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Sunday, Feb 25, 2024

Evofem Acquired by Aditxt for $100M

BIOTECH: Birth Control Maker Eyes Global Market

Local women’s health biotech firm Evofem (OTCQB: EVFM) is back on its feet again after being thrown a lifeline from Virginia-based medical innovation company Aditxt (NASDAQ: ADTX), which announced its intent to acquire the birth control maker for $100 million. Evofem’s signature vaginal gel Phexxi is the only FDA-approved nonhormonal birth control, which the company hopes will disrupt the global market by increasing women’s contraceptive choices.

Saundra Pelletier

“Sometimes – not very often – you get exactly what you’re hoping for,” said Evofem CEO Saundra Pelletier. “There have been so many obstacles and so many challenges that we have overcome but this team is resilient…Aditxt peeled back the layers and they saw the decisions that we made and the ones we steered away from. They really took the time to thoughtfully do their due diligence on what we’ve done and what we can accomplish, and they came back and squarely said that this is an innovation that deserves our support, and we are 100% in. I think in 2024 we’ll have a chance to prove that we’re able to really build market share because women deserve and want this product.”

“We looked for not only an innovation platform but also a team with passion and a team that has shown that they can stick through it through all the obstacles…If this is truly a product that women around the world should have a choice to use, then we will have to figure out ‘how,’” Aditxt Co-Founder, Chairman and CEO Amro Albanna said. “Without challenges, there would be no opportunities. Look, if it’s a perfect company with the cash and markets, it’s not for us. We are a young company, so we understand what it takes to survive.”

Amro Albanna
Co-Founder, Chairman & CEO

The $100 million proposed acquisition is expected to close in the first half of 2024. Under its terms, Aditxt was to pay $5 million to Evofem’s senior secured debtholder by the end of 2023, $8 million by September of 2024 and up to an additional $5 million thereafter. At closing, Evofem’s holders will exchange their shares for an aggregate of 610,000 Aditxt shares and Aditxt agreed to issue up to an aggregate of 89,000 shares of preferred stock to Evofem’s holders of outstanding unsecured notes, purchase rights, certain warrants and preferred stock.

“Some people have questioned whether there must be some buyer’s remorse because now, we’re a subsidiary that’s reporting to a parent company, but that doesn’t exist,” Pelletier said. “As odd as this may sound, I feel like I’m going to have an opportunity to focus on what’s mattered to me since the beginning – more access for more women. I’ll be able to spend all my time doing that instead of putting out fires.”

Rollercoaster Success

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Pelletier is painfully transparent about her company’s checkered past, acknowledging that it was on “life support” after suffering a series of crushing blows, despite its once soaring stock prices and mega-hyped fan base.

Launched early in the pandemic, Evofem shot up to rockstar status with a high-impact marketing campaign, spreading ads across social platforms and tapping into influencers.

“We were growing our scripts by 2,000 units, week over week,” she explained. Evofem pushed endorsements from celebrities like award-winning “Schitt’s Creek” actress Annie Murphy. In 2021, the company went public. “The reason that Evofem and Phexxi have experienced amazing, positive moments is that we don’t have a generic [form of it] and we’re probably not going to have a generic. Since we have this brand equity, things will significantly be improving, year after year.”

The stock price surged, at one point surpassing $8,000 at closing, but cracks began to show. Insurance providers pushed back on covering the cost Phexxi as issues bubbled up with shareholders.

“The largest body blow this organization received was a couple of years ago when two of our largest shareholders had to liquidate their entire positions. Not just in Evofem, but in everything that they were investing in. That was almost 70% of our company. It went from having solid healthcare investors to having thousands of retail investors who didn’t understand what we were doing or why we were doing it and our stock started to get heavily shorted,” she added.

Evofem believed the only way out was to generate positive results from a registrational phase 3 sexually transmitted infection (STI) study after phase 2 results proved clinically and statistically significant.

“I said, ‘Let’s stop taking these terrible financings with these awful terms. Let’s stop being held hostage. Let’s wait until we get these trial results. If the outcome is positive, our marketing opportunity will double. We’ll raise money and have good, constant capital and we’ll be done going to the markets,’” Pelletier said. “Then, the study failed due to subject loss to follow up – not because the drug didn’t work – 50% of the patients dropped out because of COVID.”

In 2022, Evofem was delisted from the NASDAQ exchange and watched as its healthcare investors drifted away.

At the start of 2023, it appeared tables were turning with insurers when updated guidelines to the Affordable Care Act took effect, requiring broad coverage of contraceptive care and services for women, following new federal guidance released in 2022 that required group health plans and insurers to cover contraceptives at no cost to individuals.

In the first quarter of the year, Evofem gained coverage for 16.3 million new Phexxi-seekers from payers including Mississippi Medicaid, Indiana  State Medicaid, multiple Blue Cross Blue Shield plans and the largest commercial payer in  Michigan.

“In the past, we were using copay cards 50% of the time, killing our revenue. Suddenly, our profits started going up, women started getting Phexxi at $0 out-of-pocket pay, and plans started covering us with no prior authorizations. We were generating more revenue than we’ve ever generated on the same number of prescriptions,” explained Pelletier. “At that moment we recognized that if plans had ethically followed the law when we launched, we never would have been in this situation.”

Cuts and More Cuts

In a drastic move to salvage the little cash that was left over, Evofem abandoned its Del Mar office and slashed spending.

“I cut 40% of my salary. I cut 20% of salaries for everyone on the executive team. I cut 50% for everyone who was a director. We eliminated bonuses. We downsized twice. We downsized 65% of the company,” Pelletier said. “We weren’t asked to do it. The board didn’t tell me to do it. I did it and told the board and those were decisions that I chose to make because they needed to be made…. I think there are a lot of people who wanted me to be replaced and who still want me to be replaced, frankly. Much to their dismay, I’m not going anywhere.”

Pelletier will remain at the helm of her company, which will keep its name as a subsidiary of Aditxt. There are no plans for major consolidations or downsizing. Looking ahead, it’s possible she may run a new women’s health arm of Aditxt.

There’s even a chance that Evofem may one day return to the NASDAQ, although Pelletier won’t move forward unless the company grows its portfolio. She declined to share information about other potential products but said Aditxt’s other subsidiaries may play a role.

A Global Target

Whether or not Evofem expands its portfolio or returns to compliance with the NASDAQ, regaining investors’ confidence may not be a cakewalk.

“It’s going to be hard to build trust again, but I’m committed to doing it,” Pelletier admitted.

Albanna added, “It’s going to be a journey but it’s a journey worth taking.”

Albanna and his team plan to prop Evofem back up using a four-pronged approach by cleaning up its capital structure, reevaluating areas for operational efficiencies, focusing on opportunistic commercial practices and supporting innovation. His sights are set on garnering an international audience.

“He believes the same thing that I believe – that poverty elimination can be best impacted through access to sustainable contraception. Period,” shared Pelletier who added that he plans to build a global footprint through licensing, starting in January.

Unlike the U.S., many European countries provide access to birth control without requiring prescriptions.

“Outside of the U.S., the contraceptive market is not as profitable,” Pelletier explained. “In Europe, for example, it’s over the counter and in order to compete with that market, we need to lower the cost of our goods.”

Evofem has already identified a Canadian manufacturer that’s able to lower the cost by more than 50% and is in discussions with Aditxt about raising the capital to proceed.

“What we know is that markets like Europe, Russia, Brazil and China are very interested in licensing to Phexxi,” she said. “The 50% reduction is the figure that gets us there. It’s the lever that would allow us to be competitive in the marketplace.”


CEO: Saundra Pelletier
BUSINESS: biotech
WEBSITE: evofem.com
NOTABLE: Evofem’s Phexxi is the first and only FDA-approved hormone-free contraceptive gel.

Aditxt, Inc.

CO-FOUNDER & CEO: Amro Albanna
BUSINESS: biotech
WEBSITE: aditxt.com
NOTABLE: Aditxt subsidiary Adimune  has signed a clinical trial agreement with top research institution  Mayo Clinic


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