Overview

Agile Therapeutics (AGRX) is a forward-thinking women’s healthcare company dedicated to fulfilling the unmet health needs of today’s women. Twirla® and its other current potential product candidates are designed to provide women with contraceptive options that offer greater convenience and facilitate compliance. The company's lead product candidate, Twirla, also known as AG200-15, is a once-weekly prescription contraceptive patch that is at the end of Phase 3 clinical development.

Since its inception in 1997, Agile Therapeutics has devoted substantial resources to developing Twirla, building its intellectual property portfolio, business planning, raising capital and providing general and administrative support for these operations. The company incurred research and development expenses of $14.4 million, $20.9 million and $25.6 million during the years ended December 31, 2017, 2016 and 2015, respectively. The company incurred research and development expenses of $2.4 million and $6.4 million for the three and six months ended June 30, 2018, respectfully and $3.8 million and $8.5 million for the three and six months ended June 30, 2017, respectfully. The company anticipate that a portion of its operating expenses will continue to be related to research and development as the company continue to develop Twirla. Substantially all of its resources are currently dedicated to developing and seeking regulatory approval for Twirla. The company believe that its cash and cash equivalents as of June 30, 2018, will be sufficient to meet its operating requirements into the second quarter of 2019. The company will require additional capital to fund its operating needs for the remainder of the second quarter of 2019 and beyond, including, among other items, the resumption and completion of its commercialization plan for Twirla, which primarily includes the validation of its manufacturing process and the commercial launch of Twirla, if approved, and advancing the development of its other potential product candidates.

Agile Therapeutics has funded its operations primarily through sales of common stock, convertible preferred stock, convertible promissory notes and term loans. As of June 30, 2018 and December 31, 2017 respectively, the company had $22.5 million and $35.9 million in cash and cash equivalents.

In February 2015, the company entered into a loan and security agreement with Hercules Capital, Inc. or Hercules, for a term loan of up to $25.0 million, which the company refer to as the Hercules Loan Agreement. A first tranche of $16.5 million was funded upon execution of the Hercules Loan Agreement, approximately $15.5 million of which was used to repay its existing term loan. The Hercules Loan Agreement was amended in August 2016 to, among other things, extend the period during which the company could have drawn the additional tranche of $8.5 million to March 31, 2017 and extended the period during which the company make interest-only payments until January 31, 2017. The Hercules Loan Agreement was further amended in May 2017 to extend the period during which the company could have drawn the additional tranche of $8.5 million to January 31, 2018. The period during which the additional tranche of $8.5 million may be drawn has expired and therefore the $8.5 million can no longer be drawn by it. On February 1, 2017, the company began making principal payments with respect to the Hercules Loan Agreement.

In January 2016, the company closed an underwritten public offering of 5,511,812 shares of common stock at a public offering price of $6.35 per share. In February 2016, the underwriters of the public offering of common stock exercised in full their option to purchase an additional 826,771 shares of common stock at the public offering price of $6.35 per share, less underwriting discounts and commissions. A total of 6,338,583 shares of common stock were sold in the public offering, resulting in total net proceeds of approximately $37.5 million.

In August 2017, the company completed an underwritten public offering of 5,333,334 shares of common stock at a public offering price of $3.75 per share. Proceeds from its August 2017 public offering, net of underwriting discounts, commissions and other offering costs, were approximately $18.5 million.

On December 21, 2017, the U.S. Food and Drug Administration, or FDA, issued a complete response letter, or the 2017 CRL, indicating that its resubmitted New Drug Application, or NDA, for Twirla could not be approved in its present form. The 2017 CRL identifies deficiencies relating to quality control adhesion test methods and specification which are part of the manufacturing process for Twirla. The 2017 CRL also noted that objectionable conditions identified during an inspection for the Twirla NDA of its third-party manufacturer, Corium International Inc., or Corium’s, facility must be resolved. Prior to receiving the 2017 CRL, the company submitted an amendment to its NDA on December 1, 2017 in response to an information request from the FDA on the issues related to the quality control adhesion test methods cited in the 2017 CRL. In the 2017 CRL, the FDA acknowledged receipt of the amendment and stated that the amendment was not reviewed prior to the FDA’s action. In addition, on November 20, 2017 and December 1, 2017, Corium provided the FDA with responses to each of the observations made during the FDA’s facility inspection. In April 2018, the company met with the FDA in a Type A meeting to discuss the deficiencies in the Twirla NDA and the regulatory path for approval of Twirla, and the company announced the content of the official minutes from the meeting in May 2018.

In June 2018, the company announced the company had submitted a formal dispute resolution request, or FDRR, with the FDA for Twirla. The dispute pertains to the determination from the FDA’s reviewing Division of Bone, Reproductive and Urologic Products, or DBRUP, that concerns surrounding the in vivo adhesion properties of Twirla prevent the approval of the NDA and cannot be addressed through its proposed patient compliance programs. By submitting the FDRR, Agile Therapeutics is availing the Company of the FDA’s established appeal process whereby disagreements with conclusions reached by a reviewing Division within the FDA are reviewed above the Division level. The initial FDRR the company submitted in June 2018 was denied by the Office of Drug Evaluation III, or ODE III, on July 20, 2018. The company will escalate its appeal to the Office of New Drugs, or OND, and, potentially, additional levels of FDA management if necessary.

In addition, while Corium has provided the FDA with responses to each of the observations made during the FDA’s facility inspection, the company expect that the FDA will re-inspect its manufacturing partner’s facilities during its review of its anticipated resubmission before approval can be granted. The FDA has the authority to re-inspect SECURE clinical trial sites as part of a review of an NDA as well. The FDA may also determine that its responses to the manufacturing deficiencies in the 2017 CRL and Corium’s responses to the manufacturing facility inspection observations are not sufficient or require additional analyses and/or studies and deny approval of the Twirla NDA on this basis as well.

Agile Therapeutics has not generated any revenue and have never been profitable for any year. The company's net loss was $28.3 million, $28.7 million and $30.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. The company's net loss was $5.3 million and $12.2 million for the three and six months ended June 30, 2018, respectively. The company expect to incur increased expenses and increasing operating losses for the foreseeable future as the company seek the approval of its NDA for Twirla, complete the qualification and validation of its commercial manufacturing process, initiate pre-launch commercial activities, commercially launch Twirla, if approved, advance its other potential product candidates and expand its research and development programs. Substantially all of its resources are currently dedicated to developing and seeking regulatory approval for Twirla. The company believe that its cash and cash equivalents as of June 30, 2018, will be sufficient to meet its operating requirements into the second quarter of 2019. The company will require additional capital to fund its operating needs for the remainder of the second quarter of 2019 and beyond including, among other items, the resumption and completion of its commercial plan for Twirla, which primarily includes the validation of its commercial manufacturing process and the commercial launch of Twirla, if approved, and advancing the development of its other potential product candidates. There can be no assurance that any financing by it can be realized, or if realized, what the terms of any such financing may be, or that any amount that Agile Therapeutics is able to raise will be adequate. Based upon the foregoing there is substantial doubt about its ability to continue as a going concern.

The company do not own any manufacturing facilities and rely on Corium for all aspects of the manufacturing of Twirla. The company will continue to invest in the manufacturing process for Twirla, and incur significant expenses, in order to complete the equipment qualification and validation related to the expansion of Corium’s manufacturing capabilities in order to be capable of supplying projected commercial quantities of Twirla, if approved. The company continue to plan the process of scaling up the commercial manufacturing capabilities for Twirla with Corium and the associated costs and timelines. The company expect the validation and expansion of its commercial manufacturing process to be completed after the approval of Twirla. If the company obtain regulatory approval for Twirla, the company expect to incur significant expenses in order to create an infrastructure to support the commercialization of Twirla, including sales, marketing, distribution, medical affairs and compliance functions, which will require additional capital.

Agile Therapeutics has incurred and will continue to incur additional costs associated with operating as a public company. Accordingly, the company will need additional financing to support its continuing operations and other potential product candidates in its pipeline in addition to the commercial activities required for the pre-launch and launch of Twirla, if approved. The company will seek to fund its operations through public or private equity or debt financings or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to it on acceptable terms, or at all. The company's failure to raise additional capital as and when needed would have a negative impact on its financial condition and its ability to pursue its business strategy. The company will need to generate significant revenue to achieve profitability, and the company may never do so.