TherapeuticsMD, Inc. 10-K

Item 1. Business Overview Throughout this Annual Report on Form 10-K (“2021 10-K Report”), the terms “we,” “us,” “our,” “TherapeuticsMD,” “the Company,” or “our company” refer to TherapeuticsMD, Inc., a Nevada corporation, and unless specified otherwise, include our wholly owned subsidiaries vitaMedMD, LLC, a Delaware limited liability company (“vitaMed”), BocaGreenMD, Inc., a Nevada corporation (“BocaGreen”), and vitaCare Prescription Services, Inc., a Florida corporation (“vitaCare”). TherapeuticsMD owns or has rights to trademarks, service marks, or trade names that are used in connection with the operation of its business including TherapeuticsMD ® , vitaMedMD ® , BocaGreenMD ® , vitaCare TM , ANNOVERA ® , BIJUVA ® , and IMVEXXY ® , which are protected under applicable intellectual property laws and are the property of, or licensed to, the Company. This 2021 10-K Report also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this 2021 10-K Report may appear without the ® , ™ 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. In addition, this 2021 10-K Report includes market and industry data that we obtained from periodic industry publications, third-party studies and surveys, government-agency sources, filings of public companies in our industry, and internal-company surveys. Industry publications and surveys generally state that their information has been obtained from sources believed to be reliable. Although we believe that the industry and market data below is reliable as of the date of this 2021 10-K Report, this information could prove to be inaccurate as a result of a variety of matters. Forward-looking statements This 2021 10-K 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 operations, financial position, business strategy, product development, and other plans and objectives for future operations, and assumptions and predictions about future product development and demand, research and development (“R&D”), marketing, expenses and sales are all forward-looking statements. These statements may be found in the items of this 2021 10-K Report entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in this 2021 10-K Report generally. These statements are generally accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “potential(ly),” “continue,” “forecast,” “predict,” “plan,” “may,” “will,” “could,” “would,” “should,” “expect,” or the negative of such terms or other comparable terminology. We have based these forward-looking statements on our current expectations and projections about future events. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to us on the date of this 2021 10-K Report, but 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. Factors that could cause or contribute to such differences include, but are not limited to, our liquidity requirements, competition from other businesses, market and general economic factors, and the other risks discussed in Item 1A of this 2021 10-K Report. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included in t his 2021 10-K Report . We have identified some of the important factors that could cause future events to differ from our current expectations and they are described in this 2021 10-K Report in the section entitled “Risk Factors” that you should review carefully. Please consider our forward-looking statements in light of those risks as you read this 2021 10-K Report. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we project. We do not undertake to update any forward-looking statements or to publicly announce the results of any revisions to any statements to reflect new information or future events or developments. Our company TherapeuticsMD is 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. At TherapeuticsMD, we combine entrepreneurial spirit, clinical 1 expertise, and business leadership to develop and commercialize health solutions that enable new standards of care for women. Our solutions range from a novel patient-controlled, procedure free, long-lasting contraceptive to advanced U.S. Food and Drug Administration (“FDA”) approved bio-identical hormone therapy pharmaceutical products for the treatment of vasomotor symptoms and dyspareunia . We also have a portfolio of branded and generic prescription prenatal vitamins under the vitaMedMD and BocaGreenMD brands that furthers our women’s healthcare focus. Our portfolio of products focused on women’s health allows us to efficiently leverage our sales and marketing plans to grow our recently approved products. Beginning in 2018, the FDA approval of our pharmaceutical products transitioned our company from predominately focused on conducting R&D to one focused on commercializing our pharmaceutical products. • In July 2018, we launched our FDA-approved product IMVEXXY (estradiol vaginal inserts) for the treatment of moderate-to-severe dyspareunia (vaginal pain associated with sexual activity), a symptom of vulvar and vaginal atrophy, or VVA, due to menopause, which was approved by the FDA in May 2018. • In April 2019, we launched our FDA-approved product BIJUVA (estradiol and progesterone) capsules, our hormone therapy combination of bioidentical 17ß-estradiol and bio-identical progesterone in a single, oral softgel capsule, for the treatment of moderate-to-severe vasomotor symptoms, or VMS, due to menopause in women with a uterus, which was approved by the FDA in October 2018. • In October 2019, we began a “test and learn” market introduction for our FDA-approved product ANNOVERA (segesterone acetate and ethinyl estradiol vaginal system), the first and only annual patient-controlled, procedure-free, reversible prescription contraceptive option for women, which was approved by the FDA in August 2018 and which we have licensed for commercialization in the U.S. pursuant to an exclusive license agreement (the “Population Council License Agreement”) with the Population Council, Inc. (the “Population Council”). We paused the full commercial launch of ANNOVERA in March 2020 due to the impact of the COVID-19 pandemic and resumed this initiative in July 2020. We have also entered into 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 June 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. vitaCare divestiture On March 6, 2022, we entered into a stock purchase agreement (the “Purchase Agreement”) with GoodRx, Inc. (“GoodRx”), a Delaware corporation and wholly-owned subsidiary of GoodRx Holdings, Inc. (“GoodRx Holdings”), which provides for the sale of all of the issued and outstanding capital stock of vitaCare to GoodRx (the “vitaCare Divestiture”). Under the terms of the Purchase Agreement, upon the closing of the vitaCare Divestiture (the “Closing”), we will receive a cash payment of $150.0 million, subject to adjustment as provided in the Purchase Agreement and customary holdbacks. In addition, we may receive up to an additional of $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. The Purchase Agreement contains customary representations and warranties, covenants and indemnities of the parties thereto. In addition, the Purchase Agreement provides that at the Closing: (i) we will enter into a long-term services agreement with vitaCare to continue utilization of the vitaCare platform with respect to our products; (ii) we and vitaCare will enter into a transition services agreement for us to provide certain transition services to vitaCare for up to 12 months following the Closing; and (iii) certain employees of ours and/or vitaCare will enter into employment agreements with GoodRx, The vitaCare Divestiture is expected to close in the second quarter of 2022, subject to the satisfaction or waiver of certain customary conditions, including the receipt of certain regulatory approvals. The impact of COVID-19 on our business 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 extent of the future impact of the COVID-19 pandemic on our business continues to be highly uncertain and difficult to predict. The ultimate global recovery 2 from the pandemic will be dependent on, among other things, actions taken by governments and businesses to contain and combat the virus, including any variant strains, the speed and effectiveness of vaccine production and global distribution, as well as how quickly, and to what extent, normal economic and operating conditions can resume on a sustainable basis globally. Since the early phase of the COVID-19 pandemic, we have been using substantial virtual options to ensure business continuity. We have also worked with independent community pharmacies and multiple third-party online pharmacies and telemedicine providers that focus on contraception or menopause which provide patients real-time access to both diagnosis and treatment. We continue to support prescribers’ needs with samples and product materials through our sales force. If access is restricted, we have mailing options in place for these materials. We also have business continuity plans and infrastructure in place that allows for live virtual e-detailing of our products. The full impact of the COVID-19 pandemic continues to evolve. However, we remain committed to the execution of our corporate goals, despite the ongoing COVID-19 pandemic, as demonstrated in part by the increase in product revenue throughout 2021. The future extent to which the COVID-19 pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain. We are continuing to assess the effect of the COVID-19 pandemic on our operations by monitoring the spread of COVID-19 and the various actions implemented to combat the pandemic throughout the world. 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. While we currently believe that our COVID-19 contingency plan has the ability to mitigate many of the negative effects of the COVID-19 pandemic on our business, the severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the duration of “social distancing” orders, the ability of our sales force to access healthcare providers to promote our products, increases in unemployment, which could reduce access to commercial health insurance for our patients, thus limiting payer coverage for our products, and the impact of the pandemic on our global supply chain, all of which remain uncertain. Our future results of operations and liquidity could be materially adversely affected by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions, uncertain demand, and the impact of any initiatives or programs that we may undertake to address financial and operations challenges that we may face. Our business model At TherapeuticsMD, our purposeful and continuous partnership with healthcare professionals (“HCPs”) and women is at the heart of our strategies for delivering innovative solutions for women. From pregnancy to post-menopause, we believe the only way to truly connect with and understand women and their HCPs is to ask questions. Healthcare has become increasingly consumer driven. Therefore, patients are seeking more information, control, and convenience, which places additional time and financial pressures on HCPs and as a result, HCPs are looking for improved ways to provide better service to their patients. A study by IMS Health Inc. concluded that HCPs desire fewer but more encompassing relationships with companies that can provide more valuable information, deliver more relevant services, and better respond to specific needs of their practice and patients. Our goal is to meet this challenge by focusing on the opportunities in women’s health, specifically the OB/GYN market, to provide a better customer experience for healthcare providers, payers, pharmacists, and patients through the following means: • We offer HCPs a comprehensive product line of women’s healthcare products across a woman’s reproductive lifecycle. • Our hormone therapy pharmaceutical products are designed to respond to both HCP and patient needs in the marketplace – low dose, FDA-approved bio-identical and convenience. • Our contraceptive product is the only long-lasting, reversible contraceptive option that is patient-controlled and procedure-free. • We believe the attributes of our prenatal vitamins will result in greater consumer acceptance and satisfaction than competitive products while offering high-quality products with differentiating ingredients. We focus on improved patient education, a high level of patient compliance, and a competitive cost of products, which can result in lower cost of care for payers and improved outcomes for patients. At the forefront of our sales approach is the philosophy that the HCPs should recommend or prescribe products based only on what is best for the patient. In general, a better outcome is achieved by providing patients with the best products and care at the best value. We believe having a portfolio of high-quality product options that can be recommended or prescribed by HCPs, and reimbursed by either government or private third-party payers, is the foundation of providing valuable options to the patient. We are dedicated to enabling HCPs to advance the health of women by offering new treatment options and giving voice to women’s needs and health concerns. We are committed to partnering with women’s health advocacy organizations as we create and commercialize solutions to help women transform how they experience reproductive health. 3 Our sales model focuses on the “4Ps”: patient, provider, pharmacist, and payer. We market and sell our products primarily through a dedicated national sales force that calls on HCPs primarily in the OB/GYN market space. In addition, our products allow HCPs to offer an alternative to patients at a co-payment that provides patients a cost that is competitive in the marketplace. We also believe that our combination of branded and authorized generic lines of prenatal vitamins offers HCPs, women, and payers cost-effective alternatives for top-quality care. We supply our prescription products to consumers through pharmacies nationwide. Our fully staffed customer care center uses current customer relationship management software to respond to HCPs, pharmacies, and consumers via incoming and outgoing telephone calls, e-mails, and live chat. We believe our sales force has developed strong relationships in the OB/GYN market to sell our current products. We have established relationships with some of the largest OB/GYN practices in their respective markets. By delivering our portfolio to similar customer bases of women and OB/GYNs, we believe we can leverage our already deployed assets to increase sales of our products and achieve profitability. We leverage our existing infrastructure, including our sales force, to efficiently commercialize our FDA-approved pharmaceutical products: ANNOVERA, IMVEXXY, and BIJUVA and our vitaMedMD and BocaGreenMD line of prenatal vitamins. In addition to our focus on direct selling from our sales organization in 103 territories, we utilize other commercial levers such as non-personal promotion to HCPs and direct-to-consumer marketing as appropriate to drive awareness and education of our product portfolio. Finally, we partner with strategic partners and licensees to commercialize our pharmaceutical products in specialty segments of the birth control markets and in non-U.S. markets. Currently, we market and sell ANNOVERA, IMVEXXY, and BIJUVA under the TherapeuticsMD brand, our prescription prenatal vitamins under our vitaMedMD brand name, and authorized generic formulations of our prescription prenatal vitamin products under our BocaGreenMD brand name. Our growth strategy We believe that the relationships our national sales force has developed with OB/GYNs, through our prescription prenatal vitamin products and our FDA-approved pharmaceutical products, will continue to grow as these products offer HCPs new opportunities to serve the needs of their patients. By delivering our entire portfolio through the same sales channel and demonstrating how these products can help women as different needs emerge throughout their lifetime, we believe we can create efficiencies and synergies to further our growth. Exclusive focus on woman’s health issues . We have steadily developed relationships with many of the largest OB/GYN practices in the country through the sales of our prenatal vitamins and our FDA-approved pharmaceutical products. We believe that our singular focus on women’s health issues enables us to continue to build long-term relationships with women as they move through their life cycles of family planning to post-menopause. Focus on hormone therapy products . We continue our focus on the commercialization of FDA-approved bio-identical hormone therapy products designed to (1) alleviate the symptoms of, and reduce the health effects resulting from, menopause-related hormone deficiencies, including VMS and VVA, and (2) fill the large unmet need in this segment of the market. Deepening focus on other aspects of a women’s reproductive lifecycle. With the acquisition and launch of ANNOVERA, we demonstrated our intent to provide effective and innovative products for women at all lifecycle stages. Penetrate compounding market with FDA-approved products . BIJUVA is currently the only FDA-approved hormone therapy combination product that is bio-identical to the estradiol and progesterone produced by the ovaries. BIJUVA provides a proven alternative to non-FDA approved compounded bio-identical hormone therapy products at potentially a lower price to patients since most insurance companies do not provide coverage for compounded hormone products, which are not FDA-approved and the safety of which has been questioned by professional societies. We continue to work with independent and community-based pharmacies that currently compound bio-identical hormone therapy products to help introduce patients and prescribers to our FDA-approved products. Multi-channel marketing emphasis . We continue our emphasis on large group OB/GYN practices that provide opportunities to reach large patient bases and that are receptive to the data and savings we provide. In addition, we work with strategic partners and licensees to commercialize and/or market our pharmaceutical products in non-U.S. markets. In our U.S. markets, we have broadened our channels that allow for wide patient access. The proliferation of digital technology has dramatically increased the amount of information available to patients and providers. We believe this makes patient/provider engagement and experience a more important factor for life sciences companies and that providing patients and providers with important information on a real-time basis is a critical piece of serving this market. As an example of the impact of technology on women’s health, products such as ANNOVERA can be prescribed to patients via online platforms, and other direct-to-consumer telehealth platforms. Subject to state telehealth and prescribing laws, prescribers affiliated with direct-to-consumer telehealth platforms can prescribe or offer products to patients through a convenient virtual platform. 4 Multiple distribution partners . We have multiple distribution partners, including large chain pharmacies, independent community pharmacies, mail order, and compounding and specialty pharmacies. We believe that providing a higher level of customer care through unique programs targeted at each of these distribution partners can produce better outcomes and value for the patient, provider, and payer. Geographical territories . We continue to adjust our marketing footprint in the United States (U.S.) and sales team, which currently totals 103 territories, as we continue to commercialize ANNOVERA, IMVEXXY, and BIJUVA. Industry and market Women’s healthcare market According to BBC Research’s September 2020 report, “Pharmaceuticals for Women’s Health: Global Markets,” post-menopausal osteoporosis, pregnancy disorders and management, menopause, endometriosis, and polycystic ovary syndrome (PCOS) are the largest segments within the global market for women’s health therapeutics. Women’s health therapeutics established a very strong presence in the global pharmaceutical market over the last few decades. The market is expected to grow moderately, mainly due to patent expirations of blockbuster drugs such as Evista, the Premarin family, Forteo, Mirena, Boniva, Actonel, Gonal-F and several other. However, the launch of new drugs in the market, and novel drugs under R&D in the late-stage pipeline, has the strong potential to drive the market during the forecast period. The global market for women’s health therapeutics is projected to grow from $31.5 billion in 2019 to $41.2 billion by 2025, at a compound annual growth rate (CAGR) of 4.7% for the period of 2019-2025. The menopause market is projected to grow from $5.7 billion in 2019 to $7.7 billion by 2025 at a CAGR of 5.4% through 2025. Reproductive market Contraception can be defined as the deliberate prevention of pregnancy by interfering with normal process of ovulation, fertilization and implantation through the use of barriers, drugs, medical devices, or surgical techniques. The contraceptive market includes non-hormonal methods, such as the non-hormonal intrauterine device, or IUD, contraceptive sponge, diaphragm, cervical cap or shield and condoms, and hormonal methods such as oral contraceptives, injections, implants, hormonal IUDs and vaginal ring and transdermal contraceptive products. Hormonal contraceptives can be composed of synthetic estrogens and progestins. Contraceptives containing both estrogen and a progestin are referred to as combination hormonal contraceptives, CHCs, and contraceptives containing only progestin are referred to as progestin-only, or P-only. The most common synthetic estrogen approved in the U.S. for use in contraceptive products is ethinyl estradiol (EE). There are 10 different progestins that have been used in contraceptives sold in the U.S. The progestin component provides most of the contraceptive effect, while the estrogen component primarily provides cycle control, for example, minimizing bleeding or spotting between cycles. The progestin exerts its contraceptive effect by inhibiting ovulation, or release of an egg from the ovary, and by thickening cervical mucus. Thickening cervical mucus helps to prevent sperm entry into the upper genital tract. The estrogen component, in addition to providing cycle control, makes a small contribution to contraception by decreasing the maturation of the egg in the ovary. As per the National Center for Health Statistics (“NCHS’) Data Brief No. 388 from the Centers for Disease Control and Prevention (“CDC”), the latest data, for 2017 to 2019, indicate that 65.3% of women aged 15 to 49 were using some type of contraceptive method with approximately half of these women in this age group using reversable prescription contraception. Most women who were not using contraception had reasons for not doing so, such as seeking pregnancy, being pregnant or postpartum, or not being sexually active. The U.S. contraceptive market size is expected to reach $9.9 billion by 2027, expanding at a CAGR of 4.3% from 2020 to 2027 according to Grand View Research, Inc. Increasing awareness about long-acting reversible contraceptives (“LARCs”) is expected to augment the product demand, thereby driving the market over the next few years. According to the NCHS, the use of LARCs in the U.S. was 10.4% in 2017-2019 among women aged 15 to 49. We believe that the increasing awareness about LARCs will grow incremental product demand, thereby driving market growth over the coming years. This is currently led by IUDs. The remainder of the market is dominated by oral contraceptives, which is represented by one major brand, Lo Loestrin ® Fe by AbbVie and a variety of generics. Menopause market Menopause is the spontaneous and permanent cessation of menstruation, which naturally occurs in most women. T he average age of menopause in the U.S. is 52. The range for women is usually between 45 and 58. Per the National Institutes of Health, i n the U.S., approximately 1.3 million women become menopausal each year, typically beginning between the ages of 51 and 52. However, about 5.0% of women experience early menopause between the ages of 40 and 45. Additionally, 1.0% of women experience premature menopause before the age of 40, due to permanent ovarian failure that may be associated with sex chromosome abnormalities. Classic symptoms of menopause are VMS (including hot flashes and night sweats), vulvovaginal symptoms (including dyspareunia and vaginal dryness) and sleep disturbances. These symptoms are caused by the reduced levels of circulating estrogen as ovarian production 5 shuts down. Common treatments for menopausal VMS and vulvovaginal symptoms of menopause range from prescription medications, including hormone therapy and non-hormonal options, to over-the-counter supplements and lubrication options. Hormone therapy is the most effective treatment in the U.S. and Canada for relief of menopausal symptoms according to the North American Menopause Society (“NAMS”). Approved FDA prescriptions for menopausal hormone therapy in the U.S. dropped significantly following the Women’s Health Initiative (“WHI”) study results published in 2002, which found that subjects using conjugated equine estrogens plus the synthetic progestin medroxyprogesterone acetate had, among other things, a greater incidence of coronary heart disease, breast cancer, stroke, and pulmonary embolism. This study caused a significant change in hormone therapy prescribing habits. Since 2002, many women and HCPs have chosen compounded hormone therapy, a bio-identical solution for treating VMS, and the use of local vaginal therapy increased during this time. The FDA recommends that women with moderate-to-severe menopausal symptoms who want to try menopausal hormone therapy for relief use it for the shortest time needed and at the lowest effective dose. Prenatal vitamin market According to the CDC, there are approximately four million births per year in the U.S. Most HCPs encourage taking a prenatal vitamin as the recommended standard of care. Prenatal vitamins are dietary supplements intended to be taken before and during pregnancy and during postnatal lactation that provide nutrients recognized by various health organizations as helpful for a healthy pregnancy outcome. The prenatal vitamin market is highly fragmented, with dozens of companies selling hundreds of competitive products. Prenatal vitamin products are marketed as either nonprescription products or prescription products, with many companies marketing their products through both channels. Our contraceptive product ANNOVERA The segesterone acetate component of ANNOVERA was classified by the FDA as a “new chemical entity,” or NCE, and thus ANNOVERA has five years of regulatory exclusivity under the Drug Price Competition and Patent Term Restoration Act of 1984, otherwise known as the Hatch-Waxman Act. ANNOVERA is a one-year (13 cycles) ring-shaped contraceptive vaginal system, or CVS. ANNOVERA, which is made with a silicone elastomer, contains segesterone acetate, a 19-nor progesterone derivative also known as Nestorone ® , or SA, and ethinyl estradiol, or EE. EE is an approved active ingredient in many marketed hormonal contraceptive products. Segesterone acetate, an NCE, is a potent progestin that, based on pharmacological studies in animals and in vitro , does not bind to the androgen or estrogen receptors and has no glucocorticoid activity at contraceptive doses. SA has been evaluated in 51 clinical studies across these delivery systems with more than 26,794 cycles of exposure. ANNOVERA can be inserted and removed by the woman herself without the aid of a healthcare provider and, unlike oral contraceptives, ANNOVERA does not require daily administration to obtain the contraceptive effect. After 21 days of use, the woman removes ANNOVERA for seven days, thereby providing a regular bleeding pattern (i.e., withdrawal/scheduled bleeding). The same CVS is then re-inserted for additional 21/7-days in/out, for up to a total of 13 cycles (one year). ANNOVERA releases daily vaginal doses of both active ingredients (SA and EE). The claimed release rate of 150 μg/day SA and 13 μg/day EE is supported by the calculated average release rate from an ex vivo analysis of ANNOVERA used for 13 cycles and is also supported by data from 13 cycles of in vitro release. As part of the approval of ANNOVERA, the FDA has required a post-approval observational study be performed to measure the risk of venous thromboembolism. In accordance with the post-marketing requirements, the full protocol for the study was submitted to the FDA in August 2019. We have agreed to perform and pay the costs and expenses associated with this post-approval study, provided that if the costs and expenses associated with such post-approval study exceed $20.0 million, half of such excess will offset against royalties or other payments owed by us under the Population Council License Agreement. Given the observational nature of the study, we do not believe that the costs of the study will be material on an annual basis. We believe that ANNOVERA competes across all the contraception options for women, especially for those women seeking a long-lasting option without a procedure. Additionally, we previously submitted a supplemental new drug application (“NDA”) to FDA to revise certain manufacturing testing limits for ANNOVERA to allow for normal commercial manufacturing variation. In December 2021, FDA determined that it could not approve the supplemental NDA without additional information. In its complete response letter (“CRL”), FDA provided recommendations and requested additional information that could support approval of revisions to certain testing specifications. In January 2022, we responded to the CRL, and provided the requested additional information to the FDA and modified the request for the manufacturing testing limits based on the FDA recommendations. We expect a response from the FDA by the end of second quarter of 2022. We will continue to manufacture and supply ANNOVERA under the existing specification. In the meantime, our third-party 6 contract manufacturer may not be able to supply us with sufficient ANNOVERA to adequately supply the market , which would have an adverse effect on our business, results of operations and financial condition. For patients, ANNOVERA provides a single, long-lasting, reversible birth control product that does not require a procedure at the doctor’s office for insertion or removal, empowering women to be in complete control of their fertility and menstruation with a 21/7 regimen. We believe that ANNOVERA is a unique alternative for women who have previously chosen other forms of birth control. These include nulliparous women (or women who have never given birth), women who are considering an IUD but would rather not have a procedure, women who are between pregnancies but desire protection without a long-term commitment, and women who are not satisfied with oral options due to the daily usage or potential side effects. We believe that the strong commercial net revenue per unit of ANNOVERA and commercial insurance adoption provide us with an opportunity to deploy additional financial resources to maximize ANNOVERA’s consumer-focused commercialization strategy and leverage the ability of doctor/patient choice of contraceptive to override insurance company formularies when necessary. As part of this strategy, we are pursuing distribution opportunities for ANNOVERA to provide women with additional access to ANNOVERA, particularly during the COVID-19 pandemic, with multiple direct-to-consumer telehealth platforms that extend the reach of ANNOVERA. Based on prescription data from Symphony Health Solutions, the FDA-approved prescription market in the U.S. for contraceptive products during 2021 amounted to more than 69 million prescriptions, generating $5.4 billion in gross sales. For 2021, 2020, and 2019, 44.2%, 31.2% and 18.1%, respectively, of our consolidated product revenue was generated by ANNOVERA. Our menopause portfolio IMVEXXY IMVEXXY is a small, digitally inserted, softgel vaginal insert that dissolves when inserted into the vagina. It is administered mess-free, without the need for an applicator, and can be used any time of day. IMVEXXY provides a mechanism of action and dosing that is comfortable for patients, with no patient education required for dose application or applicators. Additionally, the dose packaging for IMVEXXY is designed to optimize compliance and convenience for users. IMVEXXY demonstrated efficacy as early as two weeks (secondary endpoint) and maintained efficacy through week 12 in clinical studies, with no increase in systemic hormone levels beyond the normal postmenopausal range (the clinical relevance of systemic absorption rates for vaginal estrogen therapies is not known). As part of the FDA’s approval of IMVEXXY, we have committed to conduct a post-approval observational study to evaluate the risk of endometrial cancer in post-menopausal women with a uterus who use a low-dose vaginal estrogen unopposed by a progestogen. The FDA has also asked the sponsors of other vaginal estrogen products to participate in the observational study. In connection with the observational study, we will be required to provide progress reports to the FDA on an annual basis. The development of this method is underway, and we do not believe that the costs will be material on an annual basis. Based on prescription data from Symphony Health Solutions, the FDA-approved prescription market in the U.S. for the treatment of VVA symptoms includes seven products (including branded products and their generic equivalents) generated an aggregate of $1.9 billion in gross sales on 6.5 million prescriptions for 2021. Of the total gross sales, $371 million were generated by PREMARIN ® cream (Pfizer), the leading brand in the market. In addition, ESTRACE ® cream and Vagifem ® are now mostly generic which generated $1.2 billion in gross sales for 2021. These three products are localized estrogen therapy which is the most commonly used method for the treatment of VVA. For 2021, 2020, and 2019, 36.8%, 43.2% and 47.6%, respectively, of our consolidated product revenue was generated by IMVEXXY. BIJUVA BIJUVA offers the convenience of a single-capsule combination of two hormones (estradiol and progesterone), which may improve a user’s compliance. The estradiol and progesterone in BIJUVA are plant-based, not animal-sourced, and do not contain peanut oil unlike other FDA-approved progesterone products. BIJUVA provides a sustained steady state of estradiol which reduced the frequency and severity of hot flashes in clinical studies with no demonstrated impact on a patient’s weight or blood pressure. Additionally, through clinical trials, BIJUVA has demonstrated endometrial safety and greater than 90% amenorrhea rates, while providing no clinically meaningful changes in mammograms, or in coagulation or lipid parameters, and while providing clinically meaningful improvements in quality of life and sleep disturbance. In December 2021, the FDA approved the supplemental NDA for the 0.5 mg/100 mg dose of BIJUVA ® . We are currently evaluating plans for commercialization of the low dosage BIJUVA ® product. 7 Estrogen (with or without a progestin) is most commonly used to treat VMS due to menopause that is a direct result of the decline in estrogen levels associated with ovarian shutdown at menopause . Estrogen is a generic term for any substance, natural or synthetic, that exerts biological effects characteristic of estrogenic hormones, such as estradiol, a natural ovarian produced estrogen . According to NAMS, the most effective treatment for VMS due to menopause is estrogen therapy. Progestins are used in combination with estrogen in menopausal women with a uterus to avoid an increase in the incidence of endometrial hyperplasia, which is a condition caused by chronic use of estrogen alone by a woman with a uterus and is associated with an increased incidence of uterine, or endometrial, cancer. Progestins include the naturally occurring hormone progesterone and several synthetic progestin compounds that have pregestational activity. These agents are used for a variety of indications and conditions. Progestins alone are also used to treat women with secondary amenorrhea to create withdrawal bleeding in these women who have not had regular menses. Progestins are also used to treat dysfunctional uterine bleeding and endometriosis. According to Symphony Health Solutions, the total FDA-approved prescription market in the U.S. for all estrogen and progestin drug products for the treatment of VMS generated an aggregate of $2.1 billion of gross sales on 23.5 million prescriptions for 2021. The three primary hormone therapy products are estrogen, progestin, and a combination of estrogen and progestin, which are produced in a variety of forms, including oral tablets or capsules, skin patches, gels, and emulsions. For 2021, gross sales in the U.S. of FDA-approved branded and generic products for estrogen-only amounted to an aggregate of $1.3 billion on 13.2 million prescriptions. For 2021, gross sales in the U.S. of FDA-approved branded and generic products for progestins-only amounted to an aggregate of $372 million on 8.4 million prescriptions. For 2021, gross sales in the U.S. of FDA approved branded and generic products for estrogens/progestins combined amounted to an aggregate of $435 million on 1.7 million prescriptions. With the approval of BIJUVA, the FDA required a post-approval commitment to further develop and validate our in-vitro dissolution method to show how BIJUVA is released from the capsule in an in-vitro setting for quality control assessments. The development of this method and validation were completed and submitted to the FDA as required in our approval. Our hormone therapy pharmaceutical products are characterized by safety and efficacy profiles that can be consistently manufactured to target specifications. This provides an alternative to the non-FDA approved compounded bio-identical market. We believe that our FDA-approved pharmaceutical products offer advantages in terms of demonstrated safety and efficacy, consistency in the hormone dose, lower patient cost due to the increased likelihood of insurance coverage, and improved access as a result of availability from major retail pharmacy chains rather than custom order or formulation by individual compounders. The largest competitors for BIJUVA in the FDA-approved market are Pfizer (PREMPRO ® ) and Premarin, with sales of PREMPRO and Premarin constituting the largest branded products. The remainder of the market is represented almost exclusively by generic products (estradiol, the generic version of Estrace oral, and generic micronized progesterone). None of the competing FDA-approved drugs for the treatment of moderate-to-severe VMS due to menopause are a combination of both bio-identical estradiol and progesterone. The market for non-FDA-approved compounded hormone therapy products is generally considered very fragmented because the products are prepared and sold by individual compounding pharmacies. We believe that BIJUVA represents the first time a combination product of estradiol and progesterone that is bio-identical to the estradiol and progesterone produced by the ovaries in a single combined product has been FDA approved. For 2021, 2020, and 2019, 12.3%, 10.1% and 5.4%, respectively, of our consolidated product revenue was generated by BIJUVA. Our prenatal vitamin products We continue to manufacture and distribute our prescription prenatal vitamin product lines under our vitaMedMD brand name and authorized generic formulations of some of our prescription prenatal vitamin products under our BocaGreenMD Prena1 name. We will continue to support the vitaMedMD and BocaGreenMD products as they are important products to our core customers and help provide us with continued access to sell our women’s health portfolio. Our current prenatal vitamin product line features a unique, proprietary combination of FOLMAX™, FePlus™, and pur-DHA™ and includes the following products: • vitaTrue™ • vitaPearl™ • vitaMedMD One Rx Prenatal Multivitamin • vitaMedMD RediChew ® Rx Prenatal Multivitamin • BocaGreenMD Prena1 True • BocaGreenMD Prena1 Pearl • BocaGreenMD Prena1 Chew 8 According to Symphony Health Solutions, for 2021, 4.2 million prescriptions for prenatal vitamins were issued in the U.S. resulting in total sales of $188 million. For 2021, 2020, and 2019, 6.7%, 15.5% and 29.0%, respectively, of our consolidated product revenue was generated by our prenatal vitamin products. Commercialization model We are commercializing the products in our portfolio through a common model focused on the belief that providing good experiences for both HCPs and patients will drive profitability for TherapeuticsMD. Given that our portfolio focus is exclusively on women’s health, we believe that each new product launch will allow us to further leverage our existing infrastructure and build out our reputation as the premier women’s health organization in the U.S. Below is more detail on our commercialization model: HCP Education - Initially, we focus on the high writing and high potential HCPs in each territory to gain a full understanding of their prescribing behavior and practices. Our focus is on driving initial prescriptions of these writers for each new product launch and utilizing the time to also pull through on our portfolio of existing products. Once regular writing is established with the initial group of HCPs, we expand our reach to a larger set of HCPs writing in the category. We educate HCPs on our products primarily with our field sales organization supplemented by non-personal promotion. Our sales force currently has 103 territories, which includes the most significant part of the addressable markets across our product portfolio. As of December 31, 2021, 10,700 HCPs had written at least one prescription for ANNOVERA, 28,900 HCPs had written at least one prescription for IMVEXXY, and 9,800 HCPs had written at least one prescription for BIJUVA. In addition to our sales organization, we leverage non-personal promotion (multi-channel advertising) to HCPs designed to drive awareness, education, and action. These efforts are designed to allow for pull through of the sales organization’s efforts and identification of new targets that have interest in writing prescriptions for one or more of our products. We believe this will drive increased prescribing for our products and lift the overall writing universe and our products to top of mind in the HCP community. Payer Access. With the ever-changing payer environment, we believe it is critical to maximize breadth of coverage as quickly as possible to not inhibit patient access to product. We do this while working to negotiate the best possible contracts for us. Many commercial payers employ “new-to-market blocks” for newly launched products until the payers have the opportunity to make a coverage decision based upon their internal review of the product. When a product is not covered, the patient is responsible to pay the full price for the medication, which can significantly limit utilization of the product. As we seek to increase the number of lives covered by commercial payers, it is our objective to continue to seek unrestricted coverage. For IMVEXXY, through December 31, 2021, we achieved unrestricted coverage with the majority of the top nine commercial payers of VVA products by commercial payer lives, and as of December 31, 2021, 62% of the commercial payer market covered IMVEXXY with unrestricted access under pharmacy benefits. For BIJUVA, through December 31, 2021, we achieved unrestricted coverage with the majority of the top nine commercial payers of VMS products by commercial payer lives, and as of December 31, 2021, 66% of the commercial payer market covered BIJUVA with unrestricted access under pharmacy benefits. For ANNOVERA, we believe that its unique characteristics will assist us in pursuing favorable commercial payer coverage, including only one pharmacy fill fee per year and no office visit or procedure fees. We have made substantial progress in achieving unrestricted access to ANNOVERA through commercial payers, and we continue to pursue discussions with several of the country’s largest commercial insurers to further expand coverage. As of December 31, 2021, 66% of the commercial payer market covered ANNOVERA with unrestricted access under pharmacy benefits and 74% covered ANNOVERA with step access. In addition, the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010 (the “ACA”), mandates that private health plans provide coverage for women’s preventative services, without imposing patient cost-sharing requirements, as recommended by the Health Resources and Services Administration (“HRSA”). HRSA guidelines require private health plans to cover, without cost-sharing, at least one form of contraception, or product, in each of the methods, or classes, identified by the FDA for women in its Birth Control Guide, which currently includes 17 separate classes. For classes with more than one type of treatment, private payers need only provide no-cost coverage for one product in each class and may use reasonable medical management to determine whether and to what extent to cover other products in the class. We believe that given no other vaginal contraceptive product offers contraceptive benefits for an entire year that it is possible that FDA could determine that ANNOVERA constitutes a new class of contraceptive, which could allow for coverage of ANNOVERA by private health plans with no out-of-pocket cost for patients. However, there is no assurance that FDA will make such a determination and it is possible that other FDA-approved products could also be included in such a new class. For instance, the FDA may find that ANNOVERA fits into the vaginal contraceptive ring class, which it would share with NuvaRing and its generic equivalents, and potentially others. To the extent ANNOVERA is not the only FDA-approved product in a designated class of contraception, private payers may choose not to cover ANNOVERA or may require patient cost-sharing obligations. Some states have amended and expanded requirements to match the standard set in the ACA mandate, specifically requiring coverage for the full range of contraceptive methods, counseling and services used by women and eliminating out-of-pocket costs and limiting other health plan restrictions. However, the Trump administration implemented policies that permit certain employers to claim a religious or moral objection to the birth control coverage mandate under the ACA. Originally, the religious exemption applied only to churches, but the Department of Health and Human Services extended that privilege in 2017 to 9 family-owned, non-publicly traded corporations whose owners state that paying for birth control would violate their religious beliefs. Exempted entities no longer need to certify their objection or otherwise notify the federal government of their decision to stop providing coverage. In July 2020, the U.S. Supreme Court issued a ruling in the case styled Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania et al ., upholding the legality of the Trump Administration’s religious exemption to the contraceptive mandate. Prior to his election, President Biden stated that he would undo the religious exemption expansion if he were elected. To date, the Biden a dministration has not issued any Executive Order, regulation, or other policy change to reverse the Trump a dministration religious exemption policy, but such action may be forthcoming. We anticipate that any impact on contraception coverage due to religious exemption will be low; however, healthcare reform continues to attract significant legislative and administrative interest, legal challenges, regulatory and compliance requirements, new approaches and public attention that create uncertainty and the potential for additional changes. Healthcare reform implementation, additional legislation or regulations, and other changes in government policy or regulation may repeal the contraception coverage mandate, affect our reimbursement or impose additional coverage limitations and/or cost-sharing obligations on patients, any of which could have a material adverse effect on patient usage of ANNOVERA. In February 2020, we entered into an agreement with Afaxys Pharma, LLC, a pharmaceutical company focused on serving women in the public health system, to market ANNOVERA in the U.S. public health sector. As part of the Population Council License Agreement, we agreed to provide significantly reduced pricing to federally designated Title X family planning clinics serving underrepresented women. We also have agreements to market ANNOVERA to the U.S. Department of Defense, the U.S. Department of Veteran’s Affairs, and in Puerto Rico. Obtaining and maintaining favorable reimbursement can be a time-consuming and expensive process, and there is no guarantee that we will be able to negotiate or continue to negotiate reimbursement or pricing terms for our products with payers at profitable levels. Supply. We take active steps to ensure our products are available in all classes of trade and delivery systems. We offer our products through traditional chain wholesalers (Cardinal, McKesson and AmerisourceBergen) and independent retail pharmacies, community compounding pharmacies, and online pharmacies. Patient Affordability Programs. We have affordability and adherence programs in place for patients so that we can support appropriate use of our products by patients. Our co-pay assistance programs allow patients to access our products at a reasonable cost. • We continue to support our patient education and affordability program that allows all eligible patients who enroll to receive IMVEXXY and BIJUVA at a reasonable cost. When a product is not covered by a patient’s commercial insurance, the patient is responsible to pay the full price for the medication, which can significantly limit a patient’s ability to pay for the product and subsequently led to reduced utilization of the product. For IMVEXXY and BIJUVA, enrolled patients paid as little as $35.00 for a prescription with commercial insurance coverage and pay as little as $75.00 for a prescription without commercial insurance coverage. For ANNOVERA, for commercially insured patients, we offer patients assistance for as low as $60.00 for an annual prescription. However, many patients will not need a co-pay assistance program for ANNOVERA given the requirements of the ACA at the federal level and similar laws at the state level. • We continue to dialogue with the FDA regarding the potential inclusion of ANNOVERA as a new class of contraception for women in the FDA’s Birth Control Guide, which would require private health plans to cover ANNOVERA with no patient out-of-pocket costs as part of the ACA. There is no assurance that the FDA will make such a determination and it is possible that other FDA-approved products could also be included in such a new class. The FDA may also find that ANNOVERA fits into the vaginal contraceptive ring class, which it would share with NuvaRing and its generic equivalents, and potentially others. Eight states require insurance coverage of prescription contraception with co-pay regardless of inclusion in the FDA’s Birth Control Guide and 11 states, plus Washington D.C., require coverage of prescription contraception with no co-pay regardless of inclusion in the FDA’s Birth Control Guide. Patient Adherence. Establishing compliance and adherence programs that make getting on a prescription medication and obtaining prescribed refills easy and convenient for the patient and HCPs is a critical lever in our commercial model. Our focus is on minimizing complications in patients filling their first prescription and engaging with them throughout the life of their treatment to ensure patients stay on and use therapy for the appropriate length of time. We have delivered effective patient engagement programs for all of our products. Consumer Communication . Another critical level in the commercial model is consumer outreach. Our initial focus is on those patients who are already predisposed to seek treatment, such as those patients new to therapy, and those patients dissatisfied with their current therapy. Next, we are focused on expanding the market by energizing patients who are experiencing bothersome symptoms but who have not been motivated to seek treatment. Methods of communication include online, and offline media and span branded and unbranded communication to ensure we drive action from awareness of symptoms to desire to speak to an HCP to acquire a prescription. 10 License a greements Population Council license agreement Under the terms of 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 NDA for ANNOVERA, and $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. For additional information, see “Note 6. License rights and other intangible assets” to the consolidated financial statements included in this 2021 10-K Report . The Population Council is also eligible to receive future payments upon the achievement of certain commercial sales milestones of ANNOVERA. We are required to pay the Population Council additional milestone payments of $40.0 million upon cumulative net sales of ANNOVERA in the U.S. by us and our affiliated and permitted sublicensees of each of $200.0 million, $400.0 million and $1.0 billion. The Population Council has agreed to perform and pay the costs and expenses associated with four post-approval studies required by the FDA for ANNOVERA, and we have agreed to perform and pay the costs and expenses associated with a post approval study required by the FDA to measure risk for venous thromboembolism, provided that if the costs and expenses associated with such post-approval study exceed $20.0 million, half of such excess will be offset against royalties or other payments owed by us to the Population Council under the Population Council License Agreement. To the extent that the Population Council does not fulfil these studies to FDA’s satisfaction, FDA may impose additional requirements and penalties against us, as we hold the NDA for ANNOVERA. In July 2021, we received a letter from FDA indicating that the post-marketing commitment study being conducted by the Population Council for ANNOVERA to characterize the in vivo release rate of ANNOVERA was not fulfilled to FDA’s satisfaction. In addition, the final reports for the two post-marketing requirement studies being performed by the Population Council for ANNOVERA were not submitted by the initial listed submission deadline, which deadlines have since been extended by FDA. We are working with Population Council to complete the post-marketing commitment study to FDA’s satisfaction and reduce the delay in submitting the post-marketing requirement final reports. To the extent that the Population Council does not fulfil these studies to FDA’s satisfaction, FDA may impose additional requirements and penalties against us, as we hold the NDA for ANNOVERA. We and the Population Council have agreed to form a joint product committee responsible for overseeing activities under the Population Council License Agreement. We are responsible for all aspects of marketing, promotion, product positioning, pricing, education programs, publications, sales messages and any additional desired clinical studies for the one-year vaginal contraceptive system, subject to oversight and decisions made by the joint product committee. We are also required to pay the Population Council, on a quarterly basis, step-based royalty payments based on our annual net sales of ANNOVERA as follows: (i) if annual net sales are less than or equal to $50.0 million, a royalty of 5% of net sales; (ii) for annual net sales greater than $50.0 million and less than or equal to $150.0 million, a royalty of 10% of such net sales; and (iii) for net sales greater than $150.0 million, a royalty of 15% of such net sales. The annual royalty rate will be reduced to 50% of the initial rate during the six-month period beginning on the date of the first arms-length commercial sale of a generic equivalent of the one-year vaginal contraceptive system that is launched by a third-party in the U.S., and thereafter will be reduced to 20% of the initial rate. Unless earlier terminated, the Population Council License Agreement will remain in effect until the later of the expiration of the last-to-expire of the Population Council’s U.S. patents that are licensed to us, or the date following such expiration that follows a continuous period of six months during which we and our affiliates have not made a commercial sale of ANNOVERA in the U.S. The Population Council License Agreement may also be terminated for certain breach and bankruptcy-related events and by us on 180 days’ prior notice to the Population Council. Knight license agreement Pursuant to the terms of the Knight License Agreement, Knight paid us $2.0 million in milestone fees upon the first regulatory approval in Canada for IMVEXXY and BIJUVA in 2020, and is required to pay us sales milestone fees based upon certain aggregate annual sales in Canada and Israel of each of IMVEXXY and BIJUVA and royalties based on aggregate annual sales of each of IMVEXXY and BIJUVA in Canada and Israel. We may terminate the Knight License Agreement if Knight does not submit all regulatory applications, submissions and/or registrations required for regulatory approval to use and commercialize IMVEXXY and BIJUVA in Canada within certain specified time periods. We also may terminate the Knight License Agreement if Knight challenges our patents. Either party may terminate the Knight License Agreement for any material breach by the other party that is not cured within certain specified time periods or if the other party files for bankruptcy or other related matters. As part of the Knight License Agreement, Knight is prohibited from exporting IMVEXXY and BIJUVA to the U.S. 11 Theramex l icense a greement Under the terms of the Theramex License Agreement, Theramex paid us EUR 14 million, or $15.5 million, in cash as an upfront fee in August 2019. Within thirty days of signing the Theramex License Agreement, we provided Theramex the regulatory materials and clinical data that were necessary for Theramex to obtain marketing authorizations and other applicable regulatory approvals for commercializing BIJUVA and IMVEXXY. In 2019, at a point in time when Theramex was able to use and benefit from the license which was when the knowledge transfer of regulatory documents occurred, we recognized the revenue related to the upfront fee, which was a non-refundable payment. In 2021, we received additional milestone payments comprised of an aggregate of EUR 1.0 million, or $1.2 million, in regulatory milestone payments based on regulatory approvals for BIJUVA in certain specified markets. Additionally, in December 2021, we received EUR 0.5 million, or $0.6 million, in additional upfront payments for the license grants of IMVEXXY in Brazil and Mexico. The additional upfront payment for the license grants of IMVEXXY in Brazil and Mexico may be returned to Theramex under certain conditions if IMVEXXY fails to obtain marketing authorization in one of Brazil or Mexico within a prespecified period. We are eligible to receive additional sales milestone payments up to an aggregate of EUR 27.5 million in sales milestone payments to be paid in escalating tranches based on Theramex first attaining certain aggregate annual net sales milestones of BIJUVA and IMVEXXY outside of the U.S., excluding Canada and Israel (collectively the “Theramex Territory”), ranging from EUR 25 million to EUR 100 million. We are also entitled to receive quarterly royalty payments at a rate of 5% on net sales of BIJUVA and IMVEXXY in the Theramex Territory. Theramex is responsible for all regulatory and commercial activities for BIJUVA and IMVEXXY in the Theramex Territory. Theramex may sublicense its rights to commercialize BIJUVA and IMVEXXY in the Theramex Territory, except for certain specified markets. We may terminate the Theramex License Agreement if Theramex does not submit all regulatory applications, submissions and/or registrations required for regulatory approval to use and commercialize BIJUVA and IMVEXXY within certain specified time periods. We also may terminate the Theramex License Agreement if Theramex challenges our patents. Either party may terminate the Theramex License Agreement for any material breach by the other party that is not cured within certain specified time periods or if the other party files for bankruptcy or other related matters. Preclinical development As our current focus is the commercialization of our three FDA-approved pharmaceutical products, we have placed on hold our five preclinical projects: (i) a progesterone-alone transdermal cream (TX-005HR), (ii) a combination estradiol and progesterone transdermal cream (TX-006HR), (iii) a pair of transdermal patch product candidates (TX-007HR and TX-008HR), and (iv) an oral progesterone and estradiol formulation (TX-009HR). “In vivo” and “in vitro” proof-of-concept preclinical studies were conducted to assess TX-005HR and TX-006HR with respect to penetration of the estradiol and progesterone, and successful opposition of subcutaneous estradiol on the endometrium. TX-009HR previously showed improved bioavailability in animals, and in 2019, TX-009HR was tested in a Phase 1 study of healthy postmenopausal women and was well-tolerated in that study. We may, in the future, engage with a financing partner to advance one or more of these product candidates. Sales concentration We sell our prescription pharmaceutical products and prenatal vitamin products to wholesale distributors and retail pharmacy distributors. For information on the concentration of sales of our products, see “Note 11. Revenue” to the consolidated financial statements included in this 2021 10-K Report. Seasonality The pharmaceutical markets in which we compete are not subject to seasonal sales fluctuation. However, our net revenues for the first quarter of each year can be negatively affected by the annual reset of high-deductible commercial insurance plans. Manufacturing of our products We have sourced and qualified third-party contract manufacturing organizations (“CMOs”), for the commercial supply of our products. The regulations for manufacturing of approved drug products are significantly more extensive than the standards for manufacturing supplements or drug product for early-stage clinical trials. Our CMOs are responsible for the manufacture of our products in accordance with our specifications and applicable regulatory requirements. We have entered into long-term supply agreements with Catalent Pharma Solutions, LLC (“Catalent”) for the commercial supply of our IMVEXXY and BIJUVA, and Sever Pharma Solution (formerly QPharma AB), both of which have their establishments registered with FDA, for the supply of ANNOVERA. Under the terms of the agreements, we are obligated to purchase certain minimum annual amounts of each product. We may terminate the agreement for a particular drug 12 for certain specified reasons. If we are unable to obtain sufficient quantities of drugs or receive raw materials in a timely manner, we could be required to delay our manufacturing and seek alternative manufacturers, which would be costly and time-consuming. See also Item 1A. Risk Factors – “ Our dependence upon third parties for the manufacture and supply of our existing women’s healthcare products may cause delays in, or prevent us from, successfully commercializing, and marketing our products ” below for further discussion related to our dependence on third-party CMOs. We have a multi-faceted risk management approach to ensure continuous supply from our qualified CMOs for the commercial supply of our products. This approach includes oversight of the manufacturing processes, evaluation of adherence to Good Manufacturing Practices through audits, a review of their business continuity plans, management of finished product inventory and safety stock, and the initiation of projects to qualify second sourcing as appropriate. We have also sourced and qualified manufacturers of the active pharmaceutical ingredient (“APIs”) to be used in our drugs and drug candidates. We follow a risk management approach for our API manufacturers similar to that followed for the commercial supply of the finished drug products. We use third-party manufacturers to manufacture and package our vitamin and supplement products, as well as meet applicable contract and regulatory requirements. We currently obtain all of our vitaMedMD and BocaGreen products from Lang Pharma Nutrition (“Lang”), a full-service, private label and corporate brand manufacturer specializing in premium health benefit driven products, including medical foods, nutritional supplements, beverages, bars, and functional foods in the dietary supplement category. As a result, we are dependent on Lang and its subcontractors for the manufacture of our vitamin and supplement products. In addition to manufacturing, Lang also provides a variety of additional services to us, including development processes, prototype development, raw materials sourcing, regulatory review, and product packaging. We believe that Lang maintains multiple supply and purchasing relationships throughout the raw materials marketplace to provide an uninterrupted supply of product to meet our manufacturing requirements. We have experienced no material difficulties in obtaining the vitamin and supplement products we need in the amounts we require and do not anticipate those issues in the future. We believe the terms of our agreements with Lang are competitive with other suppliers and manufacturers. At present, we believe our relationship with Lang is established and reliable, and we intend to continue to use Lang as our third-party manufacturer for most of our vitamins and supplements. Although we anticipate continuing our relationship with Lang, we believe that we could obtain similar terms with other suppliers to provide the same services in the event our relationship with Lang terminates. Accordingly, we do not believe that such termination would have a material adverse effect on our business. Quality control for our products Our products for the U.S. market are required to be manufactured in accordance with the FDA’s current Good Manufacturing Practice, or cGMPs. Our third-party suppliers and manufacturers are also responsible for continued compliance with cGMP requirements. We have executed quality agreements that delineate the responsibilities of each company in the quality assurance process. To comply with these drug commercialization standards, we have personnel with pharmaceutical development, manufacturing, and quality assurance experience who are responsible for the relationships with our suppliers. We have contracted with Catalent, an established manufacturer of softgel drug products, to manufacture the commercial supply for both IMVEXXY and BIJUVA. We have also contracted with Sever Pharma Solutions to manufacture the commercial supply for ANNOVERA. For the prenatal vitamins, our quality assurance team collaborates with Lang to monitor the cGMP compliance of Lang’s contracted manufacturers and packagers. Although each of Catalent, Sever and Lang have received Form FDA 483 observations from FDA inspections in the past, we are not aware of any open FDA investigations into the manufacturing and/or packaging processes at the facilities that are used for our products. Our quality assurance team establishes controls that are designed to document the manufacturing process and ensure that our contract manufacturers meet product specifications and that our finished products contain the correct ingredients, purity, strength, and composition in compliance with FDA regulations. Depending on their roles and activities, certain of our contractors are subject to applicable requirements to test incoming raw materials and finished goods to ensure they meet or exceed FDA and U.S. Pharmacopeia standards, including quantitative and qualitative assay and microbial and heavy metal contamination (as appropriate). Our quality assurance team is responsible for the final release of the packaged drug product (ANNOVERA, IMVEXXY and BIJUVA) into commercial distribution. Distribution of our products We distribute our products within the U.S. through our third-party logistics partner, Cardinal Logistics, who ships to national wholesale distributors such as Cardinal, McKesson, and AmerisourceBergen, regional wholesalers such as Smith Drug, Anda, Value Drug and RDC, and alternate distribution partners. Wholesaler product inventory is monitored daily, and sales out are monitored weekly. We are subject to compliance responsibilities under the Drug Supply Chain Security Act (the “DSCSA”) and the Prescription Drug Marketing Act (“PDMA”) in relation to distribution of drug products in the commercial supply and dispensing chain and drug samples to HCPs, 13 respectively, and are further subject to state laws on these topics. National and regional retail pharmacies along with online pharmacies are also an area of focus to make sure our products are purchased and dispensed properly. Customer service Our goal is 100% customer satisfaction by consistently delivering superior customer experiences before, during, and after the sale. To achieve this goal, we maintain a fully staffed customer care center that uses current customer relationship management software to respond to HCPs, pharmacies, and consumers. We believe our customer service initiatives allow us to establish and maintain long-term customer relationships and facilitate repeat visits and purchases. Our representatives receive regular training so that they can effectively and efficiently field questions from current and prospective customers and are also trained not to answer questions that should be directed to a customer’s physician. Having a quality customer care center allows our representatives to provide an array of valuable data in the areas of sales, market research, quality assurance, lead generation, and customer retention. Our return policy We sell our prescription products through third-party logistics providers, wholesale distributors, and retail pharmacy distributors. We accept returns 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 vitamin and supplement products, BIJUVA and IMVEXXY currently have a shelf life of 24 months from the date of manufacture and ANNOVERA currently has a shelf life of 18 months from the date of manufacture. We do not allow product returns for prescription products that have been dispensed to a patient. Our quality guarantee We proudly stand behind the quality of our products. We believe our guarantee makes it easy, convenient, and safe for customers to purchase our products. Under our quality guarantee, we: • Ensure the potency and quality of our products; and • Help HCPs and payers by delivering information on patient compliance and satisfaction. We value frequent communication with and feedback from our customers to continue to improve our offerings and services. Research and development Historically, our product development programs have been concentrated in advanced hormone therapy pharmaceutical products. We have engaged, and may continue to engage, in programs to provide alternatives to FDA approved products and non-FDA-approved compounded bio-identical market for hormone therapy. Our programs have sought to bring new products to market in unique delivery systems or formats that enhance the effectiveness, safety, and reliability of existing hormone therapy alternatives. Intellectual property Patents and trademarks Our success depends, in part, on our ability to obtain patents, maintain trade-secret protection, and operate without infringing the proprietary rights of others. Our intellectual property portfolio is one way we attempt to protect our competitive position. We rely primarily on a combination of know-how, trade secrets, patents, trademarks, and contractual restrictions to protect our products and to maintain our competitive position. We are diligently seeking ways to protect our intellectual property through various legal mechanisms in relevant jurisdictions. Where permitted, patents for our hormone therapy drug products have been submitted to the Orange Book. As of December 31, 2021, we have 46 issued domestic patents and 47 issued foreign patents as well as 86 pending patent applications (66 foreign and 20 domestic), including: • 20 issued domestic patents and 14 issued foreign patents that relate to BIJUVA. These patents establish an important intellectual property foundation for BIJUVA and are owned by us. The domestic patents will expire in 2032. The foreign patents will expire no earlier than 2032. In addition, we have pending patent applications relating to BIJUVA in the U.S., Argentina, Australia, Brazil, Canada, China, Europe, Israel, Japan, Mexico, New Zealand, Russia, South Africa, and South Korea; • 16 issued domestic patents (14 utility and two design) and 23 foreign patents (13 utility and ten design) that relate to IMVEXXY. These patents establish an important intellectual property foundation for IMVEXXY and are owned by us. The domestic patents will expire in 2032 or 2033. The foreign utility patents will expire no earlier than 2033. The foreign design 14 patents provide protection expiring no earlier than 2025. In certain countries, the foreign design patents provide protection through at least 2037. In addition, we have pending patent applications related to IMVEXXY in the U.S., Argentina, Australia, Brazil, Canada, Europe, Israel, Japan, Mexico, New Zealand, Russia, South Africa, and South Korea; • One issued domestic utility patent that relates to our topical-cream candidates, which is owned by us and will expire in 2035; • One issued domestic utility patent and six foreign patents that relate to our transdermal-patch candidates, which are owned by us. The domestic utility patent will expire in 2032. The foreign patents will expire no earlier than 2033. We have a pending patent application with respect to our transdermal-patch candidates in Brazil; • Two issued domestic utility patents that relate to estradiol and progesterone product candidates, which are owned by us and will expire in 2032; • Three issued domestic utility patents that relate to TX-009HR, a progesterone and estradiol product candidate, which are owned by us and will expire in 2037; and • Three issued domestic and four issued foreign patents that relate to formulations containing progesterone, which are owned by us. The domestic patents will expire between 2032 and 2036. The foreign patents will expire no earlier than 2033. In addition, we have pending patent applications with respect formulations containing progesterone in the U.S., Canada, Europe, and Mexico. Also, as of December 31, 2021, we have a license to six U.S. Orange Book listed patents and one design patent relating to ANNOVERA. The Orange Book patents will expire in 2039. The design patent will expire in 2036. These licensed patents establish an important intellectual property foundation for ANNOVERA. In addition, we have a license to six U.S. pending patent applications relating to ANNOVERA. We hold multiple U.S. trademark registrations and have numerous pending trademark applications. Issuance of a federally registered trademark creates a rebuttable presumption of ownership of the mark; however, it is subject to challenge by others claiming first use in the mark in some or all the areas in which it is used. Federally registered trademarks have a perpetual life so long as they are maintained and renewed on a timely basis and used properly as trademarks, subject to the rights of third parties to seek cancellation of the trademarks if they claim priority or confusion of usage. We believe our patents and trademarks are valuable and provide us certain benefits in marketing our products. We intend to actively protect our intellectual property with patents, trademarks, trade secrets, or other legal avenues for the protection of intellectual property and to aggressively prosecute, enforce, and defend our patents, trademarks, and proprietary technology. The loss, by expiration or otherwise, of any one patent may have a material effect on our business. Defense and enforcement of our intellectual property rights can be expensive and time consuming, even if the outcome is favorable to us. It is possible that the patents issued or licensed to us will be successfully challenged, that a court may find that we are infringing on validly issued patents of third parties, or that we may have to alter or discontinue the development of our products or pay licensing fees to account for patent rights of third parties. See “– Pharmaceutical Regulation – Regulatory Exclusivity” below for information regarding our intellectual property and challenges thereto. As we continue to develop proprietary intellectual property, we will expand our protection by applying for patents on future technologies. As we examine our current product offerings and new product pipeline, we are in the process of modifying and developing new formulations that will enable us to gain patent protection for these products. While we seek broad coverage under our patent applications, there is always a risk that an alteration to the process may provide sufficient basis for a competitor to avoid infringement claims. In addition, patents expire, and we cannot provide any assurance that any patents will be issued from our pending application or that any potentially issued patents will adequately protect our intellectual property. Government regulation In the U.S., the FDA regulates pharmaceuticals, biologics, medical devices, dietary supplements, and cosmetics under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations. These products are also subject to other federal, state, and local statutes and regulations, including federal and state consumer protection laws, laws regarding pricing transparency, laws requiring the implementation of compliance programs, laws requiring the reporting of payments or other transfers of value to HCPs or other healthcare professionals, laws governing the financial relationships between manufacturers and HCPs or other referral sources and industry stakeholders, laws protecting the privacy of health-related information, laws restricting items and services of value provided to patients, and laws prohibiting unfair and deceptive acts and trade practices. See also Item 1A. Risk Factors – “Risks related to our business” for a discussion, among other things, of the extensive and costly governmental regulation we are subject to. 15 Pharmaceutical r egulation The process required by the FDA before a new drug product may be marketed in the U.S. generally involves the following: • completion of or reference to extensive preclinical laboratory tests and preclinical animal studies, all performed in accordance with the FDA’s Good Laboratory Practice, or GLP, regulations; • submission to the FDA of an investigational new drug (“IND”) application under which the holder may begin conducting human clinical trials, provided that the FDA does not object; the IND must be updated annually; • performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug candidate for each proposed indication; and • submission to the FDA of an NDA after completion of all pivotal clinical trials. An IND application is a request for authorization from the FDA to administer an investigational drug product to humans. Currently, we have three active INDs for our FDA-approved pharmaceutical products of ANNOVERA, IMVEXXY and BIJUVA. Clinical trials involve the administration of the investigational drug to human subjects under the supervision of qualified investigators in accordance with current Good Clinical Practices, or cGCPs, which include the requirement that all research subjects provide their informed consent for their participation in the clinical trial. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. Additionally, approval must also be obtained from a central or each clinical trial site’s institutional review board, or IRB, before the trials may be initiated, and the IRB must monitor the study until completed and re-assess and approve the study at least annually. There are also requirements governing the reporting of certain clinical trials and clinical trial results to public registry and results databases. In certain circumstances, FDA may deviations from the conventional three-Phase model for clinical, pursuant to modeling that FDA terms “adaptive clinical trial design.” Clinical trials are usually conducted in three phases. Phase 1 clinical trials are normally conducted in small groups of healthy volunteers to assess safety, characterize pharmacokinetics, and assist in finding the potential dosing range. During Phase 2, the drug is administered to small populations of patients to look for initial signs of efficacy in treating the targeted disease or condition and to continue to assess dosing and safety. Phase 3 clinical trials are usually multi-center, double-blind, controlled trials in hundreds or even thousands of subjects to assess the safety and effectiveness of the drug. During a clinical trial, we are required to inform the FDA and the IRB about adverse events associated with our drug candidate. The FDA, the IRB, or the clinical trial sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee, or DSMB. This group reviews unblinded data from clinical trials and assesses interim data to make recommendations regarding the feasibility and appropriateness for a trial to move forward or continue to completion. We may also suspend or terminate a clinical trial based on evolving business objectives or competitive climates. Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, detailed investigational drug product information is submitted to the FDA in the form of an NDA requesting approval to market the product for one or more indications. The application includes all relevant data available from pertinent preclinical and clinical trials, including, among other things, negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls and proposed labeling. Once the NDA submission has been accepted for filing, the FDA’s goal is to review standard applications within 10 months of the 60-day filing date for a new molecular entity NDA, or within 10 months of receipt for non-NME drug. For Original Efficacy Supplements, the FDA’s goal is to review the application within 10 months of the receipt date. The review process can be extended by FDA requests for additional information or clarification. The FDA may refer the application to an advisory committee for review, evaluation, and recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it typically follows such recommendations. Post-Approval Regulation We are required to comply with several post-approval requirements for our currently approved drug products. As a holder of an approved NDA, we are required to report, among other things, certain adverse reactions and production problems to the FDA, to provide updated safety and efficacy information, to adhere to product sampling and distribution requirements, fulfill post-marketing study commitments, and to comply with requirements concerning advertising and promotional labeling for any of our drug products, which include, among other things, standards for direct-to-consumer advertising, restrictions that prohibit promoting products for certain uses or in patient populations that are not described in the product’s approved indications or that are not otherwise consistent with the approved, FDA- 16 required label (known as “off-label use”), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the internet. Although physicians may prescribe legally available products for off-label use if they deem such use to be appropriate in their professional medical judgment, manufacturers may not market or promote such off-label uses. Also, quality control and manufacturing procedures must continue to conform to cGMPs to ensure and preserve the long-term stability of the drug product. cGMP regulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Manufacturers and other entities involved in the manufacture and distribution of approved products are, depending on the nature and scope of their activities, subject to FDA and certain state agency requirements relating to establishing and maintaining product quality. Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural, substantive, and record keeping requirements. For example, Catalent, the CMO that we have contracted with for the commercial supply of our BIJUVA and IMVEXXY hormone therapy drug products, was issued a Form FDA 483 in 2019 with respect to its softgel manufacturing plant. The observations and associated corrective actions related to our BIJUVA product were identified in Catalent’s response to the Form FDA. The current inspection classification status of that Form FDA 483 is that the response was adequate and Voluntary Action Indicated. Voluntary Action Indicated status indicates that objectionable conditions or practices were found but the FDA is not prepared to take or recommend any administrative or regulatory action. We rely, and expect to continue to rely, on third parties to produce clinical and commercial quantities of our drugs and drug candidates. Future FDA and state inspections may identify compliance issues at our facilities or at the facilities of our contract manufacturers that may disrupt production or distribution or require substantial resources to correct. In addition, discovery of previously unknown problems (for example, through adverse events observed in the post-marketing context, or in Phase 4 / post-marketing studies) with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer, or holder of an approved NDA, including withdrawal or recall of the product from the market or other voluntary, FDA-initiated or judicial action that could delay or prohibit further marketing. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and may require the implementation of other risk management measures. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development. Regulation of compounding pharmacies Our hormone therapy pharmaceutical products and product candidates may compete with non-FDA approved hormone therapy products supplied by compounding pharmacies. Pharmacy compounding is a practice in which a licensed medical practitioner or pharmacist combines, mixes, or alters ingredients in response to a prescription to create a medication tailored to the medical needs of an individual patient. The medications created by the compounding pharmacy are not approved by the FDA and are therefore not reviewed to evaluate their safety, effectiveness, or quality. For approximately 50 years, the FDA left regulation of compounding pharmacies to the states. In 1992, in response to various safety concerns, the FDA issued a Compliance Policy Guide, which announced that the “FDA may, in the exercise of its enforcement discretion, initiate federal enforcement actions... when the scope and nature of a pharmacy’s activities raises the kinds of concerns normally associated with a manufacturer and... results in significant violations of the new drug, adulteration, or misbranding provisions of the Act.” Thereafter, Congress enacted the Food and Drug Administration Modernization Act of 1997 (“FDAMA”) which sought to clarify FDA’s regulatory authority over compounding pharmacies. FDAMA exempted “compounded drugs” from the FDA’s standard drug approval requirements as long as the providers of those drugs abide by several restrictions, including that they refrain from advertising or promoting particular compounded drugs. In 2002, though, the Supreme Court declared this provision of FDAMA to be unconstitutional under the First Amendment, effectively reinstating the pre-FDAMA regime. Shortly thereafter, the FDA issued its 2002 Compliance Policy Guide 460.200, which states that the FDA will exercise enforcement discretion to exclude compounded drugs from the new drug approval requirements except where compounding pharmacies act more akin to traditional drug manufacturers. To further clarify the FDA’s jurisdiction and following a prior history in which states were primarily responsible for the regulation of compounding pharmacies, in light of industry changes to large-scale compounding operations and concerns regarding product quality and patient safety, Congress enacted and President Obama signed into law the Drug Quality and Security Act of 2013 which, among other things, formalized the relationship between the FDA and large-scale compounding pharmacies allowing for certain compounding pharmacy products to be offered without meeting FDA approval requirements (e.g., an NDA or ANDA) and without complying with 17 the requirement to label products with adequate directions for use, but requiring that the facilities and products meet FDA cGMP requirements. To qualify for this exemption, a compounding pharmacy must register with the FDA as an “outsourcing facility,” subject to FDA inspection and other requirements. Th us, overall, th e FDA does not exercise the same authority to regulate compounding pharmacies as pharmaceutical manufacturers. For example, compounding pharmacies are not required to report adverse events associated with compounded drugs, while commercial drug manufacturers are subject to stringent regulatory reporting requirements. Regulatory exclusivity There are two types of NDAs available under Section 505(b) the FDCA. Section 505(b)(1) of the FDCA provides a marketing approval pathway that is known as the “traditional” or “full” NDA process. Sponsors use 505(b)(1) applications to obtain marketing approval of a new drug with active ingredients that have not previously been approved by FDA. The data package necessary for approval of this new drug requires demonstration of safety and efficacy based on adequate and well controlled human clinical trials conducted by or for the sponsor, without allowance for reference to third party data. In contrast, Section 505(b)(2) of the FDCA provides a n alternative NDA process for approving a new drug that contains the same active ingredient as a previously approved product but allows sponsors to rely on clinical trials not conducted by or for the sponsor, as well as other clinical data or literature produced by other parties. In addition, Section 505(j) of the FDCA provides for a significantly shortened regulatory pathway for approval of a “generic” version of a new drug, by way of an Abbreviated New Drug Application or ANDA. Rather than demonstrating safety and effectiveness as required for an NDA, the ANDA requires proof that the generic drug is the “same” as or “bioequivalent” to the new drug under the standard of “bioequivalence,” often using pharmacokinetic, pharmacodynamic, and/or in vitro studies. A Section 505(b) NDA applicant may be eligible for its own regulatory exclusivity period, such as a five-year or three-year exclusivity. The first approved Section 505(b) NDA applicant for a drug containing an active ingredient that has not previously been approved in any other 505(b) NDA (a “new chemical entity,” or NCE), is eligible for a five-year NCE exclusivity period starting on the date of the NDA approval. During this period, an Abbreviated New Drug Application (“ANDA”) or 505(b)(2) application for a drug containing the protected active ingredient of the NCE product generally cannot be submitted to FDA until the end of the five-year exclusivity period, except that such applications can be submitted at year four if the product is covered by an Orange Book listed patent and the ANDA or 505(b)(2) NDA includes a Paragraph IV Certification challenging such patent. Additional exclusivities may also apply. The first approved Section 505(b) NDA applicant for a particular condition, or a supplemental NDA approval for a change to a marketed product, such as a new extended-release formulation for a previously approved product, may be eligible for a three-year Hatch-Waxman exclusivity if one or more new clinical studies, other than bioavailability or bioequivalence studies, was essential to the approval of the application and was conducted or sponsored by the applicant. Should this occur, the FDA would be precluded from granting final approval to any ANDA or 505(b)(2) application for the same condition of use or change to the marketed product that was granted exclusivity until after that three-year exclusivity period has run. Additionally, any ANDA or 505(b)(2) NDA that references the 505(b) product must include one of several types of patent certifications. If the Section 505(b) NDA drug has one or more unexpired patents listed in the Orange Book, an ANDA or 505(b)(2) NDA must include either a “Paragraph III Certification” or a “Paragraph IV Certification.” A Paragraph III Certification identifies the expiration date of the listed patent and requires FDA to withhold final approval until that patent has expired. A “Paragraph IV Certification” states that, in the applicant’s opinion, the relevant patent is invalid, unenforceable, or would not be infringed by the commercial marketing of the proposed ANDA or 505(b)(2) NDA product. The sponsor of a Paragraph IV ANDA or 505(b)(2) NDA must also provide the holder of the marketed product NDA, and the owner of the challenged patent, with notification of the Paragraph IV filing along with a detailed statement of the reasons the applicant believes the patent is invalid, unenforceable, or would not be infringed. If the patent owner brings an infringement action against the Paragraph IV applicant within 45 days of the notification, a statutory stay is imposed which prevents FDA from granting final approval of the Paragraph IV application for 30 months from the date of the Paragraph IV Notification. Generally, no more than one 30-month stay may be applied against any specific Paragraph IV ANDA or 505(b)(2) NDA. A 30-month stay can be terminated early, and the Paragraph IV application can be immediately approved, if the district court rules in favor of the Paragraph IV applicant that the patent is invalid, unenforceable, or would not be infringed. In February 2020, we received a Paragraph IV certification notice letter (the “IMVEXXY Notice Letter”) regarding an ANDA submitted to FDA by Teva Pharmaceuticals USA, Inc. (“Teva”). See Legal Proceedings in Item 4 of this 2021 10-K Report for additional information. In March 2020, we received a Paragraph IV certification notice letter (the “BIJUVA Notice Letter”) regarding an ANDA submitted to FDA by Amneal Pharmaceuticals (“Amneal”). In April 2020, we filed a complaint for patent infringement against Amneal in the U.S. District Court for the District of New Jersey arising from Amneal’s ANDA filing with FDA. In December 2021, we entered into a settlement agreement (the “Settlement Agreement”) with Amneal Pharmaceuticals, Inc., Amneal Pharmaceuticals, LLC and Amneal Pharmaceuticals of New York LLC (collectively “Amneal”) to resolve the litigation over our patents listed in FDA’s Orange Book that claim compositions and methods of BIJUVA (the “BIJUVA Patents”). Under the terms of the Settlement Agreement, the parties agreed 18 file d a consent judgment with the U.S. District Court for the District of New Jersey that enjoins Amneal from marketing a generic version of BIJUVA (1 mg estradiol and 100 mg progesterone) before the expiration of the patents-in-suit, except as provided in the Settlement Agreement, and the Company granted Amneal a non-exclusive, non-transferable, royalty-free license to commercialize Amneal’s generic formulation of BIJUVA in the U.S. commencing in May 2032 (180 days before the current expiration date in November 2032 for the last to expire of our BIJUVA P atents ) , or earlier under certain circumstances customary for settlement agreements of this nature. Dietary supplement regulation Our currently marketed prenatal vitamins are regulated as dietary supplements. The processing, formulation, safety, manufacturing, packaging, labeling, advertising, and distribution of these products are subject to regulation by one or more federal agencies, including the FDA and the Federal Trade Commission (the “FTC”) and by various agencies of the states and localities in which our products are sold. Generally, our nutritional product formulations are proprietary in that in designing them, we attempt to blend an optimal combination of nutrients that are intended to have a beneficial impact in prenatal women based upon scientific literature and input from HCPs; however, we are generally prohibited from making disease treatment and prevention claims in the promotion of our products that use these formulations. The Dietary Supplement Health and Education Act of 1994 (“DSHEA”) amended the FDCA to establish a new framework governing the composition, safety, labeling, manufacturing, and marketing of dietary supplements. Generally, under the FDCA, dietary ingredients that were marketed in the U.S. before October 1994 may be used in dietary supplements without notifying the FDA. “New” dietary ingredients ( i.e. , dietary ingredients that were “not marketed in the U.S. before October 1994”) must be the subject of a new dietary ingredient notification submitted to the FDA unless the ingredient has been “present in the food supply as an article used for food” without being “chemically altered.” A new dietary ingredient notification must provide the FDA evidence of a “history of use or other evidence of safety” establishing that use of the dietary ingredient “will reasonably be expected to be safe.” A new dietary ingredient notification must be submitted to the FDA at least 75 days before the initial marketing of the new dietary ingredient. The FDA may determine that a new dietary ingredient notification does not provide an adequate basis to conclude that a dietary ingredient is reasonably expected to be safe. Such a determination could prevent the marketing of such dietary ingredient. The FDA issued draft guidance governing the notification of new dietary ingredients. FDA guidance is not mandatory, and companies are free to use an alternative approach if the approach satisfies the requirements of applicable laws and regulations. However, FDA guidance is a strong indication of the FDA’s “current thinking” on the topic discussed in the guidance, including its position on enforcement. The draft guidance on new dietary ingredients is expected to be significantly revised when published in final form. Moreover, Congress can amend the dietary supplement provisions of the FDCA to impose additional restrictions on labeling and marketing of dietary supplements. Such action would have material adverse impact on our business and growth prospects. The FDA or other agencies could take actions against products or product ingredients that in its determination present an unreasonable health risk to consumers that would make it illegal for us to sell such products. In addition, the FDA could issue consumer warnings with respect to the products or ingredients in such products. Such actions or warnings could be based on information received through FDCA-mandated reporting of serious adverse events. The FDCA requires that reports of serious adverse events be submitted to the FDA, and based in part on such reports, the FDA has issued public warnings to consumers to stop using certain third-party dietary supplement products. In addition, DSHEA provides that so-called “third-party literature,” such as a reprint of a peer-reviewed scientific publication linking a particular dietary ingredient with health benefits, may be used “in connection with the sale of a dietary supplement to consumers” without the literature being subject to regulation as labeling. The literature: (1) must not be false or misleading; (2) may not “promote” a particular manufacturer or brand dietary supplement; (3) must present a balanced view of the available scientific information on the subject matter; (4) if displayed in establishment, must be physically separate from the dietary supplements; and (5) should not have appended to it any information by sticker or another method. If the literature fails to satisfy each of these requirements, we may be prevented from disseminating such literature with our products, and any dissemination could subject our product to regulatory action as an illegal drug. In June 2007, pursuant to the authority granted by the FDCA as amended by DSHEA, the FDA published detailed cGMP regulations that govern the manufacturing, packaging, labeling, and holding operations of dietary supplement manufacturers. The cGMP regulations, among other things, impose significant recordkeeping requirements on manufacturers. The cGMP requirements are in effect for all manufacturers, and the FDA is conducting inspections of dietary supplement manufacturers pursuant to these requirements. The failure of a manufacturing facility to comply with the cGMP regulations renders products manufactured in such facility “adulterated,” and subjects such products and the manufacturer to a variety of potential FDA enforcement actions. In addition, under the Food Safety Modernization Act (“FSMA”), which was enacted in January 2011, the manufacturing of dietary ingredients contained in dietary 19 supplements are subject to similar or even more burdensome manufacturing requirements, which has the potential to increase the costs of dietary ingredients and subject suppliers of such ingredients to more rigorous inspections and enforcement. The FSMA also requires importers of food, including dietary supplements and dietary ingredients, to conduct verification activities to ensure that the food they might import meets applicable domestic requirements. The FDA has broad authority to enforce the provisions of federal law applicable to dietary supplements, including powers to issue public Warning Letters or Untitled Letters to a company, publicize information about illegal products, detain products intended for import, require the reporting of serious adverse events, request a recall of illegal or unsafe products from the market, and request that the Department of Justice initiate a seizure action, an injunction action, or a criminal prosecution in the U.S. courts. The FSMA expands the reach and regulatory powers of the FDA with respect to the production and importation of food, including dietary supplements. The expanded reach and regulatory powers include the FDA’s ability to order mandatory recalls, administratively detain domestic products, require certification of compliance with domestic requirements for imported foods associated with safety issues and administratively revoke manufacturing facility registrations, effectively enjoining manufacturing of dietary ingredients and dietary supplements without judicial process. The regulation of dietary supplements may increase or become more restrictive in the future. The FTC exercises jurisdiction over the advertising of dietary supplements. In recent years, the FTC has instituted numerous enforcement actions against dietary supplement companies for making false or misleading advertising claims and for failing to adequately substantiate claims made in advertising. These enforcement actions have often resulted in consent decrees and the payment of civil penalties and/or restitution by the companies involved. The FTC also regulates other aspects of consumer purchases, including promotional offers of savings compared policies, telemarketing, continuity plans, and “free” offers. We are also subject to regulation under various state, local, and international laws that include provisions governing, among other things, the formulation, manufacturing, packaging, labeling, advertising, and distribution of dietary supplements and drugs. For example, Proposition 65 in the state of California is a list of substances deemed to pose a risk of carcinogenicity or birth defects at or above certain levels. If any such ingredient exceeds the permissible levels in a dietary supplement, cosmetic, or drug, the product may be lawfully sold in California only if accompanied by a prominent warning label alerting consumers that the product contains an ingredient linked to cancer or birth defect risk. Private attorney general actions as well as California attorney general actions may be brought against non-compliant parties and can result in substantial costs and fines. Other U.S. healthcare laws and compliance requirements Certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights, among other topics, are and will be applicable to our business. We are subject to regulation by both the federal government and the states in which we or our partners conduct our business. The healthcare laws and regulations that may affect our ability to operate include: • the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, soliciting, receiving or providing any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce either the referral of an individual or in return for the purchase, lease, or order of, or the arranging for, any good, facility item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs; • federal civil and criminal false claims laws and civil monetary penalty laws, including, for example, the federal civil False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; • the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payer (e.g., public or private), knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, which impose obligations on covered entities, including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; 20 • the federal physician sunshine requirements under the ACA, which require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare or Medicaid to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value provided to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members. In 2022, the Sunshine Act has been extended to payments and transfers of value to physician assistants, nurse practitioners, and other mid-level practitioners (with reporting requirements going into effect in 2022 for payments made in 2021). In addition, Section 6004 of the ACA requires annual reporting of information about drug samples that manufacturers and authorized distributors provide to healthcare providers; • federal and state laws requiring pricing transparency or limiting price increases, which are in existence today or are anticipated to be in existence in the near future, may limit the ability to raise prices, require disclosure of price increases or require disclosure of the wholesale acquisition cost of pharmaceutical products to governmental agencies and consumers; and • state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers or even self-pay; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments that may be provided to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to healthcare providers or marketing expenditures; state laws requiring a license, registration or permit to engage in manufacturing and distribution of prescription products or to engage in the practice of pharmacy; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Pharmaceutical company interactions with HCPs, patient advocacy groups, and patients, including with respect to product and patient assistance programs and other education and support initiatives, have been and continue to be, the subject of regulatory scrutiny for compliance with fraud and abuse laws. Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations could be costly. Although we believe that our business practices are structured to be compliant with applicable laws, it is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations, or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our past or present operations, including activities conducted by our sales team or agents, are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal, and administrative penalties, damages, fines, exclusion from third-party payer programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the HCPs, providers, or entities with whom we do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil, or administrative sanctions, including exclusion from government funded healthcare programs. Many aspects of these laws have not been definitively interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of subjective interpretations that increases the risk of potential violations. In addition, these laws and their interpretations are subject to change. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business, and damage our reputation. In addition to the fraud and abuse laws, we continue to monitor the potential impact of proposals to lower prescription drug costs at the federal and state level. For example, in November 2021, the Biden Administration announced several prescription drug pricing proposals as part of the Build Back Better legislation. In particular, the plan would allow for Medicare to negotiate prices for high-cost prescription drugs, including for both Part D and Part B drugs, after the drugs have been on the market for a fixed number of years: 9 years for small molecule drugs and 12 years for biologics. Medicare will negotiate up to 10 drugs per year during 2023, with the negotiated prices taking effect in 2025, increasing up to 20 drugs per year. Further, the plan imposes a tax penalty if drug manufacturers increase their prices faster than inflation. Finally, the plan places a $2,000 per year cap on out-of-pocket drug costs under Medicare Part D. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. We are unable to predict the future course of federal or state healthcare legislation in the U.S. directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. In addition, from time to time in the future, we may become subject to additional laws or regulations administered by the FDA, the FTC, U.S. Department of Health and Human Services (“HHS”), or by other federal, state, local, or foreign regulatory authorities, or the repeal 21 of laws or regulations that we generally consider favorable, such as DSHEA, or to more stringent interpretations of current laws or regulations. We are not able to predict the nature of such future laws, regulations, repeals, or interpretations, and we cannot predict what effect additional governmental regulation, if and when it occurs, would have on our business in the future. Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, additional personnel, or other new requirements. Any such developments could have a material adverse effect on our business. The growth and demand for eCommerce could result in more stringent consumer protection laws that impose additional compliance burdens on online retailers. These consumer protection laws could result in substantial compliance costs and could interfere with the conduct of our business. There is currently great uncertainty in many states whether or how existing laws governing issues such as property ownership, sales and other taxes, and libel and personal privacy apply to the Internet and commercial online retailers. These issues may take years to resolve. For example, tax authorities in several states, as well as a Congressional advisory commission, are currently reviewing the appropriate tax treatment of companies engaged in online commerce and new state tax regulations may subject us to additional state sales and income taxes. New legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or a change in application of existing laws and regulations to the Internet and commercial online services could result in significant additional taxes on our business. These taxes could have an adverse effect on our results of operations. In addition, new regulation or legislative actions regarding data privacy and security (together with applicable industry standards) may increase our costs of doing business. In this regard, we expect that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data protection in the U.S., the European Union and other jurisdictions, and we cannot determine the impact such future laws, regulations and standards may have on our business. Human capital resources We believe the growth of our employees drives the growth of our company. Therefore, to ensure the continued growth of our employees, our human capital strategy is measured around four key pillars; attracting talent, engaging the workforce, developing leaders, and promoting our culture. To attract key talent, we offer a competitive benefit package, 401(k) match, paid time off, referral bonus, and an employee stock purchase program (ESPP). To engage our workforce, in 2020 we refined our compensation approach to match our company’s size and stage of growth. We introduced a new framework as a foundation to our talent and reward programs, to clarify career paths, to promote pay equity, and to ensure pay is competitive to attract and retain talent. To develop leaders, we provide self-directed learning and company leadership training. Such leadership and self-development progress are measured through our learning management system, and we evaluate our leaders according to their achievement against goals and company values. To promote our culture, we actively seek feedback from our employees to create a culture where they feel engaged, appreciated, and fulfilled. The feedback from our employees has earned us recognition as a “Top Workplace” for 2020 according to the Sun Sentinel. Employees As of December 31, 2021, we had 416 employees, five of whom were executive officers. Our sales force currently consists mainly of employees with a limited number of contract sales agents who call on 340B entities, the Department of Defense, and Puerto Rico, with the sales management being employees. Additionally, from time to time, we hire temporary contract employees. None of our employees are covered by a collective bargaining agreement, and we are unaware of any union organizing efforts. We have never experienced a major work stoppage, strike, or dispute. We consider our relationship with our employees to be good. Available information We are a Nevada corporation, and we maintain our principal executive offices at 951 Yamato Road, Suite 220, Boca Raton, Florida 33431. Our telephone number is (561) 961-1900. We maintain a corporate website at www.therapeuticsmd.com as well as various product websites. The information contained on our websites or that can be accessed through our websites is not incorporated by reference into this 2021 10-K Report or in any other report or document we file with the SEC.