Full Press Release Details
METUCHEN'S MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
read the following management's discussion and analysis of Metuchen's financial condition and results of
operations together with Metuchen's quarterly unaudited condensed consolidated financial statements and related notes
thereto included in this Exhibit 99.1 to this Form 8-K and the annual consolidated financial statements and the notes thereto
included in the Company's Registration Statement on Form S-4 (Reg. No. 333-240064), as amended (the "Registration
Statement"), filed with the Securities and Exchange Commission. This discussion contains forward-looking statements
reflecting Metuchen's current expectations, whose actual outcomes involve risks and uncertainties. Actual results and
the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a
number of factors, including those discussed in the sections entitled "Risk Factors" and "Cautionary
Statement Regarding Forward-Looking Statements" in the Company's Registration Statement. References in this
section to "we," "us," or "the Company" refer to Metuchen.
Metuchen is a pharmaceutical
company focused on men's health therapeutics. On September 30, 2016, Metuchen acquired from Vivus, Inc. ("the Vivus
Transaction"), all of the rights to license, develop, market, sell, and distribute the drug avanafil (Stendra ) in the
United States, Canada, South America, and India. Stendra is a U.S. Food and Drug Administration ("FDA") approved
PDE-5 inhibitor prescription medication for the treatment of erectile dysfunction ("ED") and is the only patent protected
PDE-5 inhibitor on the market. Stendra offers the ED therapeutic landscape a valuable addition as an oral ED therapy that
may be taken as early as approximately 15 minutes prior to sexual engagement, with or without food when using the 100mg or 200mg
dosing (does not apply to 50mg dosing).
was founded by Joseph J. Krivulka, an experienced pharmaceutical executive who held several key leadership positions at leading
pharmaceutical companies such as Mylan Laboratories Inc. and its subsidiary Bertek Inc., and was also the co-founder of Reliant
Pharmaceuticals which was sold to GlaxoSmithKline in 2007 for $1.65 billion. During the period from Metuchen's inception
in 2016 through 2018, the founder became ill and decided to outsource the sales and marketing function to an affiliated contractor.
The level of performance expected from this affiliated contractor was not realized. In 2018, the founder passed away which caused
significant disruption to the business. Metuchen terminated this affiliate contractor and in 2019, Metuchen was forced to establish
its own internal sales, marketing, and trade distribution functions for Stendra . In 2019 Metuchen deployed a specialized key
account sales model augmented by a national non-personal promotion campaign reaching nearly 30,000 healthcare professionals. Metuchen
also enhanced its digital campaigns designed to create awareness among patients and its partners. Additionally, Metuchen engaged
in a wide array of specialty medical conferences including presentations at educational product theaters and launched a national
savings coupon for enhanced product access. Metuchen believes that these activities have established a framework for continued
growth into 2020 and beyond. Following a year of internal management over marketing, sales and trade distribution functions, we
believe the Company is well-positioned for a strong, multi-channel sales and marketing campaign as it enters the fourth quarter
addition to ED products, Metuchen is committed to identifying and developing other pharmaceuticals to advance men's health.
In March 2020, Metuchen acquired an exclusive global license to H100 from Hybrid Medical LLC ("Hybrid"). H100
is a novel and patented topical formulation candidate for the treatment of acute Peyronie's disease. Peyronie's disease
is a condition that occurs upon penile tissue disruption often caused by sexual activity or injury, healing into collagen-based
scars that may ultimately harden and cause penile deformity.
the World Health Organization ("WHO") announced a global health emergency because of a new strain of coronavirus
originating in Wuhan, China (the "COVID-19 outbreak") and the risks to the international community. In March
2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. As a result
of the COVID-19 pandemic, which continues to rapidly evolve, "shelter in place" orders and other public health
guidance measures have been implemented across much of the United States, Europe and Asia, including in the locations of our
offices, key vendors and partners. The extent to which the outbreak impacts our business, results of operations, preclinical
studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with
confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and
social distancing in the United States and other countries, business closures or business disruptions and the effectiveness
of actions taken in the United States and other countries to contain and treat the disease. During the first three quarters
of 2020, government regulations and the voluntary business practices of Metuchen and prescribing physicians have prevented
in-person visits by sales representatives to physicians' offices. Metuchen has taken steps to mitigate the negative
impact on its businesses of such restrictions. In March 2020, we reduced our sales representative head count to reflect the
lack of in-person visits. We have maintained a core sales team which continues to contact physicians via telephone and
videoconference as well as continuing to have webinars provided by our key opinion leaders ("KOLs") to other
physicians and pharmacists. We anticipate rehiring and/or assigning representatives to cover sales territories as states
reopen and physician access resumes new normal levels. In response to the spread of SARS-CoV-2 and COVID-19, in March 2020,
we closed our administrative offices and as of September 30, 2020, they remain closed, with our employees continuing their
work outside of our offices. We have selectively resumed in-person interactions by our customer-facing personnel in
compliance with local and state restrictions. We also continue to engage with customers virtually as we seek to continue to
support healthcare professionals and patient care. However, our ability to engage in personal interactions with physicians
and customers remains limited, and it is unknown when our offices will reopen, and these interactions will be fully
We continue to monitor
our operations and applicable government recommendations, and we have made modifications to our normal operations because of the
COVID-19 pandemic, including requiring most office-based employees to work remotely. Notwithstanding these measures, the COVID-19
pandemic could affect the health and availability of our workforce as well as those of the third parties we rely on taking similar
measures. If members of our management and other key personnel in critical functions across our organization are unable to perform
their duties or have limited availability due to COVID-19, we may not be able to execute on our business strategy and/or our operations
may be negatively impacted. We may also experience limitations in employee resources, including because of sickness of employees
or their families or the desire of employees to avoid contact with individuals or large groups of people. In addition, we have
experienced and will continue to experience disruptions to our business operations resulting from quarantines, self-isolations
and other restrictions on the ability of our employees to perform their jobs. Nevertheless, the extent of the impact of COVID-19
on our businesses cannot be predicted at this time.
In light of the COVID-19
outbreak, the FDA has issued a number of new guidance documents. Specifically, as a result of the potential effect of the COVID-19
outbreak on many clinical trial programs in the US and globally, the FDA issued guidance concerning potential impacts on clinical
trial programs, changes that may be necessary to such programs if they proceed, considerations regarding trial suspensions and
discontinuations, the potential need to consult with or make submissions to relevant ethics committees, Institutional Review Board
("IRBs"), and the FDA, the use of alternative drug delivery methods, and considerations with respect the outbreak's
impacts on endpoints, data collection, study procedures, and analysis. Such developments may result in delays in our development
President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CARES Act,
among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security
payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction
limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods
for qualified improvement property. The Company evaluated the provisions of the CARES Act and does not anticipate the associated
impacts, if any, will have a material effect on the Company's provision for income taxes.
Nature of Operations and Basis of Presentation
as a limited liability company pursuant to a certificate of formation filed with the Secretary of State of Delaware on July 22,
2016. Metuchen was organized for the purpose of (i) acquiring the U.S., Canadian, South American, and Indian marketing authorization
rights to Stendra , (ii) owning the purchased assets, (iii) entering into a manufacturing and supply agreement, (iv) entering
into a distribution agreement, and (v) engaging in any other lawful act or activity that is ancillary or incidental to the foregoing.
On December 10, 2018,
("Acquisition Date") JCP III CI AIV, L.P. ("JCP"), an affiliate of Juggernaut Capital Partners (the "JCP
Investor"), acquired from Krivulka Family LLC ("Krivulka") all of Krivulka's ownership interest in Metuchen
Therapeutics, LLC ("MT"), a holding company that owned 55% of Metuchen, giving JCP a controlling interest in Metuchen
(such transaction, the "JCP Acquisition"). This transaction was accounted for as a business combination and has been
pushed down to the consolidated financial statements of the Company in accordance with the guidance for business combinations found
in the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC")
805: Business Combinations.
Prior to this transaction,
Krivulka owned 68% of MT. As of September 30, 2020, investment funds affiliated with the JCP Investor owned, either directly or
indirectly, approximately 82% of the outstanding membership interests in Metuchen. On the Acquisition Date, Metuchen purchased