| Business, basis of presentation, new accounting standards and summary of significant accounting policies | 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® , IMVEXXY®, and BIJUVA®, which are protected
under applicable intellectual property laws and are the property of, or licensed by or to, us. Solely for convenience, trademarks, trade
names and service marks referred to in this 10-Q Report may appear without the ®, TM or SM symbols, but such references are not intended
to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable
licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade
names or service marks to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship
of us by, these other parties. TherapeuticsMD was previously a women’s healthcare company with
a mission of creating and commercializing innovative products to support the lifespan of women from pregnancy prevention through menopause.
In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed
to pharmaceutical organizations that possess commercial capabilities in the relevant territories. On December 30, 2022 (the “Closing
Date”), we completed a transaction (the “Mayne Transaction”) with Mayne Pharma LLC, a Delaware limited liability company
(“Mayne Pharma”) and subsidiary of Mayne Pharma Group Limited, an Australian public company, in which we and our subsidiaries
(i) granted Mayne Pharma an exclusive license to commercialize our IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under
the BocaGreenMD and vitaMedMD brands (collectively, the “Licensed Products”) in the United States and its possessions and
territories, (ii) assigned to Mayne Pharma our exclusive license to commercialize ANNOVERA® (together with the Licensed Products,
collectively, the “Products”) in the United States and its possessions and territories, and (iii) sold certain other assets
to Mayne Pharma in connection therewith. In a License Agreement, dated December 4, 2022, between TherapeuticsMD
and Mayne Pharma (the “Mayne License Agreement”), we granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable,
perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the
Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable
license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization
in the United States and its possessions and territories. Under the Mayne License Agreement, Mayne Pharma will pay us milestone
payments of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0
million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and
(iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million. Further,
Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80.0 million
in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following
the Closing Date. The royalty rate will decrease to 2.0% on a Product-by-Product basis upon the earlier to occur of (i) the expiration
or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States. Mayne Pharma
will pay us minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to
certain further adjustments, including as described below. Upon the expiry of the 20-year royalty term, the licenses granted to Mayne
Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for the Licensed Products. Under the Transaction Agreement, dated December 4, 2022, between TherapeuticsMD
and Mayne Pharma (the “Transaction Agreement”), we sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize
the Products in the United States, including, with the Population Council’s consent, our exclusive license from the Population
Council to commercialize ANNOVERA (the “Transferred Assets”). The total consideration from Mayne Pharma to TherapeuticsMD for the
purchase of the Transferred Assets and the grant of the licenses under the Mayne Transaction Agreement was (i) a cash payment of $140.0
million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined
in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at
closing for prepaid royalties in connection with the Mayne License Agreement Amendment (as defined below) and (iv) the right to receive
the contingent consideration set forth in the Mayne License Agreement, as amended. The acquisition of net working capital was determined
in accordance with the Transaction Agreement and included significant estimates which could change materially for a period of up to two
years following the Closing Date. 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 reduced
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 was paid to us. We and Mayne Pharma settled the $1.5 million of consideration due to Mayne Pharma for the assumed
obligations under a 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 of $0.6 million 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.
Knight obtained regulatory approval for IMVEXXY and BIJUVA and began commercialization efforts in 2024.
● 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 pharmaceutical royalty
company, the termination of our executive management team (except for Mr. Marlan Walker, our former General Counsel and current Chief
Executive Officer) and all other employees was completed by December 31, 2022. Severance obligations for all employees other than executive
officers were paid in full in January 2023 and severance obligations for terminated executive officers have been paid in accordance with
their employment agreements and separation agreements as previously disclosed. As of December 31, 2023 and June 30, 2024, 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. Going concern 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. On November 15, 2023, Rubric drew down an additional 877,192 shares of Common Stock
at a price per share equal to $2.2761. We received gross proceeds of $2.0 million from the drawdown, before expenses. In February 2024, the Company received Mayne
Pharma’s calculation of allowance for payer rebates and wholesale distributor fees pursuant to the Transaction Agreement which
differed significantly from the Company’s estimate of the allowances. The Company and Mayne Pharma intend to resolve this matter
through the dispute resolution process outlined in the Transaction Agreement. The Company continues to believe its estimated allowances
for payer rebates and wholesale distributor fees are reasonable. The outcome of this matter is uncertain at this point. As a result,
the Company cannot reasonably estimate a range of loss, and accordingly, the Company has not accrued any additional liability associated
with Mayne Pharma’s allowance calculation for payer rebates and wholesale distributor fees. As of June 30, 2024, the Company believes
no additional accrual is required for amounts that may be owed for the allowance for returns under the Transaction Agreement. The Company
has not recorded any contingent gains or receivables for any such allowances. Management continues to monitor the unresolved and pending
net working capital items as changes to estimated amounts owed or amounts due from Mayne Pharma may be material. If Mayne Pharma’s sales of Licensed
Products 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 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 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 2023 Annual Report
on Form 10-K (the “2023 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 sheets. Additional disclosures regarding discontinued
operations are provided in Note 2 of the condensed consolidated financial statements. Revenues, expenses, assets, liabilities, and equities can vary during
each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those
for the full year. In our opinion, all adjustments necessary for a fair 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 consolidated financial statements and accompanying notes included in our 2023 10-K Report. Certain amounts in the
consolidated financial statements and accompanying notes may not add due to rounding, and all percentages have been calculated using
unrounded amounts. Certain prior period amounts have been reclassified to conform to current-period presentation. New accounting standards Adoption of new accounting standards In December 2023, the Financial Accounting Standards Board (“FASB”)
issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.” ASU 2023-09 enhances the transparency
and decision usefulness of income tax disclosures by requiring consistent categories and greater disaggregation of information in the
rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 will be effective for the Company in its income
tax disclosure included in its 2025 Annual Report on Form 10-K and will be applied on a prospective basis. However, retrospective application
is permitted. Early adoption is also permitted. The Company is evaluating the impact of ASU 2023-09 on the Company’s income tax
disclosures and on its consolidated financial statements. Estimates and assumptions The preparation of our condensed consolidated financial statements
in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts
of revenue and expenses during the reporting periods. We evaluate our estimates and assumptions based on historical experience and on
various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ, at times in material amounts,
from these estimates under different assumptions or conditions. Significant accounting policies The significant accounting policies we use for quarterly financial
reporting are disclosed in Note 1 of the notes to the consolidated financial statements included in our 2023 10-K report. |
