TherapeuticsMD, Inc. announced that it has entered into definitive agreements to license its products to an affiliate of Mayne Pharma Group Limited for commercialization in the United States. In addition, TXMD has agreed to sell certain assets to Mayne Pharma to allow Mayne Pharma to commercialize the products. At closing of the transaction, TXMD will receive an upfront cash payment of $140.0 million for the license grant and sale of certain assets, plus an additional approximately $13.1 million, subject to customary adjustments, for acquired net working capital.

In addition, TXMD will receive a 20-year royalty stream tied to Mayne Pharma's net sales of the products. The upfront payment to be made by Mayne Pharma, along with cash on hand, will allow TXMD to repay its outstanding indebtedness with Sixth Street Partners and to redeem its outstanding preferred equity, with TXMD continuing as a pharmaceutical royalty company with the potential to create value for stakeholders over time from the resulting net cash flows. Under the terms of the transaction, TXMD will grant Mayne Pharma an exclusive license to commercialize the Company's Imvexxy®, Bijuva®, and its prescription prenatal vitamin products sold under the BocaGreenMD® and vitaMedMD® brands and will assign to Mayne Pharma the Company's exclusive license to commercialize Annovera® (collectively, the “Products”) in the United States.

In addition, TXMD will sell to Mayne Pharma certain assets to allow Mayne Pharma to commercialize the Products, including inventory. Upon completion of the transaction, which is subject to expiration or termination of the waiting period under the Hart-Scott-Rodino Act of 1976, Mayne Pharma will be responsible for development, regulatory filings, manufacturing, and commercialization of the Products. TXMD will receive an upfront payment of $140.0 million for the sale of the assets and the grant of the licenses, plus a payment of approximately $13.1 million for the acquisition of net working capital, subject to certain customary adjustments.

In addition, Mayne Pharma will make one-time, milestone payments to the Company of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million. Further, Mayne Pharma will pay to the Company royalties on net sales of all licensed Products in the United States at a royalty rate of 8.0% on the first $80.0 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the closing. The royalty rate will decrease to 2.0% on a Product-by-Product basis upon the earlier to occur of (i) the expiration or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States.

Mayne Pharma will pay to the Company minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments (cumulative ~$42.6 million). The Company will retain its existing licensing agreements with Knight Therapeutics, Inc. and Theramex HQ UK Limited.