Item 3. Legal Proceedings
Item 3.
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 10 mcg doses of IMVEXXY. In the IMVEXXY Notice Letter, Teva alleges that TherapeuticsMD patents listed in the
FDA’s Orange Book that claim compositions and methods of IMVEXXY (the “IMVEXXY Patents”) are invalid, unenforceable,
and/or will not be infringed by Teva’s commercial manufacture, use, or sale of its proposed generic drug product. The IMVEXXY Patents
identified in the IMVEXXY Notice Letter expire in 2032 or 2033. In April 2020, we filed a complaint for patent infringement against Teva
in the United States District Court for the District of New Jersey arising from Teva’s ANDA filing with the FDA. We are seeking,
among other relief, an order that the effective date of any FDA approval of Teva’s ANDA would be a date no earlier than the expiration
of the IMVEXXY Patents and equitable relief enjoining Teva from infringing the IMVEXXY Patents. Teva has filed its answer and counterclaim
to the complaint, alleging that the IMVEXXY Patents are invalid and not infringed. In July 2021, following a proposal by Teva, the District
Court entered an order temporarily staying all proceedings in the IMVEXXY litigation, which order was filed under seal. In September 2021,
the District Court made available a public version of the order following the parties’ agreement to 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 the
ANDA for 30 months from the date of the IMVEXXY Notice Letter will be extended for the number of days that the stay of the IMVEXXY litigation
is in place. In November 2024, the court lifted the stay. We have incurred and recorded legal costs amounting to $2,334 thousand in prepaid
expenses and other current assets as of December 31, 2025, for the 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
will be reclassified to patents, in license rights and other intangible assets, net, in the accompanying consolidated balance sheets,
and such costs will be amortized over the remaining useful life of the patents. If we are unsuccessful in this legal proceeding, then
the related capitalized legal costs for this legal proceeding and any unamortized IMVEXXY patent costs that were previously capitalized
will be immediately expensed in the period in which we become aware of an unsuccessful legal proceeding.
In June 2024, Mayne Pharma received the Sun Notice Letter regarding
an ANDA submitted to the FDA by Sun Pharma. The ANDA seeks approval from the FDA to commercially manufacture, use, or sell a generic version
of the 4 mcg and 10 mcg doses of IMVEXXY. In the Sun Notice Letter, Sun Pharma alleges that the IMVEXXY Patents are invalid, unenforceable,
and/or will not be infringed by Sun Pharma’s commercial manufacture, use, or sale of its proposed generic drug product. The IMVEXXY
Patents identified in the Sun Notice Letter expire in 2032 or 2033. In July 2024, we and Mayne Pharma filed a complaint for patent infringement
against Sun Pharma in the United States District Court for the District of New Jersey arising from Sun Pharma’s ANDA filing with
the FDA. We are seeking, among other relief, an order that the effective date of any FDA approval of Sun Pharma’s ANDA would be
a date no earlier than the expiration of the IMVEXXY Patents and equitable relief enjoining Sun Pharma from infringing the IMVEXXY Patents.
As of December 31, 2025, the litigation remains ongoing and has progressed to claim construction, which the courts determine the meaning
and scope of the asserted patent claims that will govern subsequent infringement and validity analysis.
Beginning on December 30, 2022 and per the Mayne License Agreement,
Mayne Pharma is responsible for all enforcement of our patents, including the responsibility for and costs of litigation discussed above
with respect to Teva and Sun Pharma.
On April 8, 2025, we filed the Mayne Lawsuit seeking damages for breach
of contract, breach of the implied covenant of good faith and fair dealing, fraudulent inducement, and unjust enrichment related to Mayne
Pharma’s actions in relation to the License Agreement and the Transaction Agreement, primarily relating to the net working capital
allowances and certain actions or inactions by Mayne Pharma relating thereto. On June 20, 2025, we filed an amended complaint against
Mayne Pharma and on July 22, 2025, Mayne Pharma filed a motion to dismiss the Mayne Lawsuit. On March 23, 2026, a magistrate judge recommended
that the court grant-in-part and deny-in-part Mayne Pharma’s motion to dismiss. The magistrate judge recommended granting Mayne’s
motion to dismiss our claims for breach of the covenant of good faith and fair dealing, certain of our breach of contract claims and our
claim for fraudulent inducement, but recommended the court grant us leave to amend the fraudulent inducement claim. The magistrate judge
recommended denying Mayne’s motion to dismiss our other claims. The magistrate judge further recommended the court stay the Mayne
Lawsuit while the parties submit the net working capital claims to a dispute resolution process. The parties have 14 days to object to
these recommendations.
On May 30, 2025, Mayne Pharma filed the Mayne Countersuit seeking damages
for breach of contract and fraudulent inducement related to the Transaction Agreement. As part of the Mayne Countersuit, Mayne Pharma
also made certain indemnification demands under the Transaction Agreement, which we dispute. On July 28, 2025, we filed a motion to dismiss
the fraudulent inducement claim in the Mayne Countersuit. On March 23, 2026, a magistrate judge recommended that the court grant our motion
to dismiss Mayne Pharma’s claim for fraudulent inducement, but recommended the court deny our motion to dismiss Mayne Pharma’s
other claims. The parties have 14 days to object to this recommendation. As of December 31, 2025, we believed no additional accrual was
required for such claims, as we could not reasonably estimate a range of loss.
From time to time, we are involved in other litigations and proceedings
in the ordinary course of business. We are currently not involved in any other litigations and proceedings that we believe would have
a material effect on our consolidated financial condition, results of operations, or cash flows.
Item 4. Mine safety disclosures
Not applicable.
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PART II