Form 10-Q

Large Accelerated Filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number:

001-00100

THERAPEUTICSMD, INC.

(Exact name of Registrant as specified in its Charter)


Nevada		87-0233535
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

951 Yamato Road, Suite 220 Boca Raton, Florida		33431
(Address of principal executive offices)		(Zip Code)

561-961-1900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	TXMD	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule

12b-2

of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No ☒

As of August 9, 2023, there were 10,575,240 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

Table of Contents


		Page
Part I – Financial Information

Item 1.	Financial statements (unaudited)
	Condensed Consolidated Balance Sheets		1
	Condensed Consolidated Statements of Operations		2
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)		3
	Condensed Consolidated Statements of Cash Flows		4
	Notes to Unaudited Condensed Consolidated Financial Statements		5

Item 2.	Management’s discussion and analysis of financial condition and results of operations		19

Item 3.	Quantitative and qualitative disclosures about market risk		29

Item 4.	Controls and procedures		29

Part II – Other Information

Item 1.	Legal proceedings		30

Item 1A.	Risk factors		30

Item 2.	Unregistered sales of equity securities and use of proceeds		30

Item 3.	Defaults upon senior securities		30

Item 4.	Mine safety disclosures		30

Item 5.	Other information		30

Item 6.	Exhibits		31

Signatures			32

Part I – Financial Information

Item 1. Financial statements

TherapeuticsMD, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited – in thousands, except per share data)


	June 30, 2023			December 31, 2022
	(Unaudited)
Assets:
Current assets:
Cash	$	13,729		$	38,067
Restricted cash		—			11,250
Royalty receivable, current portion		841			—
Prepaid and other current assets		5,043			6,034

Total current assets		19,613			55,351
Fixed assets, net		39			78
License rights and other intangible assets, net		6,767			6,943
Right of use assets		7,228			7,580
Royalty receivable, long term		19,788			20,253
Other non-current assets		254			253

Total assets	$	53,689		$	90,458

Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable	$	1,508		$	2,162
Accrued expenses and other current liabilities		11,484			18,846
Current liabilities of discontinued operations		1,372			25,831

Total current liabilities		14,364			46,839
Operating lease liabilities		6,939			7,369
Other non-current liabilities		1,189			1,107

Total liabilities		22,492			55,315

Commitments and contingencies (Note 7 )
Stockholders’ equity (deficit):
Common stock, par value $0.001; 32,000 and 12,000 shares authorized, 10,575 and 9,498 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		11			9
Additional paid-in capital		976,566			974,497
Accumulated deficit		(945,380	)		(939,363	)

Total stockholders’ equity		31,197			35,143

Total liabilities and stockholders’ equity	$	53,689		$	90,458

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TherapeuticsMD, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited – in thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenue, net:
License and service	$	437		$	348		$	853		$	1,043

Total revenue, net		437			348			853			1,043
Cost of revenue		—			348			—			1,043

Gross profit		437			—			853			—

Operating expenses:
Selling, general and administrative		2,781			14,575			5,837			32,121
Depreciation & amortization		128			282			155			611

Total operating expenses		2,909			14,857			5,992			32,732

Loss from operations		(2,472	)		(14,857	)		(5,139	)		(32,732	)

Other (expense) income:
Interest expense and other financing costs		(45	)		—			(95	)		—
Miscellaneous income (expense)		103			(16	)		510			(16	)

Total other income (loss), net		58			(16	)		415			(16	)

Loss from continuing operations before income taxes		(2,414	)		(14,873	)		(4,724	)		(32,748	)
Income (loss) from discontinued operations, net of income taxes		—			127,154			(1,293	)		96,008

Net income (loss)	$	(2,414	)	$	112,281		$	(6,017	)	$	63,260

Income (loss) per common share, basic and diluted:
Continuing operations		(0.24	)		(1.70	)		(0.47	)		(3.77	)
Discontinued operations, net		—			14.53			(0.13	)		11.06

Net income (loss) per common share, basic and diluted	$	(0.24	)	$	12.83		$	(0.60	)	$	7.29

Weighted average common shares, basic		10,219			8,750			9,988			8,682
Weighted average common shares, diluted		10,219			8,750			9,988			8,682

Net income (loss)	$	(2,414	)	$	112,281		$	(6,017	)	$	63,260
Other comprehensive incom e		—			—			—			—

Comprehensive income (loss):	$	(2,414	)	$	112,281		$	(6,017	)	$	63,260

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TherapeuticsMD, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited – in thousands)


					Additional Paid in Capital
	Common Stock						Accumulated Deficit
	Shares		Amount				Accumulated Deficit			Total
Balance, January 1, 2023		9,498	$	9	$	974,497	$	(939,363	)	$	35,143
Shares issued for vested restricted stock units and warrants		455		1		—		—			1
Share-based compensation		—		—		483		—			483
Net loss		—		—		—		(3,603	)		(3,603	)

Balance, March 31, 2023		9,953	$	10	$	974,980	$	(942,966	)	$	32,024
Shares issued for vested restricted stock units and warrants		309		—		—		—			—
Shares issued for sale of common stock related to private placement sale		313		1		1,149		—			1,150
Share-based compensation		—		—		437		—			437
Net loss		—		—		—		(2,414	)		(2,414	)

Balance, June 30, 2023		10,575	$	11	$	976,566	$	(945,380	)	$	31,197


Balance, January 1, 2022		8,598	$	9	$	957,730	$	(1,051,360	)	$	(93,621	)
Shares issued for vested restricted stock units		71		—		—		—			—
Share-based compensation		—		—		2,062		—			2,062
Net loss		—		—		—		(49,021	)		(49,021	)

Balance, March 31, 2022		8,669	$	9	$	959,792	$	(1,100,381	)	$	(140,580	)
Shares issued for rounding up of fractional shares in connection with the reverse stock split		142		—		—		—			—
Shares issued for vested restricted stock units		44		—		—		—			—
Shares issued for sale of common stock related to employee stock purchase plan		5		—		14		—			14
Share-based compensation		—		—		2,219		—			2,219
Net income		—		—		—		112,281			112,281

Balance, June 30, 2022		8,860	$	9	$	962,025	$	(988,100	)	$	(26,066	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TherapeuticsMD, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited – in thousands)


	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities:
Net income (loss)	$	(6,017	)	$	63,260
Less: income (loss) from discontinued operations, net of tax		(1,293	)		(96,008	)

Net loss from continuing operations		(4,724	)		(32,748	)
Adjustments to reconcile net loss to net cash used in continuing operating activities:
Depreciation and amortization		156			611
Write-off of patents and trademarks		59			—
Share-based compensation		921			4,295
Other		(78	)		(15	)
Changes in operating assets and liabilities:
Other assets		464			—
Prepaid and other current assets		150			(9,012	)
Accounts payable		(654	)		(860	)
Accrued expenses and other current liabilities		(7,362	)		(739	)
Other non-current liabilities		(1,025	)		(125	)

Total adjustments		(7,369	)		(5,845	)

Net cash used in continuing operating activities		(12,093	)		(38,593	)

Cash flows from investing activities:
Payment of patent related costs		—			(267	)
Purchase of fixed assets		—			(21	)

Net cash used in continuing investing activities		—			(288	)

Cash flows from financing activities:
Proceeds from sale of common stock, net of costs		1,150			—
Repayments of debt		—			(125,000	)

Net cash (used in) provided by continuing financing activities		1,150			(125,000	)

Discontinued operations:
Net cash provided by (used in) operating activities		(25,752	)		124,875
Net cash provided by investing activities		—			187
Net cash provided by financing activities		1,107			—

Net cash provided by (used in) discontinued operations		(24,645	)		125,062

Net decrease in cash		(35,588	)		(38,819	)
Cash and restricted cash – continuing operations, beginning of period		49,317			65,122
Cash and restricted cash – discontinued operations, beginning of period		—			—

Total cash and restricted cash, end of period	$	13,729		$	26,303

Supplemental disclosure of cash flow information:
Interest paid	$	—		$	—

Supplemental disclosure of noncash financing activities:
Paid in kind (“PIK”) debt financing fees with corresponding increase in debt	$	—		$	15,780

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TherapeuticsMD, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. Business, basis of presentation, new accounting standards and summary of significant accounting policies

General

TherapeuticsMD, Inc. (the “Company”), a Nevada corporation, and its condensed consolidated subsidiaries are referred to collectively in this Quarterly Report on Form

10-Q

(“10-Q

Report”) as “TherapeuticsMD,” “we,” “our” and “us.” This

10-Q

Report includes trademarks, trade names and service marks, such as TherapeuticsMD

, vitaMedMD

, BocaGreenMD

, vitaCare

, IMVEXXY

, and BIJUVA

, which are protected under applicable intellectual property laws and are the property of, or licensed by or to, us. Solely for convenience, trademarks, trade names and service marks referred to in this

10-Q

Report may appear without the

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 do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by, these other parties.

TherapeuticsMD was previously a women’s healthcare company with a mission of creating and commercializing innovative products to support the lifespan of women from pregnancy prevention through menopause. 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. 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 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.

Under the Mayne License Agreement, Mayne Pharma will pay us 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. 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. 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. Mayne Pharma will pay us 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. 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 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”).

The total consideration from Mayne Pharma to TherapeuticsMD for the purchase of the Transferred Assets and the grant of the licenses under the Mayne Transaction 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 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.

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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. 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 thousand 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 us. In addition, the parties agreed that Mayne Pharma will reduce one quarterly royalty payment (other than the first quarterly royalty payment) otherwise payable to TherapeuticsMD by $1.5 million in consideration of Mayne Pharma assuming our 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.

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 condensed consolidated financial statements. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2 of our condensed consolidated financial statements.

We also have 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. (“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 an exclusive license and supply agreement (the “Theramex License Agreement”) with Theramex HQ UK Limited (“Theramex”) to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel. 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. Severance obligations for all employees other than executive officers were paid in full in January 2023 and severance obligations for terminated executive officers are paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 2022 and June 30, 2023, we employed one full-time employee primarily engaged in an executive position. We have also entered into consulting agreements with certain former members of our management team, including our Principal Financial Officer, 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 our former subsidiary vitaCare Prescription Services, Inc. (“vitaCare”) with the sale of all of vitaCare’s issued and outstanding capital stock (the “vitaCare Divestiture”). 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. Additionally, the vitaCare Divestiture 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. We will record the contingent consideration at the settlement amount if and 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 were transferred to Mayne Pharma as part of the Mayne Transaction. 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.

The divestiture of vitaCare was determined to be a component of discontinued operations in December 2022, when we changed our business by becoming a royalty company and as a result vitaCare activities were reclassified to discontinued operations for the six months ended June 30, 2023 and 2022.

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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.

As of the date of issuance of these condensed consolidated financial statements, 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. 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.

Going concern

On December 4, 2022, we entered into agreements with Mayne Pharma pursuant to which we granted Mayne Pharma an exclusive license to commercialize IMVEXXY, BIJUVA, and prescription prenatal vitamin products (in the United States and its possessions and territories), (ii) assign to Mayne Pharma our exclusive license to commercialize ANNOVERA in the United States and its possessions and territories, and (iii) sell certain other assets to Mayne Pharma.

The total consideration from Mayne Pharma to TherapeuticsMD for the purchase of the Transferred Assets and the grant of the licenses 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 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.

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 our subsidiaries party thereto from time to time as guarantors (the “Financing Agreement”) and the Financing Agreement was terminated.

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. We may need to raise additional capital to provide additional liquidity to fund our operations until we become cash flow positive. To address our capital needs, we may pursue 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. Our ability to sell equity securities may be limited by market conditions, including the market price of our common stock, and our available authorized shares.

To the extent that we raise additional capital through the sale of such securities, the ownership interests of our existing stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. If we are not successful in obtaining additional financing, we could be forced to discontinue or curtail our business operations, sell assets at unfavorable prices, or merge, consolidate, or combine with a company with greater financial resources in a transaction that might be unfavorable to us.

On May 1, 2023, we entered into a Subscription Agreement (the “Subscription Agreement”) with Rubric Capital Management LP (“Rubric”), pursuant to which we agreed to sell to Rubric, or one or more of its affiliates, up to an aggregate of 5,000,000 shares of our common stock, par value $0.001 per share (our “Common Stock”), from time to time during the term of the Subscription Agreement in separate draw-downs at the election of the Company. On June 29, 2023, the Company issued and sold 312,525 shares of Common Stock at a price per share equal to $3.6797 pursuant to the Subscription Agreement. The Company received gross proceeds of $1.15 million from the draw down, before expenses. The Common Stock issued pursuant to the Subscription Agreement was sold and issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule

5-06

of Regulation D promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

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, if we are unsuccessful with future financings or if the continued impact of the

COVID-19

pandemic on us or the third-parties we or our licensees rely on 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. 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.

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The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Basis of presentation

We prepared the condensed consolidated financial statements included in this

10-Q

Report following the requirements of the United States (“U.S.”) Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) for complete financial statements can be condensed or omitted. However, except as disclosed herein, there has been no material change in the information disclosed in the notes included in our 2022 Annual Report on Form

10-K

(the “2022

10-K

Report”).

As part of the transformation as a result of the Mayne Tran

ction, historical results of commercial operations for all periods prior to the Closing Date have been reflected as discontinued operations in the condensed consolidated financial statements. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheet. Additional disclosures regarding discontinued operations are provided in Note 2 of the condensed consolidated financial statements.

Revenues, expenses, assets, liabilities, and equities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year. In our opinion, all adjustments necessary for a fair statement of the financial statements, which are of a normal and recurring nature, have been made for the interim periods reported. The information included in this

10-Q

Report should be read in conjunction with the condensed consolidated financial statements and accompanying notes included in our 2022

10-K

Report. Certain amounts in the consolidated financial statements and accompanying notes may not add due to rounding, and all percentages have been calculated using unrounded amounts.

New accounting standards

Adoption of new accounting standards

New accounting standards or “ASUs” were assessed and determined to be either not applicable or did not have a material impact on our condensed consolidated financial statements or processes.

Common stock reverse stock split

On May 6, 2022, we completed a reverse stock split of our Common Stock. As a result, shares of our outstanding Common Stock were split at a ratio of

50-for-1

(the “Reverse Stock Split”) with any fractional shares resulting from the Reserve Stock Split rounded up to the next whole share of Common Stock. The number of authorized shares of Common Stock was also correspondingly reduced from 600.0 million shares to 12.0 million shares to give effect to the Reverse Stock Split. Additionally, all rights to receive shares of Common Stock under outstanding warrants, options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) were adjusted to give effect to the Reverse Stock Split. Furthermore, remaining shares of Common Stock available for future issuance under share-based payment award plans and our employee stock purchase plan were adjusted to give effect to the Reverse Stock Split. Pursuant to Section 78.209 of the Nevada Revised Statutes, the approval of our stockholders was not required for our Board of Directors to effectuate the Reverse Stock Split.

All historical numbers of shares of Common Stock and per share data have been adjusted to give effect to the Reverse Stock Split. Additionally, since the Common Stock par value was unchanged, historical amounts for Common Stock and additional

paid-in

capital have been adjusted to give effect to the Reverse Stock Split.

Increase of authorized shares

On June 26, 2023, at our combined 2022 and 2023 Annual Meeting, our stockholders approved an amendment to

Amended and Restated Articles of Incorporation to increase the number of authorized shares of Common Stock from 12 million shares to 32 million shares.

Estimates and assumptions

The preparation of our condensed consolidated financial statements in conformity to U.S. GAAP requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates and assumptions based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ, at times in material amounts, from these estimates under different assumptions or conditions.

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Significant accounting policies

The significant accounting policies we use for quarterly financial reporting are disclosed in Note 1 of the accompanying notes to the consolidated financial statements included in our 2022

10-K

report and in the section below.

2. Discontinued Operations

As discussed in Note 1, we changed our business in 2022 by licensing our products to receive royalties and future sales related milestone payments, after granting an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands in the United States and assigning our exclusive license to commercialize ANNOVERA to Mayne Pharma.

This plan represented a strategic shift having a major effect on our operations and financial results. Upon our conversion from a commercial pharmaceutical company to a licensing only company with the consummation of the Mayne Transaction, we classified all direct revenues, costs and expenses related to commercial operations, within income (loss) from discontinued operations, net of tax, in the condensed consolidated statements of operations for all periods presented. We

have

not

allocated

any amounts for shared general and administrative operating support expense to discontinued operations. As required by the terms of the Financing Agreement, proceeds from the Mayne Transaction and the VitaCare Divestiture were used to fully repay our outstanding debt borrowings, and as a result interest expense and amortization of deferred financing costs as well as expense for accretion of Series A Preferred Stock and loss on extinguishment of debt are included within income (loss) from discontinued operations, net of tax (as

disclosed below).

Additionally

, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in our condensed consolidated balance sheets as of June 30, 3023 and December 31, 2022.

The total consideration from Mayne Pharma consisted of (i) a cash payment of $140.0 million at closing, (ii) a cash payment of $12.1 million for the acquisition of net working capital subject to certain adjustments, (iii) a cash payment of approximately $1.0 million 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.

Our estimate of net working capital at closing was determined in accordance with the Transaction Agreement which establishes the process for the determination of final net working capital. The determination of net working capital includes significant estimates which could change materially for a period of up to two years following the Closing Date. On March 29, 2023, we received Mayne Pharma’s closing net working capital calculation which differed significantly from our estimate of closing net working capital. We believe that our estimate of net working capital is reasonable and intend to resolve this matter through the process outlined in the Transaction Agreement. Given the nature of the estimates involved, the outcome of this matter is uncertain at this point. As a result, we cannot reasonably estimate a range of loss, and accordingly, continue to contemplate any additional liability associated with Mayne Pharma’s calculation.

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The following table presents results of discontinued operations (in thousands):


	Three months ended June, 30					Six Months Ended June 30,
	2023		2022			2023			2022
Product revenue, net	$	—	$	28,213		$	—		$	46,851
Cost of goods sold		—		4,392			—			8,557
Gross profit		—		23,821			—			38,294
Operating expenses:
Selling and marketing		—		23,679			—			42,574
General and administrative		—		2,535			335			5,050
Research and development		—		1,580			—			2,980
Depreciation & a mortization		—		11			—			28
Total operating expenses		—		27,805			335			50,632
Operating profit (loss) from discontinued operations		—		(3,984	)		(335	)		(12,338	)
Other income (expense), net		—		131,138			(958	)		108,346
Total other income (expense), net		—		131,138			(958	)		108,346

Net income (loss) from discontinued operations	$	—	$	127,154		$	(1,293	)	$	96,008

The following table presents the carrying amounts of the classes of assets and liabilities of discontinued operations as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Liabilities:
Current liabilities:
Accounts payable	$	64	$	12,243
Accrued expenses and other current liabilities		1,308		13,588

Total current liabilities	$	1,372	$	25,831

3. Prepaid and other current assets

Our prepaid and other current assets consisted of the following as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Insurance	$	1,065	$	1,167
R ent receivable		197		—
Capitalized legal		2,334		2,334
Other		1,447		2,533

Prepaid and other current assets	$	5,043	$	6,034

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4. Fixed assets

Our fixed assets, net consisted of the following as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023			December 31, 2022
Furniture and fixtures	$	931		$	931
Computer and office equipment		1,168			1,168
Computer software		375			375
Leasehold improvements		49			49

Fixed assets		2,523			2,523
Less: accumulated depreciation and amortization		(2,484	)		(2,445	)

Fixed assets, net	$	39		$	78

We recorded, in continuing operations, depreciation expense of $0.0 million and $0.2 million for the three months ended June 30, 2023 and 2022, respectively, and depreciation expense of $0.0 million and $0.3 million for the six months ended June 30, 2023 and 2022, respectively.

5. Licensed rights and other intangible assets

The following provides information about our license rights and other intangible assets, net as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Intangible assets subject to amortization:
Hormone therapy drug patents	$	6,224	$	1,714	$	4,510	$	6,225	$	1,598	$	4,627
Hormone therapy drug patents applied and pending approval		1,936		—		1,936		1,995		—		1,995

Intangible assets subject to amortization		8,160		1,714		6,446		8,220		1,598		6,622
Intangible assets not subject to amortization:
Trademarks/trade name rights		321		—		321		321		—		321

License rights and other intangible assets, net	$	8,481	$	1,714	$	6,767	$	8,541	$	1,598	$	6,943

We recorded, in continuing operations, amortization expense related to patents of $0.1 million and $0.1 million for the three months ended June 30, 2023 and 2022 respectively, and amortization expense related to patents of $0.1 million and $0.3 million for the six months ended June 30, 2023 and 2022 respectively.

Our intangible assets subject to amortization are expected to be amortized as follows (in thousands):


Year ending December 31,
2023	$	227
2024		439
2025		438
2026		438
2027		438
Thereafter		2,530

Total	$	4,510

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6. Accrued expenses and other current liabilities

Other accrued expenses and other current liabilities consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Payroll and related costs	$	2,849	$	8,748
Accrued contract termination costs		—		4,700
Research and development expenses		—		978
Professional fees		276		415
Operating lease liabilities		1,448		1,390
Prepaid royalty		—		1,011
Other accrued expenses and current liabilities		6,911		1,604

Accrued expenses and other current liabilities	$	11,484	$	18,846

7. Commitments and contingencies

Mayne Pharma Agreement

Mayne Pharma paid us approximately $12.1 million at closing on December 30, 2022, for the acquisition of net working capital, as determined in accordance with the Transaction Agreement, and

such payment

is subject to certain adjustments for a period of up to two years following the Closing Date.

Pursuant to the Mayne License Agreement Amendment, Mayne Pharma also paid us approximately $1.0 million in prepaid royalties on the Closing Date. 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 us. In addition, 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 a long-term services agreement, including our minimum payment obligations thereunder. We

recognized

$0.4 million and $0.9 million in royalty

revenues

from Mayne Pharma during the three and six months ended June 30, 2023, respectively.

Population Council License Agreement

Under the terms of our license agreement with the Population Council, Inc. (the “Population Council License Agreement”), we paid the Population Council a milestone payment of $20.0 million in 2018, which was within 30 days following the approval by the FDA of the New Drug Application (“NDA”) for ANNOVERA, and $20.0 million in 2019 following the first commercial batch release of ANNOVERA. The aggregate $40.0 million of milestone payments were recorded as license rights. The Population Council was also eligible to receive future payments upon the achievement of certain commercial sales milestones of ANNOVERA. On December 30, 2022, we assigned the ANNOVERA license to Mayne Pharma. Our rights and obligations under the Population Council License Agreement have been transferred to Mayne Pharma and may revert back to us upon the occurrence of certain events.

Legal proceedings

In February 2020, we received a Paragraph IV certification notice letter (the “IMVEXXY Notice Letter”) regarding an Abbreviated New Drug Application (“ANDA”) submitted to the FDA by Teva Pharmaceuticals USA, Inc. (“Teva”). The ANDA seeks approval from the FDA to commercially manufacture, use, or sell a generic version of the 4 mcg and 10 mcg doses of IMVEXXY. In the IMVEXXY Notice Letter, Teva alleges that TherapeuticsMD patents listed in the FDA’s Orange Book that claim compositions and methods of IMVEXXY (the “IMVEXXY Patents”) are invalid, unenforceable, and/or will not be infringed by Teva’s commercial manufacture, use, or sale of its proposed generic drug product. The IMVEXXY Patents identified in the IMVEXXY Notice Letter expire in 2032 or 2033. In April 2020, we filed a complaint for patent infringement against Teva in the United States District Court for the District of New Jersey arising from Teva’s ANDA filing with the FDA. We are seeking, among other relief, an order that the effective date of any FDA approval of Teva’s ANDA would be a date no earlier than the expiration of the IMVEXXY Patents and equitable relief enjoining Teva from infringing the IMVEXXY Patents. Teva has filed its answer and counterclaim to the complaint, alleging that the IMVEXXY Patents are invalid and not infringed. In July 2021, following a proposal by Teva, the District Court entered an order temporarily staying all proceedings in the IMVEXXY litigation, which order was filed under seal. In September 2021, the District Court made available a public version of the order following the parties’ agreement to a consent motion to redact

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information Teva contended was confidential. The order provides that the statutory stay that prevents the FDA from granting final approval of the ANDA for 30 months from the date of the IMVEXXY Notice Letter will be extended for the number of days that the stay of the IMVEXXY litigation is in place. The length of the stay of the IMVEXXY litigation is dependent on further action by Teva. We have incurred and recorded legal costs amounting to $2.3 million in prepaid expenses and other current assets as of June 30, 2023, for the IMVEXXY Paragraph IV legal proceeding since we believe that we will successfully prevail in this legal proceeding. Upon the successful conclusion of the legal proceeding, the related capitalized legal costs will be reclassified to patents, in license rights and other intangible assets, net, in the accompanying condensed consolidated balance sheets, and such costs will be amortized over the remaining useful life of the patents. If we are unsuccessful in this legal proceeding, then the related capitalized legal costs for this legal preceding and any unamortized IMVEXXY patent costs that were previously capitalized will be immediately expensed in the period in which we become aware of an unsuccessful legal proceeding.

Beginning on December 30, 2022 and per the Mayne License Agreement, Mayne Pharma is responsible for all enforcement of our patents, including the litigation discussed above with respect to Teva.

From time to time, we are involved in other litigations and proceedings in the ordinary course of business. We are currently not involved in any other litigations and proceedings that we believe would have a material effect on our condensed consolidated financial condition, results of operations, or cash flows.

Off-balance

sheet arrangements

As of June 30, 2023 and December 31, 2022 we had no

off-balance

sheet arrangements that have had or are reasonably likely to have current or future effects on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Employment agreements

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 30, 2022. Severance obligations for all employees other than executive officers were paid in full in the first quarter of 2023. As of June 30, 2023, we employ one full-time employee primarily engaged in an executive position. 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. The separation of our former Interim

Co-Chief

Executive Officers, former Interim Chief Financial Officer and other executives from TherapeuticsMD was each a termination without “Good Cause,” as defined in their respective employment agreements. In the aggregate, as of June 30, 2023, we have accrued severance liabilities for executive termination obligations of $2.4 million.

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8. Stockholders’ equity (deficit)

Warrants

As of June 30, 2023, the following table summarizes the status of our outstanding and exercisable warrants and related transactions since December 31, 2022 (in thousands, except weighted average exercise price and weighted average remaining contractual life data):


	Warrants Outstanding and exercisable
	Warrants			Weighted Average Exercise Price		Aggregate Intrinsic Value			Weighted Average Remaining Contractual Life (in Years)
As of January 1, 2023		536		$	13.10	$	2,427			9.3
Exercised		(435	)		—		(634	)		(4.5	)
Expired		(2	)		—		—			—

As of June 30, 2023		99		$	66.61	$	1,793			4.8

Share-based compensation payment plans

As of June 30, 2023, 269,207

shares of common stock were subject to outstanding awards under our share-based payment award plans and inducement grants (calculated using the base number of PSUs that may vest). As of June 30, 2023,

321,717 shares of common stock were available for future grants of share-based payment awards under the TherapeuticsMD, Inc. 2019 Stock Incentive Plan.

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The following table summarizes the status of our outstanding and exercisable options and related transactions (each adjusted to account for the Reverse Stock Split) since December 31, 2022 (in thousands, except weighed average exercise price and weighted average remaining contractual life data):


	Outstanding									Exercisable
	Options Awards			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (in Years)		Options Awards			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (in Years)
As of January 1, 2023		172		$	228.28		—		3.6		170		$	229.43		—		3.6
Granted		—			—		—		—		—			—		—		—
Exercised		—			—		—		—		—			—		—		—
Cancelled/Forfeited		—			—		—		—		—			—		—		—
Expired		(90	)		203.84		—		3.3		(90	)		203.84		—		3.3

As of June 30, 2023		82		$	255.03		—

SEC Form 10-Q filed by TherapeuticsMD Inc.