FEMASYS INC

Previous wording

We are a leading biomedical company focused on addressing significant unmet needs for women worldwide with a broad portfolio of in-office, accessible, and innovative therapeutic and diagnostic solutions, including a lead revolutionary product candidate and FDA-cleared products. Our mission is to provide women with superior minimally-invasive, non-surgical product technologies, accessible in the office, improving patient care and overall health economics focused on servicing the reproductive health needs for those seeking solutions for infertility issues (FemaSeed and FemVue) or permanent birth control (FemBloc). We are a woman-founded and led company with an expansive, internally created intellectual property portfolio with over 180 patents globally, in- house chemistry, manufacturing, and controls (CMC) and device manufacturing capabilities and proven ability to develop and commercialize products. Our suite of products and product candidates address what we believe are multi-billion dollar global market segments in which there has been little advancement for many years, helping women avoid pharmaceutical solutions, implants and surgery that can be expensive and expose women to harm.

Current wording

We are a leading biomedical company focused on addressing significant unmet needs for women worldwide with a broad portfolio of in-office, accessible, and innovative therapeutic and diagnostic solutions, including a lead revolutionary product candidate and FDA-cleared, and Canadian and European Union approved products. Our mission is to provide women with superior minimally-invasive, non-surgical product technologies, accessible in the office, improving patient care and overall health economics focused on servicing the reproductive health needs for those seeking solutions for infertility issues (FemaSeed and FemVue) or permanent birth control (FemBloc). We are a woman-founded and led company with an expansive, internally created intellectual property portfolio with over 180 patents globally, in- house chemistry, manufacturing, and controls (CMC) and device manufacturing capabilities and proven ability to develop and commercialize products. Our suite of products and product candidates address what we believe are multi-billion dollar global market segments in which there has been little advancement for many years, helping women avoid pharmaceutical solutions, implants and surgery that can be expensive and expose women to harm.

Previous wording

FemaSeed – Our Intratubal Artificial Insemination Solution. In September 2023 we announced 510(k) clearance from the FDA for FemaSeed for intratubal insemination. The clinical trial was still ongoing at the time of receiving U.S. regulatory clearance from the FDA, however, the study was concluded with enrollment completed in November 2023. Topline results of the clinical trial were announced in March 2024. The trial demonstrated that 24% of women became pregnant after FemaSeed with male factor infertility (1 million to 20 million total motile sperm count (TMSC)). In contrast, the historical control indicated a 6.7% pregnancy rate by cycle for intrauterine insemination (IUI) with male factor infertility (greater than 1 million TMSC). Although subjects were permitted to have multiple FemaSeed attempts, the majority of women who became pregnant did so after the first FemaSeed procedure. The majority of adverse events were reported as mild (n=127 subjects, 216 cycles). No new safety concerns were observed through the seven-week follow-up. All adverse events were consistent with those known for IUI. The approved labeling includes women or couples wishing to become pregnant by way of intratubal insemination. The recruitment of the commercial team began with the hire of the Chief Commercial Officer in February 2024. In March 2024, the first commercial use of FemaSeed at a former investigative site was announced. Recruitment of the commercial team is underway.

Current wording

FemaSeed – Our Intratubal Artificial Insemination Solution. In September 2023 we announced 510(k) clearance from the FDA for FemaSeed for intratubal insemination. The clinical trial was still ongoing at the time of receiving U.S. regulatory clearance from the FDA, however, the study was concluded with enrollment completed in November 2023. Topline results of the clinical trial were announced in March 2024. The trial demonstrated that 24% of women became pregnant after FemaSeed with male factor infertility (1 million to 20 million total motile sperm count (TMSC)). In contrast, the historical control indicated a 6.7% pregnancy rate by cycle for intrauterine insemination (IUI) with male factor infertility (greater than 1 million TMSC). Although subjects were permitted to have multiple FemaSeed attempts, the majority of women who became pregnant did so after the first FemaSeed procedure. The majority of adverse events were reported as mild (n=127 subjects, 216 cycles). No new safety concerns were observed through the seven-week follow-up. All adverse events were consistent with those known for IUI. The approved labeling includes women or couples wishing to become pregnant by way of intratubal insemination. The recruitment of the commercial team began with the hire of the Chief Commercial Officer in February 2024. In March 2024, the first commercial use of FemaSeed at a former investigative site was announced. Build-out of our initial commercial team in the United States, the focus of our primary market efforts was completed in June 2024. In June 2024, we received EU MDR and CE Mark certification for FemaSeed and concurrently are exploring potential strategic partners for distribution in Europe and internationally.

Previous wording

Cost of sales decreased by $16,588 or 15.8%, to $88,532 for the three months ended March 31, 2024 from $105,120 for the three months ended March 31, 2023. The decrease is primarily attributed to reduced sales and certain manufacturing efficiencies.

Current wording

Cost of sales decreased by $37,344 or 33.8%, to $73,125 for the three months ended June 30, 2024 from $110,469 for the three months ended June 30, 2023. The decrease is primarily attributed to reduced sales and certain manufacturing efficiencies.

Previous wording

Sales and marketing expenses increased by $55,591 or 22.7%, to $300,487 for the three months ended March 31, 2024 from $244,896 for the three months ended March 31, 2023. The increase is largely due to increased compensation costs as we began hiring commercial team members.

Current wording

Sales and marketing expenses increased by $846,291 or 656.6%, to $975,190 for the three months ended June 30, 2024 from $128,899 for the three months ended June 30, 2023. The increase is largely due to increased compensation costs and sales expenses as we recruited and hired commercial team members in connection with the initiation of commercialization of FemaSeed.

Previous wording

General and administrative expenses increased by $187,667, or 14.3%, to $1,502,804 for the three months ended March 31, 2024 from $1,315,137 for the three months ended March 31, 2023. The increase was largely due to increased facility, overhead and compensation costs.

Current wording

General and administrative expenses increased by $255,180, or 18.8%, to $1,611,817 for the three months ended June 30, 2024 from $1,356,637 for the three months ended June 30, 2023. The increase was largely due to increased facility, overhead and compensation costs.

Previous wording

Depreciation and amortization expenses decreased by $61,838, or 46.5%, to $71,228 for the three months ended March 31, 2024 from $133,066 for the three months ended March 31, 2023. The decrease is due to a reduction of amortization expense associated with our intangible assets and depreciation expense associated with our fixed assets.

Current wording

Depreciation and amortization expenses decreased by $65,671, or 49.3%, to $67,628 for the three months ended June 30, 2024 from $133,299 for the three months ended June 30, 2023. The decrease is due to a reduction of depreciation expense associated with our fixed assets.

Previous wording

Other income (expense), net decreased by $232,285, or 243.4%, to $136,868 of expense for the three months ended March 31, 2024 from $95,417 of income for the three months ended March 31, 2023. The decrease relates to interest expense and non-cash discount amortization related to the convertible notes payable, partially offset by an increase in interest income.

Current wording

Other income (expense), net decreased by $246,627, or 580.9%, to $204,173 of expense for the three months ended June 30, 2024 from $42,454 of income for the three months ended June 30, 2023. The decrease relates to interest expense and non-cash discount amortization related to the convertible notes payable, partially offset by an increase in interest income.

Previous wording

Sales decreased by $22,844, or 7.8%, to $271,140 for the three months ended March 31, 2024 from $293,984 for the three months ended March 31, 2023, attributable entirely to U.S. sales. Units sold decreased by 5.1% for the comparable periods, while maintaining a consistent average selling price.

Current wording

Sales decreased by $121,874, or 19.8%, to $492,624 for the six months ended June 30, 2024 from $614,498 for the six months ended June 30, 2023, attributable primarily to international sales. Units sold decreased by 25.7% for the comparable periods, while maintaining a consistent average selling price. FemaSeed sales are expected to commence in the second half of 2024.

Previous wording

R&D expenses increased by $233,292 or 15.2%, to $1,770,731 for the three months ended March 31, 2024 from $1,537,439 for the three months ended March 31, 2023. The increase relates primarily to increased compensation costs, clinical-related costs, and professional and outside consultant costs, partially offset by reduced material and development costs.

Current wording

R&D expenses increased by $681,995 or 22.3%, to $3,746,606 for the six months ended June 30, 2024 from $3,064,611 for the six months ended June 30, 2023. The increase relates primarily to increased material and development costs, clinical-related costs, compensation costs and professional and outside consultant costs.

Previous wording

Since our inception through March 31, 2024, our operations have been financed primarily by net proceeds from the sale of our common stock and convertible preferred stock, indebtedness and, to a lesser extent, product revenue. As of March 31, 2024, we had $17,835,968 of cash and cash equivalents and an accumulated deficit of $111,981,139.

Current wording

Since our inception through June 30, 2024, our operations have been financed primarily by net proceeds from the sale of our common stock and convertible preferred stock, indebtedness and, to a lesser extent, product revenue. As of June 30, 2024, we had $13,525,898 of cash and cash equivalents and an accumulated deficit of $116,665,713.

Previous wording

On July 1, 2022, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Piper Sandler & Co. (the “Sales Agent”) and filed a related prospectus establishing an “at-the-market” facility, pursuant to which we may offer and sell shares of our common stock from time to time through the Sales Agent. In October 2023, the Sales Agent was authorized to sell shares of common stock for an aggregate price up to $16.7 million pursuant to the prospectus. As of March 31, 2024, approximately 3.8 million shares of common stock have been sold for aggregate proceeds of $8.5 million under the Equity Distribution Agreement pursuant to the prospectus. As of March 31, 2024, the amount we are authorized to sell is subject to baby-shelf limitations.

Current wording

On July 1, 2022, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Piper Sandler & Co. (the “Sales Agent”) and filed a related prospectus establishing an “at-the-market” facility, pursuant to which we may offer and sell shares of our common stock from time to time through the Sales Agent. In October 2023, the Sales Agent was authorized to sell shares of common stock for an aggregate price up to $16.7 million pursuant to the prospectus. As of June 30, 2024, approximately 3.9 million shares of common stock have been sold for aggregate proceeds of approximately $8.7 million under the Equity Distribution Agreement pursuant to the prospectus. As of June 30, 2024, the amount we are authorized to sell is subject to baby-shelf limitations.

Previous wording

Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations into the second half of 2025. Our estimate as to how long we expect our existing cash and cash equivalents to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate.

Current wording

Based on our current operating plan, our current cash and cash equivalents is sufficient into July 2025. However, it is not sufficient to fund our ongoing operations for twelve months from the date of these financial statements and we will need to obtain additional financing to fund our ongoing operations. Our estimate as to how long we expect our existing cash and cash equivalents to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate. As a result of our current limited financial liquidity, we have concluded that substantial doubt exists about our ability to continue as a going concern.

Previous wording

Our cash and cash equivalents as of March 31, 2024 will not be sufficient to fund all of our product candidates through regulatory approval, and we anticipate needing to raise additional capital to complete the development and commercialization of our product candidates. However, we can give no assurances that we will be able to secure additional sources of funds to support our operations, or if such funds will be available to us, that such additional financing will be sufficient to meet our needs or be on terms acceptable to us. This risk may increase if economic and market conditions deteriorate. If we are unable to obtain additional financing when needed, we may need to terminate, significantly modify, or delay the development of our product candidates, or we may need to obtain funds through collaborations or otherwise on terms that may require us to relinquish rights to our technologies or product candidates that we might otherwise seek to develop or commercialize independently. If we are unable to raise adequate additional capital as and when required in the future, we could be forced to cease development activities and terminate our operations, and you could experience a complete loss of your investment.

Current wording

Our cash and cash equivalents as of June 30, 2024 will not be sufficient to fund our product candidate FemBloc through regulatory approval, and we anticipate needing to raise additional capital to complete the development and commercialization of our product candidate. However, we can give no assurances that we will be able to secure additional sources of funds to support our operations, or if such funds will be available to us, that such additional financing will be sufficient to meet our needs or be on terms acceptable to us. This risk may increase if economic and market conditions deteriorate. If we are unable to obtain additional financing when needed, we may need to terminate, significantly modify, or delay the development of our product candidate, or we may need to obtain funds through collaborations or otherwise on terms that may require us to relinquish rights to our technologies or product candidates that we might otherwise seek to develop or commercialize independently. If we are unable to raise adequate additional capital as and when required in the future, we could be forced to cease development activities and terminate our operations, and you could experience a complete loss of your investment.

Previous wording

The following table summarizes our cash flows for the three months ended March 31, 2024 and 2023:

Current wording

The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023:

Previous wording

For the three months ended March 31, 2024, cash used in operating activities was $4,568,124, attributable to a net loss of $3,599,510 and a net change in our net operating assets and liabilities of $1,531,133, partially offset by non-cash charges of $562,519. Non-cash charges primarily consisted of $258,802 in amortization of the discount on convertible notes, $152,664 in right-of-use amortization, $77,585 in share-based compensation and $71,228 in depreciation and amortization. The change in our net operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $929,992, increases in accounts receivable and prepaid and other assets of $209,982 and inventory of $305,419.

Current wording

For the six months ended June 30, 2024, cash used in operating activities was $8,894,780, attributable to a net loss of $8,284,084 and a net change in our net operating assets and liabilities of $1,777,514, partially offset by non-cash charges of $1,166,618. Non-cash charges primarily consisted of $544,363 in amortization of the discount on convertible notes, $299,171 in right-of-use amortization, $181,598 in share-based compensation and $138,856 in depreciation and amortization. The change in our net operating assets and liabilities was primarily due to decreases in accounts payable and accrued expenses of $781,626, lease liabilities of $137,482 and increases in inventory of $651,292 and prepaid and other assets of $173,828.

Previous wording

For the three months ended March 31, 2023, cash used in operating activities was $2,647,637, attributable to a net loss of $2,946,257, offset by a net change in our net operating assets and liabilities of $32,666 and non-cash charges of $265,955. Non-cash charges largely consisted of $133,066 in depreciation and amortization, $75,635 in right-of-use amortization, and $56,954 in share-based compensation. The change in our net operating assets and liabilities was primarily due to a decrease of $104,169 in accounts receivable and prepaid and other assets, an increase in accounts payable and accrued expenses of $81,719, partially offset by an increase of $64,318 in inventory and decrease of $91,211 in lease liabilities.

Current wording

For the six months ended June 30, 2023, cash used in operating activities was $5,388,824, attributable to a net loss of $5,839,765 and a net change in our net operating assets and liabilities of $132,443, partially offset by non-cash charges of $583,384. Non-cash charges largely consisted of $266,365 in depreciation and amortization, $148,541 in right-of-use amortization, $122,170 in stock-based compensation and $44,538 for loss on disposal of assets. The change in our net operating assets and liabilities was primarily due to decreases of $181,065 in lease liabilities and increases of $146,521 in inventory and $78,276 in accounts receivable, partially offset by decreases in prepaid and other assets of $154,065 and increases of $116,235 in accounts payable and accrued expenses.

Previous wording

For the three months ended March 31, 2024, cash used in investing activities for the purchase of property and equipment and acquisition of patents was $90,160.

Current wording

For the six months ended June 30, 2024, cash used in investing activities for the purchase of property and equipment and acquisition of patents was $297,123.

Previous wording

For the three months ended March 31, 2023, cash used in investing activities for the purchase of property and equipment was $8,901.

Current wording

For the six months ended June 30, 2023, cash used in investing activities for the purchase of property and equipment was $71,849.

Previous wording

For the three months ended March 31, 2024, cash provided by financing activities was $778,175, attributable to proceeds from sales under the at-the-market facility, net of issuance costs.

Current wording

For the six months ended June 30, 2024, cash provided by financing activities was $1,001,724, attributable to proceeds from sales under the at-the-market facility, net of issuance costs and proceeds from the issuance of shares under the ESPP plan.

Previous wording

For the three months ended March 31, 2023, cash used in financing activities was $144,060, attributable to repayments on notes payable of $141,298, payments under lease obligations of $6,135, offset by proceeds from issuance of common stock of $3,373.

Current wording

For the six months ended June 30, 2023, cash used in financing activities was $3,203,754, attributable to proceeds from the issuance of common stock and warrants of $3,905,071, partially offset by financing offering costs of $547,764, repayments on notes payable of $141,298 and payments under lease obligations of $12,255.