Evofem Biosciences Inc
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
EVFM$0.48-23.4%Stored close · as of Aug 10, 2022
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001493152-24-019428
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001493152-24-031846
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 115 previous paragraphs and 136 current paragraphs.
65 unchanged; 38 reworded; 28 added; 12 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 15 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
On July 17, 2024, we licensed exclusive commercial rights to Phexxi in the Middle East to Pharma 1 Drug Store, an emerging Emirati health care company. The licensed territory includes the United Arab Emirates (UAE), Kuwait, Saudi Arabia, Qatar and certain other countries in the region. Pharma 1 is responsible for obtaining and maintaining any regulatory approvals required to market and sell Phexxi, and will handle all aspects of distribution, sales and marketing, pharmacovigilance and all other commercial functions in these countries. Evofem will supply Phexxi to Pharma 1 at cost-plus. Pharma 1 is expected to file for regulatory approval of Phexxi in the UAE in the second half of 2024.
Current report
On July 14, 2024 we entered into the SOLOSEC Agreement to acquire global rights to SOLOSEC® (secnidazole) 2g oral granules. SOLOSEC is an FDA-approved single-dose oral antimicrobial agent that provides a complete course of therapy for the treatment of bacterial vaginosis (BV) and trichomoniasis, two common sexual health infections. As consideration for the Asset Agreement the Company paid Lupin Inc. a one-time upfront payment and will make certain sales-based payments. Additionally, we assumed the OAA Liabilities, minus Seller OAA Contributions (all capitalized terms as defined in the Asset Agreement). This acquisition aligns with and advances our mission to improve access to innovative and differentiated options that impact women’s daily lives. We plan to re-launch SOLOSEC in the second half of 2024, leveraging our commercial infrastructure and strong physician relationships.
Current report
In June 2024, Evofem entered into a partnership with Hello Alpha, a telemedicine company with a medical team specifically trained for a woman’s unique needs, under which Hello Alpha offers Phexxi as a solution that complements GLP-1 medications like Ozempic, Wegovy, Mounjaro and Zepbound. These medications can potentially reduce the effectiveness of birth control pills during specific intervals within the dosing cycle. To ensure continued pregnancy prevention, providers on HelloAlpha.com recommend switching to a non-oral birth control method or using an additional non-hormonal birth control method, like Phexxi, alongside oral contraceptives during these times.
Current report
In the second quarter of 2024, Evofem’s market access team secured multiple wins including a partnership with Modern Remedies, one of the top pharmacies dispensing Phexxi in the Northeast that took effect May 2024 and a contract with a leading group purchasing organization, among others.
Current report
On July 23, 2024, the Company consented to the transfer of ownership of the Company’s senior secured notes from Baker Brothers Life Sciences, L.P., a Delaware limited partnership, 667, L.P., a Delaware limited partnership and Baker Bros. Advisors, LP, a Delaware limited partnership (collectively, Baker). To the successor Future Pak, LLC, a Michigan limited liability company (the Assignee).
Current report
Table of Contents
Current report
Table of Contents
Current report
On July 12, 2024, the Company, the Merger Sub and Aditxt entered into the Amended and Restated Merger Agreement (the A&R Merger Agreement) which amends and restates in its entirety the Agreement and Plan of Merger (as amended January 10, 2024, January 30, 2024, February 29, 2024, and May 2, 2024 (collectively, the Original Merger Agreement)). Except as described below, the terms and provisions of the A&R Merger Agreement are consistent with the terms and provision of the Original Merger Agreement.
Current report
Further, Aditxt agreed to, on or prior to: (a) July 12, 2024, purchase 500 shares of the Company’s Series F-1 Preferred Shares for an aggregate purchase price of $0.5 million (the July Purchase) (b) August 9, 2024, purchase an additional 500 shares of F-1 Preferred Shares for an aggregate purchase price of $0.5 million (the August Purchase), (c) the earlier of August 30, 2024 or within five business days of the closing of a public offering by Aditxt resulting in aggregate net proceeds to Aditxt of no less than $20.0 million, purchase an additional 2,000 shares of F-1 Preferred Shares for an aggregate purchase price of $2.0 million; and (d) September 30, 2024, purchase an additional 1,000 shares of F-1 Preferred Stock at an aggregate purchase price of $1.0 million. The July Purchase and subsequent August Purchase of 500 shares of the Company’s Series F-1 Preferred Shares in each respective purchase were completed as scheduled.
Current report
Table of Contents
Current report
On February 29, 2024, as part of the Third Amendment, Aditxt agreed to have, as a condition of closing, that the outstanding balance, plus all accrued and unpaid interest thereon, in an amount not to exceed the Repurchase Price, shall have been paid in full. The A&R Merger Agreement, entered into on July 12, 2024, maintains the same condition to closing.
Current report
Table of Contents
Current report
Table of Contents
Current report
Table of Contents
Current report
Table of Contents
Current report
Table of Contents
Current report
The lower product sales, net in the prior year quarter, was primarily impacted by the unusual volume of product returns of $1.6 million, which was not repeated in the current year. Additionally, unit sales were up nearly 8% in the current year compared to the prior year quarter.
Current report
The decrease in research and development expenses was primarily due to a decrease of $0.2 million in personnel costs and a decrease of $0.1 million in facilities costs, partially offset by an increase of $0.2 million in outside services.
Current report
The immaterial decrease in selling and marketing expenses was primarily due to a $0.2 million decrease in facilities costs partially offset by an increase of approximately $0.2 million in business development and outside services, some of which were attributable to the accounts payable settlements reached in the prior year quarter that were not repeated in the current year.
Current report
Table of Contents
Current report
Total other income (expense), net, for the three months ended June 30, 2024 primarily included a $3.3 million gain on the change in fair value of financial instruments, partially offset by $0.5 million in interest expense related to the Adjuvant Note.
Current report
Net Product Sales
Current report
Table of Contents
Current report
Total other income (expense), net
Current report
Total other income, net, for the six months ended June 30, 2023, primarily included a gain of approximately $1.5 million related to the change in fair value of financial instruments partially offset by $1.1 million of interest expense related to the Adjuvant.
Current report
Table of Contents
Current report
Debt Financings
Current report
Table of Contents
Removed paragraphs (12)
Previous report
Effective January 1, 2024, the Washington State Health Care Authority (HCA) removed the Prior Authorization requirement for Phexxi, facilitating Phexxi access for nearly 1.8 million covered Washingtonians on the state HCA’s Managed Medicaid and Fee for Service Medicaid plans. Phexxi continues to be included on the Washington State HCA Preferred Drug List.
Previous report
As consideration for the Merger, the Parent will (i) issue 610,000 shares of Parent common stock (Parent Common Stock) (ii) exchange the Company’s preferred stock for Parent preferred stock (Parent Preferred Stock and together with Parent Common Stock, the Merger Shares) (iii) execute an assignment agreement by and between Baker Brothers Life Sciences, L.P. and the Parent for the certain secured and unsecured promissory notes aggregately valued at $18.0 million. In addition, Parent has agreed to issue up to an aggregate of 89,126 shares of preferred stock to the holders of the Company’s currently outstanding unsecured notes, purchase rights, certain warrants, and preferred stock. The closing issuance of Merger Shares may be adjusted pursuant to procedures set forth in the Merger Agreement, in connection with the finalization of exchange ratio of the Company and Parent shares.
Previous report
Cost of Goods Sold
Previous report
Research and Development Expenses
Previous report
Selling and Marketing Expenses
Previous report
General and Administrative Expenses
Previous report
Additionally, the product sales, net in the current quarter reflect a slowdown of the dispensing process as a result of the negative impact of the cyberattack on Change Healthcare in mid February 2024, at which time Change Healthcare was the sole adjudicator (processor) used by the Company’s co-pay card vendor. In late April 2024, the Company’s co-pay card vendor was able to restore operations and we anticipate normalized prescription dispensing in the second quarter of 2024 and beyond.
Previous report
Cost of Goods Sold
Previous report
Research and Development Expenses
Previous report
Selling and Marketing Expenses
Previous report
General and Administrative Expenses
Previous report
2023 Debt Financings
Reworded paragraphs (38)
Previous wording
We are a San Diego-based commercial-stage biopharmaceutical company with a strong focus on innovation in women’s health. Our first commercial product, Phexxi, was approved by the FDA on May 22, 2020. Phexxi is the first and only non-hormonal prescription contraceptive gel that women only use when they have sex. Because Phexxi is a non-hormonal contraceptive, it is not associated with side effects like depression, weight gain, headaches, loss of libido, mood swings and irritability. Taking hormones may not be right for some women, especially those with certain medical conditions including clotting disorders and hormone-sensitive cancer, or those who are breast feeding, have a BMI over 30, smoke, or have diabetes. More than 23.3 million women in the U.S. will not use a hormonal contraceptive.
Current wording
We are a San Diego-based commercial-stage biopharmaceutical company with a strong focus on innovation in women’s health. Our first commercial product, Phexxi, was approved by the FDA on May 22, 2020. Phexxi is the first and only non-hormonal prescription contraceptive gel. It is locally acting, with no systemic activity, and used on-demand by women only when they have sex. Because Phexxi is a non-hormonal contraceptive, it is not associated with side effects of exogenous hormone use like depression, weight gain, headaches, loss of libido, mood swings and irritability. Taking hormones may not be right for some women, especially those with certain medical conditions, including clotting disorders hormone-sensitive cancer, diabetes or a BMI over 30, or those who are breast feeding or smoke. More than 23.3 million women in the U.S. will not use a hormonal contraceptive.
Previous wording
Evofem has delivered Phexxi net sales growth in each consecutive year since it was launched in Sept 2020. Key growth drivers for 2024 include expanded use of Phexxi in women who take oral birth control pills in conjunction with GLP-1 prescription medications like Ozempic, Mounjaro and Zepbound for weight loss. These drugs may make oral birth control pills less effective at certain points in the dosing schedule. Per the USPI, prescribers may “advise patients using oral contraceptives to switch to a non-oral contraceptive method or add a barrier method” to prevent unintended pregnancy during these times.
Current wording
Evofem has delivered Phexxi net sales growth in each consecutive year since it was launched in Sept 2020. Key growth drivers for 2024 include expanded use of Phexxi in women who take oral birth control pills in conjunction with GLP-1 prescription medications like Ozempic, Mounjaro and Zepbound for weight loss. These drugs may make oral birth control pills less effective at certain points in the dosing schedule. Per the USPI, prescribers are instructed to “advise patients using oral contraceptives to switch to a non-oral contraceptive method or add a barrier method” to prevent unintended pregnancy during these times.
Previous wording
Phexxi was approved in Nigeria on October 6, 2022, as Femidence™ by the National Agency for Food and Drug Administration and Control. Phexxi has been submitted for approval in Mexico, Ethiopia and Ghana. We intend to commercialize Phexxi in all other global markets through partnerships or licensing agreements.
Current wording
Outside the U.S., Phexxi was approved in Nigeria on October 6, 2022, as Femidence™ by the National Agency for Food and Drug Administration and Control. To-date, Phexxi has been submitted for approval in Mexico, Ethiopia and Ghana. We intend to commercialize Phexxi in all other global markets through partnerships or licensing agreements and, as noted below, we are successfully executing this strategy.
Previous wording
On March 26, 2024 the USPTO issued to the Company a Notice of Allowance for patent application 17/823,020 entitled, “Compositions and Methods for Enhancing the Efficacy of Contraceptive Microbicides.” This Notice of Allowance is expected to result in the issuance of a U.S. patent once administrative processes are completed. The allowed claims cover methods of contraception with a composition that encompasses Phexxi vaginal gel. Evofem expects the resulting patent will be Orange Book-listable. The patent, when issued, will be Evofem’s fifth patent for Phexxi in the United States.
Current wording
On May 28, 2024 the USPTO issued U.S. patent number 11,992,472 entitled, “Compositions and Methods for Enhancing the Efficacy of Contraceptive Microbicides.” This patent covers methods of contraception with a composition that encompasses Phexxi vaginal gel. The patent is Evofem’s fifth Orange Book-listed patent for Phexxi in the United States.
Previous wording
On January 10, 2024, the Company, Aditxt and Merger Sub entered into the first amendment to the Merger Agreement (the First Amendment) to change the filing date for the Joint Proxy Statement (as defined in the Merger Agreement) to February 14, 2024.
Current wording
On January 10, 2024, the Company, Parent and Merger Sub entered into the first amendment to the Merger Agreement (the First Amendment) to change the filing date for the Joint Proxy Statement (as defined in the Merger Agreement) to February 14, 2024.
Previous wording
On February 29, 2024, the parties entered into the third amendment to the Merger Agreement to:
Current wording
On February 29, 2024, the Company, Parent and Merger Sub entered into the third amendment to the Merger Agreement (the Third Amendment) to:
Previous wording
As discussed in Note 10 – Subsequent Events, on April 26, 2024, the Company delivered a termination notice to Aditxt notifying it that the Company was exercising its right to terminate the Merger Agreement effective April 26, 2024 (the Termination Notice), in accordance with Section 8.1(f) of the Merger Agreement, as revised in the third amendment to the Merger Agreement, made on February 29, 2024.
Current wording
On April 26, 2024, the Company delivered a termination notice to Aditxt notifying it that the Company was exercising its right to terminate the Merger Agreement effective April 26, 2024 (the Termination Notice), in accordance with Section 8.1(f) of the Merger Agreement, as revised in the third amendment to the Merger Agreement, made on February 29, 2024.
Previous wording
On May 2, 2024, the Company, the Merger Sub and Aditxt entered into the Reinstatement and Fourth Amendment to the Merger Agreement (the Fourth Amendment) in order to waive and amend, among other things, the several provisions listed below. In consideration of the Fourth Amendment, Aditxt agreed to pay the Company $1.0 million.
Current wording
On May 2, 2024, the Company, the Merger Sub and Aditxt entered into the Reinstatement and Fourth Amendment to the Merger Agreement (the Fourth Amendment) in order to waive and amend, among other things, the several provisions listed below. In consideration of the Fourth Amendment, Aditxt agreed to pay the Company $1.0 million, which the Company received during the three months ended June 30, 2024.
Previous wording
Each stock option of the Company that is outstanding and unexercised immediately prior to the effective time of the Merger (the Effective Time) will be cancelled as of the Effective Time without the right to receive any consideration.
Current wording
At the Effective Time of the Merger:
Previous wording
The Merger Agreement is subject to certain closing conditions and contains customary representations, warranties and covenants including, (i) the Company and Parent Shareholder approval shall have been obtained in accordance with applicable Law; (ii) no governmental entity having jurisdiction over any party shall have issue any order, decree, ruling injunction or other action that is in effect restraining the Merger; (iii) the registration statement on Form S-4 shall be declared effective by the U.S. Securities and Exchange Commission (SEC); (iv) a voting agreement shall have been executed and delivered by the parties thereto; (v) all Company preferred stock shall have been converted to Company common stock except for the Unconverted Company Preferred Stock (as defined by the Agreement); (vi) the Company shall have received agreements from all of the holders of the Company’s warrants, duly executed, containing waivers with respect to any fundamental transaction, change in control or other similar rights that such warrant holders may have under any such Company warrants and exchange such Company warrants as they hold for an aggregate of not more than 551 shares of Parent Preferred Stock; (vii) the Company shall have cashed out any other warrant holder who has not provided a warrant holder agreement, provided, however, that the aggregate amount of such cash out for any and all other warrant holders who have not provided a warrant holder agreement shall not exceed $0.2 million; (viii) the Company shall have obtained waivers from holders of Company convertible notes of the original principal amount thereof with respect to any fundamental transaction rights such Company convertible note holders may have under any such Company convertible notes, including any right to vote, consent or otherwise approve or veto any of the transaction contemplated by this Merger Agreement; (ix) Parent shall have received a compliance certificate from the Company certifying Company complied with all its representations and warranties in the Merger Agreement; (x) Parent shall have received a certificate certifying that no interest in the Company is a U.S. real property interest, as required under U.S. treasury regulation section 1.897-2(h) and 1.1445-3©; (xi) Company shall have received from Parent a compliance certificate certifying that Parent has complied with all its representations and warranties in the Merger Agreement, that Parent Common Stock included in the Merger Shares have been approved for listing on the Nasdaq, and Parent shall have regained compliance with the stockholders equity requirement in Nasdaq listing rule 5550(b)(1).
Current wording
The consummation of the Merger is conditioned upon, among other things: (i) the Company Shareholder approval shall having been obtained in accordance with applicable Law; (ii) no governmental entity having jurisdiction over any party shall have issue any order, decree, ruling injunction or other action that is in effect restraining the Merger; (iii) a voting agreement shall have been executed and delivered by the parties thereto; (iv) all Company preferred stock shall have been converted to Company common stock except for the Unconverted Company Preferred Stock (as defined by the A&R Merger Agreement); (v) the Company shall have received agreements from all of the holders of the Company’s warrants, duly executed, containing waivers with respect to any fundamental transaction, change in control or other similar rights that such warrant holders may have under any such Company warrants and exchange such Company warrants as they hold for an aggregate of not more than 930,336 shares of Parent Preferred Stock (as defined in the A&R Merger Agreement); (vi) the Company shall have cashed out any other warrant holder who has not provided a warrant holder agreement, provided, however, that the aggregate amount of such cash out for any and all other warrant holders who have not provided a warrant holder agreement shall not exceed $0.15 million; (vii) the Company shall have obtained waivers from holders of Company convertible notes of the original principal amount thereof with respect to any fundamental transaction rights such Company convertible note holders may have under any such Company convertible notes, including any right to vote, consent or otherwise approve or veto any of the transaction contemplated by this A&R Merger Agreement; (viii) Aditxt shall have received sufficient financing to satisfy its payment obligations under the A&R Merger Agreement (ix) the requisite stockholder approval shall have been obtained by Aditxt at a special meeting of its stockholders to approve the Parent Stock Issuance (as defined in the A&R Merger Agreement) (x) Aditxt shall have received a compliance certificate from the Company certifying Company complied with all reps and warranties in the A&R Merger Agreement; (xi) Aditxt shall have received waivers from the parties to the agreements listed in Section 7.2(f) of the A&R Merger Agreement Parent Disclosure Letter of the issuance of securities in a “Variable Rate Transaction” (as such term in defined in such agreements); (xii) Parent shall have received a certificate certifying that no interest in the Company is a U.S. real property interest, as required under U.S. treasury regulation section 1.897-2(h) and 1.1445-3(c); (xiii) Aditxt shall have paid, in full, the Repurchase Price, as defined in that certain Securities Purchase and Security Agreement, dated as of April 23, 2020, as amended by that First Amendment to the Securities Purchase and Security Agreement, dated as of November 20, 2021, that Second Amendment to th…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
The Company will prepare and file a proxy statement with the SEC and, subject to certain exceptions, the Company’s Board of Directors (the Board) will recommend that the Merger Agreement be adopted by the Company’s stockholders at a special meeting of the Company’s stockholders (the “Company Board Recommendation”). However, subject to the satisfaction of certain terms and conditions, the Company and the Board, as applicable, are permitted to take certain actions which may, as more fully described in the Merger Agreement, include changing the Company Board Recommendation and entering into a definitive agreement with respect to a Company Superior Proposal (as defined in the Merger Agreement) if the Board or any committee thereof determines in good faith, after consultation with the Company’s outside legal and financial advisors and after taking into account relevant legal, financial, regulatory, estimated timing of consummation and other aspects of such proposal that the Board considers in good faith and the Person or group making such proposal, would, if consummated in accordance with its terms, result in a transaction more favorable to the Company Shareholders than the Merger. The Company would be required to pay the Parent a termination fee of $4.0 million in connection with the Company accepting a Company Superior Proposal.
Current wording
The Company will prepare and file a proxy statement with the U.S. SEC and, subject to certain exceptions, the Company’s Board of Directors will recommend that the A&R Merger Agreement be adopted by the Company’s stockholders at a special meeting of the Company’s stockholders (the Company Board Recommendation). However, subject to the satisfaction of certain terms and conditions, the Company and the Board, as applicable, are permitted to take certain actions which may, as more fully described in the A&R Merger Agreement, include changing the Company Board Recommendation and entering into a definitive agreement with respect to a Company Change of Recommendation (as defined in the A&R Merger Agreement) if the Company Board or any committee thereof determines in good faith, after consultation with the Company’s outside legal and financial advisors and after taking into account relevant legal, financial, regulatory, estimated timing of consummation and other aspects of such proposal that the Company Board considers in good faith and the Person or group making such proposal, would, if consummated in accordance with its terms, result in a transaction more favorable to the Company Shareholders than the Merger. If the Company has a Company Change of Recommendation, the Company must provide Aditxt with a ten (10) calendar day written notice thereof and negotiate with Aditxt in good faith to provide a competing offer.
Previous wording
In September 2020, we commercially launched Phexxi. Our sales force promotes Phexxi directly to obstetrician/gynecologists and their affiliated health professionals, who collectively write the majority of prescriptions for contraceptive products. Our sales force comprises approximately 16 regional sales representatives, three business managers and a VP of sales, supported by a self-guided virtual health care provider (HCP) learning platform. Additionally, we offer women direct access to Phexxi via a telehealth platform. Using the platform, women can directly meet with an HCP to determine their eligibility for a Phexxi prescription and, if eligible, have the prescription written by the HCP, filled, and mailed directly to them by a third-party pharmacy.
Current wording
In September 2020, we commercially launched Phexxi in the United States. Our sales force promotes Phexxi directly to obstetrician/gynecologists and their affiliated health professionals, who collectively write the majority of prescriptions for contraceptive products. Our sales force comprises approximately 16 regional sales representatives, two business directors and an SVP of Commercial Operations, supported by a self-guided virtual health care provider (HCP) learning platform. Additionally, we offer women direct access to Phexxi via a telehealth platform. Using this platform, women can directly meet with an HCP to determine their eligibility for a Phexxi prescription and, if eligible, have the prescription written by the HCP, filled, and mailed directly to them by a third-party pharmacy.
Previous wording
Key growth drivers for 2024 include expanded use of Phexxi in women who take oral birth control pills in conjunction with GLP-1 prescription medications like Ozempic, Mounjaro and Zepbound for weight loss. These drugs may make oral birth control pills less effective at certain points in the dosing schedule. Per the USPI, prescribers may “advise patients using oral contraceptives to switch to a non-oral contraceptive method or add a barrier method” to prevent unintended pregnancy during these times.
Current wording
Key growth drivers for 2024 include expanded use of Phexxi in women who take oral birth control pills in conjunction with GLP-1 prescription medications like Ozempic, Mounjaro and Zepbound for weight loss. These drugs may make oral birth control pills less effective at certain points in the dosing schedule. Per the USPI, prescribers are instructed to “advise patients using oral contraceptives to switch to a non-oral contraceptive method or add a barrier method” to prevent unintended pregnancy during these times.
Previous wording
We continue working to increase the number of lives covered and to gain a preferred formulary position for Phexxi. We gained 17.7 million unrestricted lives (people whose plans cover Phexxi with no PA required) in the past two years, a 5% increase in unrestricted coverage for Phexxi from January 2022 (47%) to November 2023 (53%).
Current wording
We continue working to increase the number of lives covered and to gain a preferred formulary position for Phexxi. We gained approximately 17.7 million unrestricted lives (people whose plans cover Phexxi with no PA required) in the past two years, a 5% increase in unrestricted coverage for Phexxi from January 2022 (47%) to November 2023 (53%).
Previous wording
Payer wins in 2023 and 2024 to-date included:
Current wording
Payer wins in 2024 to-date include:
Previous wording
In the second quarter of 2022, we successfully negotiated a contract with one of the largest pharmacy benefit managers (PBMs) in the nation, which added Phexxi to its formulary with no restrictions for most women covered by the plan. The agreement was retroactive and took effect January 1, 2022 and is representative of approximately 46 million lives. An additional 13.7 million lives are covered under our December 2020 contract award from the U.S. Department of Veterans Affairs.
Current wording
In the second quarter of 2022, we successfully negotiated a contract with one of the largest pharmacy benefit managers (PBMs) in the nation, which added Phexxi to its formulary with no restrictions for most women covered by the plan. The agreement was retroactive and took effect January 1, 2022 and is representative of approximately 46 million lives.
Previous wording
We also participate in government programs, including the 340B and the Medicaid Drug Rebate Program. As a result of our participation in the Medicaid National Drug Rebate Program, the U.S. Medicaid population gained access to Phexxi on January 1, 2021. As of August 2023, Medicaid provides health coverage to approximately 90 million members; an estimated 15.6 million of these are women 19-44 years of age.
Current wording
We also participate in government programs, including the 340B and the Medicaid Drug Rebate Program. As a result of our participation in the Medicaid National Drug Rebate Program, the U.S. Medicaid population gained access to Phexxi on January 1, 2021. As of August 2023, Medicaid provides health coverage to approximately 90 million members; an estimated 15.6 million of these are women 19-44 years of age. Additionally, we recently began participating in a 340B Group Purchasing Organization (GPO) that serves safety-net clinics throughout the US. This GPO has over 6,500 members, which expands our reach among safety-net providers.
Previous wording
Evofem had 73% coverage within its Commercial and Medicaid books of business as of October 2023, including 19.8 million lives covered at no out-of-pocket cost. Approximately 83% of commercial and Medicaid Phexxi prescriptions are being approved by payers.
Current wording
Approximately 83% of commercial and Medicaid Phexxi prescriptions are being approved by payers.
Previous wording
EVO100 vaginal gel was in development for the prevention of urogenital chlamydia and gonorrhea in women. Chlamydia and gonorrhea are among the many bacterial and viral pathogens that require a higher pH environment to thrive. The CDC reported that infections with these two sexually transmitted pathogens cost the U.S. healthcare system $1 billion, in aggregate direct and indirect costs. There are no FDA-approved drugs to prevent these sexually transmitted diseases (STIs), and there is a clear need for new prophylactics given the rising incidence and increasing antibiotic resistance of gonorrhea. The FDA granted Fast Track Designation to EVO100 for the prevention of both chlamydia and gonorrhea, and designated EVO100 a Qualified Infectious Disease Product (QIDP) or the prevention of urogenital chlamydia infection in women and the prevention of urogenital gonorrhea infection in women.
Current wording
EVO100 vaginal gel was in development for the prevention of urogenital chlamydia and gonorrhea in women. Chlamydia and gonorrhea are among the many bacterial and viral pathogens that require a higher pH environment to thrive. The CDC reported that infections with these two sexually transmitted pathogens cost the U.S. healthcare system $1 billion, in aggregate direct and indirect costs. There are no FDA-approved drugs to prevent these sexually transmitted diseases (STIs). The FDA granted EVO100 Fast Track Designation for the prevention of chlamydia and gonorrhea, and designated EVO100 a Qualified Infectious Disease Product (QIDP) for the prevention of infection these pathogens.
Previous wording
The Phase 2B/3 trial (AMPREVENCE) achieved its primary and secondary endpoints, demonstrating statistically significant reductions in chlamydia and gonorrhea infections of 50% and 78%, respectively, in women receiving EVO100 vs. placebo. Based on these highly positive clinical outcomes we initiated a Phase 3 clinical trial (EVOGUARD) to evaluate EVO100 for these potential indications in 2020. On October 11, 2022, we reported thatEVOGUARD did not meet its primary efficacy endpoint. We and our advisors believe the public health response to the COVID pandemic caused changes in clinical site operations, subject behavior and actions, including deviations from following the clinical study protocol requirements related to STI acquisition, detection, and prevention, which contributed to this outcome.
Current wording
The Phase 2B/3 trial (AMPREVENCE) achieved its primary and secondary endpoints, demonstrating statistically significant and clinically meaningful reductions in chlamydia and gonorrhea infections of 50% and 78%, respectively, in women receiving EVO100 vs. placebo. Based on these highly positive clinical outcomes we initiated a Phase 3 clinical trial (EVOGUARD) to evaluate EVO100 for these potential indications in 2020. On October 11, 2022, we reported thatEVOGUARD did not meet its primary efficacy endpoint. We and our advisors believe the public health response to the COVID pandemic caused changes in clinical site operations and subject behavior and actions, including deviations from following the clinical study protocol requirements related to STI acquisition, detection, and prevention, which contributed to this outcome.
Previous wording
Inventory costs include all purchased materials, direct labor and manufacturing overhead. In addition, we are obligated to pay quarterly royalty payments pursuant to our license agreement with Rush University, in amounts equal to a single-digit percentage of the gross amounts we receive on a quarterly basis, less certain deductions incurred in the quarter based on a sliding scale. We are also obligated to pay a minimum annual royalty amount of $0.1 million to the extent these earned royalties do not equal or exceed $0.1 million in a given year. Such royalty costs were $0.2 million and immaterial for the three months ended March 31, 2024 and 2023, respectively, and were included in the costs of goods sold in the condensed consolidated financial statements.
Current wording
Inventory costs include all purchased materials, direct labor and manufacturing overhead. In addition, we are obligated to pay quarterly royalty payments pursuant to our license agreement with Rush University, in amounts equal to a single-digit percentage of the gross amounts we receive on a quarterly basis, less certain deductions incurred in the quarter based on a sliding scale. We are also obligated to pay a minimum annual royalty amount of $0.1 million to the extent these earned royalties do not equal or exceed $0.1 million in a given year. Such royalty costs, included in cost of goods sold, were $0.2 million and $0.4 million for the three and six months ended June 30, 2024, respectively, and $0.2 million and $0.3 million for the three and six months ended June 30, 2023, respectively.
Previous wording
Our selling and marketing expenses consist primarily of Phexxi commercialization costs, the Phexxi telehealth platform, training, salaries, benefits, travel, noncash stock-based compensation expense and other related costs for our employees and consultants.
Current wording
Our selling and marketing expenses consist primarily of product commercialization costs, the Phexxi telehealth platform, training, salaries, benefits, travel, noncash stock-based compensation expense and other related costs for our employees and consultants.
Previous wording
In connection with our overall cost reduction strategy, our selling and marketing expenses decreased significantly in 2023 and are expected to stabilize at or below 2023 levels in the current year.
Current wording
In connection with our overall cost reduction strategy, our selling and marketing expenses decreased significantly in 2023 and are expected to stabilize near 2023 levels in the current year, with a slight increase possible due to the expenses associated with SOLOSEC.
Previous wording
The decrease in general and administrative expenses was primarily due to a $1.2 million decrease in facilities and outside services costs and a $0.6 million decrease in professional services fees related to legal and finance, partially offset by an increase of $1.0 million in personnel costs due to the Company cancelling the 2021 cash incentive bonus for named executives in the prior period quarter due to the Company’s financial constraints.
Current wording
The decrease in general and administrative expenses was primarily due to a $1.5 million decrease in facilities, a decrease of $0.8 million in personnel costs, and a $0.3 million decrease in professional fees and outside services relating to legal and finance.
Previous wording
Total other income (expense), net, for the three months ended March 31, 2023, primarily included a $1.6 million gain from the change in fair value of financial instruments and $0.2 million gain from the disposal of our fleet cars, offset by $0.6 million of interest expense related to the Adjuvant Note.
Current wording
Total other income (expense), net, for the three months ended June 30, 2023, primarily included $0.6 million of interest expense related to the Adjuvant Note and $0.3 million related to overdue payables.
Previous wording
The decrease in product sales, net, was primarily impacted by the timing of price increases on sales volumes to our customers. Wholesalers typically purchase larger volumes of product ahead of a price increase, pause purchasing until that product has been used to fill consumer demand, then resume purchasing again. Sales volume in the first quarter of 2024 was low due to the January 2024 price increase, where sales volume in the first quarter of 2023 was high, after a very small fourth quarter of 2022 due to the October 2022 price increase.
Current wording
The decrease in product sales, net, was primarily due to the impact of the timing of price increases on sales volumes to our customers. Wholesalers typically purchase larger volumes of product ahead of a price increase, pause purchasing until that product has been used to fill consumer demand, then resume purchasing again. Sales volume in the first quarter of 2024 was low due to the January 2024 price increase, where sales volume in the first quarter of 2023 was high, after a very small fourth quarter of 2022 due to the October 2022 price increase. As discussed above, product sales, net, was higher in the second quarter of 2024 compared to the same period in 2023, which caused the year-to-date sales for the current period to be more in line with the prior year.
Previous wording
The decrease in cost of goods sold was primarily due to the decrease in sales in the current period as compared to the same period in the prior year. Additionally, the units sold in the prior year were re-packaged to reflect the extended shelf life approved by the FDA in June 2022; this added costs to re-worked units that were sold in the prior year, whereas the units sold in the current year did not need to be re-packaged.
Current wording
The decrease in cost of goods sold was primarily due to the 6% decrease in sales in the current period as compared to the same period in the prior year. Additionally, the units sold in the first half of 2023 had been re-packaged to reflect the extended shelf life approved by the FDA in June 2022; this added costs to re-worked units that were sold in the prior year, whereas the units sold in the current year did not need to be re-packaged. Finally, there was a $1.1 million inventory excess and obsolescence reserve recorded in the prior year that was not repeated in the current year.
Previous wording
The increase in research and development expenses was primarily due to an increase of approximately $0.1 million in facilities and outside services costs and an immaterial increase in personnel costs, partially offset by a decrease of approximately $0.1 million in clinical trial costs associated withEVOGUARD.
Current wording
The decrease in research and development expenses was primarily due to a decrease of approximately $0.1 million in personnel costs, which was partially offset by an increase in facilities and outside services costs.
Previous wording
The decrease in selling and marketing expenses was primarily due to a $0.4 million decrease in marketing and DTC promotion costs, including media agency fees, a $0.8 million decrease in personnel costs due to reduced headcount and lower noncash stock-based compensation, and a $0.4 million decrease in facilities costs. The decreases were partially offset by an increase of approximately $0.1 million in outside services costs.
Current wording
The decrease in selling and marketing expenses was primarily due to a $0.3 million decrease in marketing and DTC promotion costs, including media agency fees, a $0.8 million decrease in personnel costs due to reduced headcount and lower noncash stock-based compensation, and a $0.4 million decrease in facilities costs and outside services costs.
Previous wording
Total other income (expense), net, for the three months ended March 31, 2024 primarily included a loss on the issuance of financial instruments related to the anti-dilution adjustment for the purchase rights and $0.6 million interest expense related to the Adjuvant Note partially offset by gains related to the re-assignment of the Baker Notes of $1.1 million and $0.8 million from the change in fair value of financial instruments offset.
Current wording
Total other income, net, for the six months ended June 30, 2024 primarily included a $4.1 million gain on the change in fair value of financial instruments and a gain of $1.1 million related to the Baker Notes extinguishment. The gains were offset by a $3.3 million loss on the issuance of financial instruments related to the anti-dilution adjustment for the purchase rights and $1.1 million interest expense related to the Adjuvant Note.
Previous wording
As of March 31, 2024, we had a working capital deficit of $67.3 million and an accumulated deficit of $893.6 million. We have financed our operations to date primarily through the issuance of preferred stock, common stock, warrants and convertible and term notes; cash received from private placement transactions; and, to a lesser extent, product sales. As of March 31, 2024, we had approximately $0.7 million in cash and cash equivalents comprised entirely of restricted cash available for use as prescribed in the Adjuvant Notes (as defined in Note 4 - Debt). Our cash and cash equivalents include amounts held in checking accounts. Management believes that the Company’s cash and cash equivalents as of March 31, 2024 are insufficient to fund operations for at least the next 12 months from the date on which this Quarterly Report on Form 10-Q is filed with the SEC.
Current wording
As of June 30, 2024, we had a working capital deficit of $66.0 million and an accumulated deficit of $892.3 million. We have financed our operations to date primarily through the issuance of preferred stock, common stock, warrants and convertible and term notes; cash received from private placement transactions; and, to a lesser extent, product sales. As of June 30, 2024, we had approximately $0.7 million in cash and cash equivalents comprised entirely of restricted cash available for use as prescribed in the Adjuvant Notes (as defined in Note 4 - Debt). Our cash, cash equivalents and restricted cash include amounts held in checking accounts. Management believes that the Company’s cash and cash equivalents as of June 30, 2024 are insufficient to fund operations for at least the next 12 months from the date on which this Quarterly Report on Form 10-Q is filed with the SEC.
Previous wording
The opinion of our independent registered public accounting firms on our audited financial statements as of and for the years ended December 31, 2023 and 2022 contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Future reports on our financial statements may include an explanatory paragraph with respect to our ability to continue as a going concern. Our unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 included in this Quarterly Report do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue our operations.
Current wording
The opinion of our independent registered public accounting firms on our audited financial statements as of and for the years ended December 31, 2023 and 2022 contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Future reports on our financial statements may include an explanatory paragraph with respect to our ability to continue as a going concern. Our unaudited condensed consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 included in this Quarterly Report do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue our operations.
Previous wording
As described in Note 4 - Debt, we received gross proceeds of approximately $1.6 million, before issuance costs, from the sale of notes and warrants in three registered direct offerings in the first quarter of 2023.
Current wording
As described in Note 4 - Debt, we entered into an insurance premium financing agreement with FIF, which resulted in a financing inflow of $0.4 million in the Statement of Cash Flows in the first half of 2024. Additionally, we received gross proceeds of approximately $2.1 million, before issuance costs, from the sale of notes and warrants in four registered direct offerings in the first half of 2023.
Previous wording
Cash Flows from Operating Activities. During the three months ended March 31, 2024, the primary reason of net cash and restricted cash provided in operating activities was due to the limited spending in operations across all functions of the Company. During the three months ended March 31, 2023, the primary use of cash, cash equivalents and restricted cash was to fund the commercialization of Phexxi and to support general and administrative operations.
Current wording
Cash Flows from Operating Activities. During the six months ended June 30, 2024, the net cash and restricted cash used in operating activities was minimal due to the limited spending in operations across all functions of the Company. During the six months ended June 30, 2023, the primary use of cash, cash equivalents and restricted cash was to fund the commercialization and manufacturing of Phexxi and to support general and administrative operations.
Previous wording
Cash Flows from Investing Activities. During the three months ended March 31, 2024, the primary use of cash, cash equivalents and restricted cash was the purchase of computer equipment for the sales force.
Current wording
Cash Flows from Investing Activities. During the six months ended June 30, 2024, the primary use of cash, cash equivalents and restricted cash was the purchase of computer equipment for the sales force.
Previous wording
Cash Flows from Financing Activities. During the three months ended March 31, 2023, the primary source of cash, cash equivalents and restricted cash was the sale of senior subordinate convertible notes and warrants for proceeds of approximately $1.6 million, in aggregate, before the debt issuance costs.
Current wording
Cash Flows from Financing Activities. During the six months ended June 30, 2024, the primary source of cash, cash equivalents, and restricted cash was from the $1.0 million received from Aditxt in order to reinstate the Merger Agreement as described above as well as the finance agreement with First Insurance Funding for $0.4 million, offset by $0.3 million payments under the Baker Notes. During the six months ended June 30, 2023, the primary source of cash, cash equivalents and restricted cash was the sale of senior subordinate convertible notes and warrants for proceeds of approximately $2.1 million, in aggregate, before debt issuance costs.
Previous wording
As described in Note 7 - Commitments and Contingencies, in November 2019, the Company entered into a supply and manufacturing agreement with a third-party to manufacture Phexxi, with potential to manufacture other product candidates, in accordance with all applicable current good manufacturing practice regulations. There were no purchases under the supply and manufacturing agreement for the three months ended March 31, 2024 or 2023.
Current wording
As described in Note 7 - Commitments and Contingencies, in November 2019, the Company entered into a supply and manufacturing agreement with a third-party to manufacture Phexxi, with potential to manufacture other product candidates, in accordance with all applicable current good manufacturing practice regulations. There were approximately $0.3 million in purchases under the supply and manufacturing agreement for the three and six months ended June 30, 2024 and no such purchases during the three and six months ended June 30, 2023.
Previous wording
As described in Note 7 - Commitments and Contingencies, royalty costs owed to Rush University pursuant to the Rush License Agreement were $0.2 million and immaterial for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and December 31, 2023, approximately $1.3 million and $1.1 million were included in accrued expenses in the condensed consolidated balance sheets and will be paid via the agreed upon payment plan.
Current wording
As described in Note 7 - Commitments and Contingencies, royalty costs owed to Rush University pursuant to the Rush License Agreement were $0.2 million and $0.4 million for the three and six months ended June 30, 2024, respectively, and $0.2 million and $0.3 million for the three and six months ended June 30, 2023, respectively. As of June 30, 2024 and December 31, 2023, approximately $1.5 million and $1.1 million were included in accrued expenses in the condensed consolidated balance sheets and will be paid via the agreed upon payment plan.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
The A&R Merger Agreement is subject to certain closing conditioned and contains customary representations, warranties and covenants and indemnifications provisions.
Current report — wording carried from elsewhere
An additional 13.7 million lives are covered under our December 2020 contract award from the U.S. Department of Veterans Affairs.
Current report — wording carried from elsewhere
The decrease in cost of goods sold was primarily due to a $1.1 million inventory excess and obsolescence reserve recorded in the prior year quarter. Additionally, the units sold in the 2023 quarter had been re-packaged to reflect the extended shelf life approved by the FDA in June 2022; this added costs to re-worked units that were sold in the prior year, whereas the units sold in the current year did not need to be re-packaged.
Current report — wording carried from elsewhere
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 (in thousands):
Current report — wording carried from elsewhere
The decrease in general and administrative expenses was primarily due to a $3.2 million decrease in facilities and outside services costs and a $0.4 million decrease in professional services fees related to legal and finance.