UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON,~~

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒

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

For the quarterly period ended September 30, ~~2017~~

2023

☐

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

For the transition period ~~from________~~ from

to ~~___________~~

Commission File ~~No.~~~~001-001000~~

~~THERAPEUTICSMD,~~Number:

001-00100

TherapeuticsMD, INC.

(Exact ~~Name~~name of Registrant as ~~Specified~~specified in ~~Its~~its Charter)

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

~~6800 Broken Sound Parkway NW, Third Floor,~~ 951 Yamato Road, Suite 220 Boca Raton, ~~FL 33487~~Florida	~~(561) 961-1900~~	33431
(Address of ~~Principal Executive Offices)~~principal executive offices)		(~~Issuer’s Telephone Number)~~Zip Code)

~~N/A~~

561-961-1900

(~~Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)~~

Registrant’s telephone number, including area code)

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


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

Indicate by check mark whether the ~~registrant:~~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~~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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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~~Registrant was required to submit ~~and post~~ 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 (Check one):~~

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~~Registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act).

Yes

☐

☒

~~The number~~

As of November 14, 2023, there were 10,575,240 shares ~~outstanding~~ of the registrant’s common stock, par value $0.001 per share, ~~as of October 30, 2017 was 216,429,642.~~

outstanding.

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~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~INDEX~~

				~~Page~~
~~PART I - FINANCIAL INFORMATION~~
						Page
			~~Item. 1~~	Part I - Financial ~~Statements~~Information

Item 1.		Financial statements (unaudited)
		Condensed Consolidated Balance Sheets			1
		Condensed Consolidated ~~Balance Sheets as~~Statements of ~~September 30, 2017 (Unaudited) and December 31, 2016~~Comprehensive Income		3
			2
		Condensed Consolidated Statements of ~~Operations for the Three and Nine Months Ended September 30, 2017 (Unaudited) and 2016 (Unaudited)~~Stockholders’ Equity (Deficit)		4
			3
		Condensed Consolidated Statements of Cash Flows ~~for the Nine Months Ended September 30, 2017 (Unaudited) and 2016 (Unaudited)~~		5
			4
		Notes to Unaudited Condensed Consolidated Financial Statements		6
			5

Item 2.	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~		21
Management’s discussion and analysis of financial condition and results of operations			19

Item 3.	~~Quantitative and Qualitative Disclosures about Market Risks~~		36
Quantitative and qualitative disclosures about market risk			30

Item 4.	~~Controls and Procedures~~		36
Controls and procedures			30

Part II - ~~OTHER INFORMATION~~Other Information

Item 1.		Legal proceedings			31

Item 1.	~~Legal Proceedings~~1A.		37
Risk factors			31

Item ~~1A.~~	~~Risk Factors~~2.		37
Unregistered sales of equity securities and use of proceeds			31

Item 6.	~~Exhibits~~3.		37Defaults upon senior securities

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~	31

Item 4.	Mine safety disclosures~~CONSOLIDATED BALANCE SHEETS~~	31

Item 5.	Other information	31

Item 6.	Exhibits	32

Signatures		33

September 30, 2017 December 31, 2016
(Unaudited)

ASSETS
Current Assets:
Cash $ 148,292,654 $ 131,534,101
Accounts receivable, net of allowance for doubtful accounts of $377,929 and $376,374, respectively 4,392,635 4,500,699
Inventory 1,293,517 1,076,321
Other current assets 3,001,777 2,299,052
Total current assets 156,980,583 139,410,173

Fixed assets, net 448,066 516,839

Other Assets:
Intangible assets, net 2,793,421 2,405,972
Security deposit 139,036 139,036
Total other assets 2,932,457 2,545,008
Total assets $ 160,361,106 $ 142,472,020

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable $ 4,199,369 $ 7,358,514
Other current liabilities 6,677,232 7,624,085
Total current liabilities 10,876,601 14,982,599

Commitments and Contingencies - See Note 14

Stockholders’ Equity:
Preferred stock - par value $0.001; 10,000,000 shares authorized; no shares issued and outstanding — —
Common stock - par value $0.001; 350,000,000 shares authorized; 216,429,642 and 196,688,222 issued and outstanding, respectively 216,430 196,688
Additional paid in capital 514,499,865 436,995,052
Accumulated deficit (365,231,790 ) (309,702,319 )
Total stockholders’ equity 149,484,505 127,489,421
Total liabilities and stockholders’ equity $ 160,361,106 $ 142,472,020

TherapeuticsMD, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

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

General

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

10-Q

(“10-Q

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

10-Q

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

, vitaMedMD

, BocaGreenMD

, vitaCare

, IMVEXXY

, and BIJUVA

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

10-Q

Report may appear without the

, 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 ~~Company, has three wholly owned subsidiaries, vitaMedMD,~~right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by, these other parties.

TherapeuticsMD was previously a women’s healthcare company with a mission of creating and commercializing innovative products to support the lifespan of women from pregnancy prevention through menopause. In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. On December 30, 2022 (the “Closing Date”), we completed a transaction (the “Mayne Transaction”) with Mayne Pharma LLC, a Delaware limited liability company (“Mayne Pharma”) and subsidiary of Mayne Pharma Group Limited, an Australian public company, in which we and our subsidiaries (i) granted Mayne Pharma an exclusive license to commercialize our IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands (collectively, the “Licensed Products”) in the United States and its possessions and territories, (ii) assigned to Mayne Pharma our exclusive license to commercialize ANNOVERA

(together with the Licensed Products, collectively, the “Products”) in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith.

In a License Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Mayne License Agreement”), we granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.

Under the Mayne License Agreement, Mayne Pharma will pay us milestone payments of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million. Further, Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80.0 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date. The royalty rate will decrease to 2.0% on a

Product-by-Product

basis upon the earlier to occur of (i) the expiration or ~~VitaMed; BocaGreenMD,~~revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States. Mayne Pharma will pay us minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below. Upon the expiry of the

20-year

royalty term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully

paid-up

and royalty free license for the Licensed Products.

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Under the Transaction Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Transaction Agreement”), we sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize the Products in the United States, including, with the Population Council’s consent, our exclusive license from the Population Council to commercialize ANNOVERA (the “Transferred Assets”).

The total consideration from Mayne Pharma to TherapeuticsMD for the purchase of the Transferred Assets and the grant of the licenses under the Mayne Transaction Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment (as defined below) and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended. The acquisition of net working capital was determined in accordance with the Transaction Agreement and included significant estimates which could change materially for a period of up to two years following the Closing Date.

On the Closing Date, TherapeuticsMD and Mayne Pharma entered into Amendment No. 1 to the Mayne License Agreement (the “Mayne License Agreement Amendment”). Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay us approximately $1.0 million in prepaid royalties on the Closing Date. The prepaid royalties will reduce the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to $257 thousand per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment is paid to us. We and Mayne Pharma settled the $1.5 million of consideration due to Mayne for the assumed obligations under a long-term services agreement (see the section entitled “vitaCare divestiture” below for a discussion of the long-term services agreement), including our minimum payment obligations thereunder.

As the parties agreed, during the second quarter of 2023, Mayne Pharma held back our royalty payment and we funded an additional

$0.9

million in August 2023 to settle the original

$1.5

million payable

As part of the transformation that included the Mayne License Agreement, historical results of commercial operations for all periods prior to the Closing Date have been reflected as discontinued operations in our condensed consolidated financial statements. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2 of our condensed consolidated financial statements.

We also have license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S.

In July 2018, we entered into a license and supply agreement (the “Knight License Agreement”) with Knight Therapeutics Inc. (“Knight”) pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel.

In September 2019, we entered into an exclusive license and supply agreement (the “Theramex License Agreement”) with Theramex HQ UK Limited (“Theramex”) to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel. In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries.

In connection with our transformation into a ~~Nevada corporation, or BocaGreen;~~pharmaceutical royalty company, the termination of our executive management team (except for Mr. Marlan Walker, our former General Counsel and ~~VitaCare~~current Chief Executive Officer) and all other employees was completed by December 31, 2022. Severance obligations for all employees other than executive officers were paid in full in January 2023 and severance obligations for terminated executive officers are paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 2022 and September 30, 2023, we employed one full-time employee primarily engaged in an executive position.

We have engaged external consultants who support our relationship with current partners and assist with certain financial, legal, and regulatory matters and the continued wind-down of our historical business operations. On August 15, 2023, we entered into a master services agreement with JZ Advisory Group, pursuant to which Joseph Ziegler would serve as our Principal Financial Officer. On August 17, 2023 Michael C. Donegan notified us of his decision to resign from the positions of Principal Financial and Accounting Officer of our Company effective as of August 17, 2023. Mr. Ziegler succeeded Mr. Donegan as Principal Financial and Accounting Officer as of the date of Mr. Donegan’s resignation.

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vitaCare Divestiture

On April 14, 2022, we completed the divestiture of our former subsidiary vitaCare Prescription Services, Inc., a Florida corporation, or VitaCare. Unless the context otherwise requires, TherapeuticsMD, VitaMed, BocaGreen, and VitaCare collectively are sometimes referred to as “our company,” “we,” “our,” or “us.”

~~Nature of Business~~

We are a women’s health care company focused on creating and commercializing products targeted exclusively for women. Currently, we are focused on pursuing the regulatory approvals and pre-commercialization activities necessary for commercialization of our advanced hormone therapy pharmaceutical products. Our drug candidates that have completed clinical trials are designed to alleviate the symptoms of and reduce the health risks resulting from menopause-related hormone deficiencies, including hot flashes, osteoporosis and vaginal discomfort. We are developing these hormone therapy drug candidates, which contain estradiol and progesterone alone or in combination, (“vitaCare”) with the ~~aim~~sale of ~~demonstrating clinical efficacy~~all of vitaCare’s issued and outstanding capital stock (the “vitaCare Divestiture”). We received net proceeds of $142.6 million, after deducting transaction costs of $7.2 million, and we recognized a gain on sale of business of $143.4 million. Included in the net proceeds amount was $11.3

million of customary holdbacks as provided in the stock purchase agreement (the “Purchase Agreement”) which we received in 2023. Additionally, the Purchase Agreement provides that we may receive up to an additional

$7.0

million in

earn-out

consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement; however, we do not believe this earnout will be realized. We will record the contingent consideration at ~~lower doses, thereby enabling an enhanced side effect profile compared with competing products. With our SYMBODA™ technology, we are developing advanced hormone therapy pharmaceutical products~~the settlement amount if and when the consideration is realized or realizable.

The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. The commitments under a long-term services agreement related to ~~enable delivery~~vitaCare were transferred to Mayne Pharma as part of ~~bio-identical hormones through a variety of dosage forms and administration routes.~~the Mayne Transaction. In addition, under the Mayne License Agreement Amendment, we ~~manufacture~~owed Mayne Pharma

$1.5

million payable from one royalty payment. During the second quarter of 2023, Mayne Pharma held back our royalty payment and ~~distribute branded~~we funded an additional $0.9 million in August 2023 to settle the original $1.5 million payable.

The divestiture of vitaCare was determined to be a component of discontinued operations in December 2022, when we changed our business by becoming a royalty company and ~~generic prescription prenatal vitamins,~~ as ~~well as over-the-counter, or OTC, iron supplements.~~

~~NOTE 2 – BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

~~Interim Financial Statements~~

a result vitaCare activities were reclassified to discontinued operations for the nine months ended September 30, 2023 and 2022.

COVID-19

With multiple variant strains of the

SARS-Cov-2

virus and the

COVID-19

disease that it causes (collectively,

“COVID-19”)

still circulating, we continue to be subject to risks and uncertainties in connection with the

COVID-19

pandemic. The ~~accompanying unaudited interim~~extent of the future impact of the

COVID-19

pandemic on our business continues to be highly uncertain and difficult to predict.

As of the date of issuance of these condensed consolidated financial statements, the future extent to which the

COVID-19

pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain and difficult to predict. Even after the

COVID-19

pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

Going concern

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

The total consideration from Mayne Pharma to TherapeuticsMD for the purchase of the Transferred Assets and the grant of the licenses under the Mayne License Agreement consisted of (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.

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time-to-time

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

Following the transaction with Mayne Pharma, our primary source of revenue is from royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. We may need to raise additional capital to provide additional liquidity to fund our operations until we become cash flow positive. To address our capital needs, we may pursue various equity and debt financing and other alternatives. The equity financing alternatives may include the private placement of equity, equity-linked, or other similar instruments or obligations with one or more investors, lenders, or other institutional counterparties or an underwritten public equity or equity-linked securities offering. Our ability to sell equity securities may be limited by market conditions, including the market price of our common stock, and our available authorized shares.

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

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

5-06

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

If Mayne Pharma’s sales of IMVEXXY, BIJUVA, or ANNOVERA grow more slowly than expected or decline, if the net working capital settlement with Mayne Pharma under the Transaction Agreement is greater than our current estimates, if we are unsuccessful with future financings or if the continued impact of the

COVID-19

pandemic on us or the third-parties we or our licensees rely on or the supply chains related to the third-party contract manufacturers are worse than we anticipate, our existing cash reserves may be insufficient to satisfy our liquidity requirements. The potential impact of these factors in conjunction with the uncertainty of the capital markets raises substantial doubt about our ability to continue as a going concern for the next twelve months from the issuance of these financial statements.

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

Basis of presentation

We prepared the condensed consolidated financial statements included in this

10-Q

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

10-K

(the “2022

10-K

Report”).

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

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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

presentation

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 ~~audited~~ consolidated financial statements and accompanying notes ~~thereto~~ included in our ~~Annual Report on Form~~ 2022

10-K ~~for~~

Report. Certain amounts in the year ended December 31, 2016, as filed with the Securities and Exchange Commission, or the SEC, from which we derived the accompanying consolidated balance sheet as of December 31, 2016. The accompanying unaudited interim consolidated financial statements and accompanying notes may not add due to rounding, and all percentages have been ~~prepared in accordancewith~~calculated using unrounded amounts. Certain prior period amounts have been reclassified to conform to current-period presentation.

New accounting ~~principles generally accepted in the United States~~standards

Adoption of ~~America,~~new accounting standards

New accounting standards or ~~GAAP, for interim financial information~~“

ASU

s” were assessed and ~~with the instructions~~determined to ~~Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying unaudited interim~~be either not applicable or did not have a material impact on our condensed consolidated financial statements ~~do not include~~or processes.

Common stock reverse stock split

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

50-for-1

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

All historical numbers of shares of Common Stock and ~~notes required by GAAP~~per share data have been adjusted to give effect to the Reverse Stock Split. Additionally, since the Common Stock par value was unchanged, historical amounts for ~~complete financial statements.~~ Common Stock and additional

paid-in

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

Increase of authorized shares

On June 26, 2023, at our combined 2022 and 2023 Annual Meeting, our stockholders approved an amendment to our Amended and Restated Articles of Incorporation to increase the number of authorized shares of Common Stock from 12 million shares to 32 million shares.

Estimates and assumptions

The ~~accompanying unaudited interim~~preparation of our condensed consolidated financial statements ~~reflect all adjustments, consisting of normal recurring adjustments, that are,~~ in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year or any other interim period in the future.

~~Recently Issued Accounting Pronouncements~~

In May 2017, the Financial Accounting Standards Board, or FASB, issued an Accounting Standards Update, or ASU, that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. The new guidance will allow companiesconformity with U.S. GAAP requires us to make certain ~~changes to awards without accounting for them as modifications. This guidance does not change~~estimates and assumptions that affect the ~~accounting for modifications. The guidance will be applied prospectively to awards modified on or after~~reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the ~~adoption~~ date and is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including in an interim period. We do not expect that adoption of this guidance will have a material effect on our consolidated financial statements.

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 is intended to reduce the diversity in practice regarding how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted with retrospective application. We do not expect that adoption of this guidance will have a material effect on our consolidated financial statements.

~~In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This guidance simplifies several aspects~~ of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. We adopted ASU 2016-09 effective January 1, 2017, electing to account for forfeitures when they occur. The impact from adoption of the provisions related to forfeiture rates was reflected in our consolidated financial statements on a modified retrospective basis, resulting in an adjustment of approximately $31,000 to retained earnings. The impact from adoption of the provisions related to excess tax benefits or deficiencies in the provision for income taxes rather than paid-in capital was adopted on a modified retrospective basis. Since we have a full valuation allowance on our net deferred tax assets, an amount equal to the cumulative adjustment made to retained earnings to recognize the previously unrecognized net operating losses from prior periods was made to the valuation allowance through retained earnings for the first quarter financial statements. Adoption of all other changes did not have an impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases. This guidance requires lessees to record most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the ~~accounting for sales-type~~reported amounts of revenue and ~~direct financing leases. The standard is effective for public business entities for annual periods beginning after December 15, 2018,~~expenses during the reporting periods. We evaluate our estimates and ~~interim periods within those years. Early adoption is permitted for all entities. We~~assumptions based on historical experience and on various other assumptions that are inbelieved to be reasonable, the ~~process of analyzing the quantitative impact of this guidance on our~~ results of ~~operations and financial position. While we are continuing to assess all potential impacts~~which form the basis for making judgments about the carrying values of ~~the standard, we currently believe the impact of this standard will be primarily related to the accounting for our operating lease.~~

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under previous guidance. This may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In July 2015, the FASB approved the proposal to defer the effective date of ASU 2014-09 standard by one year. Early adoption is permitted after December 15, 2016, and the standard is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. In 2016, the FASB issued final amendments to clarify the implementation guidance for principal versus agent considerations (ASU 2016-08), accounting for licenses of intellectual property and identifying performance obligations (ASU 2016-10), narrow-scope improvements and practical expedients (ASU 2016-12) and technical corrections and improvements to topic 606 (ASU 2016-20) in its new revenue standard. We have performed a preliminary review of the requirements of the new revenue standard and are monitoring the activity of the FASB and the transition resource group as it relates to specific interpretive guidance. We have reviewed customer contracts and applied the five-step model of the new standard to our contracts as well as compared the results to our current accounting practices. We are currently in the process of drafting disclosures required by the new standard. At this point of our analysis, we do not believe that the adoption of this standard will have a material effect on our financial statements but will potentially expand our disclosures related to contracts with customers.

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~Fair Value of Financial Instruments~~

Our financial instruments consist primarily of cash, accounts receivable, accounts payable and accrued expenses. The carrying amount of cash, accounts receivable, accounts payable and accrued expenses approximates their fair value because of the short-term maturity of such instruments, which are considered Level 1 assets under the fair value hierarchy.

~~We categorize our~~ assets and liabilities that are ~~valued~~not readily apparent from other sources. Actual results may differ, at ~~fair value~~times in material amounts, from these estimates under different assumptions or conditions.

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Significant accounting policies

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

10-K

report and in the section below.

2. Discontinued Operations

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

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

presented. We have not allocated any amounts for shared general and administrative operating support expense to discontinued operations. As required by the terms of the Financing Agreement, proceeds from the Mayne Transaction and the VitaCare Divestiture were used to fully repay our outstanding debt borrowings, and as ~~defined by Accounting Standards Codification, or ASC, 820, Fair Value Measurements~~a result interest expense and amortization of deferred financing costs as well as expense for accretion of Series A Preferred Stock and loss on extinguishment of debt are included within income (loss) from discontinued operations, net of tax (as disclosed below). ~~The fair value hierarchy gives~~

Additionally, the ~~highest priority to quoted prices in active markets for identical~~related assets and liabilities ~~(Level 1) and lowest priority to unobservable inputs (Level 3). Assets~~have been reported as assets and liabilities ~~recorded~~of discontinued operations in ~~the~~our condensed consolidated balance ~~sheet at fair value are categorized based on a hierarchy~~sheets as of ~~inputs, as follows:~~

~~Level 1~~

~~unadjusted quoted prices in active markets for identical assets or liabilities;~~

~~Level 2~~

quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and

~~Level 3~~

~~unobservable inputs for the asset or liability.~~

At September 30, ~~2017~~2023 and ~~2016, we had no assets or liabilities that were valued~~December 31, 2022.

The total consideration from Mayne Pharma consisted of (i) a cash payment of $140.0 million at ~~fair value on~~closing, (ii) a ~~recurring basis. The fair value~~cash payment of ~~indefinite-lived assets or long-lived assets is measured on~~$12.1 million for the acquisition of net working capital subject to certain adjustments, (iii) a ~~non-recurring basis using significant unobservable inputs (Level 3)~~cash payment of approximately $1.0 million for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.

Our estimate of net working capital at closing was determined in accordance with the Transaction Agreement which establishes the process for the determination of final net working capital. The determination of net working capital includes significant estimates which could change materially for a period of up to two years following the Closing Date. On March 29, 2023, we received Mayne Pharma’s closing net working capital calculation which differed significantly from our ~~impairment test. There was no impairment~~estimate of closing net working capital. We believe that our estimate of net working capital is reasonable and intend to resolve this matter through the process outlined in the Transaction Agreement. During the three months ended September 30, 2023, we revised certain estimates pertaining to contracts we were a party to when we were an operating company. These included an incremental accrual of approximately

million for net working capital adjustments related to the Transaction Agreement

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6. Accrued expenses and other current liabilities

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


	September 30, 2023		December 31, 2022
Payroll and related costs	$	332	$	8,748
Accrued contract termination costs		1,632		4,700
Research and development expenses		—		978
Professional fees		273		415
Operating lease liabilities		1,464		1,390
Prepaid royalty		—		1,011
Other accrued expenses and current liabilities		3,227		1,604

Accrued expenses and other current liabilities	$	6,928	$	18,846

7. Commitments and contingencies

Mayne Pharma Agreement

Mayne Pharma paid us approximately $12.1 million at closing on December 30, 2022, for the acquisition of net working capital, as determined in accordance with the Transaction Agreement, and such payment is subject to certain adjustments for a period of up to two years

following the Closing Date. During the three months ended September 30, 2023, we revised certain estimates; including an incremental accrual of approximately

million for net working capital adjustments related to the Transaction Agreement

Pursuant to the Mayne License Agreement Amendment, Mayne Pharma also paid us approximately $1.0 million in prepaid royalties on the Closing Date. The prepaid royalties will reduce the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to $257,250 per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment is paid to us.

Additionally, we owed Mayne Pharma

$1.5

million payable from one royalty payment. During the second quarter of 2023, Mayne Pharma held back our royalty payment and we funded an additional

0.9

million in August 2023 to settle the original

$1.5 million

payable. We recognized $(0.1) million and $0.8 million in royalty revenues from Mayne Pharma during the three and nine months ended September 30, ~~2017~~2023, respectively.

Population Council License Agreement

Under the terms of our license agreement with the Population Council, Inc. (the “Population Council License Agreement”), we paid the Population Council a milestone payment of $20.0 million in 2018, which was within 30 days following the approval by the FDA of the New Drug Application (“NDA”) for ANNOVERA, and ~~2016.~~

~~Trade Accounts Receivable~~$20.0 million in 2019 following the first commercial batch release of ANNOVERA. The aggregate $40.0 million of milestone payments were recorded as license rights. The Population Council was also eligible to receive future payments upon the achievement of certain commercial sales milestones of ANNOVERA. On December 30, 2022, we assigned the ANNOVERA license to Mayne Pharma. Our rights and ~~Allowance for Doubtful Accounts~~

~~Trade accounts receivable are customer~~ obligations ~~due~~ under ~~normal trade terms. We review accounts receivable for uncollectible accounts~~the Population Council License Agreement have been transferred to Mayne Pharma and ~~credit card charge-backs~~may revert back to us upon the occurrence of certain events.

Legal proceedings

In February 2020, we received a Paragraph IV certification notice letter (the “IMVEXXY Notice Letter”) regarding an Abbreviated New Drug Application (“ANDA”) submitted to the FDA by Teva Pharmaceuticals USA, Inc. (“Teva”). The ANDA seeks approval from the FDA to commercially manufacture, use, or sell a generic version of the 4 mcg and ~~provide an allowance for doubtful accounts, which is based upon a review~~10 mcg doses of outstanding receivables, historical collection information, and existing economic conditions. We consider trade accounts receivable past due for more than 90 days to be delinquent. We write off delinquent receivables against our allowance for doubtful accounts based on individual credit evaluations,IMVEXXY. In the ~~results of collection efforts, and specific circumstances of customers. We record recoveries of accounts previously written off when received as an increase~~IMVEXXY Notice Letter, Teva alleges that TherapeuticsMD patents listed in the ~~allowance~~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 ~~doubtful accounts. To~~patent infringement against Teva in the ~~extent data we use to calculate these estimates does not accurately reflect bad debts, adjustments to these reserves may~~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 ~~required.~~

~~Revenue Recognition~~

~~We recognize revenue on arrangements in accordance with ASC 605, Revenue Recognition. We recognize revenue only when~~a date no earlier than the ~~price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability is reasonably assured.~~

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Our OTC and prescription prenatal vitamin products are generally variations~~expiration of the ~~same product with slight modifications in formulation~~IMVEXXY Patents and ~~marketing. The primary difference between our OTC~~equitable relief enjoining Teva from infringing the IMVEXXY Patents. Teva has filed its answer and prescription prenatal vitamin products is the source of payment. Purchasers of our OTC prenatal vitamin products pay for the product directly while purchasers of our prescription prenatal vitamin products pay for the product primarily via third-party payers. Both OTC and prescription prenatal vitamin products share the same marketing support team utilizing similar marketing techniques. As of January 1, 2017, we ceased manufacturing and distributing our OTC product lines, except for Iron 21/7, which have declined steadily over time resulting in immaterial sales. The revenue that is generated by us from major customers is all generated from sales of our prescription prenatal vitamin products which is disclosed in Note 13. There are no major customers for our OTC prenatal vitamin or other products.

~~Over-the-Counter Products~~

~~We generate OTC revenue from product sales primarily to retail consumers. We recognize revenue from product sales upon shipment, when the rights of ownership and risk of loss have passed~~counterclaim to the ~~consumer. We include outbound shipping~~complaint, alleging that the IMVEXXY Patents are invalid and ~~handling fees, if any,~~not

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infringed. In July 2021, following a proposal by Teva, the District Court entered an order temporarily staying all proceedings in ~~revenues, net, and bill them upon shipment. We include shipping expenses in cost of goods sold. A majority of our OTC customers pay for our products with credit cards, and we usually receive~~ the ~~cash settlement in two to three banking days. Credit card sales minimize accounts receivable balances relative to OTC sales (Iron 21/7). We provide an unconditional 30-day money-back return policy~~IMVEXXY litigation, which order was filed under which we accept product returns from our retail and eCommerce OTC customers. We recognize revenue from OTC sales, net of estimated returns and sales discounts. As of January 1, 2017, we ceased manufacturing and distributing our OTC product lines, except for Iron 21/7, which have declined steadily over time resulting in immaterial sales.

~~Prescription Products~~

We sell our name brand and generic prescription products primarily through wholesale distributors and retail pharmacy distributors. We recognize revenue from prescription product sales, net of sales discounts, chargebacks, wholesaler fees, customer rebates and estimated returns.

~~Revenue related to prescription products sold through wholesale distributors is recognized when~~seal. In September 2021, the ~~prescription products are shipped to the distributors and the control~~District Court made available a public version of the ~~products passes~~order following the parties’ agreement to ~~each distributor. We accept returns~~a consent motion to redact information Teva contended was confidential. The order provides that the statutory stay that prevents the FDA from granting final approval of unsalable prescription products sold through wholesale distributors within a return period of six months prior to and up to 12 months following product expiration. Our prescription products currently have a shelf life of 24the ANDA for 30 months from the date of ~~manufacture.~~

~~Prior to September 1, 2016, we recognized revenue related to prescription products sold through retail pharmacy distributors when~~ the product was dispensed by the retail pharmacy distributor, at which point all revenue and discounts related to such product were known or determinable and there was no right of return with respect to such product. On September 1, 2016, we centralized the distribution channelIMVEXXY Notice Letter will be extended for both our retail pharmacy distributors and wholesale distributors, in order to facilitate sales to a broader population of retail pharmacies and mitigate exposure to any one retail pharmacy. Beginning on September 1, 2016, all of our prescription products are distributed under the wholesale distributor model described above.

We offer various rebate programs in an effort to maintain a competitive position in the marketplace and to promote sales and customer loyalty. We estimate the allowance for consumer rebates and coupons that we have offered based on our experience and industry averages, which is reviewed, and adjusted if necessary, on a quarterly basis. We record distributor fees based on amounts stated in contracts and estimate chargebacks based on the number of ~~units sold each period.~~

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Share-Based Compensation~~

days that the stay of the IMVEXXY litigation is in place. The length of the stay of the IMVEXXY litigation is dependent on further action by Teva. We ~~measure~~have incurred and recorded legal costs amounting to $2.3 million in prepaid expenses and other current assets as of September 30, 2023, for the ~~compensation~~IMVEXXY Paragraph IV legal proceeding since we believe that we will successfully prevail in this legal proceeding. Upon the successful conclusion of the legal proceeding, the related capitalized legal costs ~~of share-based compensation arrangements based on the grant-date fair value~~will be reclassified to patents, in license rights and ~~recognize the costs~~other intangible assets, net, in the ~~financial statements~~accompanying condensed consolidated balance sheets, and such costs will be amortized over the period during which employees are required to provide services. Share-based compensation arrangements may include options, restricted stock, restricted stock units, performance-based awards, and share appreciation rights. We amortize such compensation amounts, if any, over the respective service periods of the award. We use the Black-Scholes-Merton option pricing model, or the Black-Scholes Model, an acceptable model in accordance with ASC 718, Compensation-Stock Compensation, to value options. Option valuation models require the input of assumptions, including the expectedremaining useful life of the ~~stock-based awards,~~patents. If we are unsuccessful in this legal proceeding, then the ~~estimated stock price volatility, the risk-free interest rate,~~related capitalized legal costs for this legal preceding and the expected dividend yield. The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the instrument. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the term of the award. Prior to January 1, 2017, the expected volatility of share options was estimated based on a historical volatility analysis of peer entities whose stock prices were publicly availableany unamortized IMVEXXY patent costs that were similar to our company with respect to industry, stage of life cycle, market capitalization, and financial leverage. On January 1, 2017, we started using our own stock price in our volatility calculation along with two other peer entities whose stock prices were publicly available that were similar to our company. Our calculation of estimated volatility is based on historical stock prices over a period equal to the expected term of the awards. The average expected life of warrants is based on the contractual terms of the awards. The average expected life of options is based on the contractual terms of the stock option using the simplified method. We utilize a dividend yield of zero based on the fact that we have never paid cash dividends and have no current intention to pay cash dividends. Calculating share-based compensation expense requires the input of highly subjective judgment and assumptions, estimates of expected life of the share-based award, stock price volatility and risk-free interest rates. The assumptions used in calculating the fair value of share-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future.

Equity instruments (“instruments”) issued to non-employees are recorded on the basis of the fair value of the instruments, as required by ASC 505, Equity - Based Payments to Non-Employees, or ASC 505. ASC 505 defines the measurement date and recognition period for such instruments. In general, the measurement date is when either (a) a performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The estimated expense is recognized each period based on the current fair value of the award. As a result, the amount of expense related to awards to non-employees can fluctuate significantly during the period from the date of the grant through the final measurement date. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in ASC 505.

We recognize the compensation expense for all share-based compensation granted based on the grant date fair value estimated in accordance with ASC 718. We generally recognize the compensation expense on a straight-line basis over the employee’s requisite service period.~~We adopted ASU 2016-09, effective January 1, 2017, electing to account for forfeitures when they occur. Prior to that,we estimated the forfeiture rate based on our historical experience of forfeitures.~~

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Research and Development Expenses~~

Research and development, or R&D, expenses include internal R&D activities, services of external contract research organizations, or CROs, costs of their clinical research sites, manufacturing, laboratory supplies, scale-up and validation costs, and other activities. Internal R&D activity expenses include salaries, benefits, and non-cash share-based compensation expenses. Advance payments to be expensed in future research and development activities arepreviously capitalized and were $0 at September 30, 2017 and $228,933 at December 31, 2016, all of which were included in other current assets on the accompanying consolidated balance sheets. CRO activity expenses include preclinical laboratory experiments and clinical trial studies. Other activity expenses include regulatory consulting and legal fees and costs. The activities undertaken by our regulatory consultants that were classified as R&D expenses include assisting, consulting with, and advising our in-house staff with respect to various U.S. Food and Drug Administration, or the FDA, submission processes, clinical trial processes, and scientific writing matters, including preparing protocols and FDA submissions. Legal activities include professional research and advice regarding R&D, patents and regulatory matters. These consulting and legal expenses were direct costs associated with preparing, reviewing, and undertaking work for our clinical trials and investigative drugs. We charge internal R&D activities and other activity expenses to operations as incurred. We make payments to CROs based on agreed-upon terms, which may include payments in advance of a study starting date. We expense nonrefundable advance payments for goods and services that will be used in future R&D activities when the activity has been performed or when the goods have been received rather than when the payment is made. We review and accrue CRO expenses and clinical trial study expenses based on services performed and rely on estimates of those costs applicable to the completion stage of a study as provided by CROs. Estimated accrued CRO costs are subject to revisions as such studies progress to completion. We charge revisions expenseimmediately expensed in the period in which we become aware of an unsuccessful legal proceeding.

Beginning on December 30, 2022 and per the ~~facts that give rise to the revision become known.~~

~~Segment Reporting~~

~~We are managed and operated as one business, which~~Mayne License Agreement, Mayne Pharma is ~~focused on creating and commercializing products targeted exclusively~~responsible for ~~women. Our business operations are managed by a single management team that reports to the President~~all enforcement of our ~~company. We do not operate separate lines of business~~patents, including the litigation discussed above with respect to ~~any~~Teva.

In September 2023, one of our ~~products~~former contractors retained to market Annovera under Title X, filed a lawsuit that accused us of breach of contract. We answered their complaint and filed breach of contract counterclaims.

From time to time, we ~~do not prepare discrete financial information with respect to separate products. All product sales~~ are ~~derived from sales~~involved in other litigations and proceedings in the ~~United States. Accordingly,~~ordinary course of business. We are currently not involved in any other litigations and proceedings that we ~~view~~believe would have a material effect on our condensed consolidated financial condition, results of operations, or cash flows.

Off-balance

sheet arrangements

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

off-balance

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

Employment agreements

Co-Chief

Executive Officers, former Interim Chief Financial Officer and other executives from TherapeuticsMD was each a termination without “Good Cause,” as ~~one reportable operating segment.~~

~~NOTE 4 – INVENTORY~~

~~Inventory consists~~defined in their respective employment agreements. In the aggregate, as of September 30, 2023, we have accrued severance liabilities for executive termination obligations of $1.6 million.

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8. Stockholders’ equity (deficit)

Warrants

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


	Warrants Outstanding and exercisable
	Warrants			Weighted Average Exercise Price		Aggregate Intrinsic Value			Weighted Average Remaining Contractual Life (in Years)
As of January 1, 2022		536		$	13.10	$	2,427			9.3
Exercised		(435	)		—		(634	)		(4.5	)
Expired		(2	)		—		—			—

As of September 30, 2023		99		$	66.61	$	1,793			6.5

Share-based compensation payment plans

As of September 30, 2023, 382,207 shares of common stock were subject to outstanding awards under our share-based payment award plans and inducement grants (calculated using the base number of PSUs that may vest). As of September 30, 2023, 392,504 shares of common stock were available for future grants of share-based payment awards under the TherapeuticsMD, Inc. 2019 Stock Incentive Plan.

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


	Outstanding									Exercisable
	Options Awards			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (in Years)		Options Awards			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (in Years)
As of January 1, 2023		172		$	228.28		—		3.6		170		$	229.43		—		3.6
Granted		—			—		—		—		—			—		—		—
Exercised		—			—		—		—		—			—		—		—
Cancelled/Forfeited		—			—		—		—		—			—		—		—
Expired		(92	)		206.54		—		—		(90	)		206.54		—		—

As of September 30, 2023		80		$	253.31		—		3.2		80		$	253.31		—		3.2

The following table summarizes the status of our RSUs and related transactions (each adjusted to account for the Reverse Stock Split) since December 31, 2022 (in thousands, except weighed average grant date fair value):


	RSUs awards outstanding
	RSUs			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
As of January 1, 2023		57		$	14.57	$	318.63
Granted		163			4.82		—
Vested		(136	)		—		—
Cancelled/Forfeited		—			—		—

Unvested as of September 30, 2023		84		$	8.12	$	253.67

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The following table summarizes the status of our PSUs and related transactions for each for the following years (each adjusted to account for the Reverse Stock Split) since December 31, 2022 (in thousands, except weighed average grant date fair value):


	Outstanding
	PSUs (1)			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Unvested as of January 1, 2023		19		$	52.15	$	107.55
Granted		—			—		—
Vested		(5	)		—		—
Cancelled/Forfeited		—			—		—

Unvested, as of September 30, 2023		14		$	50.87	$	43.71

(1)	The number of PSUs represents the base number of PSUs that may vest.

Share-based payment compensation cost

Share-based payment compensation expense for PSUs is based on 100% vesting which was a part of the ~~following:~~

September 30,
2017

December 31,
2016

Finished product $ 1,293,517 $ 1,062,285
Raw material — 14,036
TOTAL INVENTORY $ 1,293,517 $ 1,076,321

~~NOTE 5 – OTHER CURRENT ASSETS~~

~~Other current assets consist~~termination benefits for all employees who were terminated in 2022. We recorded share-based payment award compensation costs related to previously issued options, RSU and PSUs, as well as shares of ~~the following:~~

September 30,
2017

December 31,
2016

Prepaid manufacturing costs $ 999,508 $ 991,809
Prepaid sales and marketing costs 535,936 —
Prepaid insurance 953,792 628,039
Prepaid research and development costs — 100,035
Prepaid consulting — 128,898
Prepaid vendor deposits 5,000 44,311
Other prepaid costs 507,541 405,960
TOTAL OTHER CURRENT ASSETS $ 3,001,777 $ 2,299,052
common stock issued under our

employee stock purchase plan (“ESPP”)

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 6 – FIXED ASSETS~~

~~Fixed assets consist of the following:~~

September 30,
2017

December 31,
2016

Accounting system $ 301,096 $ 301,096
Equipment 247,568 215,182
Computer hardware 80,211 80,211
Furniture and fixtures 116,542 113,079
Leasehold improvements 37,888 37,888
783,305 747,456
Accumulated depreciation (335,239 ) (230,617 )
TOTAL FIXED ASSETS $ 448,066 $ 516,839

~~Depreciation expense~~totaling $0.2 million and $4.3 million for the three months ended September 30, ~~2017~~2023 and ~~2016 was $35,622 and $26,543~~ 2022

respectively, and ~~$104,622~~$1.2 million and ~~$45,759~~$8.5 million for the nine months ended September 30, ~~2017~~2023 and ~~2016,~~ 2022

respectively.

~~NOTE 7 – INTANGIBLE ASSETS~~

~~The following table sets forth the gross carrying amount and accumulated amortization of our intangible assets as of September 30, 2017 and December 31, 2016:~~

September 30, 2017

Gross Carrying Amount

Accumulated Amortization

Net
Amount

Weighted- Average
Remaining Amortization
Period (yrs.)

Amortizing intangible assets:
OPERA^®software patent $ 31,951 $ (7,988 ) $ 23,963 12
Development costs of corporate website 91,743 (91,743 ) — n/a
Approved hormone therapy drug candidate patents 1,247,181 (153,216 ) 1,093,965 15.25
Hormone therapy drug candidate patents (pending) 1,474,061 — 1,474,061 n/a
Non-amortizing intangible assets:
Multiple trademarks 201,432 — 201,432 indefinite
Total $ 3,046,368 $ (252,947 ) $ 2,793,421

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

December 31, 2016

Gross Carrying Amount

Accumulated Amortization

Net
Amount

Weighted- Average
Remaining Amortization
Period (yrs.)

Amortizing intangible assets:
OPERA^®software patent $ 31,951 $ (6,490 ) $ 25,461 12.75
Development costs of corporate website 91,743 (91,743 ) — n/a
Approved hormone therapy drug candidate patents 1,093,452 (102,393 ) 991,059 16
Hormone therapy drug candidate patents (pending) 1,203,987 — 1,203,987 n/a
Non-amortizing intangible assets:
Multiple trademarks 185,465 — 185,465 indefinite
Total $ 2,606,598 $ (200,626 ) $ 2,405,972

We capitalize external costs, consisting primarily of legal costs, related to securing our patents and trademarks. Once a patent is granted, we amortize the approved hormone therapy drug candidate patents using the straight-line method over the estimated useful life of approximately 20 years, which is the life of intellectual property patents. If the patent is not granted, we write-off any capitalized patent costs at that time. Trademarks are perpetual and are not amortized. During the nine months ended September 30, 2017 and year ended December 31, 2016, there was no impairment recognized related to intangible assets.

~~In addition to numerous pending patent applications, as of September 30, 2017, we had 17 issued patents, including:~~

●

13 utility patents that relate to our combination progesterone and estradiol product candidates, which are owned by us and are U.S. jurisdiction patents with expiration dates in 2032. We have pending patent applications with respect to certain of these patents in Argentina, Australia, Brazil, Canada, Europe, Israel, Japan, Mexico, Russia, South Africa, and South Korea.

●

two utility patents that relate to TX-004HR, our applicator-free vaginal estradiol softgel product candidate, which establishes an important intellectual property foundation for TX-004HR, which are owned by us and are U.S. jurisdiction patents with an expiration date in 2033. We have pending patent applications with respect to certain of these patents in Argentina, Australia, Brazil, Canada, Europe, Israel, Japan, Mexico, Russia, South Africa, and South Korea.

●

one utility patent that relates to a pipeline transdermal patch technology, which is owned by us and is a U.S. jurisdiction patent with an expiration in 2032. We have pending patent application with respect to this patent in Australia, Brazil, Canada, Europe, Mexico, and Japan.

●

~~one utility patent that relates to our OPERA® information technology platform, which is owned by us and is a U.S. jurisdiction patent with an expiration date in 2029.~~

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

Amortization expense was $18,433 and $13,917 for the three months ended September 30, 2017 and 2016, respectively, and $52,321 and $38,560 for the nine months ended September 30, 2017 and 2016, respectively. Estimated amortization expense for the next five years for the patent cost currently being amortized is as follows:

Year Ending
December 31, Estimated
Amortization
2017(3 months) $ 18,433
2018 $ 73,732
2019 $ 73,732
2020 $ 73,732
2021 $ 73,732
Thereafter $ 804,567

~~NOTE 8 – OTHER CURRENT LIABILITIES~~

~~Other current liabilities consist of the following:~~

September 30,
2017

December 31,
2016

Accrued clinical trial costs $ 556,048 $ 1,281,080
Accrued payroll, bonuses and commission costs 2,662,359 3,531,440
Accrued compensated absences 952,587 665,561
Accrued legal and accounting expense 366,828 176,518
Accrued sales and marketing costs 69,041 665,773
Other accrued expenses 319,015 224,865
Allowance for wholesale distributor fees 145,563 76,510
Accrued royalties 93,870 26,507
Allowance for coupons and returns 1,218,249 794,816
Accrued rent 293,672 181,015
TOTAL OTHER CURRENT LIABILITIES $ 6,677,232 $ 7,624,085

~~NOTE 9 – NET LOSS PER SHARE~~

We calculate earnings per share, or EPS, in accordance with ASC 260, Earnings Per Share, which requires the computation and disclosure of two EPS amounts: basic and diluted. We compute basic EPS based on the weighted-average number of shares of common stock, par value $0.001 per share, or Common Stock, outstanding during the period. We compute diluted EPS based on the weighted-average number of shares of Common Stock outstanding plus all potentially dilutive shares of Common Stock outstanding during the period. Such potentially dilutive shares of Common Stock consist of options and warrants and were excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive due to the net loss reported by us. The table below presents potentially dilutive securities that could affect our calculation of diluted net loss per share allocable to common stockholders for the periods presented.

Nine Months Ended
September 30,
2017 2016
Stock options 23,383,100 20,705,923
Warrants 3,115,905 12,060,571
26,499,005 32,766,494

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 10 – STOCKHOLDERS’ EQUITY~~

~~Preferred Stock~~

~~At September 30, 2017, we had 10,000,000 shares of preferred stock, par value $0.001, authorized for issuance, of which no shares of preferred stock were issued or outstanding.~~

~~Common Stock~~

~~At September 30, 2017, we had 350,000,000 shares of Common Stock authorized for issuance, of which 216,429,642 shares of Common Stock were issued and outstanding.~~

~~Issuances During 2017~~

On September 25, 2017, we entered into an underwriting agreement with J.P. Morgan Securities LLC relating to an underwritten public offering of 12,400,000 shares of our Common Stock at a price of $5.55 per share. The net proceeds to us from the offering were approximately $68,573,000, after deducting estimated offering expenses payable by us. The offering closed on September 28, 2017 and we issued 12,400,000 shares of Common Stock.

During the three months ended September 30, 2017, certain individuals exercised stock options to purchase 2,500 shares of Common Stock for $255 in cash. During the nine months ended September 30, 2017, certain individuals exercised stock options to purchase 102,546 shares of Common Stock for $212,615 in cash.

~~Issuances During 2016~~

On January 6, 2016, we entered into an underwriting agreement with Goldman Sachs & Co. and Cowen and Company, LLC, as the representatives of the several underwriters, or the Underwriters, relating to an underwritten public offering of 15,151,515 shares of Common Stock at a public offering price of $8.25 per share. Under the terms of the underwriting agreement, we granted the Underwriters a 30-day option to purchase up to an aggregate of 2,272,727 additional shares of Common Stock, which option was exercised in full. The net proceeds to us from the offering were approximately $134,864,000, after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. The offering closed on January 12, 2016 and we issued 17,424,242 shares of Common Stock.

During the three months ended September 30, 2016, certain individuals exercised stock options to purchase 127,109 shares of Common Stock. Stock options to purchase shares of Common Stock were exercised as follows: (i) 10,000 options for $1,018 in cash and (ii) 117,109 options, pursuant to the stock options’ cashless provision, wherein 78,017 shares of Common Stock were issued. During the nine months ended September 30, 2016, certain individuals exercised stock options to purchase 544,277 shares of Common Stock. Stock options to purchase shares of Common Stock were exercised as follows: (i) 427,168 options for $979,060 in cash and (ii) 117,109 options, pursuant to the stock options’ cashless provision, wherein 78,017 shares of Common Stock were issued.

~~Warrants to Purchase Common Stock~~

As of September 30, ~~2017,~~2023, we had ~~warrants outstanding to purchase an aggregate~~$0.4 million of 3,115,905 shares of Common Stock with a weighted-average contractual remaining life of approximately 2.08 years, and exercise prices ranging from $0.24 to $8.20 per share, resulting in a weighted average exercise price of $2.58 per share.

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

The valuation methodology used to determine the fair value of our warrants is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions, including volatility of the stock price, the risk-free interest rate and the term of the warrant. During the nine months ended September 30, 2017, we granted warrants to purchase 125,000 shares of Common Stock to outside consultants at an exercise price of $6.83 per share. The fair value for these warrants was determined by using the Black-Scholes Model on the date of the grant using a term of five years; volatility of 63.24%; risk free rate of 1.47%; and dividend yield of 0%. The grant date fair value of the warrants was $3.67 per share. The warrants are vesting ratably over a 12-month period and have an expiration date of March 15, 2022. During the nine months ended September 30, 2016, we granted warrants to purchase 245,000 shares of Common Stock to outside consultants at a weighted average exercise price of $7.90 per share. The weighted average grant date fair value of these warrants was $4.78 per share. The fair value for these warrants was determined by using the Black-Scholes Model on the date of the grant using a term of five years; volatility of 74.10%-74.15%; risk free rate of 1.04%-1.28%; and dividend yield of 0%. These warrants vest and have expiration dates as follows: warrants to purchase 75,000 shares of Common Stock vested on April 21, 2016 and have an expiration date of April 21, 2021, warrants to purchase 50,000 shares of Common Stock vest ratably over a 24-month period and have an expiration date of April 21, 2021, and warrants to purchase 120,000 shares of Common Stock vest ratable over a 12-month period and have an expiration date of January 21, 2021.

During the three months ended September 30, 2017 and 2016, we recorded $101,376 and $137,161, respectively, and during the nine months ended September 30, 2017 and 2016 we recorded $217,150 and $820,751, respectively, asunrecognized share-based payment award compensation ~~expense in the accompanying consolidated financial statements related to warrants. As of September 30, 2017, unamortized costs associated with these warrants totaled approximately $279,000.~~

In May 2013, we entered into a consulting agreement with Sancilio and Company, Inc., or SCI, to develop drug platforms to be used in our hormone replacement drug candidates. These services include support of our efforts to successfully obtain FDA approval for our drug candidates, including a vaginal capsule for the treatment of vulvar and vaginal atrophy, or VVA. In connection with the agreement, SCI agreed to forfeit its rights to receive warrants to purchase 833,000 shares of Common Stock that were to be granted pursuant to the terms of a prior consulting agreement dated May 17, 2012. As consideration under the agreement, we agreed to issue to SCI a warrant to purchase 850,000 shares of Common Stock at $2.01 per share that has vested or will vest, as applicable, as follows:

283,333 shares were earned on May 11, 2013 upon acceptance of an Investigational New Drug application by the FDA for an estradiol based drug candidate in a softgel vaginal capsule for the treatment of VVA; however, pursuant to the terms of the consulting agreement, the shares did not vest until June 30, 2013. The fair value of $405,066 for the shares vested on June 30, 2013 was determined by using the Black-Scholes Model on the date of vesting using a term of 5 years; a volatility of 45.89%; risk free rate of 1.12%; and a dividend yield of 0%. We recorded the entire $405,066 as non-cash compensation as of June 30, 2013;

283,333 shares vested on June 30, 2013. The fair value of $462,196 for these shares was determined by using the Black-Scholes Model on the date of vesting using a term of 5 years; a volatility of 45.84%; risk free rate of 1.41%; and a dividend yield of 0%. During both the three months ended September 30, 2017 and 2016, we did not record any non-cash compensation related to this warrant in the accompanying consolidated financial statements. During the nine months ended September 30, 2017 and 2016, we recorded $0 and $77,026, respectively, as non-cash compensation in the accompanying consolidated financial statements related to this warrant. As of June 30, 2016, this warrant was fully amortized; and

~~283,334 shares will vest upon the receipt by us of any final FDA approval of a drug candidate that SCI helped us design. It is anticipated that this event will occur in the near future.~~

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

In May 2012, we issued warrants to purchase an aggregate of 1,300,000 shares of Common Stock to SCI for services to be rendered over approximately five years beginning in May 2012. The warrants vested upon issuance. Services provided are to include (a) services in support of our drug development efforts, including services in support of our ongoing and future drug development and commercialization efforts, regulatory approval efforts, third-party investment and financing efforts, marketing efforts, chemistry, manufacturing and controls efforts, drug launch and post-approval activities, and other intellectual property and know-how transfer associated therewith; (b) services in support of our efforts to successfully obtain New Drug Approval; and (c) other consulting services as mutually agreed upon from time to time in relation to new drug development opportunities. The warrants were valued at $1,532,228 on the date of the issuance using an exercise price of $2.57; a term of five years; a volatility of 44.71%; risk free rate of 0.74%; and a dividend yield of 0%. During the three months ended September 30, 2017 and 2016, we recorded $0 and $64,449, respectively, and during the nine months ended September 30, 2017 and 2016, we recorded $128,898 and $193,347, respectively, as non-cash compensation expense with respect to these warrants in the accompanying consolidated statements of operations. The contract will expire upon the commercial manufacture of a drug product. As of September 30, 2017, the SCI warrants issued in 2013 and 2012 were fully amortized.

During both the three months ended September 30, 2017 and 2016, no warrants were exercised. During the nine months ended September 30, 2017, certain individuals exercised warrants to purchase 2,476,666 shares of Common Stock for $3,798,999 in cash. In addition, during the nine months ended September 30, 2017, certain individuals exercised warrants to purchase 6,590,000 shares of Common Stock pursuant to the warrants’ cashless exercise provisions, wherein 4,762,208 shares of Common Stock were issued. During the nine months ended September 30, 2016, certain individuals exercised warrants to purchase 722,744 shares of Common Stock for $1,373,000 in cash.

~~Options to Purchase Common Stock~~

In 2009, we adopted the 2009 Long Term Incentive Compensation Plan, or the 2009 Plan, to provide financial incentives to employees, directors, advisers, and consultants of our company who are able to contribute towards the creation of or who have created stockholder value by providing them stock options and other stock and cash incentives, or the Awards. The Awards available under the 2009 Plan consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, and other stock or cash awards as described in the 2009 Plan. There are 25,000,000 shares authorized for issuance thereunder. Generally, the options vest annually over four years or as determined by our board of directors, upon each option grant. Options may be exercised by paying the price for shares or on a cashless exercise basis after they have vested and prior to the specified expiration date provided and applicable exercise conditions are met, if any. The expiration date is generally ten years from the date the option is issued. As of September 30, 2017, there were non-qualified stock options to purchase 18,592,959 shares of Common Stock outstanding under the 2009 Plan. As of September 30, 2017, there were 2,156,003 shares of Common Stock available to be issued under the 2009 Plan.

In 2012, we adopted the 2012 Stock Incentive Plan, or the 2012 Plan, a non-qualified plan that was amended in August 2013. The 2012 Plan was designed to serve as an incentive for retaining qualified and competent key employees, officers, directors, and certain consultants and advisors of our company. The Awards available under the 2012 Plan consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, and other stock or cash awards as described in the 2012 Plan. Generally, the options vest annually over four years or as determined by our board of directors, upon each option grant. Options may be exercised by paying the price for shares or on a cashless exercise basis after they have vested and prior to the specified expiration date provided and applicable exercise conditions are met, if any. The expiration date is generally ten years from the date the option is issued. There are 10,000,000 shares of Common Stock authorized for issuance thereunder. As of September 30, 2017, there were non-qualified stock options to purchase 4,790,141 shares of Common Stock outstanding under the 2012 Plan. As of September 30, 2017, there were 5,128,333 shares of Common Stock available to be issued under the 2012 Plan.

The valuation methodology used to determine the fair value of stock options is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the risk-free interest rate, and the expected life of the stock options. The assumptions used in the Black-Scholes Model for options granted during the nine months ended September 30, 2017 and 2016 are set forth in the table below.

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

Nine Months Ended
September 30,
2017 September 30,
2016
Risk-free interest rate 1.84-2.01% 1.13-1.70%
Volatility 61.56-63.95% 70.26-71.22%
Term (in years) 5.5-6.25 6.00-6.25
Dividend yield 0.00% 0.00%

~~A summary of activity under the 2009 and 2012 Plans and related information follows:~~

Number of Shares Underlying Stock Options Weighted Average Exercise Price Weighted
Average
Remaining
Contractual
Life in Years Aggregate
Intrinsic Value
Balance at December 31, 2016 21,767,854 $ 3.56 5.8 $ 60,495,730
Granted 2,184,500 $ 6.61
Exercised (102,546 ) $ 2.07 $ 452,287
Expired/Forfeited (466,708 ) $ 6.52
Balance at September 30, 2017 23,383,100 $ 3.79 5.4 $ 52,467,444
Vested and Exercisable at September 30, 2017 18,883,183 $ 3.15 4.6 $ 52,059,288
Unvested at September 30, 2017 4,499,917 $ 6.46 8.6 $ 408,156

At September 30, 2017, our outstanding stock options had exercise prices ranging from $0.10 to $8.92 per share. The weighted average grant date fair value per share of options granted was $3.82 and $4.70 during the nine months ended September 30, 2017 and 2016, respectively. Share-based compensation expense for options recognized in our results of operations is based on vested awards. Share-based compensation expense related to options for the three months ended September 30, 2017 and 2016 was $1,885,050 and $3,982,759, respectively, and for the nine months ended September 30, 2017 and 2016 was $4,691,735 and $12,294,089, respectively. At September 30, 2017, total unrecognized estimated compensation expensecost related to unvested options, ~~granted prior to that date was approximately $12,419,000. This cost~~RSUs and PSUs as well as shares issuable under our ESPP, which may be adjusted for future changes in forfeitures and is ~~expected to be recognized over a weighted-average period of 2.2 years.~~included as additional

paid-in

capital in the accompanying condensed consolidated balance sheets. No tax benefit was realized due to a continued pattern of ~~operating~~net losses.

~~NOTE 11 – INCOME TAXES~~

~~Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis~~

The unrecognized compensation cost as of ~~assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are~~September 30, 2023 of $0.4 million is expected to ~~reverse.~~ be recognized as share-based payment award compensation over a weighted average period of 0.6 years.

9. Revenue

Pursuant to the Mayne License Agreement, the Company granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.

Pursuant to the Mayne License Agreement, Mayne Pharma will make

one-time,

milestone payments to the Company of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million. Further, Mayne Pharma will pay to the Company royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date. The royalty rate will decrease to 2.0% on a

Product-by-Product

basis upon the earlier to occur of (i) the expiration or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States. Mayne Pharma will pay to the Company minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below.

Upon the expiry of the

20-year

royalty term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully

paid-up

and royalty free license for the Licensed Products.

We reported revenue of ($0.1) million in the third quarter of 2023 due to changes in estimates of revenue amounting to ($0.3) million subject to royalty due to TXMD by Mayne. Additionally, a portion of this adjustment is due to reallocations of revenue to other income (expense). On a quarterly basis, we reallocate royalty revenue proportionately between operating revenue for the amounts related to our licensed intellectual property and other income for royalties related to intellectual property we sold.

10.

come taxes

We do not expect to pay any significant federal or state income ~~tax for 2017~~taxes as a result of ~~(a)~~(i) the losses recorded during the nine months ended September 30, ~~2017, (b)~~2023 and 2022, (ii) additional losses expected for the remainder of ~~2017, and/~~2023 or ~~(c)~~losses recorded in 2022, or (iii) net operating ~~loss~~losses carry forwards from prior years. ~~Accounting standards require the consideration of~~

We recorded a full valuation allowance ~~for deferred tax assets if it is “more likely than not” that some component or all~~ of the ~~benefits of deferred tax assets will not be realized. As~~net operating losses for the nine months ended September 30, 2023 and 2022. Accordingly, there were no provisions for income taxes for the nine months ended September 30, 2023 and 2022. Additionally, as of September 30, ~~2017,~~2023 and December 31, 2022, we maintain a full valuation allowance for all deferred tax assets. ~~Based on these requirements, no provision or benefit~~

11. Income (Loss) per common share

The following table sets forth the computation of basic and diluted (loss) per common share (each adjusted to account for ~~income taxes has been recorded. There were no recorded unrecognized tax benefits at~~ the ~~end of~~Reverse Stock Split) for the ~~reporting period.~~

periods presented (in thousands, except per share amounts):

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 12 – RELATED PARTIES~~

~~In July 2015, J. Martin Carroll,~~


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator:
Net income (loss) from continuing operations	$	(1,434	)	$	(14,631	)	$	(6,158	)	$	(47,379	)
Net income (loss) from discontinued operations		(1,944	)		(14,334	)		(3,237	)		81,674

Net income (loss)	$	(3,378	)	$	(28,965	)	$	(9,395	)	$	34,295

Denominator:
Weighted average common shares for basic loss per common share		10,701			9,261			10,241			8,877
Effect of dilutive securities		—			—			—			—

Weighted average common shares for diluted loss per common share		10,701			9,261			10,241			8,877

Income (loss) per common share, continuing operations
Basic	$	(0.13	)	$	(1.58	)	$	(0.60	)	$	(5.34	)

Diluted		(0.13	)		(1.58	)		(0.60	)		(5.34	)

Income (loss) per common share, discontinued operations
Basic	$	(0.18	)	$	(1.55	)	$	(0.32	)	$	9.20

Diluted		(0.18	)		(1.55	)		(0.32	)		9.20

Since we reported a director of our company, was appointed to the board of directors of Catalent, Inc. From time to time, we have entered into agreements with Catalent, Inc. and its affiliates, or Catalent, 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 since July 2015. During the three months ended September 30, 2017 and 2016, we were billed by Catalent approximately $186,000 and $828,000, respectively,net loss from continuing operations for ~~manufacturing activities related to our clinical trials, scale-up, registration batches, stability and validation testing. During~~ the nine months ended September 30, ~~2017~~2023 and ~~2016, we were billed by Catalent approximately $2,646,000~~2022, our potentially dilutive securities are deemed to be anti-dilutive, accordingly, there was no effect of dilutive securities. Therefore, our basic and ~~$2,907,000, respectively,~~diluted loss per common share and our basic and diluted weighted average common shares are the same for ~~manufacturing activities related to our clinical trials, scale-up, registration batches, stability and validation testing. As of~~the nine months ended September 30, ~~2017~~2023 and 2022.

Table of Contents

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 nine months ended September 30, 2023 and 2022 (in thousands):


	September 30, 2023
	2023		2022
Stock options		80		197
RSUs		84		301
PSUs		14		100
Warrants		99		411

		277		1,009

12. Related parties

On August 23, 2022, we appointed Mr. Justin Roberts as a director to fill a newly created vacancy on our Board of Directors. Mr. Roberts was elected to serve as a director at our combined 2022 and 2023 Annual Meeting held on June 26, 2023. Mr. Roberts will serve until our next Annual Meeting of Stockholders or until his successor is duly elected or appointed or his earlier death or resignation. As a director of our Company, Mr. Roberts is entitled to receive compensation in the same manner as our other

non-employee

directors, described in the section entitled “Director Compensation” in our Amendment No. 1 to Form

10-K

for the fiscal year ended December 31, ~~2016, there were amounts due~~2022, filed with the Securities and Exchange Commission on May 1, 2023, but he has elected not to ~~Catalent~~receive any compensation for his service as a

non-employee

director at this time. Mr. Roberts currently serves as a Partner of Rubric. On July 29, 2022, September 30, 2022, October 28, 2022, and May 1, 2023, we entered into subscription agreements with Rubric. On December 30, 2022, in accordance with the terms of the Certificate of Designation, we redeemed all 29,000 outstanding shares of Series A Preferred Stock previously issued to affiliates of Rubric at a purchase price of $1,333 per share. also paid certain affiliates of Rubric approximately ~~$26,000~~$3.0 million as a make-whole payment pursuant to the subscription agreements previously entered into between us and ~~$57,000, respectively.~~

~~NOTE 13 - BUSINESS CONCENTRATIONS~~

~~We purchase~~Rubric. On June 29, 2023, we issued and sold 312,525 shares of Common Stock to Rubric at a price per share equal to $3.6797 pursuant to the Subscription Agreement and received gross proceeds of $1.15 million, before expenses.

13. Business concentrations

TherapeuticsMD was previously a women’s healthcare company with a mission of creating and commercializing innovative products to support the lifespan of women from pregnancy prevention through menopause. In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products ~~from several suppliers~~licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. As part of the transformation that included the Mayne License Agreement, historical results of commercial operations for all periods prior to the Closing Date have been reflected as discontinued operations in our condensed consolidated financial statements. Assets and liabilities associated with ~~approximately 100%~~the commercial business are classified as assets and ~~97%~~liabilities of discontinued operations in our ~~purchases supplied from one vendor for both~~condensed consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2.

For the three and nine months ended September 30, ~~2017 and 2016, respectively.~~

We sell our prescription prenatal vitamin products to wholesale distributors, specialty pharmacies, specialty distributors, and chain drug stores that generally sell products to retail pharmacies, hospitals, and other institutional customers. As a result2023, 100% of developments in the pharmaceutical industry that negatively affected independent pharmacies, including such pharmacies’ reliance on third-party payors, in 2016, we identified that payment periods for our retail pharmacy distributors were becoming longer than in prior years. As a result, during the third quarter of 2016, we centralized the distribution channel for both our retail pharmacy distributors and wholesale distributors, in order to facilitate sales to a broader population of retail pharmacies and minimize business risk exposure to any one retail pharmacy. During the third quarter of 2016, we entered into new distribution agreements with our retail pharmacy distributors to effectuate this centralization which were effective September 1, 2016.

During both the nine months ended September 30, 2017 and 2016, four customers each generated more than 10% of our total revenue. Revenue generated from four major customers combined accounted for approximately 60% of ourlicense revenue for both the nine months ended September 30, 2017 and 2016. During the nine months ended September 30, 2017, Pharmacy Innovations PA generated approximately $2,715,000 of our revenue, AmerisourceBergen generated approximately $1,716,000 of our revenue, Cardinal Health generated approximately $1,764,000 of our revenue and McKesson Corporation generated approximately $1,458,000 of our revenue. During the nine months ended September 30, 2016, Woodstock Pharmaceutical and Compounding generated approximately $2,247,000 of our revenue, Medical Center Pharmacy generated approximately $2,683,000 of our revenue, Due West Pharmacy generated approximately $1,890,000 of our revenue and Pharmacy Innovations generated approximately $2,113,000 of our revenue.

~~THERAPEUTICSMD, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 14– COMMITMENTS AND CONTINGENCIES~~

~~Operating Lease~~

We lease administrative office space in Boca Raton, Florida pursuant to a non-cancelable operating lease that commenced on July 1, 2013 and originally provided for a 63-month term. On February 18, 2015, we entered into an agreement with the same lessors to lease additional administrative office space in the same location, pursuant to an addendum to such lease. In addition, on April 26, 2016, we entered into an agreement with the same lessors to lease additional administrative office space in the same location. This agreement was effective beginning May 1, 2016 and extended the original expiration of the lease term to October 31, 2021. On October 4, 2016, we entered into an agreement with the same lessors to lease additional administrative office space in the same location, pursuant to an addendum to such lease. This addendum is effective beginning November 1, 2016.

~~The rental expense~~ related to ~~our current lease during the three months ended September 30, 2017~~Mayne Pharma and 2016 was approximately $257,000 and $182,000, respectively. The rental expense related to our current lease during the nine months ended September 30, 2017 and 2016 was approximately $772,000 and $482,000, respectively.

Theramex.

As of September 30, ~~2017, future~~2023, we had a royalty receivable of $2.7 million relating to the short-term portion of receivable from Mayne Pharma and Theramex and $19.1 million relating to the long-term portion of royalty receivable which includes royalties recognized from the minimum ~~rental payments on non-cancelable operating leases are as follows:~~

Years Ending December 31,
2017 (3 months) $ 224,632
2018 951,194
2019 1,094,116
2020 1,113,069
2021 943,127
Total minimum lease payments $ 4,326,138

~~Legal Proceedings~~

annual royalty that Mayne Pharma is obligated to pay to us under the Mayne License

Agreement.

14. Subsequent events

On ~~April 17, 2017,~~November 10, 2023, we delivered a ~~securities class action lawsuit was filed against our company and certain of our officers and directors in~~drawdown notice (the “Notice”) to Rubric under the ~~U.S. District Court for the Southern District of Florida (Case No. 9:17-cv-80473-RLR) that purported to state a claim for alleged violations of Sections 10(b) and 20(a)~~terms of the ~~Securities Exchange Act~~Subscription Agreement. Pursuant to the Notice, we agreed to sell 877,192 shares of ~~1934, as amended, and Rule 10b-5 promulgated thereunder, based~~Common Stock to Rubric at a price per share of $2.28, for total gross proceeds of approximately $2.0 million. The settlement of the transaction is expected to occur on ~~statements made by~~ the ~~defendants concerning~~third trading day following the ~~NDA for TX-004HR. The complaint sought unspecified damages, interest, attorneys’ fees and other costs. On July 18, 2017,~~delivery of the ~~complaint was voluntarily dismissed by~~Notice in accordance with the ~~lead plaintiff without prejudice. We and certain~~terms of ~~our officers and directors were are also subject to two shareholder derivative lawsuits regarding~~ the NDA for TX-004HR, one filed in the U.S. District Court for the Southern District of Florida on May 30, 2017 (Case No. 9:17-cv-80686-RLR) and one filed in Florida state court in Palm Beach County on June 5, 2017 (Case No. 502017CA006289XXXXMB). These complaints were both voluntarily dismissed by the lead plaintiffs without prejudice on August 14, 2017.Subscription Agreement.

Item 2. Management’s ~~Discussion~~discussion and ~~Analysis~~analysis of ~~Financial Condition~~financial condition and ~~Results~~results of ~~Operations~~

~~General~~

operations

The following discussion ~~and analysis provides information that we believe to be relevant to an assessment and understanding of our results of operations and financial condition for the periods described. This discussion~~ should be read ~~together~~in conjunction with our 2022 Annual Report on Form 10-K (“2022 10-K Report”), and the condensed consolidated financial statements and ~~the~~related notes ~~to the financial statements, which are included~~in Item 1, Financial Statements, appearing elsewhere in this Quarterly Report on Form 10-Q. This information should also be read in conjunction with the information contained in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission, or the SEC, on February 28, 2017, or the Annual Report, including the audited financial10-Q (“10-Q Report”). The following discussion may contain forward-looking statements, and ~~notes included therein. The reported~~our actual results ~~will not necessarily reflect future~~may differ materially from the results ~~of operations or financial condition.~~

~~In addition, this Quarterly Report on Form 10-Q contains~~suggested by these forward-looking ~~statements~~statements. Factors that ~~involve substantial risks and uncertainties. Forward-looking statements may~~might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2022 10-K Report under the heading “Risk Factors.” We assume no obligation to revise or update any forward-looking statements ~~relating~~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 contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve substantial risks and uncertainties. For example, statements regarding our ~~objectives,~~operations, financial position, debt position, liquidity, business strategy, and other plans and objectives for future operations, and assumptions and predictions about future cost reduction 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.~~expenses and royalties are all forward-looking statements. These statements are ~~often characterized~~generally accompanied by ~~terminology~~words such as ~~“believes,~~“intend,” ~~“hopes,~~“anticipate,” “believe,” “estimate,” “potential(ly),” “continue,” “forecast,” “predict,” “plan,” “may,” ~~“anticipates,~~“will,” “could,” “would,” “should,” ~~“intends,~~“expect,” ~~“plans,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy”~~or the negative of such terms or other comparable terminology.

We have based these forward-looking statements on our current expectations and ~~similar expressions~~projections about future events. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, 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~~information available to ~~be appropriate. Forward-looking statements are made as of~~us on the date of this ~~Quarterly~~10-Q Report, ~~on Form 10-Q~~ and we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning. These forward-looking statements are inherently subject to known and unknown risks and uncertainties. Actual results or experience may differ materially from those expected or anticipated in the forward-looking statements. We do not undertake ~~no duty~~ to update any forward-looking statements or ~~revise~~to publicly announce the results of any ~~such~~revisions to any statements ~~whether as a result of~~to reflect new information or future events or ~~otherwise.~~ developments, 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~~Factors that could cause ~~actual results, developments~~or contribute to such differences include, but are not limited to, our liquidity requirements, supply chain issues, management transitions, risks related to our licensing agreements, market and business decisions to differ materially from forward-looking statements are described in the sections titled “Risk Factors” in our Annual Report, and include the following: our ability to resolve the deficiencies identified by the U.S. Food and Drug Administration, or FDA, in our new drug application, or NDA, for our TX-004HR product candidategeneral economic factors, and the time frame associated with such resolution; whether we will be able to prepare an amended NDA for our TX-004HR product candidate and, if prepared, whether the FDA will accept and approve the NDA; our ability to maintain or increase salesother risks discussed in Part I, Item 1A of our ~~products;~~2022 10-K Report, as updated and supplemented by Part II, Item 1A of this 10-Q Report.

Our company

In December 2022, we changed our ~~ability~~business to ~~develop and commercialize~~become a pharmaceutical royalty company, primarily collecting royalties from our hormone therapy drug candidates and obtain additional financing necessary therefor; whether we will be able to prepare an NDA for our TX-001HR product candidate and, if prepared, whether the FDA will accept and approve the NDA; the length, cost and uncertain results of our clinical trials, including any additional clinical trials that the FDA may requirelicensees. We are no longer engaged in connection with TX-004HR; the potential of adverse side effects or other safety risks that could preclude the approval of our hormone therapy drug candidates; our reliance on third parties to conduct our clinical trials, research and development and manufacturing; 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.

~~Throughout this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “TherapeuticsMD,”~~ or ~~“our company” refer to TherapeuticsMD, Inc.~~commercial operations. On December 30, 2022 (the “Closing Date”), we completed a ~~Nevada corporation, and unless specified otherwise, include our wholly owned subsidiaries, vitaMedMD,~~transaction (the “Mayne Transaction”) with Mayne Pharma LLC, a Delaware limited liability company ~~or VitaMed;~~(“Mayne Pharma”) and subsidiary of Mayne Pharma Group Limited, an Australian public company, pursuant to which we (i) granted Mayne Pharma an exclusive license to commercialize IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD ~~Inc.~~and vitaMedMD brands (collectively, the “Licensed Products”) in the United States and its possessions and territories, (ii) assigned to Mayne Pharma our exclusive license to commercialize ANNOVERA (together with the Licensed Products, collectively, the “Products”) in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith.

Pursuant to a License Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Mayne License Agreement”), ~~a Nevada corporation, or BocaGreen;~~we granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and ~~VitaCare Prescription Services, Inc., a Florida corporation, or VitaCare.~~commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.

~~Overview~~

In connection with our transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr. Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 31, 2022. Severance obligations for all employees other than executive officers were paid in full in the first quarter of 2023 and severance obligations for terminated executive officers will be paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 2022 and September 30, 2023, we employed one full-time employee primarily engaged in an executive position. We have ~~obtained FDA acceptance~~engaged external consultants, including certain former members of our ~~Investigational New Drug, or IND, applications to conduct clinical trials for five~~management team, who support our relationship with current partners and assist with certain financial, legal and regulatory matters and the continued wind-down of our proposed hormone therapy drug products: TX-001HR, our oral combination of progesterone and estradiol; TX-002HR, our oral progesterone alone; TX-003HR, our oral estradiol alone; and TX-004HR, our applicator-free vaginal estradiol softgel with estradiol alone and TX-006HR our combination estradiol and progesterone product in a topical cream form. Our IND applications for TX-002HR and TX-003HR are currently inactive.historical business operations.

vitaCare Divestiture

In December 2016, we announced positive top-line results from the recently completed the REPLENISH Trial, our phase 3 clinical trial of TX-001HR, our bio-identical hormone therapy combination of 17ß- estradiol and progesterone in a single, oral softgel drug candidate, for the treatment of moderate to severe vasomotor symptoms, or VMS, due to menopause in post-menopausal women with an intact uterus. In December 2015,On April 14, 2022, we completed the ~~REJOICE Trial, our phase 3 clinical~~divestiture of ~~TX-004HR, our applicator-free vaginal estradiol softgel drug candidate for~~vitaCare Prescription Services, Inc. (“vitaCare”) with the ~~treatment~~sale of ~~moderate~~all vitaCare’s issued and outstanding capital stock (the “vitaCare Divestiture”). We received net proceeds of $142.6 million, net of transaction costs of $7.2 million, and we recognized a gain on sale of business of $143.4 million. Included in the net proceeds amount was $11.3 million of customary holdbacks as provided in the stock purchase agreement between us and GoodRx, Inc. (the “Purchase Agreement”), which was recorded as restricted cash in the condensed consolidated balance sheets until the cash was released to ~~severe dyspareunia (vaginal pain during sexual intercourse), a symptom~~us. The restricted cash was held by an escrow agent and was released to us in March 2023. Additionally, we may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of ~~vulvar and vaginal atrophy, or VVA, in post-menopausal women with vaginal linings that~~the Purchase Agreement, however we do not ~~receive enough estrogen.~~believe this earnout will be realized. We will record the contingent consideration at the settlement amount when the consideration is realized or realizable.

The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. Our commitments under a long-term services agreement related to vitaCare were transferred to Mayne Pharma as part of the Mayne Transaction. In addition, under the ~~fourth~~Mayne License Agreement Amendment, we owed Mayne Pharma $1.5 million payable from one royalty payment. During the second quarter of ~~2016~~2023, Mayne Pharma held back our royalty payment and we ~~submitted~~funded an ~~IND application for TX-006HR,~~additional $0.9 million in August 2023 to settle the original $1.5 million payable.

The pre-divesture operations of vitaCare were reclassified to discontinued operations in December 2022 when we transitioned to becoming a royalty company and licensed our ~~combination estradiol~~products to Mayne Pharma.

COVID-19

With multiple variant strains of the SARS-Cov-2 virus and ~~progesterone drug candidate~~the COVID-19 disease that it causes (collectively, “COVID-19”) still circulating, we continue to be subject to risks and uncertainties in ~~a topical cream form,~~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 ~~intend~~difficult to ~~commence phase 1 clinical trials~~predict.

As of the date of the filing of this ~~drug candidate~~10-Q Report, the future extent to which the COVID-19 pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain and difficult to predict. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as ~~early as 2018. In July 2014, we suspended enrollment~~a result of any economic recession or depression that has occurred or may occur in the SPRY Trial, our phase 3 clinical trial for TX-002HR, our oral progesterone alone drug candidate, and, in October 2014, we stopped the trial in order to update the phase 3 protocol based on discussions with the FDA. We have currently suspended further development of this drug candidate to prioritize our leading drug candidates. Our IND is currently in inactive status.We have no current plans to conduct clinical trials for TX-003HR, our oral estradiol alone drug candidate, and the IND application for this drug candidate is currently inactive.future.

~~TX-001HR~~

TX-001HR is our bio-identical hormone therapy combination of 17ß- estradiol and progesterone in a single, oral softgel drug candidate for the treatment of moderate to severe VMS due to menopause, including hot flashes, night sweats and sleep disturbances in post-menopausal women with an intact uterus. The hormone therapy drug candidate is bioidentical to – or having the same chemical and molecular structure as - the hormones that naturally occur in a woman’s body, namely estradiol and progesterone, and is being studied as a continuous-combined regimen, in which the combination of estrogen and progesterone are taken together in one product daily. If approved by the FDA, we believe this would represent the first time a combination product of estradiol and progesterone bioidentical to the estradiol and progesterone produced by the ovaries would be approved for use in a single combined product.

On September 5, 2013, we began enrollment in the REPLENISH Trial, a multicenter, double-blind, placebo-controlled, phase 3 clinical trial of TX-001HR in postmenopausal women with an intact uterus. The trial was designed to evaluate the efficacy of TX-001HR for the treatment of moderate to severe VMS due to menopause and the endometrial safety of TX-001HR. Patients were assigned to one of five arms, four active and one placebo, and received study medication for 12 months. The primary endpoint for the reduction of endometrial hyperplasia was an incidence of endometrial hyperplasia of less than 1% at 12 months, as determined by endometrial biopsy. The primary endpoint for the treatment of moderate to severe VMS was the mean change of frequency and severity of moderate to severe VMS at weeks four and 12 compared to placebo, as measured by the number and severity of hot flashes. Only subjects experiencing a minimum daily frequency of seven moderate to severe hot flashes at screening were included in the VMS analysis, while all subjects were included in the endometrial hyperplasia analysis. The secondary endpoints included reduction in sleep disturbances and improvement in quality of life measures, night sweats and vaginal dryness, measured at 12 weeks, six months and 12 months. The trial evaluated 1,835 patients between 40 and 65 years old at 111 sites. On December 5, 2016, we announced positive topline data for the REPLENISH Trial.

~~The REPLENISH Trial evaluated four doses of TX-001HR and placebo; the doses studied were:~~

●

~~17ß-estradiol 1 mg/progesterone 100 mg (n = 416)~~

●

~~17ß-estradiol 0.5 mg/progesterone 100 mg (n = 423)~~

●

~~17ß-estradiol 0.5 mg/progesterone 50 mg (n = 421)~~

●

~~17ß-estradiol 0.25 mg/progesterone 50 mg (n = 424)~~

●

~~Placebo (n = 151)~~

~~The REPLENISH Trial results demonstrated:~~

~~● TX-001HR estradiol 1 mg/progesterone 100 mg and TX-001HR estradiol 0.5 mg/progesterone 100 mg both achieved all four of the co-primary efficacy endpoints and the primary safety endpoint.~~

● TX-001HR estradiol 1 mg/progesterone 100 mg and TX-001HR estradiol 0.5 mg/progesterone 100 mg both demonstrated a statistically significant and clinically meaningful reduction from baseline in both the frequency and severity of hot flashes compared to placebo.

● TX-001HR estradiol 0.5 mg/progesterone 50 mg and TX-001HR estradiol 0.25 mg/progesterone 50 mg were not statistically significant at all of the co-primary efficacy endpoints. The estradiol 0.25 mg/progesterone 50 mg dose was included in the clinical trial as a non-effective dose to meet the recommendation of the FDA guidance to identify the lowest effective dose.

~~● The incidence of consensus endometrial hyperplasia or malignancy was 0 percent across all four TX-001HR doses, meeting the recommendations established by the FDA’s draft guidance.~~

As outlined in the FDA guidance, the co-primary efficacy endpoints in the REPLENISH Trial were the change from baseline in the number and severity of hot flashes at weeks four and 12 as compared to placebo. The primary safety endpoint was the incidence of endometrial hyperplasia with up to 12 months of treatment. General safety was also evaluated.

~~The results of the REPLENISH Trial are summarized in the table below (p-values of < 0.05 meet FDA guidance and support evidence of efficacy):~~

Replenish Trial Co-Primary Efficacy Endpoints: Mean Change in Frequency and Severity of Hot Flashes Per Week Versus Placebo at Weeks 4 and 12, VMS-MITT Population

Estradiol/Progesterone 1 mg/100 mg 0.5 mg/100 mg 0.5 mg/50 mg 0.25 mg/50 mg Placebo
(n = 141) (n = 149) (n = 147) (n = 154) (n = 135)

Frequency

Week 4 P-value versus placebo <0.001 0.013 0.141 0.001 —
Week 12 P-value versus placebo <0.001 <0.001 0.002 <0.001 —

Severity

Week 4 P-value versus placebo 0.031 0.005 0.401 0.100 —
Week 12 P-value versus placebo <0.001 <0.001 0.018 0.096 —

Replenish Trial Primary Safety Endpoint: Incidence of Consensus Endometrial Hyperplasia or Malignancy up to 12 months, Endometrial Safety PopulationŦ

Endometrial Hyperplasia 0% (0/280) 0% (0/303) 0% (0/306) 0% (0/274) 0% (0/92)

~~MITT = Modified intent to treat~~

~~ŦPer FDA, consensus hyperplasia refers to the concurrence of two of the three pathologists be accepted as the final diagnosis.~~

We had a pre-NDA meeting for TX-001HR with the FDA on August 28, 2017. We anticipate that we will submit an NDA for TX-001HR to the FDA in the fourth quarter of 2017. Assuming that the NDA is accepted 60 days thereafter and an FDA review period of ten months from the receipt date to the Prescription Drug User Fee Act, or PDUFA, date for a non-new molecular entity, the NDA for TX-001HR could be approved by the FDA as soon as the fourth quarter of 2018.

~~TX-002HR~~

TX-002HR is a natural progesterone formulation for the treatment of secondary amenorrhea without the potentially allergenic component of peanut oil. The hormone therapy drug candidate is bioidentical to – or having the same chemical and molecular structure as - the hormones that naturally occur in a woman’s body. We believe it will be similarly effective to traditional treatments, but may demonstrate efficacy at lower dosages. In January 2014, we began recruitment of patients in the SPRY Trial, a phase 3 clinical trial designed to measure the safety and effectiveness of TX-002HR in the treatment of secondary amenorrhea. During the first two quarters of 2014, the SPRY Trial encountered enrollment challenges because of Institutional Review Board approved clinical trial protocols and FDA inclusion and exclusion criteria. In July 2014, we suspended enrollment and in October 2014 we stopped the SPRY Trial in order to update the phase 3 protocol based on discussions with the FDA. Our IND is currently in inactive status. We are considering updating the phase 3 protocol to, among other things, target only those women with secondary amenorrhea due to polycystic ovarian syndrome and to amend the primary endpoint of the trial. We believe that the updated phase 3 protocol, if proposed by us and approved by the FDA, would allow us to mitigate the enrollment challenges in, and shorten the duration of, the SPRY Trial. However, there can be no assurance that the FDA will approve the updated phase 3 protocol if we propose it. We have currently suspended further development of this drug candidate to prioritize our leading drug candidates.

~~TX-004HR~~

TX-004HR is our applicator free vaginal estradiol softgel drug candidate for the treatment of VVA in post-menopausal women with vaginal linings that do not receive enough estrogen. We believe that our drug candidate will be at least as effective as the traditional treatments for VVA because of an early onset of action with less systemic exposure, inferring a greater probability of dose administration to the target tissue, and it will have an added advantage of being a simple, easier to use dosage form versus traditional VVA treatments. TX-004HR features our SYMBODA^TM technology. This allows for the production of cohesive, stable formulations and provides content uniformity and accuracy of dosing strengths for TX-004HR. We initiated the REJOICE Trial, a randomized, multicenter, double-blind, placebo-controlled phase 3 clinical trial during the third quarter of 2014 to assess the safety and efficacy of three doses – 25 mcg, 10 mcg and 4 mcg (compared to placebo) – of TX-004HR for the treatment of moderate to severe dyspareunia, or painful intercourse, as a symptom of VVA due to menopause.

Going concern

On December ~~7, 2015,~~4, 2022, we ~~announced positive top-line results from the REJOICE Trial. The pre-specified four co-primary efficacy endpoints were the changes from baseline~~entered into agreements with Mayne Pharma pursuant to ~~week 12 versus placebo in the percentage of vaginal superficial cells, percentage of vaginal parabasal cells, vaginal pH~~which we (i) granted Mayne Pharma an exclusive license to commercialize IMVEXXY, BIJUVA, and severity of participants’ self-reported moderate to severe dyspareunia as the most bothersome symptom of VVA. The trial enrolled 764 postmenopausal women (40 to 75 years old) experiencing moderate to severe dyspareunia at approximately 89 sites acrossprescription prenatal vitamin products (in the United States and ~~Canada. Trial participants were randomized~~its possessions and territories), (ii) assigned to ~~receive either TX-004HR at 25 mcg (n=190), 10 mcg (n=191), or 4 mcg (n=191) doses or placebo (n=192) for a~~Mayne Pharma our exclusive license to commercialize ANNOVERA in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma.

The total of 12 weeks, all administered once daily for two weeks and then twice weekly (approximately three to four days apart) for ten weeks. The 25 mcg dose of TX-004HR demonstrated highly statistically significant results at the p < 0.0001 level compared to placebo across all four co-primary endpoints. The 10 mcg dose of TX-004HR demonstrated highly statistically significant results at the p < 0.0001 level compared to placebo across all four co-primary endpoints. The 4 mcg dose of TX-004HR also demonstrated highly statistically significant results at the p < 0.0001 level compared to placeboconsideration we received from Mayne Pharma for the ~~endpoints~~purchase of ~~vaginal superficial cells, vaginal parabasal cells,~~the Transferred Assets and ~~vaginal pH;~~ the ~~change from baseline compared to placebo in~~grant of the ~~severity~~licenses under the Mayne License Agreement consisted of ~~dyspareunia was statistically significant~~(i) a cash payment of $140.0 million at ~~the p = 0.0149 level. The FDA has previously indicated to us that in order to approve the drug based on~~closing, (ii) a ~~single trial, the trial would need to show statistical significance~~cash payment of approximately $12.1 million at the 0.01 level or lower for each endpoint, and that a trial that is merely statistically significant at a higher level may not provide sufficient evidence to support an NDA filing or approval of a drug candidate where the NDA relies on a single clinical trial. Statistical improvement over placebo was also observed for all three doses at the first assessment at week two and sustained through week 12. Vaginal dryness was a pre-specified key secondary endpoint. The 25 mcg and 10 mcg doses of TX-004HR demonstrated highly statistically significant results at the p < 0.0001 level compared to placeboclosing for the ~~endpoint~~acquisition of ~~vaginal dryness. The 4 mcg dose of TX-004HR demonstrated statistically significant results at the p = 0.0014 level compared~~net working capital subject to placebo. The pharmacokinetic data for all three doses demonstrated negligible to very low systemic absorption of 17 beta estradiol, estrone and estrone conjugated, supporting the previous phase 1 trial data. TX-004HR was well tolerated, and there were no clinically significant differences compared to placebo-treated participants with respect to adverse events. There were no drug-related serious adverse events reported.

~~We submitted the NDA for TX-004HR with the FDA on July 7, 2016. The FDA determined that the NDA was sufficiently complete to permit~~certain adjustments, (iii) a substantive review and accepted the NDA for filing with the PDUFA target action date for the completion of the FDA’s review of May 7, 2017. The NDA submission was supported by the complete TX-004HR clinical program, including positive results of the phase 3 REJOICE Trial. The NDA submission included all three doses of TX-004HR (4 mcg, 10 mcg and 25 mcg) that were evaluated in the REJOICE Trial. If approved, the 4 mcg formulation would represent a lower effective dose than the currently available VVA therapies approved by the FDA.

On May 5, 2017, we received a Complete Response Letter, or CRL, from the FDA regarding the NDA for TX-004HR. In the CRL, the only approvability concern raised by the FDA was the lack of long-term safety data for TX-004HR beyond the 12-weeks studied in the phase 3 REJOICE Trial. The CRL did not identify any issues related to the efficacy of TX-004HR and did not identify any approvability issues related to chemistry, manufacturing and controls. We believe that the NDA was approvable as filed and have been engaged in discussions with the FDA to address the concerns raised by the FDA in the CRL.

On June 14, 2017, we participated in a Type A Post-Action Meeting with the Division of Bone, Reproductive, and Urologic Products (DBRUP) of the FDA to discuss the CRL. The meeting enabled us to present new information that we believe could address concerns raised by the FDA in the CRL and positively affect the status of the NDA for TX-004HR. We have received the minutes of the meeting and, per the FDA’s request, on July 5, 2017 formally submitted the new information for consideration related to the NDA for TX-004HR.

On August 3, 2017, we received a formal General Advice Letter from the FDA stating that an initial review of this information has been completed and requesting that we submit the additional endometrial safety information to the NDA for TX-004HR on or before September 18, 2017. On September 14, 2017, we submitted the additional endometrial safety information that was requested by the FDA in the General Advice Letter to the NDA for TX-004HR. The submission includes a comprehensive, systematic review of the medical literature on the use of vaginal estrogen products and the risk of endometrial hyperplasia or cancer, including the safety data from the recently published Women’s Health Initiative Observational Study, or WHI Study, of vaginal estrogen use in postmenopausal women and information on the relevance of the first uterine pass effect for low-dose vaginal estrogen products. The WHI Study demonstrated no significant difference in the risk of invasive breast cancer, stroke, colorectal cancer, endometrial cancer and venous thromboembolism in vaginal estrogen users versus non-users. The WHI Study also shows that, among women with an intact uterus, there was a decreased risk of cardiovascular disease, hip fracture and all-cause mortality in vaginal estrogen users versus non-users. The WHI Study evaluated over 4,000 women who used vaginal estrogens for a median duration of two to three years.

On November 3, 2017, we participated in an in-person meeting with DBRUP. At the meeting, DBRUP agreed to the resubmission of the NDA for the 4 mcg and 10 mcg doses of TX-004HR without the need for an additional pre-approval study. We will commit to conduct a post-approval observational study. We believe that we will be in a position to resubmit the NDA for TX-004HR within the coming weeks, with a potential approval of the NDA within two to six months after resubmission, depending on the classification of the review of the NDA.

As of September 30, 2017, we had 17 issued patents, which included 13 utility patents that relate to our combination progesterone and estradiol formulations, two utility patents that relate to TX-004HR, which establish an important intellectual property foundation for TX-004HR, one utility patent that relates to a pipeline transdermal patch technology, and one utility patent that relates to our OPERA^® ~~information technology platform.~~

~~Research and Development Expenses~~

A significant portion of our operating expenses to date have been incurred in research and development activities. Research and development expenses relate primarily to the discovery and development of our drug candidates. Our business model is dependent upon our company continuing to conduct a significant amount of research and development. Our research and development expenses consist primarily of expenses incurred under agreements with contract research organizations, or CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion of our preclinical studies; employee-related expenses, which include salaries and benefits, and non-cash share-based compensation; the cost of developing our chemistry, manufacturing and controls capabilities, and acquiring clinical trial materials; and costs associated with other research activities and regulatory approvals. Other research and development costs listed below consist of costs incurred with respect to drug candidates that have not received IND application approval from the FDA.

We make payments to the CROs based on agreed upon terms that may include payments in advance of a study starting date. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when thecash payment is made. Advance payments to be expensed in future research and development activities are capitalized, and were $0 at September 30, 2017 and $228,933 at December 31, 2016 which were included in other current assets on the accompanying consolidated balance sheets. CRO activity expenses include preclinical laboratory experiments and clinical trial studies.

~~The following table indicates our research and development expense by project/category for the periods indicated:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017
2016
2017 2016
(000s) (000s)
TX 001-HR $ 3,066 $ 7,751 $ 11,971 $ 25,101
TX 002-HR — — — —
TX 004-HR 1,580 2,611 6,292 7,724
Other research and development 1,791 4,302 4,615 10,777
Total $ 6,437 $ 14,664 $ 22,878 $ 43,602

Research and development expenditures will continue to be incurred as we continue development of our drug candidates and advance the development of our proprietary pipeline of novel drug candidates. We expect to incur ongoing research and development costs as we develop our drug pipeline, continue stability testing and validation on our drug candidates, prepare regulatory submissions and work with regulatory authorities on existing submissions.

The costs of clinical trials may vary significantly over the life of a project owing to factors that include, but are not limited to, the following: per patient trial costs; the number of patients that participate in the trials; the number of sites included in the trials; the length of time each patient is enrolled in the trial; the number of doses that patients receive; the drop-out or discontinuation rates of patients; the amount of time required to recruit patients for the trial; the duration of patient follow-up; and the efficacy and safety profile of the drug candidate. We base our expenses related to clinical trials on estimates that are based on our experience and estimates from CROs and other third parties. Research and development expenditures for the drug candidates will continue after the trial completes for on-going stability and laboratory testing, regulatory submission and response work.

~~Results of Operations~~

~~Three months ended September 30, 2017 compared with three months ended September 30, 2016~~

Three Months Ended
September 30,
2017 2016 Change
(000s)
Revenues, net $ 4,417 $ 5,536 $ (1,119 )
Cost of goods sold 701 1,237 (536 )
Operating expenses 18,548 29,427 (10,879 )
Operating loss (14,832 ) (25,128 ) (10,296 )
Other income, net 167 113 54
Net loss $ (14,665 ) $ (25,015 ) $ (10,350 )

~~Revenues and Cost of Goods Sold~~

Revenues for the three months ended September 30, 2017 decreased approximately $1,119,000, or 20%, to approximately $4,417,000, compared with approximately $5,536,000 for the three months ended September 30, 2016. This decrease was attributable to a decrease in the average net revenue per unit of our products and a slight decrease in the number of units sold. Cost of goods sold decreased approximately $536,000, or 43%, to approximately $701,000 for the three months ended September 30, 2017, compared with approximately $1,237,000 for the three months ended September 30, 2016. Our gross margin was approximately 84% and 78% for the three months ended September 30, 2017 and 2016, respectively. The increase in gross margin percentage was primarily attributable to the centralization of the distribution channel for both our retail pharmacy distributors and wholesale distributors, which, among other things, lowered the cost to package, prepare and deliver our products to customers.

~~Operating Expenses~~

~~Our principal operating costs include the following items as a percentage of total operating expenses.~~

Three Months Ended
September 30,
2017 2016
Research and development costs 34.7 % 49.8 %
Human resource related costs including salaries, benefits and taxes 32.2 % 20.3 %
Sales and marketing costs, excluding human resource costs 17.0 % 14.3 %
Professional fees for legal, accounting and consulting 6.9 % 4.9 %
Other operating expenses 9.2 % 10.7 %

Operating expenses decreased by approximately $10,879,000, or 37%, to approximately $18,548,000 for the three months ended September 30, 2017, from approximately $29,427,000 for the three months ended September 30, 2016 as a result of the following items:

Three Months Ended
September 30,
2017 2016 Change
(000s)
Research and development costs $ 6,437 $ 14,664 $ (8,227 )
Human resources related costs, including salaries, benefits and taxes 5,966 5,965 1
Sales and marketing, excluding human resource costs 3,163 4,201 (1,038 )
Professional fees for legal, accounting and consulting 1,271 1,450 (179 )
Other operating expenses 1,711 3,147 (1,436 )
Total operating expenses $ 18,548 $ 29,427 $ (10,879 )

Research and development costs for the three months ended September 30, 2017 decreased by approximately $8,227,000, or 56%, to approximately $6,437,000, compared with $14,664,000 for the three months ended September 30, 2016. Research and development costs include costs related to clinical trials as well as salaries, wages, non-cash compensation and benefits of personnel involved in research and development activities. Research and development costs decreased as a direct result of the completion of the REPLENISH Trial for TX-001HR, our combination estradiol and progesterone drug candidate. Research and developments costs during the three months ended September 30, 2017 included the following research and development projects.

During the three months ended September 30, 2017 and the period from February 2013 (project inception) through September 30, 2017, we have incurred approximately $3,066,000 and $107,987,000, respectively, in research and development costs with respect to TX-001HR, our combination estradiol and progesterone drug candidate.

During the three months ended September 30, 2017 and the period April 2013 (project inception) through September 30, 2017, we have incurred approximately $0 and $2,525,000, respectively, in research and development costs with respect to TX-002HR, our progesterone only drug candidate.

During the three months ended September 30, 2017 and the period from August 2014 (project inception) through September 30, 2017, we have incurred approximately $1,580,000 and $39,098,000, respectively, in research and development costs with respect to TX-004HR, our applicator-free vaginal estradiol softgel drug candidate.

For a discussion of the nature of efforts and steps necessary to complete these projects, see “Item 1. Business — Pharmaceutical Regulation” in our Annual Report and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Research and Development” above. For a discussion of the risks and uncertainties associated with completing development of our products, see “Item 1A. Risk Factors — Risks Related to Our Business” in our Annual Report. For a discussion of the extent and nature of additional resources that we may need to obtain if our current liquidity is not expected to be sufficient to complete these projects, see “— Liquidity and Capital Resources” below. For a discussion as to whether a future milestone such as completion of a development phase, date of filing an NDA with a regulatory agency or approval from a regulatory agency can be reliably determined, see “Item 1. Business — Our Hormone Therapy Drug Candidates,” and “Item 1. Business — Pharmaceutical Regulation” in our Annual Report. Future milestones, including NDA submission dates and potential approval dates, are not easily determinable as such milestones are dependent on various factors related to our clinical trials, scale-up and manufacturing activities.

Human resource costs, including salaries, benefits and taxes, for the three months ended September 30, 2017 increased by approximately $1,000, or less than 1%, to approximately $5,966,000, compared with approximately $5,965,000 for the three months ended September 30, 2016, primarily as a result of a an increase of approximately $1,042,000 in personnel costs in sales, marketing and regulatory areas to support commercialization of our hormone therapy drug candidates partially offset by a decrease of approximately $1,041,000 in non-cash compensation expense included in this category related to employee stock option amortization.

~~Sales and marketing costs~~$1.0 million at closing for the three months ended September 30, 2017 decreased by approximately $1,038,000, or 25%, to approximately $3,163,000, compared with approximately $4,201,000 for the three months ended September 30, 2016, primarily as a result reduced spending associated with sales and marketing efforts to support commercialization of our hormone therapy drug candidates, partially offset by higher costs related to outsourced sales personnel and their related expenses together with an increase in employee incentives.

Professional fees for the three months ended September 30, 2017 decreased by approximately $179,000, or 12%, to approximately $1,271,000, compared with approximately $1,450,000 for the three months ended September 30, 2016, primarily as a result of decreased consulting expenses partially offset by a slight increase in legal expenses.

Other operating expense for the three months ended September 30, 2017 decreased by approximately $1,436,000, or 46%, to approximately $1,711,000, compared with approximately $3,147,000 for the three months ended September 30, 2016, as a result of decrease in bad debt expense, partially offset by increased rent, information technology and other office expenses.

~~Operating Loss~~

As a result of the foregoing, our operating loss decreased approximately $10,296,000, or 41%, to approximately $14,832,000 for the three months ended September 30, 2017, compared with approximately $25,128,000 for the three months ended September 30, 2016, primarily as a result of decreased research and development costs and reduced spending associated with sales and marketing efforts to support commercialization of our hormone therapy drug candidates, partially offset by higher costs related to outsourced sales personnel and their related expenses, professional fees, and other operating expenses, as well a decrease in revenue.

As a result of the continued development of our hormone therapy drug candidates, we anticipate that we will continue to have operating losses for the near future until our hormone therapy drug candidates are approved by the FDA and brought to market, although there is no assurance that we will attain such approvals or that any marketing of our hormone therapy drug candidates, if approved, will be successful.

~~Other Income~~

Other non-operating income increased by approximately $54,000, or 48%, to approximately $167,000 for the three months ended September 30, 2017 compared with approximately $113,000 for the comparable period in 2016, primarily as a result of increased interest income.

~~Net Loss~~

As a result of the net effects of the foregoing, net loss decreased approximately $10,350,000, or 41%, to approximately $14,665,000 for the three months ended September 30, 2017, compared with approximately $25,015,000 for the three months ended September 30, 2016. Net loss per share of Common Stock, basic and diluted, was ($0.07) for the three months ended September 30, 2017, compared with ($0.13) for the three months ended September 30, 2016.

~~Nine months ended September 30, 2017 compared with nine months ended September 30, 2016~~

Nine Months Ended
September 30,

2017 2016 Change
(000s)
Revenues, net $ 12,653 $ 14,869 $ (2,216 )
Cost of goods sold 2,042 3,476 (1,434 )
Operating expenses 66,559 78,706 (12,147 )
Operating loss (55,948 ) (67,313 ) (11,365 )
Other income, net 450 274 176
Net loss $ (55,498 ) $ (67,039 ) $ (11,541 )

~~Revenues and Cost of Goods Sold~~

Revenues for the nine months ended September 30, 2017 decreased approximately $2,216,000, or 15%, to approximately $12,653,000, compared with approximately $14,869,000 for the nine months ended September 30, 2016. This decrease was attributable to a decrease in the average net revenue per unit of our products, primarily related to higher estimates related to discounts and returns in 2017, partially offset by a slight increase in the number of units sold. Cost of goods sold decreased approximately $1,434,000, or 41%, to approximately $2,042,000 for the nine months ended September 30, 2017, compared with approximately $3,476,000 for the nine months ended September 30, 2016. Our gross margin was approximately 84% and 77% for the nine months ended September 30, 2017 and 2016, respectively. The increase in gross margin percentage was primarily attributable to the centralization of the distribution channel for both our retail pharmacy distributors and wholesale distributors which, among other things, lowered the cost to package, prepare and deliver our products to customers.

~~Operating Expenses~~

~~Our principal operating costs include the following items as a percentage of total operating expenses.~~

Nine Months Ended
September 30,
2017 2016
Research and development costs 34.4 % 55.4 %
Human resource related costs, including salaries, benefits and taxes 26.2 % 22.0 %
Sales and marketing costs, excluding human resource costs 24.9 % 9.9 %
Professional fees for legal, accounting and consulting 6.1 % 4.6 %
Other operating expenses 8.4 % 8.1 %

Operating expenses decreased by approximately $12,147,000, or 15%, to approximately $66,559,000 for the nine months ended September 30, 2017, from approximately $78,706,000 for the nine months ended September 30, 2016 as a result of the following items:

Nine Months Ended
September 30,

2017 2016 Change
(000s)
Research and development costs $ 22,878 $ 43,602 $ (20,724 )
Human resources related costs, including salaries, benefits and taxes 17,415 17,309 106
Sales and marketing costs, excluding human resource costs 16,590 7,796 8,794
Professional fees for legal, accounting and consulting 4,062 3,615 447
Other operating expenses 5,614 6,384 (770 )
Total operating expenses $ 66,559 $ 78,706 $ (12,147 )

Research and development costs for the nine months ended September 30, 2017 decreased by approximately $20,724,000, or 48%, to approximately $22,878,000, compared with $43,602,000 for the nine months ended September 30, 2016. Research and development costs include costs related to clinical trials as well as salaries, wages, non-cash compensation and benefits of personnel involved in research and development activities. Research and development costs decreased as a direct result of the completion of the REPLENISH Trial for TX-001HR, our combination estradiol and progesterone drug candidate. Research and developments costs during the nine months ended September 30, 2017 included the following research and development projects.

During the nine months ended September 30, 2017 and the period from February 2013 (project inception) through September 30, 2017, we have incurred approximately $11,971,000 and $107,987,000, respectively, in research and development costs with respect to TX-001HR, our combination estradiol and progesterone drug candidate.

During the nine months ended September 30, 2017 and the period April 2013 (project inception) through September 30, 2017, we have incurred approximately $0 and $2,525,000, respectively, in research and development costs with respect to TX-002HR, our progesterone only drug candidate.

During the nine months ended September 30, 2017 and the period from August 2014 (project inception) through September 30, 2017, we have incurred approximately $6,292,000 and $39,098,000, respectively, in research and development costs with respect to TX-004HR, our applicator-free vaginal estradiol softgel drug candidate.

Human resource costs, including salaries, benefits and taxes, for the nine months ended September 30, 2017 increased by approximately $106,000, or less than 1%, to approximately $17,415,000, compared with approximately $17,309,000 for the nine months ended September 30, 2016, primarily as a result of an increase of approximately $4,636,000 in personnel costs in sales, marketing and regulatory areas to support commercialization of our hormone therapy drug candidates partially offset by a decrease of approximately $4,530,000 in non-cash compensation expense included in this category related to employee stock option amortization.

Sales and marketing costs for the nine months ended September 30, 2017 increased by approximately $8,794,000, or 113%, to approximately $16,590,000, compared with approximately $7,796,000 for the nine months ended September 30, 2016, primarily as a result of increased expenses in the first half of 2017 associated with sales and marketing efforts to support commercialization of our hormone therapy drug candidates, which were curtailed in the third quarter of 2017 due to the status of the NDA for TX-004HR, higher costs related to outsourced sales personnel and their related expenses which started in the fourth quarter of 2016, together with an increase in employee incentives.

Professional fees for the nine months ended September 30, 2017 increased by approximately $447,000, or 12%, to approximately $4,062,000, compared with approximately $3,615,000 for the nine months ended September 30, 2016, primarily as a result of increased legal and other professional expenses, partially offset by a decrease in consulting expenses.

Other operating expense for the nine months ended September 30, 2017 decreased by approximately $770,000, or 12%, to approximately $5,614,000, compared with approximately $6,384,000 for the nine months ended September 30, 2016, as a result of a decrease in bad debt expense as well as decreased investor relations expenses, partially offset by increased rent, information technology and other office expenses.

~~Operating Loss~~

As a result of the foregoing, our operating loss decreased approximately $11,365,000, or 17%, to approximately $55,948,000 for the nine months ended September 30, 2017, compared with approximately $67,313,000 for the nine months ended September 30, 2016, primarily as a result of decreased research and development costs and other operating expenses, partially offset by increased personnel costs, sales and marketing expenses to support commercialization of our hormone therapy drug candidates, higher costs related to outsourced sales personnel and their related expenses and professional fees as well a decrease in revenue.

~~Other Income~~

Other non-operating income increased by approximately $176,000, or 64%, to approximately $450,000 for the nine months ended September 30, 2017, compared with approximately $274,000 for the comparable period in 2016, primarily as a result of increased interest income.

~~Net Loss~~

As a result of the net effects of the foregoing, net loss decreased approximately $11,541,000, or 17%, to approximately $55,498,000 for the nine months ended September 30, 2017, compared with approximately $67,039,000 for the nine months ended September 30, 2016. Net loss per share of Common Stock, basic and diluted, was ($0.27) for the nine months ended September 30, 2017, compared with ($0.34) for the nine months ended September 30, 2016.

~~Liquidity and Capital Resources~~

~~We have funded our operations primarily through public offerings of our Common Stock and private placements of equity and debt securities. Since 2014~~, we received approximately $337,582,000 in net proceeds from the issuance of shares of Common Stock. As of September 30, 2017, we had cash and cash equivalents totaling approximately $148,293,000, however, changing circumstances may cause us to consume funds significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control.

~~On September 25, 2017, we entered into an underwriting agreement with J.P. Morgan Securities LLC relating to an underwritten public offering of 12,400,000 shares of our Common Stockat a price of $5.55 per share~~. The net proceeds to us from the offering were approximately $68,573,000, after deducting estimated offering expenses payable by us. The offering closed on September 28, 2017 and we issued 12,400,000 shares of our Common Stock. We intend to use a majority of the net proceeds from this offering to fund pre-commercialization and commercialization activities for our TX-004HR and TX-001HR drug candidates. We currently intend to fund the remainder of our pre-commercialization and commercialization expenses for our TX-004HR and TX-001HR drug candidates through debt financing and are currently engaged in discussions to secure debt financing commitments during the fourth quarter of 2017. If we are successful in obtaining these commitments, we currently anticipate we would begin to draw on them following approval of either TX-004HR or TX-001HR.

During the nine months ended September 30, 2017, certain individuals exercised warrants to purchase 2,476,666 shares of Common Stock for $3,798,999 in cash. During the nine months ended September 30, 2017, certain individuals exercised stock options to purchase 102,546 shares of Common Stock for $212,615 in cash.

As a result of developments in the pharmaceutical industry that negatively affected independent pharmacies, including such pharmacies’ reliance on third party payors, in 2016, we identified that payment periods for our retail pharmacy distributors were becoming longer than in prior years. As a result, during the third quarter of 2016, we centralized the distribution channel for both our retail pharmacy distributors and wholesale distributors, in order to facilitate sales to a broader population of retail pharmacies and minimize business risk exposure to any one retail pharmacy. During the third quarter of 2016, we entered into new distribution agreements with our retail pharmacy distributors to effectuate this centralization which were effective September 1, 2016.

For the three months ended September 30, 2017, our days sales outstanding, or DSO, was 91 days compared to 92 days for the year ended December 31, 2016. We anticipate that our DSO will fluctuate in the future based upon a variety of factors, including longer payment terms associated with the centralization of the distribution channel for both our retail pharmacy distributors and wholesale distributors in September 2016, as compared to the terms previously provided to our retail pharmacy distributors, changes in the healthcare industry and specific terms that may be extendedprepaid royalties in connection with the ~~launch~~Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.

On the Closing Date, we repaid all obligations under the Financing Agreement, dated as of April 24, 2019, as amended, with Sixth Street Specialty Lending, Inc., as administrative agent, the various lenders from time-to-time party thereto, and certain of our ~~hormone therapy drug candidates, if approved.~~subsidiaries party thereto from time to time as guarantors (the “Financing Agreement”) and the Financing Agreement was terminated.

Following the transaction with Mayne Pharma, we changed our business to become a royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. We ~~believe that our existing cash will allow us~~may need to raise additional capital to provide additional liquidity to fund our ~~operating plan through at least~~operations until we become cash flow positive. To address our capital needs, we are pursuing various equity and debt financing and other alternatives. The equity financing alternatives may include the ~~next 12 months from~~private placement of equity, equity-linked, or other similar instruments or obligations with one or more investors, lenders, or other institutional counterparties or an underwritten public equity or equity-linked securities offering.

Our ability to sell equity securities may be limited by market conditions, including the ~~date of this quarterly report. However, if the commercialization~~market price of our ~~hormone therapy drug candidates is delayed, our existing cash may be insufficient to satisfy our liquidity requirements until we are able to commercialize our hormone therapy drug candidates. If~~common stock and our available cash is insufficient to satisfy our liquidity requirements, we may curtail our sales, marketing and other pre-commercialization efforts and we may seek to sell additional equity or debt securities or obtain a credit facility. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. authorized shares.

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

On May 1, 2023, we entered into a Subscription Agreement (the “Subscription Agreement”) with Rubric Capital Management LP (“Rubric”), pursuant to which we agreed to sell to Rubric, or one or more of its affiliates, up to an aggregate of 5,000,000 shares of our common stock, par value $0.001 per share (our “Common Stock”), from time to time during the term of the Subscription Agreement in separate draw-downs at the election of the Company. On June 29, 2023, we issued and sold 312,525 shares of Common Stock at a price per share equal to $3.6797 pursuant to the Subscription Agreement. We received gross proceeds of $1.15 million from the draw down, before expenses. The Common Stock issued pursuant to the Subscription Agreement was sold and issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 5-06 of Regulation D promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

If Mayne Pharma’s sales of IMVEXXY, BIJUVA, or ANNOVERA are delayed, if the net working capital settlement with Mayne Pharma under the Transaction Agreement is greater than our current estimates if we are unsuccessful with future financings or if the continued impact of the COVID-19 pandemic on us or the third parties we rely on is worse than we anticipate, our existing cash reserves may be insufficient to satisfy our liquidity requirements. The potential impact of these factors in conjunction with the uncertainty of the capital markets raises substantial doubt about our ability to continue as a going concern for the next twelve months from the issuance of these financial statements.

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

In ~~May 2017,~~ the ~~Financial Accounting Standards Board,~~normal course of business, we may be confronted with issues or ~~FASB, issued an Accounting Standards Update, or ASU,~~events that ~~clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and~~may result in ~~fewer changes~~contingent liability. These generally relate to lawsuits, claims, environmental actions, or the ~~terms~~actions of various regulatory agencies. We consult with counsel and other appropriate experts to assess the claim. If, in our opinion, we have incurred a probable loss as set forth by U.S. GAAP, an award being accounted for as modifications. The new guidance will allow companies to make certain changes to awards without accounting for them as modifications. This guidance does not change the accounting for modifications. The guidance will be applied prospectively to awards modified on or after the adoption date andestimate is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including in an interim period. We do not expect that adoption of this guidance will have a material effect on our consolidated financial statements.

Critical accounting policies and estimates

Management’s discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements included elsewhere in this 10-Q Report, which has been prepared in accordance with U.S. GAAP. We make estimates and assumptions that affect the reported amounts on ~~a modified retrospective basis, resulting in an adjustment of approximately $31,000 to retained earnings. The impact from adoption~~our condensed consolidated financial statements and accompanying notes as of the ~~provisions related to excess tax benefits or deficiencies in~~date of the provision for income taxes rather than paid-in capital was adopted on a modified retrospective basis. Since we have a full valuation allowance on our net deferred tax assets, an amount equal to the cumulative adjustment made to retained earnings to recognize the previously unrecognized net operating losses from prior periods was made to the valuation allowance through retained earnings for the first quartercondensed consolidated financial statements. ~~Adoption of all other changes did not have an impact on~~The critical accounting policies and estimates used are disclosed in Item 7 - Critical accounting policies and estimates in our ~~consolidated financial statements.~~2022 10-K Report.

In February 2016, the FASB issued ASU 2016-02, Leases. This guidance requires lessees to record most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The standard is effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. We are in the process of analyzing the quantitative impact of this guidance on our results of operations and financial position. While we are continuing to assess all potential impacts of the standard, we currently believe the impact of this standard will be primarily related to the accounting for our operating lease.

Item 3. Quantitative and ~~Qualitative Disclosures~~qualitative disclosures about ~~Market Risk~~

~~Our~~ market risk ~~has~~

As a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of Regulation S-K, we are not ~~changed materially from the interest rate risk disclosed in Item 7A of our Annual Report.~~required to provide this information.

Item 4. Controls and ~~Procedures~~procedures

Management’s evaluation of disclosure controls and procedures

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934, as amended ~~or the Exchange Act,~~(the “Exchange Act”), is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, in order to allow timely decisions ~~in connection with~~regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

Our ~~management, with the participation of our~~ Chief Executive ~~Officer and Chief Financial~~ Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this ~~Quarterly Report on Form 10-Q.~~10-Q Report. Based on that evaluation, our Chief Executive ~~Officer and Chief Financial~~ Officer concluded that our disclosure controls and procedures as of the end of the period covered by this ~~Quarterly~~10-Q Report ~~on Form 10-Q~~ were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and ~~Chief~~Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our ~~management, including our~~ Chief Executive ~~Officer and Chief Financial~~ Officer does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our company have been or will be prevented or detected. Further, internal controls may become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures.

Changes in ~~Internal Controls~~internal controls over financial reporting

~~During the three months ended~~In connection with our transformation into a pharmaceutical royalty company, we terminated our executive management team and all other employees. As of September 30, ~~2017, there were no~~2023, we employed one full-time employee primarily engaged in an executive position. We have engaged external consultants who support our relationship with current partners and assist with certain financial, legal and regulatory matters and the continued wind-down of our historical commercial business operations. As a result of these changes, inwe have updated our risk assessment and design of internal ~~control~~controls over financial reporting that ~~have materially affected, or are reasonably likely~~align with reduced transaction volume and reliance on external consultants to ~~materially affect, our~~manage the day-to-day operations of the Company. The Company is and will continue to evaluate changes to processes, information technology systems and other components of internal ~~control~~controls over financial ~~reporting.~~reporting as part of its ongoing business transformation activities, and as a result, controls may be periodically changed. The Company believes, however, that it will be able to maintain sufficient controls over its financial reporting throughout this transformation process.

~~PART~~Part II - ~~OTHER INFORMATION~~Other Information

Item 1. Legal ~~Proceedings~~proceedings

~~On April 17, 2017, a securities class action lawsuit was filed against our company~~From time to time, we are involved in litigation and ~~certain~~proceedings in the ordinary course of our ~~officers~~business. Other than the legal proceedings disclosed in Note 7, Commitments and ~~directors~~contingencies in ~~the U.S. District Court for the Southern District of Florida (Case No. 9:17-cv-80473-RLR)~~Part I, Item 1, Financial Statements, appearing elsewhere in this 10-Q Report, we are not involved in any legal proceeding that ~~purported to state~~we believe would have a ~~claim for alleged violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, based~~material effect on statements made by the defendants concerning the NDA for TX-004HR. The complaint sought unspecified damages, interest, attorneys’ fees and other costs. On July 18, 2017, the complaint was voluntarily dismissed by the lead plaintiff without prejudice. We and certain of our officers and directors are also subject to two shareholder derivative lawsuits regarding the NDA for TX-004HR, one filed in the U.S. District Court for the Southern District of Florida on May 30, 2017 (Case No. 9:17-cv-80686-RLR) and one filed in Florida state court in Palm Beach County on June 5, 2017 (Case No. 502017CA006289XXXXMB). These complaints were both voluntarily dismissed by the lead plaintiffs without prejudice on August 14, 2017.business or financial condition.

Item 1A. Risk ~~Factors~~factors

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of the 2022 10-K Report under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price. There have been no material changes to ~~the~~our risk factors ~~previously disclosed~~since the 2022 10-K Report.

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

None.

Item 3. Defaults upon senior securities

None.

Item 4. Mine safety disclosures

None.

Item 5. Other information

On November 10, 2023, we delivered a drawdown notice (the “Notice”) to Rubric under the terms of the Subscription Agreement. Pursuant to the Notice, we agreed to sell 877,192 shares of Common Stock to Rubric at a price per share of $2.28, for total gross proceeds of approximately $2.0 million. The settlement of the transaction is expected to occur on the third trading day following the delivery of the Notice in ~~our Annual Report.~~accordance with the terms of the Subscription Agreement.

The Common Stock issued pursuant to the Subscription Agreement will be sold and issued without registration under the Securities Act, in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506 of Regulation D promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

Item 6. Exhibits


Exhibit No.	~~Date~~Description

10.1†	~~Description~~Master Service Agreement, dated August 15, 2023, between TherapeuticsMD, Inc. and JZ Advisory Group.
~~10.1~~
31.1†	~~September 25, 2017~~	~~Underwriting Agreement by and between the Company and J.P. Morgan Securities LLC~~⁽¹⁾
31.1*	~~November 7, 2017~~	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
31.2*
31.2†	~~November 7, 2017~~	Certification of ~~Chief~~Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
32.1*
32.1††	~~November 7, 2017~~	Section 1350 Certification of Chief Executive Officer
32.2*
32.2††	~~November 7, 2017~~	Section 1350 Certification of ~~Chief~~Principal Financial Officer
101.INS*
101†	~~n/a~~Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q

104†	Inline XBRL ~~Instance~~for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document
101.SCH*	~~n/a~~	~~XBRL Taxonomy Extension Schema Document~~
101.CAL*	~~n/a~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF*	~~n/a~~	~~XBRL Taxonomy Extension Definition Linkbase Instance Document~~
101.LAB*	~~n/a~~	~~XBRL Taxonomy Extension Label Linkbase Instance Document~~
101.PRE*	~~n/a~~	~~XBRL Taxonomy Extension Presentation Linkbase Instance Document~~ Set

†	1) Filed herewith.

††	~~Filed as Exhibit 1.1 to Form 8-K filed with the SEC on September 25, 2017 and incorporated herein by reference~~ Furnished herewith.

* Filed herewith.

~~SIGNATURES~~

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the ~~Company~~registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~DATE: November 7, 2017~~

	~~THERAPEUTICSMD, INC.~~
Date: November 14, 2023
	~~By:~~	~~/s/ Robert G. Finizio~~
		~~Robert G. Finizio~~
		TherapeuticsMD, Inc.

				/s/ Marlan D. Walker
				Marlan D. Walker
				Chief Executive Officer (Principal Executive Officer)

		~~(Principal Executive Officer)~~

	~~By:~~	/~~s/ Daniel A. Cartwright~~
		~~Daniel A. Cartwright~~ /s/ Joseph Ziegler
		~~Chief Financial Officer~~
		~~(Principal~~	Joseph Ziegler
				Principal Financial and Accounting ~~Officer)~~Officer

3833


	September 30, 2023			December 31, 2022
	(Unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	10,166		$	38,067
Restricted cash		—			11,250
Royalty receivable, current portion		2,705			—
Prepaid and other current assets		4,570			6,034

Total current assets		17,441			55,351
Fixed assets, net		19			78
License rights and other intangible assets, net		6,657			6,943
Right of use assets		7,055			7,580
Royalty receivable, long term		19,067			20,253
Other non-current assets		254			253

Total assets	$	50,493		$	90,458

Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable	$	696		$	2,162
Accrued expenses and other current liabilities		6,928			18,846
Current liabilities of discontinued operations		6,888			25,831

Total current liabilities		14,512			46,839
Operating lease liabilities		6,740			7,369
Other non-current liabilities		1,189			1,107

Total liabilities		22,441			55,315

Commitments and contingencies (Note 7)
Stockholders’ equity (deficit):
Common stock, par value $0.001; 32,000 and 12,000 shares authorized, 10,575 and 9,498 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		11			9
Additional paid-in capital		976,799			974,497
Accumulated deficit		(948,758	)		(939,363	)

Total stockholders’ equity		28,052			35,143

Total liabilities and stockholders’ equity	$	50,493		$	90,458

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016

Revenues, net	$	4,417,598		$	5,535,685		$	12,653,495		$	14,869,023

Cost of goods sold		700,814			1,237,446			2,042,174			3,475,997
Gross profit		3,716,784			4,298,239			10,611,321			11,393,026

Operating expenses:
Sales, general, and administration		12,057,868			14,721,710			43,524,412			35,019,268
Research and development		6,436,802			14,664,123			22,878,037			43,602,333
Depreciation and amortization		54,055			40,460			156,943			84,319
Total operating expense		18,548,725			29,426,293			66,559,392			78,705,920

Operating loss		(14,831,941	)		(25,128,054	)		(55,948,071	)		(67,312,894	)

Other income:
Miscellaneous income		167,300			109,942			442,322			265,879
Accreted interest		—			2,451			7,699			7,850
Total other income		167,300			112,393			450,021			273,729

Loss before taxes		(14,664,641	)		(25,015,661	)		(55,498,050	)		(67,039,165	)

Provision for income taxes		—			—			—			—

Net loss	$	(14,664,641	)	$	(25,015,661	)	$	(55,498,050	)	$	(67,039,165	)

Net loss per share, basic and diluted	$	(0.07	)	$	(0.13	)	$	(0.27	)	$	(0.34	)

Weighted average number of common shares outstanding		207,938,338			196,502,327			203,282,335			195,912,173

	Nine Months Ended
	September 30, 2017			September 30, 2016

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(55,498,050	)	$	(67,039,165	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation of fixed assets		104,622			45,759
Amortization of intangible assets		52,321			38,560
Provision for doubtful accounts		1,555			2,261,568
Share-based compensation		5,037,783			13,385,215
Changes in operating assets and liabilities:
Accounts receivable		106,509			(4,245,151	)
Inventory		(217,196	)		(153,245	)
Other current assets		(831,623	)		379,930
Accounts payable		(3,159,145	)		1,098,245
Other current liabilities		(946,853	)		703,895
Net cash used in operating activities		(55,350,077	)		(53,524,389	)

CASH FLOWS FROM INVESTING ACTIVITIES
Patent costs		(439,770	)		(541,686	)
Purchase of fixed assets		(35,849	)		(307,714	)
Payment of security deposit		—			(14,036	)
Net cash used in investing activities		(475,619	)		(863,436	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net of costs		68,572,635			134,863,475
Proceeds from exercise of warrants		3,798,999			1,373,000
Proceeds from exercise of options		212,615			979,060
Net cash provided by financing activities		72,584,249			137,215,535

Increase in cash		16,758,553			82,827,710
Cash, beginning of period		131,534,101			64,706,355
Cash, end of period	$	148,292,654		$	147,534,065


	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net income (loss)	$	(9,395	)	$	34,295
Less: income (loss) from discontinued operations, net of tax		(3,237	)		81,674

Net loss from continuing operations		(6,158	)		(47,379	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		285			884
Write-off of patents and trademarks		59			—
Share-based compensation		1,155			8,587
Other		525			(25	)
Changes in operating assets and liabilities:
Other assets		1,185			—
Prepaid and other current assets		(1,241	)		394
Accounts payable		(1,466	)		(1,290	)
Accrued expenses and other current liabilities		(11,918	)		18,337
Lease liabilities		(629	)		—
Other non-current liabilities		82			(385	)

Total adjustments		(11,963	)		26,502

Net cash used in continuing operating activities		(18,121	)		(20,877	)

Cash flows from investing activities:
Payment of patent related costs		—			(260	)
Purchase of fixed assets		—			(21	)

Net cash used in continuing investing activities		—			(281	)

Cash flows from financing activities:
Proceeds from sale of common stock, net of costs		1,149			2,454
Proceeds from exercise of options and warrants		—			14
Repayments of debt		—			(125,000	)
Payment of debt financing fees		—			(729	)

Net cash provided by (used in) continuing financing activities		1,149			(123,261	)

Discontinued operations:
Net cash provided by (used in) operating activities		(22,179	)		117,573
Net cash provided by investing activities		—			54
Net cash provided by financing activities		—			—

Net cash provided by (used in) discontinued operations		(22,179	)		117,627

Net decrease in cash		(39,151	)		(26,792	)
Cash, cash equivalents and restricted cash - continuing operations, beginning of period		49,317			65,122
Cash, cash equivalents and restricted cash - discontinued operations, beginning of period		—			—

Total cash and restricted cash, end of period	$	10,166		$	38,330

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

Supplemental disclosure of noncash financing activities:
Paid in kind (“PIK”) interest with corresponding increase in debt	$	—		$	2,452
PIK debt financing fees with corresponding increase in debt	$	—		$	16,980
Issue of warrants to lenders related to debt financing fees	$	—		$	1,983


	Three months ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Product revenue, net	$	(833	)	$	20,562		$	(833	)	$	67,413
Cost of goods sold		—			3,434			—			11,991

Gross profit		(833	)		17,128			(833	)		55,422

Operating expenses:
Selling and marketing		—			19,129			—			61,703
General and administrative		(39	)		3,107			296			8,157
Research and development		—			1,112			—			4,092
Depreciation & amortization		—			8			—			36

Total operating expenses		(39	)		23,356			296			73,988

Operating loss from discontinued operations		(794	)		(6,228	)		(1,129	)		(18,566	)
Other income (expense), net		(1,150	)		(8,106	)		(2,108	)		100,240

Total other income (expense), net		(1,150	)		(8,106	)		(2,108	)		100,240

Net income (loss) from discontinued operations	$	(1,944	)	$	(14,334	)	$	(3,237	)	$	81,674

	September 30, 2017			December 31, 2016
	(Unaudited)

ASSETS
Current Assets:
Cash	$	148,292,654		$	131,534,101
Accounts receivable, net of allowance for doubtful accounts of $377,929 and $376,374, respectively		4,392,635			4,500,699
Inventory		1,293,517			1,076,321
Other current assets		3,001,777			2,299,052
Total current assets		156,980,583			139,410,173

Fixed assets, net		448,066			516,839

Other Assets:
Intangible assets, net		2,793,421			2,405,972
Security deposit		139,036			139,036
Total other assets		2,932,457			2,545,008
Total assets	$	160,361,106		$	142,472,020

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	4,199,369		$	7,358,514
Other current liabilities		6,677,232			7,624,085
Total current liabilities		10,876,601			14,982,599

Commitments and Contingencies - See Note 14

Stockholders’ Equity:
Preferred stock - par value $0.001; 10,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock - par value $0.001; 350,000,000 shares authorized; 216,429,642 and 196,688,222 issued and outstanding, respectively		216,430			196,688
Additional paid in capital		514,499,865			436,995,052
Accumulated deficit		(365,231,790	)		(309,702,319	)
Total stockholders’ equity		149,484,505			127,489,421
Total liabilities and stockholders’ equity	$	160,361,106		$	142,472,020


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

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

Balance, June 30, 2023		10,575	$	11	$	976,566	$	(945,380	)	$	31,197
Share-based compensation		—		—		233		—			233
Net loss		—		—		—		(3,378	)		(3,378	)

Balance, September 30, 2023		10,575	$	11	$	976,799	$	(948,758	)	$	28,052

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

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

Balance, June 30, 2022		8,860	$	9	$	962,025	$	(988,100	)	$	(26,066	)
Sale of common stock, net of costs		565		—		2,454		—			2,454
Shares issued for vested restricted stock units		42		—		—		—			—
Share-based compensation		—		—		4,306		—			4,306
Net loss		—		—		—		(28,965	)		(28,965	)

Balance, September 30, 2022		9,467	$	9	$	968,785	$	(1,017,065	)	$	(48,271	)


	September 30, 2023		December 31, 2022
Liabilities:
Current liabilities:
Accounts payable	$	113	$	12,243
Accrued expenses and other current liabilities		6,775		13,588

Total current liabilities	$	6,888	$	25,831


	September 30, 2023		December 31, 2022
Insurance	$	632	$	1,167
Rent receivable		429		—
Capitalized legal		2,334		2,334
Other		1,175		2,533

Prepaid and other current assets	$	4,570	$	6,034


	September 30, 2023			December 31, 2022
Furniture and fixtures	$	931		$	931
Computer and office equipment		1,167			1,168
Computer software		375			375
Leasehold improvements		49			49

Fixed assets		2,522			2,523
Less: accumulated depreciation and amortization		(2,503	)		(2,445	)

Fixed assets, net	$	19		$	78


	September 30, 2023						December 31, 2022
	Gross Carrrying Amount		Accumulated Amortization		Net		Gross Carrrying Amount		Accumulated Amortization		Net
Intangible assets subject to amortization:
Hormone therapy drug patents	$	6,224	$	1,824	$	4,400	$	6,225	$	1,598	$	4,627
Hormone therapy drug patents applied and pending approval		1,936		—		1,936		1,995		—		1,995

Intangible assets subject to amortization		8,160		1,824		6,336		8,220		1,598		6,622
Intangible assets not subject to amortization:
Trademarks/trade name rights		321		—		321		321		—		321

License rights and other intangible assets, net	$	8,481	$	1,824	$	6,657	$	8,541	$	1,598	$	6,943


Year ending December 31,
2023	$	110
2024		439
2025		438
2026		438
2027		438
Thereafter		2,537

Total	$	4,400

	September 30, 2017		December 31, 2016
Finished product	$	1,293,517	$	1,062,285
Raw material		—		14,036
TOTAL INVENTORY	$	1,293,517	$	1,076,321

	September 30, 2017		December 31, 2016
Prepaid manufacturing costs	$	999,508	$	991,809
Prepaid sales and marketing costs		535,936		—
Prepaid insurance		953,792		628,039
Prepaid research and development costs		—		100,035
Prepaid consulting		—		128,898
Prepaid vendor deposits		5,000		44,311
Other prepaid costs		507,541		405,960
TOTAL OTHER CURRENT ASSETS	$	3,001,777	$	2,299,052

	September 30, 2017			December 31, 2016
Accounting system	$	301,096		$	301,096
Equipment		247,568			215,182
Computer hardware		80,211			80,211
Furniture and fixtures		116,542			113,079
Leasehold improvements		37,888			37,888
		783,305			747,456
Accumulated depreciation		(335,239	)		(230,617	)
TOTAL FIXED ASSETS	$	448,066		$	516,839

	September 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Weighted- Average Remaining Amortization Period (yrs.)
Amortizing intangible assets:
OPERA^®software patent	$	31,951	$	(7,988	)	$	23,963		12
Development costs of corporate website		91,743		(91,743	)		—		n/a
Approved hormone therapy drug candidate patents		1,247,181		(153,216	)		1,093,965		15.25
Hormone therapy drug candidate patents (pending)		1,474,061		—			1,474,061		n/a
Non-amortizing intangible assets:
Multiple trademarks		201,432		—			201,432		indefinite
Total	$	3,046,368	$	(252,947	)	$	2,793,421

Year Ending December 31,		Estimated Amortization
	2017(3 months)	$	18,433
	2018	$	73,732
	2019	$	73,732
	2020	$	73,732
	2021	$	73,732
	Thereafter	$	804,567

	September 30, 2017		December 31, 2016
Accrued clinical trial costs	$	556,048	$	1,281,080
Accrued payroll, bonuses and commission costs		2,662,359		3,531,440
Accrued compensated absences		952,587		665,561
Accrued legal and accounting expense		366,828		176,518
Accrued sales and marketing costs		69,041		665,773
Other accrued expenses		319,015		224,865
Allowance for wholesale distributor fees		145,563		76,510
Accrued royalties		93,870		26,507
Allowance for coupons and returns		1,218,249		794,816
Accrued rent		293,672		181,015
TOTAL OTHER CURRENT LIABILITIES	$	6,677,232	$	7,624,085

	Nine Months Ended September 30,
	2017		2016
Stock options		23,383,100		20,705,923
Warrants		3,115,905		12,060,571
		26,499,005		32,766,494

	Nine Months Ended
	September 30, 2017	September 30, 2016
Risk-free interest rate	1.84-2.01%	1.13-1.70%
Volatility	61.56-63.95%	70.26-71.22%
Term (in years)	5.5-6.25	6.00-6.25
Dividend yield	0.00%	0.00%

	Number of Shares Underlying Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Balance at December 31, 2016		21,767,854		$	3.56		5.8	$	60,495,730
Granted		2,184,500		$	6.61
Exercised		(102,546	)	$	2.07			$	452,287
Expired/Forfeited		(466,708	)	$	6.52
Balance at September 30, 2017		23,383,100		$	3.79		5.4	$	52,467,444
Vested and Exercisable at September 30, 2017		18,883,183		$	3.15		4.6	$	52,059,288
Unvested at September 30, 2017		4,499,917		$	6.46		8.6	$	408,156

Years Ending December 31,
2017 (3 months)	$	224,632
2018		951,194
2019		1,094,116
2020		1,113,069
2021		943,127
Total minimum lease payments	$	4,326,138

Replenish Trial Co-Primary Efficacy Endpoints: Mean Change in Frequency and Severity of Hot Flashes Per Week Versus Placebo at Weeks 4 and 12, VMS-MITT Population


Estradiol/Progesterone	1 mg/100 mg	0.5 mg/100 mg	0.5 mg/50 mg	0.25 mg/50 mg	Placebo
	(n = 141)	(n = 149)	(n = 147)	(n = 154)	(n = 135)


		Frequency

Week 4 P-value versus placebo	<0.001	0.013	0.141	0.001	—
Week 12 P-value versus placebo	<0.001	<0.001	0.002	<0.001	—

		Severity

Week 4 P-value versus placebo	0.031	0.005	0.401	0.100	—
Week 12 P-value versus placebo	<0.001	<0.001	0.018	0.096	—

Replenish Trial Primary Safety Endpoint: Incidence of Consensus Endometrial Hyperplasia or Malignancy up to 12 months, Endometrial Safety PopulationŦ

Endometrial Hyperplasia	0% (0/280)	0% (0/303)	0% (0/306)	0% (0/274)	0% (0/92)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(000s)				(000s)
TX 001-HR	$	3,066	$	7,751	$	11,971	$	25,101
TX 002-HR		—		—		—		—
TX 004-HR		1,580		2,611		6,292		7,724
Other research and development		1,791		4,302		4,615		10,777
Total	$	6,437	$	14,664	$	22,878	$	43,602

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