EVFM Evofem Biosciences Inc (QB)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): September 8, 2023

 

EVOFEM BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		001-36754		20-8527075
(State or other jurisdiction		(Commission		(I.R.S. Employer
of incorporation)		File Number)		Identification No.)

 

7770 Regents Road, Suite 113-618

San Diego, California 92122

(Address of principal executive offices)

 

(858) 550-1900

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common Stock, par value $0.0001 per share		EVFM		OTCQB

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging Growth Company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01

Entry into a Material Definitive Agreement

 

Amendment to Securities Purchase Agreement

 

On September 8, 2023 (“Effective Date”), Evofem Biosciences, Inc. (the “Company”), certain institutional investors (the “Purchasers”) and Baker Bros. Advisors LP as their designated agent (the “Designated Agent”) entered into a fourth amendment (the “Fourth Amendment”) to the Securities Purchase and Security Agreement by and among the Company, the Purchasers and the Designated Agent, dated as of April 23, 2020 (the “Agreement”), as amended, pursuant to which the Purchasers purchased certain convertible promissory notes (the “Notes”).

 

The Fourth Amendment amends certain provisions within the Agreement including, (i) the rescission of the Notice of Default delivered to the Company on March 7, 2023 and waiving the Events of Default named therein, (ii) the waiver of any and all other Events of Default existing as of the Effective Date, (iii) the Notes shall no longer be convertible into shares of Company common stock, including the removal of any requirement to reserve shares of common stock for conversion of the Notes as well as any registration rights related thereto, (iv) the clarification that for the sole purpose of enabling ex-U.S. license agreement for such assets, any Patents, Trademarks or Copyrights acquired after the Effective Date shall be excluded from the definition of Collateral, and (v) removal of the requirement for the Company to obtain $100 million in cumulative net sales in the specified timeframe.

 

Additionally, the Purchasers and the Designated Agent have granted to the Company the ability to repurchase the principal amount and accrued and unpaid interest of the Notes for up to a five-year period for the “Repurchase Price” designated below:

 

Date		Repurchase Price
On or prior to September 8, 2024		$14,000,000 (less Applicable Reductions)
September 9, 2024-September 8, 2025		$16,750,000 (less Applicable Reductions)
September 9, 2025-September 8, 2026		$19,500,000 (less Applicable Reductions)
September 9, 2026-September 8, 2027		$22,250,000 (less Applicable Reductions)
September 9, 2027-September 8, 2028		$25,000,000 (less Applicable Reductions)

 

The current outstanding balance of $97.5 million will continue to accrue interest at 10% per annum. In the event of a default in the agreement or a failure to pay the Repurchase Price on or before September 8, 2028 (the “Maturity Date”), the Purchasers and Designated Agent may collect on the full principal amount then outstanding.

 

The Company is required to make a $1 million Upfront Payment (as defined in the amendment) by October 1, 2023 and has agreed to make quarterly cash payments of no more than 5% of the Company’s global net product revenues, depending on revenue thresholds. These upfront and cash payments are Applicable Reductions from the Repurchase Price outlined above.

 

The foregoing description of the Amendment is qualified in its entirety by reference to the Fourth Amendment attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

 

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth under Items 1.01 of this Current Report on Form 8-K regarding the issuance of the Notes is incorporated into this Item 2.03 by reference.

 

Item 9.01

Financial Statements and Exhibits.

 

Exhibit No.		Description
10.1^		Fourth Amendment to Securities Purchase and Security Agreement
99.1		Press Release, dated September 11, 2023
104		Cover Page Interactive Data File (formatted as Inline XBRL)

 

^ Pursuant to Item 601(b)(10) of Regulation S-K, certain portions of this exhibit have been omitted by means of marking such portions with asterisks because the information is both not material and is the type that the Company treats as private or confidential.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	EVOFEM BIOSCIENCES, INC.
Dated: September 11, 2023	By:	/s/Saundra Pelletier
		Saundra Pelletier
		Chief Executive Officer

 

 

 

Exhibit 10.1

 

CERTAIN INFORMATION CONTAINED IN THIS EXHIBIT, MARKED BY [***], HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE THE REGISTRANT HAS DETERMINED THAT IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

 

FOURTH AMENDMENT TO

SECURITIES PURCHASE AND SECURITY AGREEMENT

 

This Fourth Amendment to Securities Purchase and Security Agreement (this “Amendment”) is entered into as of September 8, 2023 (the “Amendment Effective Date”) by and among Evofem Biosciences, Inc., a Delaware corporation (the “Company”), 667, L.P., Baker Bros. Life Sciences, L.P. (each, a “Purchaser”, and collectively, the “Purchasers”), and Baker Bros. Advisors LP, as agent and collateral agent for the Purchasers (in such capacity, the “Designated Agent”).

 

RECITALS

 

WHEREAS, the Company, the Purchasers and the Designated Agent are party to that certain Securities Purchase Agreement, dated as of April 23, 2020, as amended by that First Amendment to the Agreement, dated as of November 20, 2021, that Second Amendment to the Agreement, dated as of March 21, 2022, and that Third Amendment dated as of September 15, 2022, by and among the Company, the Purchasers and the Designated Agent (as amended, the “Purchase Agreement”), pursuant to which the Purchasers purchased certain convertible promissory notes (the “Notes”) and common stock warrants (the “Warrants”, and together with the Purchase Agreement and the Notes, the “Transaction Documents”) of the Company;

 

WHEREAS, pursuant to Section 12.8 of the Purchase Agreement, any term of the Purchase Agreement, the Notes or the Warrants may be amended only with the written consent of the Company, the Designated Agent and the Purchasers holding a majority of the outstanding balance, in the aggregate, of all Notes issued pursuant to the Purchase Agreement (the “Requisite Purchasers”);

 

WHEREAS, the undersigned Purchasers constitute the Requisite Purchasers; and

 

WHEREAS, the Company, the Purchasers and the Designated Agent wish to amend the Purchase Agreement to address the provisions set forth herein effective as of the Amendment Effective Date.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

AGREEMENT

 

1. Definitions; References; Continuation of Purchase Agreement. Unless otherwise specified herein, each capitalized term used herein that is defined in the Purchase Agreement shall have the meaning assigned to such term in the Purchase Agreement and each capitalized term used herein that is defined in the Warrants shall have the meaning assigned to such term in the Warrants. Each reference to “hereof,” “hereto,” “hereunder,” “herein” and “hereby” and each other similar reference, and each reference to “this Agreement”, the “Securities Purchase Agreement” and each other similar reference, contained in the Purchase Agreement and any other Transaction Document shall from and after the date hereof refer to the Purchase Agreement as amended hereby. Except as amended or waived hereby, all terms and provisions of the Purchase Agreement, the Notes and the Warrants shall continue unmodified and remain in full force and effect.

 

 

2. Amendment to the Purchase Agreement.

 

2.1 Amendment to Section 1.1 of the Purchase Agreement. Effective as of the Amendment Effective Date, Section 1.1 of the Purchase Agreement is hereby amended to add new defined terms for “Amendment Effective Date,” “Applicable Reductions,” “Cash Rate,” “Interest Payment Date” and “Repurchase Date” as set forth below:

 

“Amendment Effective Date” shall mean September 8, 2023.

 

“Applicable Reductions” has the meaning set forth in the definition of “Repurchase Price”.

 

“Cash Rate” shall mean:

 

(a) an amount equal to the sum of: (A) the product obtained by multiplying 3% by global net revenues of Phexxi during such applicable calendar quarter that is equal to or less than $5,000,000, plus (B) the product obtained by multiplying 4% by global net revenues of Phexxi during such applicable calendar quarter that exceeds $5,000,000 and is equal to or less than $7,000,000, plus (C) the product obtained by multiplying 5% by global net revenues of Phexxi during such applicable calendar quarter that exceeds $7,000,000; plus

 

(b) [***]¹

 

“Interest Payment Date” shall mean, for each calendar quarter, a date within 30 days of filing of the audited or reviewed financial statements in the Form 10-Q and/or 10-K as applicable (if timely filed, and if not timely filed, within 45 days of the last day of each applicable quarter).

 

“Repurchase Price” means the applicable amount set forth below, reduced in each case by the aggregate amount of (i) the Upfront Payment and (ii) all payments of interest made at the Cash Rate, in each case, to the extent made prior to the applicable repurchase date (collectively, the “Applicable Reductions”):

 

Applicable Repurchase Date		Repurchase Price
On or prior to the twelve-month anniversary of the Amendment Effective Date		$14,000,000 (less Applicable Reductions)
After the twelve-month anniversary of the Amendment Effective Date, but on or prior to the twenty-four-month anniversary of the Amendment Effective Date		$16,750,000 (less Applicable Reductions)

 

¹Certain confidential information omitted.

 

 

After the twenty-four-month anniversary of the Amendment Effective Date, but on or prior to the thirty-six-month anniversary of the Amendment Effective Date		$19,500,000 (less Applicable Reductions)
After the thirty-six-month anniversary of the Amendment Effective Date, but on or prior to the forty-eight-month anniversary of the Amendment Effective Date		$22,250,000 (less Applicable Reductions)
After the forty-eight-month anniversary of the Amendment Effective Date, but on or prior to the sixty-month anniversary of the Amendment Effective Date		$25,000,000 (less Applicable Reductions)

 

2.2 Amendment to Section 3.1 of the Purchase Agreement. Effective as of the Amendment Effective Date, Section 3.1 of the Purchase Agreement is hereby amended to replace clause (a) thereof with the following: “(a) the fifth anniversary of the Amendment Effective Date,”

 

2.3 Amendment to Section 3.2 of the Purchase Agreement. Effective as of the Amendment Effective Date, Section 3.2 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

“3.2 Interest; Repayment. Interest on the unpaid principal balance of the Notes (such balance as increased as provided in this Section 3.2, the “Outstanding Balance”) will accrue from the applicable Closing Date at the rate of 10.0% per annum, calculated on the basis of a 360 day year and actual days elapsed. Accrued interest shall accrue daily and shall be paid on each Interest Payment Date, by paying the accrued and unpaid interest due on such Interest Payment Date (a) in cash in an amount equal to the Cash Rate, and (b) the remainder in kind by automatically capitalizing the remaining amount of accrued and unpaid interest as additional principal to the Outstanding Balance of the Notes. To the extent not previously repurchased pursuant to Section 5 hereof, the Company will repay the Outstanding Balance plus all accrued and unpaid interest thereon on the Maturity Date, but not to exceed the Repurchase Price maximum of $25,000,000 (less applicable reductions), provided further that such Repurchase Price maximum shall apply (1) only if the Company is not then in default of the Notes, and (2) only if the Company pays the Repurchase Price (less applicable reductions) in full on or before the Maturity Date and not, for the sake of clarity, after the Maturity Date”

 

2.4 Amendment to Article of the Purchase Agreement. Effective as of the Amendment Effective Date, Article 5 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

 

“5. REPURCHASE BY THE COMPANY.

 

5.1 Until the fifth anniversary of the Amendment Effective Date (the “Repurchase Date”), the Company may repurchase the Notes from the Purchasers, in whole but not in part, at the Repurchase Price. If, as of the Repurchase Date, the Company has not earlier repurchased the Notes, the Company shall then repurchase the Notes from the Purchasers for an aggregate cash payment of $25,000,000 (less Applicable Reductions).”

 

2.5 Amendment to Article 8 of the Purchase Agreement. Effective as of the Amendment Effective Date, Article 8 of the Purchase Agreement is hereby amended to replace each of Sections 8.1(c), 8.1(d), 8.1(e), 8.1(f), 8.1(h), 8.1(i), 8.1(j), 8.1(k) and 8.1(l) in its entirety with “[Reserved].”

 

2.6 Amendment to Section 2.7 of the Third Amendment to Purchase Agreement. Effective as of the Amendment Effective Date, Section 2.7 of the Third Amendment to the Purchase Agreement, dated as of September 15, 2022, is hereby deleted in its entirety and replaced with “[Reserved.]”.

 

2.7 Amendment to Exhibit C of the Purchase Agreement. The last paragraph of Exhibit C shall be amended to delete the word “and” prior to clause (iv) thereto, and add the following immediately prior to end of such paragraph: “and (v) for the sole purpose of enabling ex-U.S. license agreements for such assets, any Patents, Trademarks or Copyrights acquired after the Amendment Effective Date”.

 

3. Certain Waivers.

 

3.1 Notice of Default. Effective as of the Amendment Effective Date, the Purchasers rescind the Notice of Default delivered to the Company on March 7, 2023 and waive from the date hereof the Events of Default described therein.

 

3.2 Purchasers waive any and all other Events of Default under the Transaction Documents existing as of the Amendment Effective Date.

 

4. Conditions Subsequent. No later than October 1, 2023 (the “Upfront Payment Deadline”), the Company shall pay to the Purchasers, or the Designated Agent for the benefit of the Purchasers an amount of the Outstanding Balance of the Notes equal to $1,000,000 (the “Upfront Payment”). Failure to pay the Upfront Payment by the Upfront Payment Deadline shall constitute an immediate Event of Default under the Purchase Agreement pursuant to Section 9.1(a)(i) of the Purchase Agreement.

 

5. Miscellaneous.

 

5.1 Governing Law. This Amendment shall be governed in all respects by and construed in accordance with the laws of the State of New York without regard to provisions regarding choice of laws.

 

5.2 Entire Agreement. This Amendment, together with the Purchase Agreement, the Notes, the Warrants, the other Note Documents and the Exhibits and Schedules to the Purchase Agreement and thereto (all of which are hereby expressly incorporated herein by this reference) constitute the entire understanding and agreement between the parties with regard to the subjects hereof and thereof.

 

 

5.3 Titles and Subtitles. The titles of the sections and clauses of this Amendment are for convenience of reference only and are not to be considered in construing this Amendment.

 

5.4 Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Delivery by facsimile or e-mail of an executed counterpart of a signature page shall be effective as delivery of an original executed counterpart.

 

5.5 Severability. Should any provision of this Amendment be determined to be illegal or unenforceable, such determination shall not affect the remaining provisions of this Amendment.

 

5.6 Tax Matters. Each of the parties hereto agrees to treat (a) any interest or original issue discount arising under this Amendment as interest described in section 871(h)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the “Code”) and (b) this Amendment as a recapitalization within the meaning of Code section 368(a)(1)(E).

 

[Signature page follows.]

 

 

IN WITNESS WHEREOF, the parties have executed this Fourth Amendment to Securities Purchase and Security Agreement to be effective as of the date first above written.

 

	EVOFEM BIOSCIENCES, INC., as Company
	By:	/s/ Saundra Pelletier
	Name:	Saundra Pelletier
	Title:	Chief Executive Officer
	Address:
	12400 High Bluff Drive, Suite 600
	San Diego, CA
	Email:

 

Signature Page to Fourth Amendment to Securities Purchase and Security Agreement

 

 

	BAKER BROS. ADVISORS LP,
	as the Designated Agent
	By:	/s/ Scott Lessing
		Scott Lessing
		President
	Address:
		860 Washington St., 10th Floor
		New York, NY 10014
		Attn: Scott Lessing
	Email:

 

Signature Page to Fourth Amendment to Securities Purchase and Security Agreement

 

 

	667, L.P.,
	as a Purchaser
	By: Baker Bros. Advisors LP, management company and investment adviser to 667, L.P., pursuant to authority granted to it by Baker Biotech Capital, L.P., general partner to 667, L.P., and not as the general partner.
	By:	/s/ Scott Lessing
		Scott Lessing
		President
	Address:
		c/o Baker Bros. Advisors LP
		860 Washington St., 10th Floor
		New York, NY 10014
		Attn: Scott Lessing
	Email:

 

Signature Page to Fourth Amendment to Securities Purchase and Security Agreement

 

 

	BAKER BROTHERS LIFE SCIENCES, L.P.,
	as a Purchaser
	By:	BAKER BROS. ADVISORS LP,
	management company and investment adviser to Baker Brothers Life Sciences, L.P., pursuant to authority granted to it by Baker Brothers Life Sciences Capital, L.P., general partner to Baker Brothers Life Sciences, L.P., and not as the general partner.
	By:	/s/ Scott Lessing
		Scott Lessing
		President
	Address:
		c/o Baker Bros. Advisors LP
		860 Washington St., 10th Floor
		New York, NY 10014
		Attn: Scott Lessing
	Email:

 

Signature Page to Fourth Amendment to Securities Purchase and Security Agreement

 

 

Exhibit 99.1

 

 

Evofem Biosciences Successfully Amends S.P.A.

with Institutional Investor

 

— Investor withdraws March 2023 Notice of Default —

 

— Notes are no longer convertible to shares of common stock, removing potential dilution from the previously-reserved over 240 million shares of common stock —

 

— Evofem may repurchase Notes within five years for as little as $14 million

and no more than $25 million, instead of the $97.5 million outstanding balance —

 

SAN DIEGO, CA, September 11, 2023 —Evofem Biosciences, Inc. (OTCQB: EVFM) (Evofem or the “Company”) today announced it has successfully negotiated and entered into a fourth amendment (the “Fourth Amendment”) to its Securities Purchase and Security Agreement dated April 2020, as amended (the “2020 S.P.A.”), with a U.S.-based, healthcare-focused institutional investor (the “Investor”), under which the Investor purchased $25 million of convertible senior secured promissory notes (the “Notes”) from Evofem. Most notably, in the Fourth Amendment, the Investor withdraws and waives the March 2023 Event of Default and allows for the Company to repurchase the Notes for no more than $25 million.

 

“We deeply appreciate that the Investor has worked with us to amend the 2020 S.P.A. in a way that respects their initial investment while dramatically strengthening our financial position, facilitating execution of our growth strategy, and positioning Evofem for future success,” said Saundra Pelletier, CEO of Evofem Biosciences.

 

 

Under the Fourth Amendment, Evofem may repurchase the Notes for as little as $14 million and no more than $25 million, depending on timing of the repurchase within the stated five-year time frame. Evofem will pay the Investor $1 million by October 1, 2023, which will be applied towards the eventual Note repurchase price. Furthermore, for five years or until the date of repurchase, whichever is earlier, Evofem will pay the Investor a low single-digit percentage of its global net product sales. These payments will also count towards and reduce the ultimate Note repurchase price.

 

A key benefit of the Fourth Amendment is the positive impact to Evofem’s capital structure. Because the Notes are no longer convertible into shares of Evofem’s common stock, the Company will no longer need to reserve shares of common stock to provide for their potential conversion. The current balance will accrue interest and remain in the footnotes to Evofem’s financial tables until the Company has repurchased the debt. The repayment is expected to be no more than $25 million instead of the approximately $97.5 million principal amount and accrued interest as of September 8, 2023.

 

The Investor continues to hold warrants to purchase shares of Evofem’s common stock, and the Company will continue to reserve from its authorized and unissued common stock enough shares to provide for the issuance of warrant shares upon the exercise of these warrants.

 

About Evofem Biosciences

 

Evofem Biosciences, Inc., is focused on commercializing innovative products to address unmet needs in women’s sexual and reproductive health. The Company’s first FDA-approved product, Phexxi® (lactic acid, citric acid and potassium bitartrate), is a hormone-free, on-demand prescription contraceptive vaginal gel. It comes in a box of 12 pre-filled applicators and is applied 0-60 minutes before each act of sex. Learn more at phexxi.com and evofem.com.

 

Phexxi® is a registered trademark of Evofem Biosciences, Inc.

 

Forward-Looking Statements

 

This press release includes “forward-looking statements” within the meaning of the safe harbor for forward-looking statements provided by Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 including, without limitation, statements related to: the expected benefits to the Company of the Fourth Amendment; the Company’s ability to meet the terms of the Fourth Amendment; successful execution the Company’s growth strategy; the Company’s anticipated future operating results including, but not limited to, net sales, operating expenses, income from operations and net income; the sufficiency of the Company’s cash resources; and, the availability of additional financing if and as needed. You are cautioned not to place undue reliance on these forward-looking statements, which are current only as of the date of this press release. Each of these forward-looking statements involves risks and uncertainties. Important factors that could cause actual results to differ materially from those discussed or implied in the forward-looking statements are disclosed in the Company’s SEC filings, under the heading “Risk Factors,” including its Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on April 27, 2023, Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 filed with the SEC on August 14, 2023 and any subsequent filings. All forward-looking statements are expressly qualified in their entirety by such factors. The Company does not undertake any duty to update any forward-looking statement except as required by law.

 

Contact

 

Amy Raskopf

Evofem Biosciences, Inc.

araskopf@evofem.com

(917) 673-5775

 

v3.23.2

Cover	Sep. 08, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 08, 2023
Entity File Number	001-36754
Entity Registrant Name	EVOFEM BIOSCIENCES, INC.
Entity Central Index Key	0001618835
Entity Tax Identification Number	20-8527075
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	7770 Regents Road
Entity Address, Address Line Two	Suite 113-618
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92122
City Area Code	(858)
Local Phone Number	550-1900
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	EVFM
Entity Emerging Growth Company	false

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