☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Femasys Inc.
|
||
(Exact Name of Registrant as Specified in its Charter)
|
Delaware
|
11-3713499
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
|
3950 Johns Creek Court, Suite 100
|
||
Suwanee, GA 30024
|
(770) 500-3910
|
|
(Address of principal executive offices, including zip code)
|
(Registrant’s telephone number, including area code)
|
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☑ | Smaller reporting company ☑ |
Emerging growth company ☑ |
Title of each class
|
Trading symbol
|
Name of each exchange on which
registered
|
|||
Common stock, $0.001 par value
|
FEMY
|
The
|
• |
our ability to develop and advance our current product candidates and programs into, and successfully initiate and complete, clinical trials;
|
• |
the ability of our clinical trials to demonstrate safety and effectiveness of our product candidates and other positive results;
|
• |
estimates regarding the total addressable market for our product candidates;
|
• | our ability to enroll subjects in the clinical trials for our product candidates in order to advance the development thereof on a timely basis; |
• | our ability to obtain additional financing to fund the clinical development of our products and fund operations; |
• |
competitive companies and technologies in our industry;
|
• |
our ability to obtain U.S Food and Drug Administration (FDA) approval for our permanent birth control
system, ability to gain FDA grant of a de novo classification request for our intrauterine insemination system, expand sales of our women-specific medical products and develop and commercialize additional products;
|
• |
our ability to commercialize or obtain regulatory approvals, grants of de novo classification requests or 510(k) clearance for our product candidates, or the effect of delays in commercializing or obtaining
regulatory authorizations;
|
• |
our business model and strategic plans for our products, technologies and business, including our implementation thereof;
|
• |
commercial success and market acceptance of our product candidates;
|
• |
our ability to achieve and maintain adequate levels of coverage or reimbursement for our FemBloc system or any future products we may seek to commercialize;
|
• |
our ability to manufacture our products and product candidates in compliance with applicable laws, regulations and requirements and to oversee third-party suppliers, service providers and vendors in the
performance of any contracted activities in accordance with applicable laws, regulations and requirements;
|
• |
the impact of the COVID-19 pandemic on our business, financial condition, results of operations, and prospects;
|
• |
our ability to accurately forecast customer demand for our product candidates, and manage our inventory;
|
• |
our ability to build, manage and maintain our direct sales and marketing organization, and to market and sell our permanent birth control system, artificial insemination system and women-specific medical
products in markets in and outside of the United States (U.S.);
|
• |
our ability to hire and retain our senior management and other highly qualified personnel;
|
• | FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry generally, including healthcare reform measures in the U.S. and international markets; |
• |
the timing or likelihood of regulatory filings and approvals or clearances;
|
• |
our ability to establish and maintain intellectual property protection for our product candidates and our ability to avoid claims of infringement;
|
• |
the volatility of the trading price of our common stock; and
|
• |
our expectations about market trends.
|
ITEM I. |
Financial Statements
|
Assets
|
March 31,
2022
|
December 31,
2021
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
21,767,634
|
24,783,029
|
|||||
Accounts receivable, net
|
170,302
|
84,258
|
||||||
Inventory, net
|
223,008
|
208,270
|
||||||
Other current assets
|
567,300
|
555,853
|
||||||
Total current assets
|
22,728,244
|
25,631,410
|
||||||
Property and equipment, at cost:
|
||||||||
Leasehold improvements
|
1,195,637
|
1,155,332
|
||||||
Office equipment
|
99,344
|
99,344
|
||||||
Furniture and fixtures
|
424,947
|
424,947
|
||||||
Machinery and equipment
|
2,287,126
|
2,261,793
|
||||||
Construction in progress
|
434,443
|
379,713
|
||||||
4,441,497
|
4,321,129
|
|||||||
Less accumulated depreciation
|
(2,854,315
|
)
|
(2,722,117
|
)
|
||||
Net property and equipment
|
1,587,182
|
1,599,012
|
||||||
Long-term assets:
|
||||||||
Lease right-of-use assets, net
|
574,943
|
665,747
|
||||||
Intangible assets, net of accumulated amortization
|
17,663
|
25,093
|
||||||
Other long-term assets
|
625,418
|
655,418
|
||||||
Total long-term assets
|
1,218,024
|
1,346,258
|
||||||
Total assets
|
$
|
25,533,450
|
28,576,680
|
Liabilities and Stockholders’ Equity |
March 31,
2022
|
December 31,
2021
|
||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
548,377
|
445,522
|
|||||
Accrued expenses
|
565,228
|
603,787
|
||||||
Clinical holdback – current portion
|
36,238
|
18,947
|
||||||
Note payable – current portion
|
45,666
|
181,123
|
||||||
Lease liabilities – current portion
|
400,620
|
406,674
|
||||||
Other – current
|
36,037
|
36,037
|
||||||
Total current liabilities
|
1,632,166
|
1,692,090
|
||||||
Long-term liabilities:
|
||||||||
Clinical holdback – long-term portion
|
102,502
|
149,791
|
||||||
Lease liabilities – long-term portion
|
305,071
|
402,417
|
||||||
Total long-term liabilities
|
407,573
|
552,208
|
||||||
Total liabilities
|
2,039,739
|
2,244,298
|
||||||
Commitments and contingencies
|
||||||||
Stockholders’ equity:
|
||||||||
Common stock, $0.001 par, 200,000,000 authorized,
11,921,388 shares issued and 11,804,165 outstanding as of
March 31, 2022 and December 31, 2021
|
11,921
|
11,921
|
||||||
Treasury stock, 117,223 shares
|
(60,000
|
)
|
(60,000
|
)
|
||||
Warrants
|
702,492
|
702,492
|
||||||
Additional paid-in-capital
|
108,462,663
|
108,418,304
|
||||||
Accumulated deficit
|
(85,623,365
|
)
|
(82,740,335
|
)
|
||||
Total stockholders’ equity
|
23,493,711
|
26,332,382
|
||||||
Total liabilities and stockholders' equity
|
$
|
25,533,450
|
28,576,680
|
Three Months Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
Sales
|
$
|
321,405
|
329,775
|
|||||
Cost of sales
|
122,675
|
93,042
|
||||||
Gross margin
|
198,730
|
236,733
|
||||||
Operating expenses:
|
||||||||
Research and development
|
1,421,063
|
995,022
|
||||||
Sales and marketing
|
68,863
|
22,819
|
||||||
General and administrative
|
1,447,355
|
891,987
|
||||||
Depreciation and amortization
|
144,199
|
153,453
|
||||||
Total operating expenses
|
3,081,480
|
2,063,281
|
||||||
Loss from operations
|
(2,882,750
|
)
|
(1,826,548
|
)
|
||||
Other income (expense):
|
||||||||
Interest income, net
|
2,454
|
164
|
||||||
Interest expense
|
(2,734
|
)
|
(3,848
|
)
|
||||
Other expense, net
|
(280 | ) | (3,684 | ) | ||||
Net loss
|
$
|
(2,883,030
|
)
|
(1,830,232
|
)
|
|||
Net loss attributable to common stockholders, basic and diluted
|
$
|
(2,883,030
|
)
|
(1,830,232
|
)
|
|||
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.24
|
)
|
(1.84
|
)
|
|||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
11,804,165
|
995,208
|
Series B and Series C Redeemable Convertible
|
Total
|
|||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock
|
Common stock
|
Treasury stock
|
Preferred stock
|
Additional
|
Accumulated
|
stockholders’
|
||||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Warrants
|
paid-in capital
|
deficit
|
Equity (Deficit)
|
|||||||||||||||||||||||||||||||||||||
THREE MONTHS ENDED MARCH 31, 2022
|
||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021
|
—
|
$
|
—
|
11,921,388
|
$
|
11,921
|
117,223
|
$
|
(60,000
|
)
|
—
|
$
|
—
|
$
|
702,492
|
$
|
108,418,304
|
$
|
(82,740,335
|
)
|
$
|
26,332,382
|
||||||||||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
44,359
|
—
|
44,359
|
||||||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(2,883,030
|
)
|
(2,883,030
|
)
|
||||||||||||||||||||||||||||||||||
Balance at March 31, 2022
|
—
|
$
|
—
|
11,921,388
|
$
|
11,921
|
117,223
|
$
|
(60,000
|
)
|
—
|
$
|
—
|
$
|
702,492
|
$
|
108,462,663
|
$
|
(85,623,365
|
)
|
$
|
23,493,711
|
||||||||||||||||||||||||||
THREE MONTHS ENDED MARCH 31, 2021
|
||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020
|
55,835,833
|
$
|
55,343,686
|
1,110,347
|
$
|
1,110
|
117,223
|
$
|
(60,000
|
)
|
17,210,609
|
$
|
17,211
|
$
|
702,492
|
$
|
22,725,949
|
$
|
(75,202,490
|
)
|
$
|
(51,815,728
|
)
|
|||||||||||||||||||||||||
Issuance of common stock for cash upon exercise of options
|
—
|
—
|
2,084
|
2
|
—
|
—
|
—
|
—
|
—
|
10,048
|
—
|
10,050
|
||||||||||||||||||||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
72,490
|
—
|
72,490
|
||||||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1,830,232
|
)
|
(1,830,232
|
)
|
||||||||||||||||||||||||||||||||||
Balance at March 31, 2021
|
55,835,833
|
$
|
55,343,686
|
1,112,431
|
$
|
1,112
|
117,223
|
$
|
(60,000
|
)
|
17,210,609
|
$
|
17,211
|
$
|
702,492
|
$
|
22,808,487
|
$
|
(77,032,722
|
)
|
$
|
(53,563,420
|
)
|
Three Months Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(2,883,030
|
)
|
(1,830,232
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation
|
136,769
|
141,202
|
||||||
Amortization
|
7,430
|
12,251
|
||||||
Amortization of right-of-use assets
|
86,233
|
98,256
|
||||||
Inventory reserve
|
2,700 | — | ||||||
Share-based compensation expense
|
44,359
|
72,490
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(86,044
|
)
|
30,043
|
|||||
Inventory
|
(17,438
|
)
|
(12,679
|
)
|
||||
Other assets
|
18,553
|
63,081
|
||||||
Accounts payable
|
102,855
|
171,665
|
||||||
Accrued expenses and other
|
(38,559
|
)
|
194,506
|
|||||
Lease liabilites
|
(97,851
|
)
|
(105,986
|
)
|
||||
Other liabilities
|
(29,998
|
)
|
4,721
|
|||||
Net cash used in operating activities
|
(2,754,021
|
)
|
(1,160,682
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
(120,368
|
)
|
—
|
|||||
Net cash used in investing activities
|
(120,368
|
)
|
—
|
|||||
Cash flows from financing activities:
|
||||||||
Payments of deferred offering costs
|
— | (126,377 | ) | |||||
Proceeds from issuance of common stock
|
—
|
10,050
|
||||||
Repayment of note payable
|
(135,457
|
)
|
(23,643
|
)
|
||||
Payments under lease obligations
|
(5,549
|
)
|
(5,021
|
)
|
||||
Net cash used in financing activities
|
(141,006
|
)
|
(144,991
|
)
|
||||
Net change in cash and cash equivalents
|
(3,015,395
|
)
|
(1,305,673
|
)
|
||||
Cash and cash equivalents:
|
||||||||
Beginning of period
|
24,783,029
|
3,322,226
|
||||||
End of period
|
$
|
21,767,634
|
2,016,553
|
Supplemental cash flow information
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
2,734
|
1,845
|
|||||
Income taxes
|
$
|
800
|
—
|
|||||
Non-cash financing activities:
|
||||||||
Deferred offering costs included in accounts payable and accrued expenses
|
$ | — | 526,476 | |||||
Prepaid insurance financed with promissory notes
|
$
|
45,666
|
41,199
|
(1)
|
Organization, Nature of Business, and Liquidity
|
(2)
|
Cash and Cash Equivalents
|
(3)
|
Inventories
|
March 31,
2022
|
December 31,
2021
|
|||||||
Materials
|
$
|
132,185
|
111,531
|
|||||
Work in progress
|
55,709
|
12,795
|
||||||
Finished goods
|
35,114
|
83,944
|
||||||
Inventory, net
|
$
|
223,008
|
208,270
|
(4)
|
Accrued Expenses
|
March 31,
2022
|
December 31,
2021
|
|||||||
Clinical trial costs
|
$
|
324,329
|
301,730
|
|||||
Compensation costs
|
127,873
|
98,272
|
||||||
Franchise taxes |
16,500 | 103,020 | ||||||
Other
|
96,526
|
100,765
|
||||||
Accrued expenses
|
$
|
565,228
|
603,787
|
(5)
|
Clinical Holdback
|
Balance at December 31, 2021
|
$
|
168,738
|
||
Clinical holdback retained
|
4,023
|
|||
Clinical holdback paid
|
(34,021
|
)
|
||
Balance at March 31, 2022
|
$
|
138,740
|
||
Less: clinical holdback - current portion
|
(36,238
|
)
|
||
Clinical holdback - long-term portion
|
$
|
102,502
|
(6)
|
Revenue Recognition
|
Three Months Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
Primary geographical markets
|
||||||||
U.S.
|
$
|
263,360
|
271,730
|
|||||
International
|
58,045
|
58,045
|
||||||
Total
|
$
|
321,405
|
329,775
|
(7)
|
Commitments and Contingencies
|
(8)
|
Notes Payable
|
(9)
|
Redeemable Convertible Preferred Stock and Stockholders’ Equity
|
(10)
|
Equity Incentive Plans
|
(a) |
Stock Option Plans
|
Number of
options
|
Weighted
average
exercise price
|
Weighted
average
remaining
contracted
term in
years
|
Aggregate
intrinsic
value
|
|||||||||||||
Outstanding at December 31, 2021
|
689,995
|
$
|
3.58
|
$ | 683,531 | |||||||||||
Granted
|
270,170
|
6.71
|
||||||||||||||
Expired
|
(3,334
|
)
|
27.00
|
|||||||||||||
Forfeited
|
(834
|
)
|
6.12
|
|||||||||||||
Outstanding at March 31, 2022
|
955,997
|
$
|
4.38
|
6.47 | $ | 125,279 | ||||||||||
Vested and exercisable at March 31, 2022 |
529,027 | $ | 3.65 | 5.21 | $ | 64,168 |
Employee | Nonemployee | |||||||
Expected term (in years)
|
6.47
|
6.00
|
||||||
Risk‑free interest rate
|
1.74
|
%
|
1.64
|
%
|
||||
Dividend yield
|
—
|
%
|
—
|
%
|
||||
Expected volatility
|
107.23
|
%
|
107.78
|
%
|
(b) |
Inducement Grant
|
Inducement
|
||||
Expected term (in years)
|
6.25
|
|||
Risk‑free interest rate
|
1.76
|
%
|
||
Dividend yield
|
—
|
%
|
||
Expected volatility
|
106.76
|
%
|
(c) | Share-Based Compensation Expense |
Three Months Ended March 31, | ||||||||
2022
|
2021
|
|||||||
Research and development
|
$
|
29,139
|
35,496
|
|||||
Sales and marketing
|
1,126
|
926
|
||||||
General and administrative
|
14,094
|
36,068
|
||||||
Total share-based compensation expense
|
$
|
44,359
|
72,490
|
(d) |
Employee Stock Purchase Plan
|
(11)
|
Net Loss per Share Attributable to Common Stockholders
|
Three Months Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
Net loss attributable to common stockholders, basic & diluted
|
$
|
(2,883,030
|
)
|
(1,830,232
|
)
|
|||
Weighted average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
11,804,165
|
995,208
|
||||||
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.24
|
)
|
(1.84
|
)
|
March 31, 2022
|
March 31, 2021
|
|||||||
Convertible preferred stock outstanding
|
—
|
8,116,343
|
||||||
Options to purchase common stock
|
1,055,997
|
740,444
|
||||||
Warrants to purchase to common stock
|
244,572
|
244,572
|
||||||
Total potential shares
|
1,300,569
|
9,101,359
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Three Months Ended March 31,
|
Change
|
% Change
|
||||||||||||||
2022
|
2021
|
|||||||||||||||
Sales
|
$
|
321,405
|
329,775
|
(8,370
|
)
|
-2.5
|
%
|
|||||||||
Cost of sales
|
122,675
|
93,042
|
29,633
|
31.8
|
%
|
|||||||||||
Gross margin
|
198,730
|
236,733
|
(38,003
|
)
|
-16.1
|
%
|
||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
1,421,063
|
995,022
|
426,041
|
42.8
|
%
|
|||||||||||
Sales and marketing
|
68,863
|
22,819
|
46,044
|
201.8
|
%
|
|||||||||||
General and administrative
|
1,447,355
|
891,987
|
555,368
|
62.3
|
%
|
|||||||||||
Depreciation and amortization
|
144,199
|
153,453
|
(9,254
|
)
|
-6.0
|
%
|
||||||||||
Total operating expenses
|
3,081,480
|
2,063,281
|
1,018,199
|
49.3
|
%
|
|||||||||||
Loss from operations
|
(2,882,750
|
)
|
(1,826,548
|
)
|
(1,056,202
|
)
|
57.8
|
%
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
2,454
|
164
|
2,290
|
1396.3
|
%
|
|||||||||||
Interest expense
|
(2,734
|
)
|
(3,848
|
)
|
1,114
|
-29.0
|
%
|
|||||||||
Other expense, net
|
(280
|
)
|
(3,684
|
)
|
3,404
|
-92.4
|
%
|
|||||||||
Net loss
|
$
|
(2,883,030
|
)
|
(1,830,232
|
)
|
(1,052,798
|
)
|
57.5
|
%
|
Three Months Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
Compensation and related personnel costs
|
$
|
764,792
|
676,547
|
|||||
Clinical-related costs
|
443,970
|
173,473
|
||||||
Material and development costs
|
131,450
|
114,118
|
||||||
Professional and outside consultant costs
|
68,664
|
17,957
|
||||||
Other costs
|
12,187
|
12,927
|
||||||
Total research and development expenses
|
$
|
1,421,063
|
995,022
|
Three Months Ended March 31,
|
||||||||
2022
|
2021
|
|||||||
Net cash used in operating activities
|
$
|
(2,754,021
|
)
|
(1,160,682
|
)
|
|||
Net cash used in investing activities
|
(120,368
|
)
|
—
|
|||||
Net cash used in financing activities
|
(141,006
|
)
|
(144,991
|
)
|
||||
Net change in cash and cash equivalents
|
$
|
(3,015,395
|
)
|
(1,305,673
|
)
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3. |
Defaults Upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Item 6. |
Exhibits
|
Dated: May 11, 2022
|
By: /s/ Kathy Lee-Sepsick
|
Kathy Lee-Sepsick
|
|
Chief Executive Officer and President
|
|
By: /s/ Dov Elefant | |
Dov Elefant | |
Chief Financial Officer
|
|
(Principal financial and accounting officer)
|
FEMASYS INC.
|
||
Date: May 11, 2022
|
By:
|
/s/ Kathy Lee-Sepsick
|
Kathy Lee-Sepsick
|
||
Chief Executive Officer and President
|
||
(principal executive officer)
|
FEMASYS INC.
|
||
Date: May 11, 2022
|
By:
|
/s/ Dov Elefant
|
Dov Elefant
|
||
Chief Financial Officer
|
||
(principal financial and accounting officer)
|
FEMASYS INC.
|
||
|
||
Date: May 11, 2022 |
By:
|
/s/ Kathy Lee-Sepsick
|
Kathy Lee-Sepsick
|
||
Chief Executive Officer and President
|
||
(principal executive officer)
|
FEMASYS INC.
|
||
Date: May 11, 2022 |
By:
|
/s/ Dov Elefant
|
Dov Elefant
|
||
Chief Financial Officer
|
||
(principal financial and accounting officer)
|