TherapeuticsMD, Inc. - Quarter Report: 2021 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended June 30, 2021

or

For the transition period from _______________ to _______________

Commission File Number: 001-00100

THERAPEUTICSMD, INC.

(Exact name of Registrant as specified in its Charter)

561-961-1900

(Registrant’s telephone number, including area code)

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

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 4, 2021, there were 423,817,326 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

Table of Contents

Part I – Financial Information

Item 1.Financial Statements

TherapeuticsMD, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except per share data)

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

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TherapeuticsMD, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited - in thousands, except per share data)

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

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TherapeuticsMD, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity (Deficit)

(Unaudited - in thousands)

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

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TherapeuticsMD, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited - in thousands)

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

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TherapeuticsMD, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

General

TherapeuticsMD, Inc., a Nevada corporation (the “Company”), and its 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 our trademarks, trade names and service marks, such as TherapeuticsMD^®, vitaMedMD^®, BocaGreenMD^®, IMVEXXY^®, BIJUVA^® and ANNOVERA^®, which are protected under applicable intellectual property laws and are the property of, or licensed to, the Company. Solely for convenience, trademarks, trade names and service marks referred to in this 10-Q Report may appear without the ^®, ^TM 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 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.

We are 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. At TherapeuticsMD, we combine entrepreneurial spirit, clinical expertise, and business leadership to develop and commercialize health solutions that enable new standards of care for women. Our solutions range from a patient-controlled, long-lasting contraceptive to advanced hormone therapy pharmaceutical products. We also have a portfolio of branded and generic prescription prenatal vitamins under the vitaMedMD and BocaGreenMD brands.  Our portfolio of products focused on women’s health allows us to efficiently leverage our sales and marketing plan to grow our recently approved products.

Principles of consolidation

We prepared the 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”) can be condensed or omitted.

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 consolidated financial statements and accompanying notes included in our 2020 Annual Report on Form 10-K (“2020 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.

Risks and uncertainties related to COVID-19

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. We continue to provide an uninterrupted supply of our U.S. Food and Drug Administration (“FDA”) approved products and the vitaPearl™ family of products. We believe we have sufficient inventory of finished products to meet anticipated demand in the near future. Additionally, we believe we have sufficient active pharmaceutical ingredients (“API”) on hand for the continued manufacture of our products. The ultimate global recovery from the pandemic will be dependent on, among other things, actions taken by governments and businesses to contain and combat the virus, including any variant strains, the speed and effectiveness of vaccine production and global distribution, as well as how quickly, and to what extent, normal economic and operating conditions can resume on a sustainable basis globally.

Since the early phase of the COVID-19 pandemic, we have been using substantial virtual options to ensure business continuity. One of our subsidiaries, vitaCare^™ Prescription Services, Inc. (“vitaCare Prescription Services”), a Florida corporation, assists patients in obtaining easy and convenient access to their prescriptions for products at a pharmacy of their choice, including via home delivery pharmacy options. We have also partnered with independent community pharmacies and multiple third-party online pharmacies and telemedicine providers that focus on contraception or menopause which provide patients real-time access to both diagnosis and treatment. We continue to support prescribers’ needs with samples and product materials through our sales force. If access is restricted, we have mailing options in place for these materials. We also have business continuity plans and infrastructure in place that allows for live virtual e-detailing of our products.

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As part of our response to the COVID-19 pandemic, we implemented measures to reduce marketing expenses for 2020. We also implemented cost saving measures in 2020, which included negotiating lower fees or suspending services from third party vendors; implementing a company-wide hiring restriction; delaying or cancelling non-critical information technology projects; and eliminating non-essential travel, entertainment, meeting, and event expenses.

The full impact of the COVID-19 pandemic continues to evolve. However, we remain committed to the execution of our corporate goals, despite the ongoing COVID-19 pandemic, as demonstrated in part by the increase in product revenue throughout 2020. As of the date of issuance of these 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. We are continuing to assess the effect of the COVID-19 pandemic on our operations by monitoring the spread of COVID-19 and the various actions implemented to combat the pandemic throughout the world. 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.

While we currently believe that our COVID-19 contingency plan has the ability to mitigate the effect of the COVID-19 pandemic on our business, the severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the duration of “social distancing” orders, the ability of our sales force to access healthcare providers to promote our products, increases in unemployment, which could reduce access to commercial health insurance for our patients, thus limiting payer coverage for our products, and the impact of the pandemic on our global supply chain, all of which are uncertain. Our future results of operations and liquidity could be materially adversely affected by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions, uncertain demand, and the impact of any initiatives or programs that we may undertake to address financial and operations challenges that we may face.

Significant accounting policies

The significant accounting policies we use for quarterly financial reporting are disclosed in Note 2, Summary of Significant Accounting Policies of the accompanying notes to the consolidated financial statements included in our 2020 10-K Report, and in the section below.

Accounting standards issued but not yet adopted

There have been no recently issued accounting standards not yet adopted by us which are expected, upon adoption, to have a material impact on our consolidated financial statements or processes.

Reclassification

Certain amounts, including type of operating expenses, reported in prior periods in the financial statements have been reclassified to conform to the current period’s presentation.

We extend credit on an unsecured basis to most of our customers. Our exposure to credit losses may increase if our customers are adversely affected by changes in healthcare laws, coverage, and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current COVID-19 pandemic, or other customer-specific factors. While we actively manage our credit exposure and work to respond to both changes in our customers’ financial conditions or macroeconomic events, there can be no guarantee we will be able to mitigate all of these risks successfully. Although we have historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables in the future.

We review accounts receivable for uncollectible accounts and provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, reasonable supportable forecasts and existing economic conditions and we record an allowance that presents the net amount expected to be collected. We evaluate trade accounts receivable for delinquency. We write off delinquent receivables against our allowance for doubtful accounts based on individual credit evaluations, the results of collection efforts, and specific circumstances of customers. We record recoveries of accounts previously written off when received as an increase in the allowance for doubtful accounts. To the extent data we use to calculate these estimates does not accurately reflect bad debts, adjustments to these reserves may be required.

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The following sets forth activities in our allowance for credit losses (in thousands):

We have optimized the level of our inventory on hand, and we believe we have sufficient finished products to meet anticipated demand in the near future and sufficient raw materials for the continued manufacture of our finished products.  We rely on third parties to manufacture our finished products, and we have entered into long-term supply agreements for the manufacture of ANNOVERA, IMVEXXY, and BIJUVA, however, we do not have a long-term supply agreement for the manufacture of our prescription vitamins.  Additionally, we do not have long-term contracts for the supply of the API used in ANNOVERA and BIJUVA. If any of our third party contract manufacturers or any suppliers of the API experiences any significant difficulties in its respective manufacturing processes, do not comply with the terms of an agreement between us, or do not devote sufficient time, energy, and care to providing our manufacturing needs, we could experience significant interruptions in the supply of our products, which may have a material adverse impact on our revenue, results of operations and financial position.

Our inventory consisted of the following (in thousands):

Our prepaid and other current assets consisted of the following (in thousands):

Our fixed assets, net consisted of the following (in thousands):

We recorded depreciation expense of $0.2 million for the three months ended June 30, 2021 and 2020, and $0.4 million for the six months ended June 30, 2021 and 2020.  

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The following provides information about our license rights and other intangible assets, net (in thousands):

We recorded amortization expense related to the exclusive license rights agreement (the “Population Council License Agreement”) with Population Council of $0.8 million for the three months ended June 30, 2021 and 2020, and $1.5 million for the six months ended June 30, 2021 and 2020.    

As of June 30, 2021 and December 31, 2020, respectively, we had a total of 83 patents, of which 41 were domestic, and a total of 77 patents, of which 38 were domestic.  We recorded amortization expense related to patents of $0.1 million for the three months ended June 30, 2021 and 2020, and $0.2 million and $0.1 million for the six months ended June 30, 2021 and 2020, respectively.  

We use a combination of qualitative and quantitative factors to assess intangible assets for impairment. As a result of performing these assessments, we determined that no impairment existed as of June 30, 2021 and, therefore, recorded no write-downs to any of our intangible assets.  

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

We are party to a Financing Agreement, as amended (the “Financing Agreement”), with Sixth Street Specialty Lending, Inc., as administrative agent (the “Administrative Agent”), various lenders from time to time party thereto, and certain of our subsidiaries party thereto from time to time as guarantors. Interest on amounts borrowed under the Financing Agreement is due and payable quarterly in arrears, and the Financing Agreement matures on March 31, 2024.

In January 2021, we entered into Amendment No. 7 to the Financing Agreement (“Amendment No. 7”) pursuant to which, among other amendments, the minimum quarterly product net revenue requirements attributable to commercial sales of IMVEXXY, BIJUVA, and ANNOVERA for the fiscal quarters ending March 31, 2021 and June 30, 2021 were reduced, and we paid an amendment financing fee of $5.0 million, which was included as a component of deferred financing fees in long-term debt in the accompanying consolidated balance sheets. Additionally, in connection with entering into Amendment No. 7, the warrants issued to the Administrative Agent and the lenders under the Financing Agreement on August 5, 2020 were further amended to provide for an

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additional adjustment to the exercise price if we conducted certain dilutive issuances prior to March 31, 2021.  No such adjustments were made to the exercise price of these warrants prior to the expiration of such period.

In March 2021, we entered into Amendment No. 8 to the Financing Agreement (“Amendment No. 8”) pursuant to which, among other amendments, the minimum quarterly product net revenue requirements attributable to commercial sales of IMVEXXY, BIJUVA, and ANNOVERA were revised, the amortization and prepayment terms of the borrowings under the Financing Agreement were revised, and the Administrative Agent consented to a framework for our potential disposition of our vitaCare Prescription Services business. With respect to amortization and prepayment terms of the borrowings under the Financing Agreement, in connection with Amendment No. 8, we (i) repaid $50.0 million in principal under the Financing Agreement during the three months ended March 31, 2021, plus a 5.0% prepayment fee and (ii) agreed to make additional quarterly principal repayments plus the prepayment fees described below starting on March 31, 2022 through March 31, 2024.  Additionally, in connection with Amendment No. 8, the prepayment fees on principal amounts being prepaid under the Financing Agreement were revised as follows: (i) 30.0% of the principal amount being repaid through March 31, 2022 (excluding the scheduled $5.0 million principal repayment on such date, which is subject to a 5.0% prepayment fee); (ii) 5.0% of the principal amount being repaid from April 1, 2022 through March 31, 2023; (iii) 3.0% of the principal amount being repaid from April 1, 2023 through March 31, 2024; and (iv) thereafter, none, in each case subject to certain limited exceptions, including with respect to a repayment in full of the obligations under the Financing Agreement.  

Our debt consisted of the following (in thousands):

Our future principal payments under the Financing Agreement are as follows (in thousands):

Interest and financing costs

Interest expense and other financing costs consisted of the following (in thousands):

Both Amendment No. 7 and No. 8 were accounted for as debt modification in accordance with U.S. GAAP.  Accordingly, the unamortized deferred financing fees at each amendment date and the financing fee of $5.0 million for Amendment No. 7 are being deferred.  These deferred financing fees are being amortized over the remining term of our Financing Agreement.

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The estimated future amortization of our deferred financing fees is as follows (in thousands):

Debt covenants compliance

The Financing Agreement requires us to have a minimum unrestricted cash balance of $60.0 million.  As of the filing date of this 10-Q Report, our cash balance was above the required minimum balance.  Based on our current projections, along with financing that may be available to us under our at-the-market equity offering program (the “2021 ATM Program”) relating to shares of our common stock, we anticipate that we will remain in compliance with the minimum cash balance covenant for the next twelve months from the issuance of the consolidated financial statements included in this 10-Q Report. In addition, we have reviewed numerous potential scenarios in connection with the impact of COVID-19 pandemic on our business and we believe that our existing cash reserves, along with financing that may be available to us under the 2021 ATM Program, are sufficient to meet our cash needs arising in the ordinary course of business for the next twelve months from the issuance of the consolidated financial statements included in this 10-Q Report. However, if we are unsuccessful with the commercialization of IMVEXXY, BIJUVA, or ANNOVERA, if such commercialization is delayed, or if the continued impact of the COVID-19 pandemic on our business is worse than we anticipate, among other circumstances, we may consume funds significantly faster than we currently anticipate and our existing cash reserves, along with financing that may be available to us under the 2021 ATM Program, would be insufficient to maintain compliance with the Financing Agreement covenants or satisfy our liquidity requirements until we are able to successfully commercialize IMVEXXY, BIJUVA, and ANNOVERA.

The Financing Agreement also requires us to maintain certain minimum quarterly product net revenue requirements and several other restrictive covenants. These and other terms in the Financing Agreement have to be monitored closely for compliance and could restrict our ability to grow our business or enter into transactions that we believe would be beneficial to our business. If we are unable to maintain the minimum unrestricted cash balance, achieve any of the total minimum net revenue requirements or otherwise comply with any other covenant of the Financing Agreement, all or a portion of our obligations under the Financing Agreement may be declared immediately due and payable, which would have an adverse effect on our business, results of operations and financial condition.  As of June 30, 2021, we were in compliance, in all material respects, with our covenants under the Financing Agreement.

Minimum purchase commitments

We have manufacturing and supply agreements whereby we are required to purchase from Catalent, Inc. (“Catalent”) a minimum number of units of BIJUVA and IMVEXXY softgels during each respective annual contract year. The annual contract period for BIJUVA and IMVEXXY ends each April and July, respectively. If the minimum order quantities of BIJUVA or IMVEXXY are not met, we are required to pay a minimum commitment fee equal to 50% or 60%, respectively, of the difference between the total amount we would have paid if the minimum requirement had been fulfilled and the total amount of purchases of BIJUVA or IMVEXXY during each product’s respective contract year.

Additionally, with another third-party manufacturer, we have a manufacturing and supply agreement whereby we are required to purchase a minimum number of units of ANNOVERA during a contract year. The annual contract period for ANNOVERA ends each August. If the minimum order quantities of ANNOVERA are not met, we are required to pay a minimum commitment fee equal to the difference between the total amount we would have paid if the minimum requirement had been fulfilled and the total amount of purchases of ANNOVERA during the contract year.

For each of the three annual contract years ending in 2021, we expect to meet our minimum purchase number of units in all material respects, accordingly, we believe that minimum commitment fees that we may pay, if any, will not have a material impact to our financial position and operating results.  For annual contract years ending in 2022 and thereafter, we will continue to evaluate whether we will be able to meet each annual contract year’s respective minimum purchase commitment and will record a liability for estimated minimum commitment fees if we believe that we will not be able to reasonably meet the minimum purchase commitment.

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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 FDA by Teva Pharmaceuticals USA, Inc. (“Teva”). The ANDA seeks approval from 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 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. A trial date has not been set. In July 2021, the District Court entered an order temporarily staying all proceedings in the IMVEXXY litigation. The terms of the District Court order staying all proceedings in the IMVEXXY litigation are presently filed under seal.  We anticipate that a public version of the order will become available upon resolution of a motion by Teva to redact information it deems confidential.

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”). The ANDA seeks approval from FDA to commercially manufacture, use, or sell a generic version of BIJUVA. In the BIJUVA Notice Letter, Amneal alleges that TherapeuticsMD patents listed in FDA’s Orange Book that claim compositions and methods of BIJUVA (the “BIJUVA Patents”) are invalid, unenforceable, and/or will not be infringed by Amneal’s commercial manufacture, use, or sale of its proposed generic drug product. The BIJUVA Patents identified in the BIJUVA Notice Letter expire in 2032. In April 2020, we filed a complaint for patent infringement against Amneal in the United States District Court for the District of New Jersey arising from Amneal’s ANDA filing with FDA. We are seeking, among other relief, an order that the effective date of any FDA approval of Amneal’s ANDA would be a date no earlier than the expiration of the BIJUVA Patents and equitable relief enjoining Amneal from infringing the BIJUVA Patents. Amneal has filed its answer and counterclaim to the complaint, alleging that the BIJUVA Patents are invalid and not infringed. A trial date has not been set. In February 2021, the District Court entered an order temporarily staying all proceedings in the BIJUVA litigation. The District Court stay also extends the 30-month stay for the period in which the BIJUVA litigation has been stayed.

As of June 30, 2021, in the aggregate, we have incurred and recorded paragraph IV legal proceeding costs amounting to $2.7 million in prepaid expenses and other current assets in the accompanying consolidated balance sheets since we believe that we will successfully prevail in these two legal proceedings. Upon the successful conclusion of each of the above legal proceeding, the related capitalized legal costs for that legal proceeding will be reclassified to patents, in license rights, and other intangible assets, net in the accompanying consolidated balance sheets and such costs will be amortized over the remaining useful of the respective patent.  If we are unsuccessful in either one of the above legal proceedings, then the related capitalized legal costs and respective unamortized patent costs for that legal proceeding will be immediately expensed in the period in which we become aware of unsuccessful legal proceeding.

Common stock

In November 2020, we entered into an at-the-market offering program (the “2020 ATM Program”) relating to shares of our common stock. The 2020 ATM Program permitted us to offer and sell shares of our common stock having an aggregate offering price of up to $50.0 million from time to time through or to the sales agent under the 2020 ATM Program. Sales of our common stock were permitted to be made from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), including by means of ordinary broker’s transactions on the Nasdaq Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices, or as otherwise agreed to with the sales agent.  The sales agent was entitled to compensation at a fixed commission rate of 3.0% of the aggregate gross sales price per share sold.  As of February 8, 2021, sales of shares of our common stock under the 2020 ATM Program were completed when we sold an aggregate total of 28,600,689 shares of our common stock at an average sale price of $1.75 per share, and we received net proceeds of $47.3 million, after deducting the discounts and commissions to the sales agent and estimated offering expenses.

In February 2021, we closed on an underwritten public offering of our common stock, pursuant to which we issued 59,459,460 shares of our common stock at an offering price of $1.85 per share, and we received net proceeds of $96.6 million, after deducting the underwriting discounts and commissions and estimated offering expenses.

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In March 2021, we entered into the 2021 ATM Program relating to shares of our common stock. The 2021 ATM Program permits us to offer and sell shares of our common stock having an aggregate offering price of up to $100.0 million from time to time through or to the sales agent under the 2021 ATM Program. Sales of our common stock may be made from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act, including by means of ordinary broker’s transactions on the Nasdaq Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices, or as otherwise agreed to with the sales agent.  The sales agent will be entitled to compensation at a fixed commission rate of 3.0% of the aggregate gross sales price per share sold.  The sales agent is not required to sell any specific number or dollar amounts of securities but will act as sales agent and use commercially reasonable efforts to sell on our behalf all of the shares of common stock requested to be sold by us, consistent with its normal trading and sales practices, on mutually agreed terms between us and the sales agent. Through June 30, 2021, we have sold a total of 4,935,500 shares of our common stock under the 2021 ATM Program at an average sale price of $1.58 per share and we received estimated net proceeds of $7.2 million, after deducting discounts and commissions to the sales agent and estimated offering expenses. Subsequently, through the date of this 10-Q Report, we have sold an additional 28,769,815 shares of our common stock under the 2021 ATM Program at an average sale price of $1.14 per share and we received estimated net proceeds of $31.8 million, after deducting discounts and commissions to the sales agent and estimated offering expenses. Future sales, if any, under the 2021 ATM Program will depend on a variety of factors, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding, and potential uses of funding available to us.

Warrants

The following tables summarizes the status of our outstanding and exercisable warrants and related transactions since December 31, 2020 (in thousands, except weighed average exercise price and weighted average remaining contractual life data):

The aggregate intrinsic value of warrants exercised during the six months ended June 30, 2021 was $1.1 million.

Share-based compensation payment plans

At the 2021 annual meeting of stockholders of the Company, held on May 27, 2021, our stockholders approved the First Amendment to the TherapeuticsMD, Inc. 2019 Stock Incentive Plan (the “2019 Plan”) to increase the number of shares of our common stock available under the 2019 Plan by 22,475,000 shares.

As of June 30, 2021, there were 25,086,153 shares of common stock available for issuance under the 2019 Plan, consisting of (i) new shares, (ii) unallocated shares previously available for issuance under the 2012 Stock Incentive Plan (the “2012 Plan”) that were not then subject to outstanding “Awards” (as defined in the 2012 Plan), and (iii) unallocated shares previously available for issuance under the 2009 Long-Term Incentive Compensation Plan (the “2009 Plan”) that were not then subject to outstanding “Awards” (as defined in the 2009 Plan). Any shares subject to outstanding options or other equity “Awards” under the 2019 Plan, the 2012 Plan and the 2009 Plan that are forfeited, expire or otherwise terminate without issuance of the underlying shares, or if any such Award is settled for cash or otherwise does not result in the issuance of all or a portion of the shares subject to such Award (other than shares tendered or withheld in connection with the exercise of an Award or the satisfaction of withholding tax liabilities), the shares to which those Awards were subject, shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available for delivery with respect to Awards under the 2019 Plan.  As of December 31, 2020, there were 2,583,565 shares of common stock available for issuance under the 2019 Plan.

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The following table summarizes the status of our outstanding and exercisable options and related transactions since December 31, 2020 (in thousands, except weighed average exercise price and weighted average remaining contractual life data):

The aggregate intrinsic value of options exercised during the six months ended June 30, 2021 was less than $0.1 million.

The following table summarizes the status of our restricted stock units (“RSUs”) and related transactions since December 31, 2020 (in thousands, except weighed average grant date fair value):

The aggregate intrinsic value of RSUs vested and settled during the six months ended June 30, 2021 was $1.1 million.

The following table summarizes the status of our performance stock units (“PSUs”) and related transactions since December 31, 2020 (in thousands, except weighed average grant date fair value):

In June 2020, our stockholders approved the TherapeuticsMD, Inc. 2020 Employee Stock Purchase Plan (“ESPP”), which reserved 5,400,000 shares of our common stock for purchase by eligible employees.  The ESPP permits eligible employees to purchase our common stock at a price per share which is equal to 85% of the lesser of (i) the fair market value of the shares on the offering date of the offering period or (ii) the fair market value of the shares on the purchase date. In May 2021, 150,078 shares were sold under the ESPP at an average sale price of $0.89 per share and we received proceeds of $0.1 million.  

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We recorded share-based compensation related to previously issued options, RSU and PSUs, as well as shares of common stock issued under the ESPP totaling $2.5 million and $5.5 million for the three and six months ended June 30, 2021, respectively, and $3.0 million and $5.4 million for the three and six months ended June 30, 2020, respectively.  

As of June 30, 2021, we had $10.0 million of unrecognized share-based compensation cost related to unvested options, RSUs and PSUs as well as shares issuable under the ESPP, which is included as additional paid-in capital in the accompanying consolidated balance sheets and may be adjusted for future changes in forfeitures. The unrecognized share-based compensation cost as of June 30, 2021 is expected to be recognized as share-based compensation over a weighted average period of 1.4 years as follows (in thousands):

In July 2021, we granted options to purchase an aggregate of 60,000 shares of our common stock, and we issued RSUs to receive 7,782,279 shares of our common stock and PSUs to receive 4,586,668 shares of our common stock. The number of PSUs represents the base number of PSUs that may vest. The actual number of PSUs that will vest will be between zero and two times the base number of PSUs depending on the Company’s achievement of certain performance metrics. The aggregate estimated grant date fair value of the options, RSUs and PSUs was $12.3 million.  The estimated grant date fair value of the PSUs at two times the base number of PSUs was an additional $2.8 million for an aggregate total of $15.1 million for all equity awards. The estimated grant date fair value for all equity award is expected to be recognized as share-based compensation over a weighted average period of 3.2 years.

The following table provides information about disaggregated revenue by product mix and service (in thousands):

We do not expect to pay any significant federal or state income taxes as a result of (i) the losses recorded during the three and six months ended June 30, 2021 and 2020, (ii) additional losses expected for the remainder of 2021 or losses recorded in 2020, or (iii) net operating losses carry forwards from prior years.

We recorded a full valuation allowance of the net operating losses for the three and six months ended June 30, 2021 and 2020.  Accordingly, there were no provisions for income taxes for the three and six months ended June 30, 2021 and 2020. Additionally, as of June 30, 2021 and December 31, 2020, we maintain a full valuation allowance for all deferred tax assets.

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The following table sets forth the computation of basic and diluted loss per common share for the periods presented (in thousands, except per share amounts):

Since we reported a net loss for the three and six months ended June 30, 2021 and 2020, our potentially dilutive securities are deemed to be anti-dilutive, accordingly, there was no effect of dilutive securities.  Therefore, our basic and diluted loss per common share and our basic and diluted weighted average common share are the same for the three and six months ended June 30, 2021 and 2020.  

The following table sets forth the outstanding securities as of the periods presented which were not included in the calculation of diluted earnings per common share during the respective three and six months periods then ended (in thousands):

A member of our Board of Directors, J. Martin Carrol, is also a director of Catalent. From time to time, we have entered into agreements with Catalent and its affiliates in the normal course of business. Agreements with Catalent have been reviewed by independent directors of our Company, or a committee consisting of independent directors of our Company. For manufacturing activities, Catalent billed us $0.7 million for the three months ended June 30, 2021 and 2020, and $1.5 million and $2.0 million for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021 and December 31, 2020, we have estimated amounts payable to Catalent totaling $0.3 million. In addition, we have minimum purchase requirements in place with Catalent as disclosed in Note 9, Commitments and contingencies.

A member of our Board of Directors, Karen L. Ling, was an executive vice president and chief human resources officer of American International Group, Inc. (“AIG”). From time to time, we have entered into agreements with AIG in the normal course of business. Agreements with AIG have been reviewed by independent directors of our Company, or a committee consisting of independent directors of our Company. For various insurance premiums, AIG billed us less than $0.1 million for the three and six months ended June 30, 2021, and $0.1 million for the three and six months ended June 30, 2020.  As of June 30, 2021 and December 31, 2020, we have no amounts payable to AIG.

We sell our products to wholesale distributors, specialty pharmacies, specialty distributors, and chain drug stores that generally sell products to retail pharmacies, hospitals, and other institutional customers.

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Customers with product revenue equal to or greater than 10% of our total revenue for the periods indicated were as follows:

Customers that accounted for 10% or greater of our accounts receivable as of the periods indicated were as follows:

We rely on third parties for the manufacture and supply of our products, as well as third-party logistics providers.  In instances where these parties fail to perform their obligations, we may be unable to find alternatives suppliers or satisfactorily deliver our products to our customers on time, if at all.  

Vendors with product purchases equal to or greater than 10% of our total purchases for the periods indicated were as follows:

Vendors that accounted for 10% or greater of our accounts payable as of the periods indicated were as follows:

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our 2020 Annual Report on Form 10-K (“2020 10-K Report”), and the consolidated financial statements and related notes in Item 1, Financial Statements, appearing elsewhere in this this Quarterly Report on Form 10-Q (“10-Q Report”). The following discussion may contain forward-looking statements, and our actual results may differ materially from the results suggested by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2020 10-K Report under the heading “Risk Factors,” as updated and supplemented by Part II, Item 1A of this 10-Q Report. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.  Certain amounts in the following discussion may not add due to rounding, and all percentages have been calculated using unrounded amounts.

Forward-looking statements

This 10-Q Report may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans, and strategies as well as statements, other than historical facts, that address activities, events, or developments that we intend, expect, project, believe, or anticipate will or may occur in the future. These statements are often characterized by terminology such as “believes,” “hopes,” “may,” “anticipates,” “should,” “intends,” “plans,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” and similar expressions and are based on assumptions and assessments made in light of management’s experience and perception of historical trends, current conditions, expected future developments, and other factors believed to be appropriate. Forward-looking statements are made as of the date of this 10-Q Report and we undertake no duty to update or revise any such statements, whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC.

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of our control. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the sections titled “Risk Factors” in our 2020 10-K Report, and include the following: the effects of the COVID-19 pandemic; our ability to maintain or increase sales of our approved products; our ability to successfully commercialize IMVEXXY, BIJUVA, and ANNOVERA, and to develop and commercialize our hormone therapy drug candidates and obtain additional financing necessary therefor, including pursuant to our 2021 ATM Program; our commercialization, marketing, and manufacturing capabilities and strategy for our approved products; the size of markets and the potential market opportunity for which our products are approved and our ability to penetrate such markets; the rate and degree of market acceptance of our products; the willingness of healthcare providers to prescribe and patients to use our products; our ability to obtain additional financing when needed and to service our debt; our competitive position and the success of competing products that are or become available for the indications that we are pursuing; our intellectual property position; whether we will be able to comply with the covenants and conditions under our term loan facility; the length, cost, and uncertain results of our clinical trials, the potential of adverse side effects or other safety risks that could adversely affect the commercialization of our current or future approved products or preclude the approval of our future drug candidates; whether the U.S. Food and Drug Administration (“FDA”) will approve the efficacy supplement for the lower dose of BIJUVA; our ability to protect our intellectual property, including with respect to the Paragraph IV notice letters we received regarding IMVEXXY and BIJUVA; the length, cost, and uncertain results of future clinical trials; our reliance on third parties to conduct our manufacturing, R&D and clinical trials; the ability of our licensees to commercialize and distribute our products; the ability of our marketing contractors to market our products; the availability of reimbursement from government authorities and health insurance companies for our products; the impact of product liability lawsuits; and the influence of extensive and costly government regulation; the potential disposition of vitaCare Prescription Services or any other divestitures we may pursue in the future; the volatility of the trading price of our common stock and the concentration of power in our stock ownership.

Business overview

We are 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. At TherapeuticsMD, we combine entrepreneurial spirit, clinical expertise, and business leadership to develop and commercialize health solutions that enable new standards of care for women. Our solutions range from a patient-controlled, long-lasting contraceptive to advanced hormone therapy pharmaceutical products. We also have a portfolio of branded and generic prescription prenatal vitamins under the vitaMedMD and BocaGreenMD brands that furthers our women’s healthcare focus.  

During the first six months of 2021, the recovery from the COVID-19 pandemic drove improved access to health care providers for our sales force and increased consumer demand for our products, which had a positive impact on our net product revenue relating to ANNOVERA, IMVEXXY, and BIJUVA.  We believe the growth in our net product revenue will continue to be affected by the pace of recovery from the COVID-19 pandemic.    

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Product portfolio

Our portfolio of products focused on women’s health allows us to efficiently leverage our sales and marketing plans to grow our pharmaceutical products. We are focused on activities necessary for the continued commercialization of IMVEXXY, commercially launched in the third quarter of 2018; BIJUVA, commercially launched in the second quarter of 2019; and ANNOVERA, which we started selling in the third quarter of 2019 and commercially launched in March 2020, which was subsequently paused as a result of the COVID-19 pandemic and relaunched in July 2020.  We continue to manufacture and distribute our prescription prenatal vitamin product lines, consisting of branded prenatal vitamins under vitaMedMD and authorized generic formulations of some of our prescription prenatal vitamin products under BocaGreenMD.

IMVEXXY (estradiol vaginal inserts), 4-μg and 10-μg

This pharmaceutical product is for the treatment of moderate-to-severe dyspareunia (vaginal pain associated with sexual activity), a symptom of vulvar and vaginal atrophy due to menopause. The 4-μg formulation of IMVEXXY represents the lowest FDA approved dose of vaginal estradiol available. IMVEXXY is a small, digitally inserted, softgel vaginal insert that dissolves when inserted into the vagina. It is administered mess-free, without the need for an applicator, and can be used any time of day. IMVEXXY provides a mechanism of action and dosing that are familiar and comfortable for patients, with no patient education required for dose application or applicators. IMVEXXY demonstrated efficacy as early as two weeks (secondary endpoint) and maintained efficacy through week 12 in clinical studies, with no increase in systemic hormone levels beyond the normal postmenopausal range (the clinical relevance of systemic absorption rates for vaginal estrogen therapies is not known).

As part of the FDA’s approval of IMVEXXY, we have 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. 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 will be required to provide progress reports to the FDA on an annual basis. The development of this method is underway, and we do not believe that the costs will be material on an annual basis.

We market and sell IMVEXXY in the U.S. and have entered into licensing agreements with third parties to market and sell IMVEXXY outside of the U.S.  We have 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 in Canada and Israel.  We have entered into a licensing and supply agreement (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 June 30, 2021, no IMVEXXY sales have been made through these licensing agreements.

BIJUVA (estradiol and progesterone) capsules, 1 mg/100 mg

This pharmaceutical product is the first and only FDA approved bioidentical hormone therapy combination of estradiol and progesterone in a single, oral capsule for the treatment of moderate-to-severe vasomotor symptoms (commonly known as hot flashes or flushes) due to menopause in women with a uterus. The estrogen and progesterone in BIJUVA have the same chemical and molecular structure as the hormones that are naturally produced in a woman’s body.

BIJUVA offers the convenience of a single-capsule combination of two hormones (estradiol and progesterone), which may improve a user’s compliance. The estradiol and progesterone in BIJUVA are plant-based, not animal-sourced, and does not contain peanut oil unlike other FDA approved progesterone products. BIJUVA provides a sustained steady state of estradiol which reduced the frequency and severity of hot flashes in clinical studies with no demonstrated impact on a patient’s weight or blood pressure. Additionally, through clinical trials, BIJUVA has demonstrated endometrial safety and greater than 90% amenorrhea rates, while providing no clinically meaningful changes in mammograms.