; • we, the Population Council, or our licensees were not the first to make the inventions covered by each of our issued patents and pending patent applications; • we, the Population Council, or our licensees may not have been the first inventors to invent or file patent applications for these technologies in the U.S. or were not the first to file patent applications directed to these technologies abroad; • we may fail to comply with procedural, documentary, fee payment, and other similar provisions during the patent application process, which can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights; • future pharmaceutical product candidates may not be patentable; • others may claim rights or ownership regarding patents and other proprietary rights that we hold or license; • delays in development, testing, clinical trials, and regulatory review may reduce the period during which we could market our pharmaceutical products under patent protection; and • we or our licensees may fail to timely apply for patents on our technologies or products.
These risks include the possibility of the following: ● the patent applications that we or our licenses have filed may fail to result in issued patents in the U.S. or in foreign jurisdictions; ● patents issued or licensed to us, or our partners, may be challenged or discovered to have been issued on the basis of insufficient, incomplete, or incorrect information, and thus held to be invalid or unenforceable; ● the scope of any patent protection may be too narrow to exclude competitors from developing or designing around these patents; ● we, the Population Council, or our licensees were not the first to make the inventions covered by each of our issued patents and pending patent applications, or may have created bars under U.S. or foreign laws that would preclude the issuance of patents; 22 ● we, the Population Council, or our licensees may not have been the first inventors to invent or file patent applications for these technologies in the U.S. or were not the first to file patent applications directed to these technologies abroad; ● we may fail to comply with procedural, documentary, fee payment, and other similar provisions during the patent application process, which can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights; ● future pharmaceutical product candidates may not be patentable; ● others may claim rights or ownership regarding patents and other proprietary rights that we hold or license; ● delays in development, testing, clinical trials, and regulatory review may reduce the period during which we could market our pharmaceutical products under patent protection; and ● we or our licensees may fail to timely apply for patents on our technologies or products.
In the United States, private health insurers and other third-party payors often provide reimbursement for products and services based on the level at which the government provides reimbursement through the Medicare or Medicaid programs for such products and services.
In the United States, private health insurers and other third-party payers often provide reimbursement for products and services based on the level at which the government provides reimbursement through the Medicare or Medicaid programs for such products and services.
If our past or present operations, including activities conducted by our sales team or agents, are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal, and administrative penalties, damages, fines, exclusion from government healthcare programs, and the curtailment or restructuring of our operations.
If our past or present operations, including activities conducted by our sales team or agents, are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal, and administrative penalties, damages, fines, and exclusion from government healthcare programs.
If our licensees are unable to hire, engage, and develop enough productive sales personnel or fails to adequately promote our products, our business prospects could suffer.
If our licensees are unable to hire, engage, and develop enough productive sales personnel or fail to adequately promote our products, our business prospects could suffer.
In such event, our ability to commercialize our pharmaceutical products may be threatened, we could lose our competitive advantage, and the competition we face could increase, all of which could adversely affect our business, financial condition, results of operations, and prospects.
In such event, ours or our licensee’s ability to commercialize our pharmaceutical products may be threatened, we could lose our competitive advantage, and the competition we face could increase, all of which could adversely affect our business, financial condition, results of operations, and prospects.
Despite our layered security controls, experienced computer programmers and hackers may be able to penetrate our information systems and misappropriate or compromise sensitive patient or personnel information or proprietary or confidential information, create system disruptions or cause shutdowns.
Despite our layered security controls, experienced computer programmers and hackers may be able to penetrate our information systems or the information systems of our licensees and misappropriate or compromise sensitive patient or personnel information or proprietary or confidential information, create system disruptions or cause shutdowns.
Market acceptance of our products, including our hormone therapy pharmaceutical products and patient-controlled, long-acting contraceptive, by physicians, patients, and payers, will depend on a number of factors, many of which are beyond our control, including the following: • the clinical indications for which our hormone therapy pharmaceutical products and patient-controlled, long-acting contraceptive are approved; • acceptance by physicians and payers of each product as a safe and effective treatment; • the cost of treatment in relation to alternative treatments, including numerous generic pharmaceutical products; • the relative convenience and ease of administration of our products in the treatment of the symptoms for which they are intended; • the availability and efficacy of competitive drugs and devices; • the effectiveness of our licensee’s sales force and marketing efforts; • the extent to which the product is approved for inclusion on formularies of hospitals and managed care organizations, including any access barriers such as prior authorizations and step-edits; • the potential inclusion of a new category for one-year multi-cycle hormonal birth control methods in the FDA Birth Control Guide, which payers may rely upon as guidance for coverage; • the availability of coverage and adequate reimbursement by third parties, such as insurance companies and other healthcare payers, or by government healthcare programs, including Medicare and Medicaid; • limitations or warnings contained in a product’s FDA-approved labeling; and • prevalence and severity of adverse side effects.
Market acceptance of our products, including our hormone therapy pharmaceutical products and patient-controlled, long-acting contraceptive, by physicians, patients, and payers, will depend on a number of factors, many of which are beyond our control, including the following: ● the clinical indications for which our hormone therapy pharmaceutical products and patient-controlled, long-acting contraceptive are approved; ● acceptance by physicians and payers of each product as a safe and effective treatment; ● the cost of treatment in relation to alternative treatments, including numerous generic pharmaceutical products; ● the relative convenience and ease of administration of our products in the treatment of the symptoms for which they are intended; ● the availability and efficacy of competitive drugs and devices; ● the effectiveness of our licensee’s sales force and marketing efforts; ● the extent to which the product is approved for inclusion on formularies of hospitals and managed care organizations, including any access barriers such as prior authorizations and step-edits; ● the availability of coverage and adequate reimbursement by third parties, such as insurance companies and other healthcare payers, or by government healthcare programs, including Medicare and Medicaid; ● limitations or warnings contained in a product’s FDA-approved labeling; and ● prevalence and severity of adverse side effects.
Our operations are dependent on uninterrupted performance of our information systems. Failure to maintain reliable information systems, disruptions in our existing information systems or the implementation of new systems could cause disruptions in our business operations, including violations of patient privacy and confidentiality requirements and other regulatory requirements, increased administrative expenses and other adverse consequences.
Failure to maintain reliable information systems, disruptions in our existing information systems or the implementation of new systems could cause disruptions in our business operations, including violations of patient privacy and confidentiality requirements and other regulatory requirements, increased administrative expenses and other adverse consequences.
Any return to stockholders will be limited to the capital appreciation, if any, of their stock.
Any return to stockholders may be limited to the capital appreciation, if any, of their stock.
Our future results of operations and liquidity could be adversely affected by extended billing and collection cycles at our company, our licensees, or otherwise; delays in payments of outstanding receivable amounts beyond normal payment terms, including royalty payments; supply chain disruptions; and uncertain demand.
Further. our future results of operations and liquidity could be adversely affected during or following any future pandemics or epidemics by extended billing and collection cycles at our company, our licensees, or otherwise; delays in payments of outstanding receivable amounts beyond normal payment terms, including royalty payments; supply chain disruptions; and uncertain demand.
If we, or, with respect to the ANNOVERA license agreement that we have assigned to Mayne Pharma, Mayne Pharma, fail to meet obligations under that license agreement in a material respect, the respective licensor could have the right to terminate the respective agreement and upon the effective date of such termination, have the right to re-obtain the related technology as well as, potentially, aspects of any intellectual property controlled by us or Mayne Pharma and developed during the period the agreement was in force that relate to the applicable technology.
If Mayne Pharma, with respect to the ANNOVERA license agreement that we have assigned to Mayne Pharma, fails to meet obligations under that license agreement in a material respect, the Population Council could have the right to terminate the agreement and upon the effective date of such termination, have the right to re-obtain the related technology as well as, potentially, aspects of any intellectual property controlled by Mayne Pharma and developed during the period the agreement was in force that relate to the applicable technology.
Further, despite our progress with commercial payers, there is no guarantee that our licensees will be able to retain our agreements or obtain new agreements or that they will be able to negotiate favorable reimbursement or pricing terms for our products in the future.
Despite our licensees coverage with commercial payers, there is no guarantee that our licensees will be able to retain ours or their agreements or obtain new agreements, or that they will be able to negotiate favorable reimbursement or pricing terms for our products in the future.
If we, our licensees or our third-party suppliers fail to comply with applicable regulatory requirements, a regulatory agency may take any of the following actions: • conduct an investigation into our or our licensees’ practices and any alleged violation of law; • seek an injunction or impose civil or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; • suspend or impose restrictions on our licensees’ operations, including costly new manufacturing requirements; • seize or detain products, refuse to permit the import or export of products, or require our licensees to initiate a product recall; or • exclude our licensees from providing our products to those participating in government healthcare programs, such as Medicare and Medicaid, and refuse to allow our licensees to enter into supply contracts, including government contracts. 27 Recent government enforcement has targeted pharmaceutical companies for violations of fraud, abuse and other laws.
If we, our licensees or our third-party suppliers fail to comply with applicable regulatory requirements, a regulatory agency may take any of the following actions: ● conduct an investigation into our or our licensees’ practices and any alleged violation of law; ● seek an injunction or impose civil or criminal penalties or monetary fines; ● suspend or withdraw regulatory approval; ● suspend or impose restrictions on our licensees’ operations, including costly new manufacturing requirements; ● seize or detain products, refuse to permit the import or export of products, or require our licensees to initiate a product recall; or ● exclude our licensees from providing our products to those participating in government healthcare programs, such as Medicare and Medicaid, and refuse to allow our licensees to enter into supply contracts, including government contracts.
If any supplier of the API or other products used in our products experiences any significant difficulties in its respective manufacturing processes, does not comply with the terms of their agreement between, or does not devote sufficient time, energy, and care to providing our manufacturing needs, we could experience significant interruptions in the supply of our products, which could impair our licensee’s ability to supply our products at the levels required for commercialization and prevent or delay their successful commercialization.
If any supplier of the API or other products used in our products experiences any significant difficulties in its respective manufacturing processes, chooses to cease supplying, or does not devote sufficient time, energy, and care to providing our manufacturing needs, we could experience significant interruptions in the supply of our products, which could impair our licensee’s ability to supply our products at the levels required for commercialization and prevent or delay their successful commercialization.
If any of the third-party CMOs of our products or any suppliers of raw materials or API experience further difficulties, do not comply with the terms of their agreements, or do not devote sufficient time, energy, and care to providing our manufacturing needs, or if any manufacturing specification modifications that we or Mayne Pharma have requested are not approved by the FDA, we could experience additional interruptions in the supply of our products, which may have a material adverse impact on our revenue, results of operations and financial position.
If any of the third-party CMOs of our products or any suppliers of raw materials or API experience further difficulties, do not comply with the terms of their agreements, or do not devote sufficient time, energy, and care to providing our manufacturing needs, or if any manufacturing specification modifications that we or Mayne Pharma have requested are not approved by the FDA, we could experience additional interruptions in the supply of our products, which may have a material adverse impact on our revenue, results of operations, and financial position. 13 Our licensees also do not have long-term contracts for the supply of all the API used in BIJUVA, and ANNOVERA.
If we are unable to maintain effective internal control over financial reporting or our independent auditors are unwilling or unable to provide us with an attestation report on the effectiveness of internal control over financial reporting for future periods as required by, or voluntarily followed under, Section 404 of the Sarbanes-Oxley Act, we may not be able to produce accurate financial statements, and investors may therefore lose confidence in our operating results, our stock price could decline and we may be subject to litigation or regulatory enforcement actions. 34 We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.
If we are unable to maintain effective internal control over financial reporting or our independent auditors are unwilling or unable to provide us with an attestation report on the effectiveness of internal control over financial reporting for future periods as required by, or voluntarily followed under, Section 404 of the Sarbanes-Oxley Act, we may not be able to produce accurate financial statements, and investors may therefore lose confidence in our operating results, our stock price could decline and we may be subject to litigation or regulatory enforcement actions.
The majority of our cash is held in accounts at U.S. banking institutions that we believe are of high quality. Cash held in depository accounts may exceed the $250,000 Federal Deposit Insurance Corporation (“FDIC”) insurance limits.
We maintain our cash at financial institutions, often in balances that exceed federally insured limits. The majority of our cash is held in accounts at U.S. banking institutions that we believe are of high quality. Cash held in depository accounts may exceed the $250,000 Federal Deposit Insurance Corporation (“FDIC”) insurance limits.
Such claims may lead to material costs for us, or an inability to protect or use valuable intellectual property rights, which could adversely affect our business, financial condition, results of operations, and prospects.
Litigation may be necessary to defend against these claims. Such claims may lead to material costs for us, or an inability to protect or use valuable intellectual property rights, which could adversely affect our business, financial condition, results of operations, and prospects.
We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain any future earnings for the operation of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, the terms of any future debt agreements may also preclude us from paying dividends.
We currently anticipate that we will retain any future earnings for the operation of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, the terms of any future debt agreements may also preclude us from paying dividends.
Following the Mayne Transaction, we no longer have the express right to enforce our intellectual property. To counter infringement or unauthorized use, we must rely on Mayne Pharma to file infringement claims, including with respect to Teva’s IMVEXXY Notice Letter.
Competitors may infringe our patents or the patents of the ANNOVERA licensor. Following the Mayne Transaction, we no longer have the express right to enforce our intellectual property. To counter infringement or unauthorized use, we must rely on Mayne Pharma to file infringement claims, including with respect to Teva’s IMVEXXY Notice Letter.
Our licensees may be able to enter into long-term agreements with alternative manufacturers, or do so on commercially reasonable terms, and if they do enter into agreements with alternative manufacturers, those alternative manufacturers may not be approved by the FDA, any of which could have an adverse impact on our business.
Our licensees may seek to enter into long-term agreements with alternative manufacturers on commercially reasonable terms, and if they do enter into agreements with alternative manufacturers, those alternative manufacturers may not be approved by the FDA or subsequently lose FDA approval to manufacture our drugs, any of which could have an adverse impact on our business.
Accordingly, disruptions to our business as a result of COVID-19 and other pandemics or epidemics could continue to result in an adverse effect on our business, results of operations, financial condition and prospects in the near-term and beyond 2023. Unfavorable global economic conditions could harm our business, financial condition or results of operations.
Accordingly, disruptions to our business as a result of COVID-19 and other pandemics or epidemics could continue to result in an adverse effect on our business, results of operations, financial condition and prospects in the near-term and beyond 2024.
Our current liquidity position raises substantial doubt about our ability to continue as a going concern and Grant Thornton LLP, our independent registered public accounting firm for the fiscal year ended December 31, 2022, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2022, indicating such.
Our current liquidity position raises substantial doubt about our ability to continue as a going concern and Berkowitz Pollack Brant, Advisors + CPAs, our independent registered public accounting firm for the fiscal year ended December 31, 2023, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2023, indicating such.
We also could experience manufacturing delays if our CMOs give greater priority to the supply of other products over our products to the delay or other detriment of our products, or otherwise do not satisfactorily perform according to the terms of their agreements. Finally, we could experience manufacturing delays or interruptions because of the ongoing COVID-19 pandemic.
We also could experience manufacturing delays if our CMOs give greater priority to the supply of other products over our products to the delay or other detriment of our products, or otherwise do not satisfactorily perform according to the terms of their agreements.
In addition, mechanisms exist in much of the world permitting some form of challenge by generic drug marketers to our patents before, or immediately following, the expiration of any regulatory exclusivity, and generic companies are increasingly employing aggressive strategies, such as “at risk” launches to challenge relevant patent rights.
In addition, mechanisms exist in much of the world permitting some form of challenge by generic drug marketers to our patents before, or immediately following, the expiration of any regulatory exclusivity, and generic companies are increasingly employing aggressive strategies, such as “at risk” launches or the post-grant approval processes that exists in the U.S. and foreign jurisdictions to challenge relevant patent rights.
Our stockholders may experience dilution upon future equity issuances, including convertible debt or equity securities we may issue in the future, the exercise of stock options to purchase common stock granted to our employees, consultants and directors, including options to purchase common stock granted under our stock option and equity incentive plans or the issuance of common stock in settlement of previously issued awards under our stock option and equity incentive plans that may vest in the future.
Our stockholders may experience dilution upon future equity issuances, including convertible debt or equity securities we may issue in the future, the exercise of stock options to purchase common stock granted to our employees, consultants and directors, including options to purchase common stock granted under our stock option and equity incentive plans or the issuance of common stock in settlement of previously issued awards under our stock option and equity incentive plans that may vest in the future. 30 We expect that additional capital will be needed in the future to continue our planned operations.
If revenue from royalties related to sales of our products does not increase, we may be required to seek to raise additional funds, which could have an adverse effect on our business, financial condition, results of operations, and growth prospects.
If revenue from royalties related to sales of our products does not increase, we may be required to seek to raise additional funds, which could have an adverse effect on our business, financial condition, results of operations, and growth prospects. In addition, our revenue from royalties is based on information compiled by, and received from, our licensees.
If the manufacturers of our products are unsuccessful in obtaining raw materials, if are licensees are unable to manufacture and release inventory on a timely and consistent basis, if our licensees fail to maintain an adequate level of product inventory, if inventory is destroyed or damaged, or if our licensees’ inventory reaches its expiration date, patients might not have access to our products, our reputation and brands could be harmed, and physicians may be less likely to recommend our products in the future, each of which could have an adverse effect on our business, financial condition, results of operations, and cash flows.
If the manufacturers of our products are unsuccessful in obtaining raw materials, if are licensees are unable to manufacture and release inventory on a timely and consistent basis, if our licensees fail to maintain an adequate level of product inventory, if inventory is destroyed or damaged, or if our licensees’ inventory reaches its expiration date, patients might not have access to our products, our reputation and brands could be harmed, and physicians may be less likely to recommend our products in the future, each of which could have an adverse effect on our business, financial condition, results of operations, and cash flows. 26 Our business may be impacted by new or changing tax laws or regulations and actions by federal, state, and/or local agencies, or how judicial authorities apply tax laws.
If our dietary supplement , hormone therapy pharmaceutical products or patient-controlled, long-acting contraceptive products do not have the effects intended or cause undesirable side effects, our business may suffer.
Similar regulations apply in foreign jurisdictions. 19 If our dietary supplement , hormone therapy pharmaceutical products or patient-controlled, long-acting contraceptive products do not have the effects intended or cause undesirable side effects, our business may suffer.
Adverse publicity in the form of published scientific research, statements by regulatory authorities or otherwise, whether or not accurate, that associates use of our products or any other similar products with illness or other adverse effects, or that questions the benefits of our products or similar products, or that claims that such products do not have the effect intended, or that question the marketing of our products, could have an adverse effect on our business, reputation, financial condition, or results of operations.
Adverse publicity in the form of published scientific research, statements by regulatory authorities or otherwise, whether or not accurate, that associates use of our products or any other similar products with illness or other adverse effects, or that questions the benefits of our products or similar products, or that claims that such products do not have the effect intended, or that question the marketing of our products, could have an adverse effect on our business, reputation, financial condition, or results of operations. 25 Our licensees may initiate product recalls or withdrawals or may be subject to regulatory enforcement actions that could negatively affect our business.
Disruptions have occurred and may occur in the future that affect our licensees’ ability to obtain supplies or other components for our products, manufacture additional products, or deliver inventory in a timely manner.
Also, disruptions have occurred and may occur in the future that affect our licensees’ ability to obtain supplies or other components for our products, manufacture additional products, or deliver inventory in a timely manner. This would result in lost sales (and royalties) and damage to our reputation.
Our financial condition and results of operations for 2021 and 2022 were, and our financial condition and results of operations for 2023 and beyond may be, adversely affected by the ongoing COVID-19 pandemic and any future pandemics or epidemics.
Our financial condition and results of operations in 2021 and 2022 were, and our financial condition and results of operations in the future may be, adversely affected by the COVID-19 pandemic and any future pandemics or epidemics. Our business was impacted by the COVID-19 pandemic and it may be impacted by any future pandemics or epidemics.
The occurrence of any of the foregoing events or penalties may force us to expend significant amounts of time and money and may significantly inhibit our licensee’s ability to continue to market our products and generate revenue.
The violations of any of these law or rules may result in penalties that may force us to expend significant amounts of time and money and may significantly inhibit our licensee’s ability to continue to market our products and generate revenue.
In connection with the products we previously sold and the royalties we receive, we calculate, collect, and remit various federal, state, and local taxes, surcharges and regulatory fees, or taxes, to numerous federal, state and local governmental authorities.
In connection with the products we previously sold and the royalties we receive, we calculate, collect, and remit various federal, state, and local taxes, surcharges and regulatory fees, or taxes, to numerous federal, state and local governmental authorities. In addition, we incur and pay state and local taxes and fees on purchases of goods and services used in our business.
The Medicaid Drug Rebate statute requires manufacturers to calculate and report price points, which are used to determine Medicaid rebate payments shared between the states and the federal government and Medicaid payment rates for the drug.
Payment or reimbursement of prescription drugs by Medicaid or Medicare requires manufacturers of the drugs to submit pricing information to CMS. The Medicaid Drug Rebate statute requires manufacturers to calculate and report price points, which are used to determine Medicaid rebate payments shared between the states and the federal government and Medicaid payment rates for the drug.
This would result in lost sales (and royalties) and damage to our reputation. 20 Our business may also be affected by negative impacts of the COVID-19 pandemic and any future pandemic or epidemic on capital markets and economies worldwide, and it is possible that the pandemic could cause a local and/or global economic recession.
Our business may also be affected by negative impacts of any future pandemic or epidemic on capital markets and economies worldwide, and it is possible that a pandemic could cause a local and/or global economic recession.
A severe or prolonged economic downturn, including the impact of increased interest rates and inflation (such as the recent rise in inflation in the United States), could result in a variety of risks to our business, including our ability to raise additional capital when needed on acceptable terms, if at all.
Our results of operations could be harmed by general conditions in the global economy and in the global financial markets. A severe or prolonged economic downturn, including the impact of increased interest rates and inflation, could result in a variety of risks to our business, including our ability to raise additional capital when needed on acceptable terms, if at all.
If we continue to incur substantial losses and are unable to secure additional financing, we could be forced to discontinue or curtail our business operations, merge, consolidate, or combine with a company with greater financial resources in a transaction that might be unfavorable to us. 16 There is s ubstantial doubt about our ability to continue as a going concern.
If we continue to incur substantial losses, because the royalties of our products are insufficient or otherwise, and are unable to secure additional financing, we could be forced to discontinue or curtail our business operations, merge, consolidate, or combine with a company with greater financial resources in a transaction that might be unfavorable to us.
If the FDA raises concerns regarding our licensees’ promotional materials or messages, they may be required to modify or discontinue using them and may be required to provide corrective information. 26 Commercial products must now meet the requirements of the Drug Supply Chain Security Act (“DSCSA”) which imposes obligations on manufacturers of prescription pharmaceutical products for commercial distribution, regulating the distribution of the products at the federal level, and sets certain standards for federal or state registration and compliance of entities in the supply chain (manufacturers and re-packagers, wholesale distributors, third-party logistics providers, and dispensers).
Commercial products must now meet the requirements of the Drug Supply Chain Security Act (“DSCSA”) which imposes obligations on manufacturers of prescription pharmaceutical products for commercial distribution, regulating the distribution of the products at the federal level, and sets certain standards for federal or state registration and compliance of entities in the supply chain (manufacturers and re-packagers, wholesale distributors, third-party logistics providers, and dispensers).
Our principal stockholder owns a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval. As of December 31, 2022, Rubric Capital Management LP (“Rubric”) and its affiliates beneficially owned approximately 18.5% of our common stock. Rubric may be able to largely determine the outcome of all matters requiring stockholder approval.
As of December 31, 2023, Rubric Capital Management LP (“Rubric”) and its affiliates beneficially owned approximately 25.6% of our common stock. Rubric may be able to largely determine the outcome of all matters requiring stockholder approval.
The recent implementation of the GDPR has increased our responsibility and liability in relation to personal data that we process, including in clinical trials, and we may in the future be required to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attention and increase our cost of doing business.
The implementation of the GDPR has increased our responsibility and liability in relation to personal data that we process, and we may in the future be required to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attention and increase our cost of doing business. 27 In July 2020, the Court of Justice of the European Union issued its long-awaited decision in the case Data Protection Commission v.
If we have incorrectly described, disclosed, calculated, assessed, or remitted amounts that were due to governmental authorities, we could be subject to additional taxes, fines, penalties, or other adverse actions, which could impact our business, results of operations, and financial condition. We may not be able to maintain effective and efficient information systems or properly safeguard our information systems.
The impact of tax reform on holders of our common stock is also uncertain and could be adverse. If we have incorrectly described, disclosed, calculated, assessed, or remitted amounts that were due to governmental authorities, we could be subject to additional taxes, fines, penalties, or other adverse actions, which could impact our business, results of operations, and financial condition.
One of our third-party contract manufacturers has recently experienced an increase in difficulties with manufacturing of ANNOVERA, resulting in intermittent supply of ANNOVERA for commercial distribution. See “Our dependence upon third parties for the manufacture and supply of our existing women’s healthcare products may cause delays in, or prevent our licensees from, successfully commercializing, and marketing our products” above.
See “Our dependence upon third parties for the manufacture and supply of our existing women’s healthcare products may cause delays in or prevent our licensees from successfully commercializing and marketing our products” above.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our headquarters is in Boca Raton, Florida. The lease includes 56,212 rentable square feet, or the full premises, of which the lease on 7,561 square feet commenced in 2018 and the lease on the remaining 48,651 square feet commenced in August 2019, or the full premises commencement date.
Biggest changeItem 2. Properties Our headquarters are in Boca Raton, Florida. We operate from a fully remote environment. We have a lease that includes 62,748 rentable square feet, or the full premises, of which the lease of 7,561 square feet commenced in 2018 and the lease of 55,187 square feet commenced in August of 2019, or the full premises commencement date.
The extension option is not included in the determination of the lease term as it is not reasonably certain to be exercised. The term of the lease includes escalating rent and free rent periods. We are also responsible for certain other operating costs under the lease, including 40 electricity and utility expenses.
The extension option is not included in the determination of the lease term as it is not reasonably certain to be exercised. The term of the lease includes escalating rent and free rent periods. We are also responsible for certain other operating costs under the lease, including electricity and utility expenses.
W e are in a process of subleasing our headquarters in Boca Raton as a result of shifting our business to become a pharmaceutical royalty company and terminating our employees.
We have sublet 41,418 square feet and are in the process of subletting the remaining 21,330 square feet of our headquarters in Boca Raton as a result of shifting our business to become a pharmaceutical royalty company and terminating our employees.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe length of the stay of the IMVEXXY litigation is dependent on further action by Teva. As of December 31, 2022, for the IMVEXXY Paragraph IV legal proceeding, we have incurred and recorded legal costs amounting to $2.3 million in prepaid expenses and other current assets since we believe that we will successfully prevail in this legal proceeding.
Biggest changeThe length of the stay of the IMVEXXY litigation is dependent on further action by Teva. As of December 31, 2022, for the IMVEXXY Paragraph IV legal proceeding, we had incurred and recorded legal costs amounting to $2.3 million in prepaid expenses and other current assets since we believe that we will successfully prevail in this legal proceeding.
We are currently not involved in any other litigations and proceedings that we believe would have a material effect on our consolidated financial condition, results of operations, or cash flows. Item 4. Mine safety disclosures Not applicable. 41 PART II
We are currently not involved in any other litigations and proceedings that we believe would have a material effect on our consolidated financial condition, results of operations, or cash flows. Item 4. Mine safety disclosures Not applicable. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of February 28, 2023, there were 40,366 stockholders of record of our common stock. Performance graph As a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of Regulation S-K, we are not required to provide this information.
Biggest changeAs of March 29, 2024, there were 80 stockholders of record of our common stock. Performance graph As a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of Regulation S-K, we are not required to provide this information.
Item 5. Market for registrant’s common equity, related stockholder matters, and issuer purchases of equity securities market information on common stock Since October 2017, our common stock has been listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “TXMD.” As of December 30, 2022, the closing price of our common stock on Nasdaq was $5.59 per share.
Item 5. Market for registrant’s common equity, related stockholder matters, and issuer purchases of equity securities market information on common stock Since October 2017, our common stock has been listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “TXMD.” As of December 29, 2023, the closing price of our common stock on Nasdaq was $2.25 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAdditional disclosures regarding discontinued operations are provided in Note 2 to the financial statements included in this Annual Report. 45 The discussion below, and the revenues and expenses discussed below, are based on and relate to the continuing operations of the company. 2022 compared to 2021 Year ended December 31, 2022 2021 Revenue: Product revenue, net $ — $ — License revenue 69,963 2,573 Total revenue, net 69,963 2,573 Cost of revenue 1,397 1,402 Gross profit 68,566 1,171 Operating expenses: Selling and marketing — — General and administrative 57,903 80,748 Research and development — — Restructuring expense 9,472 — Total operating expenses 67,375 80,748 Income (loss) from operations 1,191 (79,577 ) Other (expense) income: Other (expense) income, net (117 ) 272 Total other (expense) income, net (117 ) 272 Income (loss) from continuing operations before income taxes 1,074 (79,305 ) Provision for income taxes — — Net income (loss) from continuing operations 1,074 (79,305 ) Income (loss) from discontinued operations, net of income taxes 110,923 (93,110 ) Net income (loss) $ 111,997 $ (172,415 ) Revenue.
Biggest changeThe following table sets forth the results of our operations (in thousands): Years ended December 31, 2023 2022 Revenue, net: License and service revenue $ 1,302 $ 69,963 Total revenue, net 1,302 69,963 Cost of revenue — 1,397 Gross profit 1,302 68,566 Operating expenses: Selling, general and administrative 8,903 56,710 Depreciation & amortization 922 1,193 Restructuring — 9,472 Total operating expenses 9,825 67,375 Income (loss) from operations (8,523 ) 1,191 Other income (expense): Miscellaneous income (expense) 781 (117 ) Total other income (loss), net 781 (117 ) Income (loss) from continuing operations before income taxes (7,742 ) 1,074 Benefit (provision) for income taxes 43 — Net income (loss) from continuing operations (7,699 ) 1,074 Income (loss) from discontinued operations, net of income taxes (2,579 ) 110,923 Net income (loss) $ (10,278 ) $ 111,997 Revenue.
The FDA has also asked the sponsors of other vaginal estrogen products to participate in the observational study. In connection with the observational study, we would have been required to provide progress reports to the FDA on an annual basis. The obligation to conduct this study was transferred to Mayne Pharma as part of the License Agreement.
The FDA has also asked the sponsors of other vaginal estrogen products to participate in the observational study. In connection with the observational study, we would have been required to provide progress reports to the FDA on an annual basis. The obligation to conduct this study was transferred to Mayne Pharma as part of the Mayne License Agreement.
Upon the expiry of the 20-year royalty term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for the Licensed Products.
Upon the expiry of the 20-year royalty term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for the Licensed Products.
Under the agreement, the Mayne License Agreement, the Company is entitled to earn royalties on net sales of all of the Licensed Products at a royalty rate of (i) 8% on the first $80 million of net sales of the Licensed Products and (ii) 7.5% on net sales of all of the Licensed Products after the first $80 million of net sales.
Under the Mayne License Agreement, the Company is entitled to earn royalties on net sales of all of the Licensed Products at a royalty rate of (i) 8% on the first $80 million of net sales of the Licensed Products and (ii) 7.5% on net sales of all of the Licensed Products after the first $80 million of net sales.
On December 30, 2022, we granted Mayne Pharma (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.
Mayne Pharma License Agreement On December 30, 2022, we granted Mayne Pharma (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.
The Minimum Annual Royalty totaled $42.6 million, and this total amount was allocated among the Licensed Products on the relative net present value of forecasted future product sales from those products. The portion allocated to consideration for the sale of ANNOVERA was attributed towards the gain on disposal of that asset.
The Minimum Annual Royalty originally totaled $42.6 million, and this total amount was allocated among the Licensed Products on the relative net present value of forecasted future product sales from those products. The portion allocated to consideration for the sale of ANNOVERA was attributed towards the gain on disposal of that asset.
On December 30, 2022, we granted an exclusive license to commercialize the Company’s IMVEXXY in the United States and its possessions and territories to Mayne Pharma. We also have entered into licensing agreements with third parties to market and sell IMVEXXY outside of the U.S.
On December 30, 2022, we granted an exclusive license to commercialize IMVEXXY in the United States and its possessions and territories to Mayne Pharma. We also have entered into licensing agreements with third parties to market and sell IMVEXXY outside of the U.S.
On December 30, 2022, we granted an exclusive license commercialize the Company’s BIJUVA in the United States and its possessions and territories to Mayne Pharma. We also have entered into the Knight License Agreement with Knight pursuant to which we granted Knight an exclusive license to commercialize BIJUVA in Canada and Israel.
On December 30, 2022, we granted an exclusive license to commercialize BIJUVA in the United States and its possessions and territories to Mayne Pharma. We also have entered into the Knight License Agreement with Knight pursuant to which we granted Knight an exclusive license to commercialize BIJUVA in Canada and Israel.
This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. See “Statement Regarding Forward-Looking Information.” Our actual results may differ materially from those contained in or implied by any forward-looking statements as a result of various factors, including, but not limited to, the risks and uncertainties described under “Risk Factors” elsewhere in this 2022 10-K Report.
This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. See “Statement Regarding Forward-Looking Information.” Our actual results may differ materially from those contained in or implied by any forward-looking statements as a result of various factors, including, but not limited to, the risks and uncertainties described under “Risk Factors” elsewhere in this 2023 10-K Report.
In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories.
In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in relevant territories.
We applied the royalty recognition constraint required under the guidance for sales-based royalties, which requires a sales-based royalty to be recorded no sooner than the underlying sale. Therefore, royalties on sales of products commercialized by Mayne Pharma will be recognized in the subsequent periods that the Licensed Products are sold. For additional discussion on revenue, see “L.
We applied the royalty recognition constraint required under the guidance for sales-based royalties, which requires a sales-based royalty to be recorded no sooner than the underlying sale. Therefore, royalties on sales of products commercialized by Mayne Pharma will be recognized in the subsequent periods that the Licensed Products are sold. For additional discussion on revenue, see “J.
An adjustment has been made to the consolidated statements of operations for the twelve months ended December 31, 2022 and 2021 to reclassify commercial activities and vitaCare activities to discontinued operations as the cessation of these operations, in the aggregate, represented a business shift that will have a major effect on the Company’s operations and financial results.
An adjustment has been made to the consolidated statements of operations for the twelve months ended December 31, 2023 and 2022 to reclassify commercial activities and vitaCare activities to discontinued operations as the cessation of these operations, in the aggregate, represented a business shift that will have a major effect on the Company’s operations and financial results.
Further, Mayne Pharma will pay to the Company royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date.
Further, Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80.0 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date.
As part of the transformation that included the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated financial statements for all periods prior to the Closing Date. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in the Company’s consolidated balance sheets.
As part of the transformation that included the Mayne License Agreement, historical results of commercial operations for all periods prior to the Closing Date have been reflected as discontinued operations in our consolidated financial statements. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in our consolidated balance sheets.
Item 7. Management’s discussion and analysis of financial condition and results of operations You should read the following discussion and analysis in conjunction with the information set forth under our consolidated financial statements and the notes to those financial statements included elsewhere in this 2022 10-K Report.
Item 7. Management’s discussion and analysis of financial condition and results of operations You should read the following discussion and analysis in conjunction with the information set forth under our consolidated financial statements and the notes to those financial statements included elsewhere in this 2023 10-K Report.
The total consideration from Mayne Pharma to the Company for the purchase of the Transferred Assets and the grant of the licenses under the Mayne License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.
The total consideration from Mayne Pharma to TherapeuticsMD for the purchase of the Transferred Assets under the Transaction Agreement and the grant of the licenses under the Mayne License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment (as defined below) and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.
On December 30, 2022, we granted an exclusive license to commercialize the Company’s IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD® and vitaMedMD® brands and assigning the Company’s exclusive license to commercialize ANNOVERA to Mayne Pharma.
On December 30, 2022, we granted an exclusive license to commercialize IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands and assigning our exclusive license to commercialize ANNOVERA to Mayne Pharma.
We will record the contingent consideration at the settlement amount when the consideration is realized or realizable. The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. The commitments under a long-term services agreement related to vitaCare was transferred to Mayne Pharma as part of the Mayne Transaction.
We will record the contingent consideration at the settlement amount when the consideration is realized or realizable. The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. Our commitments under a long-term services agreement related to vitaCare were transferred to Mayne Pharma as part of the Mayne Transaction.
Our royalty revenue recognized in 2022 primarily related to royalties provided for under the Mayne License Agreement based on Mayne Pharma’s sales of the Licensed Products subject to that agreement.
Our royalty revenue recognized in 2023 primarily related to royalties provided for under the Mayne License Agreement based on Mayne Pharma’s sales of the Licensed Products subject to that agreement.
The proceeds at closing were allocated between consideration for the sale of ANNOVERA and the initial license fee for the Licensed Products, as the sale of ANNOVERA was accounted for under ASC 610-20, Gains and Losses from Derecognition of Nonfinancial Assets in arriving at the gain on disposal (see Note 2 to the financial statements included in this Annual Report), while the license grant of the other products were recognized under the provisions of ASC 606, Revenue from Contracts with Customers, as a license of functional intellectual asset.
The proceeds at closing were allocated between consideration for the sale of ANNOVERA and the initial license fee for the Licensed Products, as the sale of ANNOVERA was accounted for under ASC 610-20, Gains and Losses from Derecognition of Nonfinancial Assets in arriving at the gain on disposal (see Note 2 to the consolidated financial statements included in this 2023 10-K Report), while the license grant of the other products were recognized under the provisions of ASC 606, Revenue from Contracts with Customers, as a license of functional intellectual asset.
We entered into the Theramex License Agreement with Theramex HQ UK Limited (“Theramex”) pursuant to which we granted Theramex an exclusive license to commercialize IMVEXXY for human use outside of the U.S., except for Canada and Israel. As of December 31, 2022, no IMVEXXY sales had been made through these licensing agreements.
We entered into the Theramex License Agreement with Theramex HQ UK Limited (“Theramex”) pursuant to which we granted Theramex an exclusive license to commercialize IMVEXXY for human use outside of the U.S., except for Canada and Israel. As of December 31, 2023, no IMVEXXY sales had been made through the Theramex and Knight licensing agreements.
Commitments and contingencies" to the consolidated financial statements included in this 2022 10-K Report. Critical accounting policies and estimates Management's discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included elsewhere in this 2022 10-K Report, which has been prepared in accordance with U.S. GAAP (“U.S. GAAP”).
Commitments and contingencies” to the consolidated financial statements included in this 2023 10-K Report. Critical accounting policies and estimates Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included elsewhere in this 2023 10-K Report, which has been prepared in accordance with U.S. GAAP (“U.S. GAAP”).
This royalty receivable is a contract asset as of December 31, 2022, and is further subject to offset by Mayne Pharma.
This royalty receivable is a contract asset as of December 31, 2023, and is further subject to offset by Mayne Pharma.
The Company also has license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S. • In July 2018, we entered into a the Knight License Agreement with Knight pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel. • In June 2019, we entered into the “Theramex License Agreement with Theramex to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel.
The Company also has license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S. ● In July 2018, we entered into the “Knight License Agreement” with Knight pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel. ● In June 2019, we entered into the “Theramex License Agreement” with Theramex to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel.
Results of operations In December 2022, we granted an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products and assigning the Company’s exclusive license to commercialize ANNOVERA to Mayne Pharma, which resulted in a business shift that had a major effect on our operations and financial results.
Results of operations In December 2022, we granted an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products and assigned our exclusive license to commercialize ANNOVERA to Mayne Pharma, which resulted in a business shift that had a major effect on our operations and financial results.
As of December 31, 2022, we had a royalty receivable of $1.5 million relating to the short-term portion of receivable from Mayne Pharma and $20.3 million relating to the long term portion of royalty receivable which includes royalties recognized from the Minimum Annual Royalty.
As of December 31, 2023, we had a royalty receivable of $3.1 million relating to the short-term portion of receivable from Mayne Pharma and $18.5 million relating to the long-term portion of royalty receivable which includes royalties recognized from the Minimum Annual Royalty.
Mayne Pharma will pay to the Company minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below.
Mayne Pharma will pay us minimum annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below.
The restricted cash was held by an escrow agent and was be released to us in March 2023. Additionally, we may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement.
The restricted cash was held by an escrow agent and was released to us in March 2023. Additionally, we may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement, however we do not believe this earnout will be realized.
Severance obligations for all employees other than executive officers were paid in full in the first quarter of 2023 and severance obligations for terminated executive officers will be paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 2022, we employed one full-time employee primarily engaged in an executive position.
Severance obligations for all employees other than executive officers were paid in full in January 2023 and severance obligations for terminated executive officers were paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 2023, we employed one full-time employee primarily engaged in an executive position.
We utilized $120.0 million of net proceeds from the vitaCare Divestiture to make a prepayment of the loans under the Financing Agreement under the terms of Amendment No. 9 of the Financing Agreement.
We utilized $120.0 million of net proceeds from the vitaCare Divestiture to make a prepayment of the loans under the Financing Agreement.
Mayne Pharma will pay to the Company minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain 47 further adjustments, including as described below.
Mayne Pharma will pay us minimum annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below.
The presence of these projected factors in conjunction with the uncertainty of the capital markets raises substantial doubt about the Company's ability to continue as a going concern for the next twelve months from the issuance of these financial statements.
The potential impact of these factors in conjunction with the uncertainty of the capital markets raises substantial doubt about our ability to continue as a going concern for the next twelve months from the issuance of these financial statements.
Additional disclosures regarding discontinued operations are provided in Note 2 Discontinued Operations to the consolidated financial statements included in this Annual Report.
Additional disclosures regarding discontinued operations are provided in Note 2 to the consolidated financial statements included in this 2023 10-K Report.
GAAP, an estimate is made of the loss and the appropriate accounting entries are reflected in our financial statements. Purchase commitments Information regarding purchase commitments is in "Note 8. Commitments and contingencies" to the consolidated financial statements included in this 2022 10-K Report. Employment agreements Information regarding employment agreements is in "Note 8.
GAAP, an estimate is made of the loss and the appropriate accounting entries are reflected in our consolidated financial statements. Commitments Information regarding commitments is in “Note 8. Commitments and contingencies” to the consolidated financial statements included in this 2023 10-K Report. Employment agreements Information regarding employment agreements is in “Note 8.
The prepaid royalties will reduce the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to $257,250 per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment is paid to the Company.
The prepaid royalties reduced the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to $257 thousand per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment was paid to us.
As part of the transformation of our Company and the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated financial statements for all periods presented. Revenue from continuing operations is related to our license agreements.
As part of our transformation and the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated financial statements for all periods presented.
On the Closing Date, the Company and Mayne Pharma entered into Amendment No. 1 to the Mayne License Agreement. Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay the Company approximately $1.0 million in prepaid royalties on the Closing Date.
Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay us approximately $1.0 million in prepaid royalties on the Closing Date.
Discontinued Operations Discontinued operations comprise activities that were disposed of at the end of the period, represent a separate major line of business that can be clearly distinguished for operational and financial reporting purposes and represent a business shift having a major effect on the Company’s operations and financial results according to Accounting Standard Codification (“ASC”) Topic 205, Presentation of Financial Statements.
Basis of presentation, new accounting standards and summary of significant accounting policies” to the consolidated financial statements included in this 2023 10-K Report. 40 Discontinued Operations Discontinued operations comprise activities that were disposed of at the end of the period, represent a separate major line of business that can be clearly distinguished for operational and financial reporting purposes and represent a business shift having a major effect on the Company’s operations and financial results according to Accounting Standard Codification (“ASC”) Topic 205, Presentation of Financial Statements.
Prenatal vitamin products On December 30, 2022, we granted an exclusive license to commercialize, in the United States and its possessions and territories, our prescription prenatal vitamin product lines under our vitaMedMD brand name and authorized generic formulations of some of our prescription prenatal vitamin products under our BocaGreenMD Prena1 name to Mayne Pharma.
Our obligations to perform the post-approval study have been transferred to Mayne Pharma as part of the Mayne License Agreement. 35 Prenatal vitamin products On December 30, 2022, we granted an exclusive license to commercialize, in the United States and its possessions and territories, our prescription prenatal vitamin product lines under our vitaMedMD brand name and authorized generic formulations of some of our prescription prenatal vitamin products under our BocaGreenMD Prenatal name to Mayne Pharma.
To address our capital needs, we are pursuing various equity and debt financing and other alternatives. The equity financing alternatives may include the private placement of equity, equity-linked, or other similar instruments or obligations with one or more investors, lenders, or other institutional counterparties or an underwritten public equity or equity-linked securities offering.
The equity financing alternatives may include the private placement of equity, equity-linked, or other similar instruments or obligations with one or more investors, lenders, or other institutional counterparties or an underwritten public equity or equity-linked securities offering.
Pursuant to a Transaction Agreement, dated December 4, 2022, between the Company and Mayne Pharma, the Company sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize the Products in the United States, including the Company’s exclusive license from the Population Council to commercialize ANNOVERA.
Under the Transaction Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Transaction Agreement”), we sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize the Products in the United States, including, with the Population Council’s consent, our exclusive license from the Population Council to commercialize ANNOVERA (the “Transferred Assets”).
Our gross profit for 2022 was $68.6 million, an increase of $67.4 million, compared to 2021. The increase in our gross profit was primarily a result of an increase in license revenue related to the initial upfront payment and guaranteed minimums from the Mayne Transaction. Operating expenses.
Our gross profit for 2023 was $1.3 million, a decrease of $67.3 million, compared to $68.6 million for 2022. This decrease in our gross profit was primarily a result of the license revenue related to the initial upfront payment and guaranteed minimums from the Mayne Transaction that was recognized during the year ended December 31, 2022. Operating expenses.
Recent accounting pronouncements Information regarding accounting standards adopted during 2022 is included in "Note 1. Basis of Presentation, New Accounting Standards and Significant Accounting Policies" to the consolidated financial statements.
Recent accounting pronouncements Information regarding accounting standards issued or effective in 2023 is included in “Note 1. Basis of Presentation, New Accounting Standards and Significant Accounting Policies” to the consolidated financial statements.
Further, Mayne Pharma will pay to the Company royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date. 42 The royalty rate will decrease to 2.0% on a Product-by-Product basis upon the earlier to occur of ( i ) the expiration or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States.
Further, Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date.
In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries. In connection with the Company’s transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr.
In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries. In connection with our transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr. Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 31, 2022.
If Mayne Pharma’s sales of IMVEXXY, BIJUVA, or ANNOVERA are delayed, if the net working capital settlement with Mayne Pharma under the Transaction Agreement is greater than estimated, or if we are unsuccessful with future financings and or the continued impact of the COVID-19 pandemic or the supply chains related to the third-party contract manufacturers is worse than we anticipate, our existing cash reserves would be insufficient to satisfy our liquidity.
If Mayne Pharma’s sales of Licensed Products grow more slowly than expected or decline, if the net working capital settlement with Mayne Pharma under the Transaction Agreement is greater than our current estimates, if we are unsuccessful with future financings or the supply chains related to the third-party contract manufacturers are worse than we anticipate, our existing cash reserves may be insufficient to satisfy our liquidity requirements.
On December 30, 2022, the Company completed the Mayne Transaction pursuant to which the Company and its subsidiaries (i) granted Mayne Pharma an exclusive license to commercialize the Company’s IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD® and vitaMedMD® brands in the United States and its possessions and territories, (ii) assigned to Mayne Pharma the Company’s exclusive license to commercialize ANNOVERA in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith.
On December 30, 2022 (the “Closing Date”), we completed a transaction (the “Mayne Transaction”) with Mayne Pharma LLC, a Delaware limited liability company (“Mayne Pharma”) and subsidiary of Mayne Pharma Group Limited, an Australian public company, in which we and our subsidiaries (i) granted Mayne Pharma an exclusive license to commercialize our IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands (collectively, the “Licensed Products”) in the United States and its possessions and territories, (ii) assigned to Mayne Pharma our exclusive license to commercialize ANNOVERA® (together with the Licensed Products, collectively, the “Products”) in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith.
In 2022 or 2021 , we recorded no provision for income taxes for continuing operations. Net income (loss) from continuing operations . For 2022, we had a net income of $1.1 million, or $0.12 per basic and $0.11 per diluted common share, compared to a loss of $79.3 million, or $9.96 per basic and diluted common share, for 2021.
For 2023, we had net loss from continuing operations of $7.7 million, or $0.74 per basic and diluted common share, a decrease of $8.8 million, compared to net income from continuing operations of $1.1 million, or $0.12 per basic and $0.11 per diluted common share, for 2022.
On the Closing Date, we repaid all obligations under the Financing Agreement, dated as of April 24, 2019, as amended, with Sixth Street Specialty Lending, Inc., as administrative agent, the various lenders from time-to-time party thereto, and certain of the Company’s subsidiaries party thereto from time to time as guarantors (the “Financing Agreement”) and the Financing Agreement was terminated.
Going concern On the Closing Date of the Mayne Transaction, we repaid all obligations under the Financing Agreement, dated as of April 24, 2019, as amended, with Sixth Street Specialty Lending, Inc., as administrative agent, the various lenders from time-to-time party thereto, and certain of our subsidiaries party thereto from time to time as guarantors (the “Financing Agreement”) and the Financing Agreement was terminated. 38 Following the transaction with Mayne Pharma, our primary source of revenue is from royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories.
The total consideration from Mayne Pharma to us under the License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the transaction agreement dated December 4, 2022, and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the License Agreement, as amended.
The total consideration from Mayne Pharma to us under the Mayne License Agreement consisted of (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement, and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended. 37 Pursuant to the Mayne License Agreement, Mayne Pharma will pay us one-time, milestone payments of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million.
We have entered into the Theramex License Agreement with Theramex pursuant to which we granted Theramex an exclusive license to commercialize BIJUVA for human use outside of the 44 U.S., except for Canada and Israel.
We have entered into the Theramex License Agreement with Theramex pursuant to which we granted Theramex an exclusive license to commercialize BIJUVA for human use outside of the U.S., except for Canada and Israel. ANNOVERA (segesterone acetate (“SA”) and ethinyl estradiol (“EE”) vaginal system) On December 30, 2022, we assigned our exclusive license to commercialize ANNOVERA to Mayne Pharma.
The restricted cash was held by an escrow agent and was released to us in March 2023. Additionally, we may receive up to an additional $7.0 million in earn-out consideration, 43 contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement.
We may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement, however we do not believe this earnout will be realized.
Non-refundable up-front fees that are not contingent on any future performance by us, and do not require continuing involvement on our part, are recognized as revenue when the right to use functional intellectual property is transferred to the customer.
Non-refundable up-front fees that are not contingent on any future performance by us, and do not require continuing involvement on our part, are recognized as revenue when the right to use functional intellectual property is transferred to the customer. 41 On December 30, 2022, we closed a License Agreement with Mayne Pharma pursuant to which we sold to Mayne Pharma the exclusive license rights in our product ANNOVERA and granted an exclusive license in other products, including IMVEXXY and BIJUVA.
We recorded $70.0 million in license revenue related to the allocation of the initial upfront payment and guaranteed minimum royalties from the Mayne License Agreement during the year ended December 31, 2022, and $2.6 million in license revenue related to achieving previously established milestone payment targets and sales from other licensee during the year ended December 31, 2021. Gross profit.
We recorded $1.3 million in license revenue during the year ended December 31, 2023 primarily from the Mayne License Agreement, a decrease of $68.7 million, compared to $70.0 million in license revenue recorded for the allocation of the initial upfront payment and guaranteed minimum royalties from the Mayne License Agreement during the year ended December 31, 2022. 36 Gross profit.
Pursuant to a License Agreement, dated December 4, 2022, the Company granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.
In a License Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Mayne License Agreement”), we granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories. 33 Under the Mayne License Agreement, Mayne Pharma will pay us one-time milestone payments of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million.
Investing Activities from continuing operations. Net cash used in investing activities for 2022 was $0.4 million, compared to net cash used in investing activities of $2.2 million for 2021. This change was due to lower fixed asset and patent related costs as compared to 2021. Financing Activities from continuing operations.
Net cash used in investing activities for 2023 was $0.0 million, a decrease of $0.4 million, compared to net cash used in investing activities of $0.4 million for 2022. This change was due our transition from a manufacturing and commercialization business to a royalty-based business. Financing Activities from continuing operations.
Net cash provided by operating activities in 2022 was $9.4 million, compared to net cash used in operating activities of $55.1 million for 2021.
Net cash used in discontinued operations for 2023 was $25.1 million, a decrease of $235.5 million, as compared to net cash provided by discontinued operations of $210.4 million for 2022.
We received net proceeds of $142.6 million, net of transaction costs of $7.2 million, and we recognized a gain on sale of business of $143.4 million. Included in the net proceeds amount was $11.3 million of customary holdbacks as provided in the Purchase Agreement, which is recorded as restricted cash in the consolidated balance sheets.
Included in the net proceeds amount was $11.3 million of customary holdbacks as provided in the stock purchase agreement between us and GoodRx, Inc. (the “Purchase Agreement”), which was recorded as restricted cash in the consolidated balance sheets until the cash was released to us.
On December 30, Mayne Pharma acquired our account receivable balance of approximately $29.3 million which is subject to certain working capital adjustments.
For additional details, see the consolidated statements of cash flows included in our consolidated financial statements in this 2023 10-K Report. Other liquidity measure Receivable from Mayne. On December 30, 2022, Mayne Pharma acquired our accounts receivable balance of approximately $29.3 million which is subject to certain working capital adjustments.
We have funded our operations primarily through public offerings of our common stock and private placements of equity and debt securities. As of December 31, 2022, we had cash totaling $38.1 million. We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation insured limits of $0.25 million per bank.
As of December 31, 2023, we had cash and cash equivalents totaling $4.3 million. We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation insured limits of $0.25 million per bank. We have never experienced any losses related to these funds. vitaCare Divestiture On April 14, 2022, we completed the vitaCare Divestiture.
Basis of presentation, new accounting standards and summary of significant accounting policies” to the consolidated financial statements included in this 2022 10-K Report.
Revenue recognition” in Note 1. Basis of presentation, new accounting standards and summary of significant accounting policies to the consolidated financial statements included in this 2023 10-K Report. Restructuring Costs. Our restructuring costs consist primarily of severance, employee termination costs, contract termination costs, and write off of fixed assets related to restructuring activities.
Cash flows The following table reflects the major categories of cash flows from continuing operations for each of the periods (in thousands) .
The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Cash flows The following table reflects the major categories of cash flows from continuing operations for each of the periods (in thousands).
The operations of vitaCare were classified as discontinued operations in December 2022, when the Company completed the change in its business by becoming a royalty company.
The pre-divesture operations of vitaCare were reclassified to discontinued operations in December 2022 when we transitioned to becoming a royalty company and licensed our products to Mayne Pharma.
See Note 1 Business, basis of presentation, new accounting standards and summary of significant accounting policies (L Revenue Recognition) to the consolidated financial statements included in this Annual Report. Inventory. On December 30, Mayne Pharma acquired our inventory balance of approximately $8.4 million , which is subject to certain net working capital adjustments. Debt.
See Note 1 Business, basis of presentation, new accounting standards and summary of significant accounting policies (Revenue Recognition) to the consolidated financial statements included in this 2023 10-K Report. Contractual obligations, off-balance sheet arrangements, purchase commitments and employment agreements Our contractual obligations and off-balance sheet arrangements are discussed below.
Operating expenses were $97.6 million for 2022, a decrease of $35.7 million, as compared to the prior year.
Discontinued Operations — For 2023 revenues from discontinued operations were $(0.8) million, a decrease of $81.5 million, as compared to $80.7 million in 2022. Revenue in 2023 reflected adjustments to earnings under the Mayne Agreement. In 2023, operating expenses from discontinued operations were $0.5 million, a decrease of $97.1 million, compared to $97.6 million in 2022.
Cash flow from continuing operations 2022 2021 Net cash provided by (used in) operating activities $ 9,359 $ (55,133 ) Net cash used in investing activities (355 ) (2,223 ) Net cash (used in) provided by financing activities (235,206 ) 129,552 2022 compared to 2021 Operating Activities from continuing operations.
Years ended December 31, Cash flow from continuing operations 2023 2022 Net cash provided by (used in) operating activities $ (23,081 ) $ 9,359 Net cash (used in) investing activities — (355 ) Net cash provided by (used in) financing activities 3,151 (235,206 ) Net cash provided by (used in) discontinued operations (25,060 ) 210,397 Net decrease in cash $ (44,990 ) $ (15,805 ) Operating Activities from continuing operations.
Net cash used in financing activities for 2022 was $235.2 million, compared to net cash provided by financing activities of $129.6 million for 2021.
Net cash provided by financing activities for 2023 was $3.2 million, a decrease of $238.4 million, compared to net cash used by financing activities of $235.2 million for 2022. Cash proceeds in 2023 are from stock sales to Rubric Capital Management and cash outflows during 2022 reflect our paydowns of debt. Discontinued operations.
We have engaged external consultants, including certain former members of our management team, who support our relationship with current partners and assist with certain financial, legal and regulatory matters and the continued wind-down of our historical business operations. vitaCare divestiture On April 14, 2022, we completed the divestiture of vitaCare with the sale of all vitaCare’s issued and outstanding capital stock (the “vitaCare Divestiture”).
We have engaged external consultants who support our relationship with current partners and assist with certain financial, legal, and regulatory matters and the continued wind-down of our historical business operations. On August 15, 2023, we entered into a master services agreement with JZ Advisory Group, pursuant to which Joseph Ziegler would serve as our Principal Financial and Accounting Officer.
For additional information, see Note 2 - Discontinued Operations, in the notes to the consolidated financial statements appearing elsewhere in this Annual Report. Liquidity and capital resources Our primary use of cash is to fund the continued operations of our company.
For 2023, net loss from discontinued operations was $2.6 million, a decrease of $113.5 million, compared to net income from discontinued operations of $110.9 million for 2022. For additional information, see Note 2 – Discontinued Operations, in the notes to the consolidated financial statements appearing elsewhere in this 2023 10-K Report.
In addition, the parties agreed that Mayne Pharma will reduce one quarterly royalty payment (other than the first quarterly royalty payment) otherwise payable to the Company by $1.5 million in consideration of Mayne Pharma assuming the Company’s obligations under a long-term services agreement, including the Company’s minimum payment obligations thereunder.
We and Mayne Pharma settled the $1.5 million of consideration due to Mayne for the assumed obligations under a long-term services agreement (see the section entitled “vitaCare divestiture” below for a discussion of the long-term services agreement), including our minimum payment obligations thereunder.
The total consideration from Mayne Pharma to the Company for the purchase of the Transferred Assets and the grant of the licenses under the License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the License Agreement, as amended.
Mayne Pharma paid us approximately $12.1 million at closing on the Closing Date for the acquisition of net working capital, subject to certain adjustments as determined in accordance with the Transaction Agreement.
Operating Activities from discontinued operations. Net cash used in operating activities in 2022 was $13.4 million as compared to net cash used in operating activities of $87.6 million for 2021.
Net cash used in operating activities in 2023 was $23.1 million, a decrease of $32.4 million, compared to net cash provided by operating activities of $9.4 million for 2022. This change was due our transition from a manufacturing and commercialization business to a royalty-based business.
Removed
Pursuant to the Mayne License Agreement, Mayne Pharma will make one-time, milestone payments to the Company of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million.
Added
The acquisition of net working capital was determined in accordance with the Transaction Agreement and included significant estimates which could change materially for a period of up to two years following the Closing Date. On the Closing Date, TherapeuticsMD and Mayne Pharma entered into Amendment No. 1 to the Mayne License Agreement (the “Mayne License Agreement Amendment”).
Removed
Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 31, 2022.
Added
As the parties agreed, during the second quarter of 2023, Mayne Parma held back our royalty payment of $0.6 million and we funded an additional $0.9 million in August 2023 to settle the original $1.5 million payable.
Removed
In addition, under the Mayne License Agreement Amendment, Mayne Pharma will reduce one quarterly royalty payment (other than the first quarterly royalty payment) otherwise payable to us by $1.5 million in consideration of Mayne Pharma assuming our obligations under the long-term services agreement related to vitaCare.
Added
Additional disclosures regarding discontinued operations are provided in Note 2 of our consolidated financial statements.
Removed
COVID-19 With multiple variant strains of the SARS-Cov-2 virus and the COVID-19 disease that it causes (collectively, “COVID-19”) still circulating, we continue to be subject to risks and uncertainties in connection with the COVID-19 pandemic. The extent of the future impact of the COVID-19 pandemic on our business continues to be highly uncertain and difficult to predict.
Added
On August 17, 2023 Michael C. Donegan notified us of his decision to resign from the positions of Principal Financial and Accounting Officer of our Company effective as of August 17, 2023. Mr. Ziegler succeeded Mr. Donegan as Principal Financial and Accounting Officer as of the date of Mr.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and qualitative disclosures about market risk As a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of Regulation S-K, we are not required to provide this information. 52 Ite m 8.
Biggest changeItem 7A. Quantitative and qualitative disclosures about market risk As a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of Regulation S-K, we are not required to provide this information.
Removed
Financial statements and supplementary data Reference is made to the financial statements, the notes thereto, and the report thereon, commencing on page F-1 of this 2022 10-K Report, which financial statements, notes, and reports are incorporated herein by reference. Item 9. Change in and disagreements with accountants on accounting and financial disclosure None.

Other TXMD 10-K year-over-year comparisons