Evofem Biosciences Will Need Cash Soon (NASDAQ:EVFM)

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Investors should avoid shares of Evofem Biosciences (EVFM) as the risk of substantial loss is high. The company has a May 25 PDUFA date for their contraceptive gel called Phexxi, at which time they may receive approval, but if they do, they will need to raise substantial capital in order to launch the drug.

Formed by reverse merger into Neothetics in January 2018, Evofem is a women’s health specialty pharmaceutical company. Evofem’s lead drug, Phexxi (formerly known as Amphora), is a contraceptive vaginal gel that they licensed from Rush University. Phexxi, in my view, offers little benefit over currently available over-the-counter contraceptive gels that can be purchased online for less than $20.


Evofem is likely to run out of money in 6 months without a substantial capital raise (ended 2019 with $24M cash). The current run rate of operating expense is $52MM (2019 R&D of $22M and G&A of $30.5M) which, in my view, is quite high for a pre-commercial single product company. For comparison, I looked at Agile Therapeutics (AGRX) who just received approval on its contraceptive patch, it had R&D expense of $9.8M and G&A of $9M in 2019.

This high level of expense is pre-approval, so the company will still need to hire a salesforce which, in my view, indicates expenses will rise substantially. On the 4Q conference call, management said they anticipate the annualized cost of the salesforce to be approximately $35M, and on top of that, they expect to have DTC expense in the range of $30-50M. Given the low cash balance, this indicates that a significant raise will be necessary very soon. While possible that shares could rise into or following a deal, in my view, this is unlikely given the substantial capital needs and long runway they will likely need. AGRX was able to raise around $45M at $3 per share after receiving approval on their contraceptive patch, but the stock quickly traded lower following the deal.


The current market cap of EVFM is around $275M which likely indicates that some investors believe Phexxi has a large market opportunity. In filings, EVFM management has estimated the target patient population for Phexxi at around 17M women. AGRX, which already has approval on its contraceptive patch, has a market cap around $190M and AMAG Pharmaceuticals (AMAG), which had revenues of $327M in 2019, has a market cap around $260M. In my view, EVFM’s current market cap does not properly discount the risk of not gaining timely approval as well as the risk of a launch trajectory below expectations.


Phexxi is a contraceptive hormone-free gel made from 3 off-patent components (L-lactic acid, citric acid, and potassium bitartrate). The company believes the product to be differentiated from other currently available forms of birth control as it has a unique mechanism of action and is hormone-free. The product was licensed from Rush University Medical School to whom they will owe a mid-single-digit royalty on sales.

Beginning in 2013, the company conducted a large phase 3 trial of Phexxi called AMP001 which was a non-inferiority trial to Conceptrol, a hormone-free contraceptive gel containing 4% N-9, which is available for sale over-the-counter and is easily purchased online. In the trial, results for Phexxi and Conceptrol were remarkably similar. The primary endpoint was the six-month cumulative pregnancy rate for typical use and both Phexxi and Conceptrol were around 10% (Conceptrol was actually 10% vs. Phexxi at 10.5%), this is taken straight from Evofem’s 2019 10-K:

The trial was fully enrolled in July 2013 and completed during the first half of 2014. In the primary efficacy analysis, the six-month cumulative pregnancy rate for typical use (defined as trial subjects who had at least one episode of coitus without using the product correctly during the study and without any backup or emergency contraception), was approximately 10.5% for Phexxi, as compared to 10.0% for Conceptrol.”

The efficacy of Phexxi was about the same as Conceptrol in their own trial. The safety data demonstrated that 57.1% of patients in the trial using Phexxi and 58% using Conceptrol had at least one AE. In my view, the safety profiles also appear to be about the same, you can view the breakdown in EVFM’s 2017 10-K.

While Phexxi is a different chemical compound and will require a prescription, these studies do not appear to demonstrate a significantly differentiated efficacy or safety profile from Conceptrol. As mentioned previously, Conceptrol is easily purchased online, it is listed at around $16 at Walmart.com for 10 applications; another similar contraceptive hormone-free gel, Gynol II, can be purchased for around $15 on Amazon.com.

Following the completion of the AMP001 study, the company then submitted an application to the FDA for approval based on these results. However, they received a CRL in April 2016 as the FDA rejected some of the data that was gathered in Russia and requested further clinical work. This rejection led to a new study, the AMPOWER trial which the company began in 2017. This trial was a single-arm trial, so no comparator was used. The results with regard to the primary endpoint as noted in their 10-K are below:

The primary endpoint of the study was the pregnancy rate over seven cycles of use (one cycle 21-35 days) as assessed by the Kaplan-Meier statistical method. Top-line data analysis demonstrates a cumulative pregnancy rate of 13.7% over seven cycles of use (95% CI 9.9, 17.4) in the mITT population (referred to as typical use), which met the pre-determined endpoint of this clinical trial. This corresponds to an 86.3% efficacy rate.”

These results again used an endpoint of pregnancy over seven cycles and do not appear to have shown an improvement versus the results achieved in AMP001. In my view, there are also reasons to be skeptical of these results as they do not have detailed 12-month efficacy data and 19.8% of patients in the study reported vaginal burning. Some experts see the lack of 12-month data as a potential challenge in interpreting the true efficacy.

STI protection data

While Phexxi will not come with STI protection on the label, the company plans to start a phase 3 study in 1Q21 where they will seek approval for the prevention of chlamydia and gonorrhea. In a phase 2b study, they showed a chlamydia infection rate of 4.9% for women who used Phexxi compared to 9.8% for placebo while the rate for gonorrhea was 0.7% on Phexxi compared to 3.2% on placebo. While this may appear interesting since the study does not cover HIV or other STIs, it would seem barrier methods should still be used. In my view, real-world use as a prevention method is unlikely with data from only 2 STIs. The company estimated on their 4th quarter call that the phase 3 STI trial will cost around $35M.

Other Women’s Health Specialty Pharma Companies Could Be A Warning Sign

AGRX recently gained approval on its once-a-week contraceptive patch, Twirla. The company had struggled for years to get Twirla approved but finally did gain approval on February 14, 2020. The stock peaked on February 11, a few days before the approval, then the company was able to price a $45M common stock deal at $3.00 on February 21 after closing at $3.58 on February 20. Several weeks later on April 15, shares were well below the deal price, closing at $2.25.

Source: Bloomberg

AMAG Pharmaceuticals is another women’s health specialty pharmaceutical company. Their most notable disappointment is Intrarosa, which they acquired and touted as a potential revenue generator of over $500M as management estimated their target market at 18M women. Intrarosa is a prescription vaginal insert used to treat painful sex. The drug was launched in July 2017 and did $21MM of sales in 2019 (source AMAG 10-K), a far cry from management’s $500MM original estimate. Below, you can see what happened to AMAG’s stock price following this launch:

Source: Bloomberg

Adamis Pharmaceuticals (ADMP) is a specialty pharmaceutical company that attempted to bring a differentiated contraceptive gel to the market. While their main focus is not on contraceptives, back in 2010, the company acquired a drug called Savvy (C31G), which was also a hormone-free contraceptive gel. The company ran a phase 3 study that demonstrated Savvy was non-inferior to Conceptrol (a similar study as the Evofem AMP001 trial). The company claimed that Savvy would have a market opportunity in the $500M range. The company believed this large market opportunity was available as Savvy was differentiated and does not contain N-9 as most currently available spermicides do. Savvy never made it to the market at all, shareholders are still waiting to see what will become of this once highly touted opportunity.


EVFM’s largest shareholder is PDL Biopharma (PDLI), as of the last filing late last year, they owned about 26% of EVFM shares. PDLI in a conference call on March 11, 2020, announced they would seek to sell key assets by the end of 2020:

Our goal is now to complete either a whole company sale or the monetization of our four key assets by the end of 2020, a significantly accelerated timeline compared to the two to three years we previously communicated.”

This process could present a substantial overhang on the share price of EVFM. In my view, there is no likely a financial or strategic buyer of Evofem.


The company may receive approval on the PDUFA date of May 25 which could cause shares to move higher, but, in my view, would be short-lived. While I view the possibility of the company being bought for a substantial premium as unlikely, this is always a possibility and poses the risk for shares to move higher. The company may also do a successful capital raise and shares could move higher, although the recent experience of AGRX casts doubt on this as their stock is well below the deal price several weeks after the deal.


Investors should avoid shares of Evofem as the risk of substantial loss is high. The company is likely to need multiple financings over the coming years and there is a significant share overhang from the PDLI stake. The company will need to do a substantial capital raise in the near future as they are likely to burn through the current cash reserves in the near term and expenses will increase significantly in the case of approval. In my view, the product is not differentiated from currently available OTC contraceptive gels which suggest a limited market opportunity.

Disclosure: I am/we are short EVFM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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