Risk Factor
The Company is supplementing
the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2019, filed with
the U.S. Securities and Exchange Commission on February 24, 2020 (the “2019 Form 10-K”), with the following risk
factor:
The Company’s
financial condition and results of operations for fiscal year 2020 and beyond may be materially adversely affected by the ongoing
COVID-19 (coronavirus) outbreak.
The outbreak of the novel
COVID-19 (coronavirus) has evolved into a global pandemic. COVID-19 has spread to many regions of the world, including the United
States and Europe. The full extent to COVID-19 impacts our business and operating results will depend on future developments that
are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and the
actions to contain COVID-19 or treat its impact, among others.
While the Company has developed
a comprehensive COVID-19 contingency plan designed to preserve the value of the Company’s investments in its sales and marketing
infrastructure, protect the Company’s balance sheet during this period of market disruption and meet the needs of the Company’s
patients and prescribers, including cost-containment and spending cuts in the second quarter of 2020 that can be extended through
the rest of the year depending on the evolution of COVID-19, the Company has suspended its previously announced 2020 financial
guidance due to the unknown impact of COVID-19 on the Company’s business and the rapidly evolving nature of the pandemic.
As a result of COVID-19, the Company will, among other things, (i) defer approximately $10 million in consumer and healthcare practitioner
marketing spending for ANNOVERA® and IMVEXXY®, (ii) make cuts of approximately $20 million in other planned expenses for
the year, (iii) negotiate lower fees and/or suspend services from non-critical third party vendors, (iv) implement a hiring freeze,
(v) delay or cancel any non-critical information technology projects and (vi) eliminate travel, entertainment, meeting and event
expenses.
Although the Company currently
continues to have uninterrupted wholesale and retail distribution of its products and the Company does not anticipate a shortage
of its products due to COVID-19 at this time, disruptions may occur for the Company’s customers or suppliers that may materially
affect the Company’s ability to obtain supplies or other components for its products, manufacture additional products or
deliver inventory in a timely manner. This would result in lost sales, additional costs, or penalties, or damage to the Company’s
reputation. In addition, due to closures and restrictions on travel, the Company’s sales force is currently functioning largely
utilizing digital engagement tools and tactics and virtual detailing, which may be less effective than the Company’s ordinary
course sales and marketing programs. The Company may also require an increased level of working capital if it experiences extended
billing and collection cycles as a result of displaced employees at the Company, payors, revenue cycle management contractors,
or otherwise. The Company may also experience other unknown impacts from COVID-19 that cannot be predicted. Accordingly, disruptions
to the Company’s business as a result of COVID-19 could result in a material adverse effect on the Company’s business,
results of operations, financial condition and prospects in the near-term and beyond 2020.
Forward-Looking Statements
This Current Report on
Form 8-K may contain forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating
to the Company’s objectives, plans and strategies as well as statements, other than historical facts, that address activities,
events or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future. These
statements are often characterized by terminology such as “believes,” “hopes,” “may,” “anticipates,”
“should,” “intends,” “plans,” “will,” “expects,” “estimates,”
“projects,” “positioned,” “strategy” and similar expressions and are based on assumptions and
assessments made in light of the Company’s management’s experience and perception of historical trends, current conditions,
expected future developments and other factors believed to be appropriate. Forward-looking statements in this Form 8-K are made
as of the date of this Form 8-K, and the Company undertakes no duty to update or revise any such statements, whether as a result
of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject
to risks and uncertainties, many of which are outside of the Company’s control. Important factors that could cause actual
results, developments and business decisions to differ materially from forward-looking statements are described in the sections
titled “Risk Factors” in the 2019 Form 10-K as well as this Form 8-K, and include the following: the effects of the
COVID-19 pandemic; the Company’s ability to maintain or increase sales of its products; the Company’s ability to develop
and commercialize IMVEXXY®, ANNOVERA®, BIJUVA® and its hormone therapy drug candidates and obtain additional financing
necessary therefor; whether the Company will be able to comply with the covenants and conditions under its term loan facility,
including the conditions to draw an additional tranche thereunder and whether the lender will make such tranche available; the
potential of adverse side effects or other safety risks that could adversely affect the commercialization of the Company’s
current or future approved products or preclude the approval of the Company’s future drug candidates; whether the U.S. Food
and Drug Administration (FDA) will approve the efficacy supplement for the lower dose of BIJUVA; the Company’s ability to
protect its intellectual property, including with respect to the Paragraph IV notice letters the Company received regarding IMVEXXY
and BIJUVA; the length, cost and uncertain results of future clinical trials; the Company’s reliance on third parties to
conduct its manufacturing, research and development and clinical trials; the ability of the Company’s licensees to commercialize
and distribute the Company’s products; the ability of the Company’s marketing contractors to market ANNOVERA; the availability
of reimbursement from government authorities and health insurance companies for the Company’s products; the impact of product
liability lawsuits; the influence of extensive and costly government regulation; the volatility of the trading price of the Company’s
common stock and the concentration of power in its stock ownership.