Commercial-stage biopharmaceutical company Evofem Biosciences, Inc. (EVFM) develops and commercializes various products to address needs in women’s sexual and reproductive health. Its product, Phexxi, which is a pregnancy prevention gel for women, was approved by the U.S. FDA in May 2020. However, EVFM’s stock has lost nearly 50% year-to-date to close yesterday’s trading session at $1.21.

EVFM’s EVO100, which is being developed for the prevention of urogenital gonorrhea in women, received a Fast-Track designation from the FDA in May 2021. However, the commercial success of this product is still uncertain. 

CEO Saundra Pelletier sale of 122,500 shares in September 2020, following Phexxi’s commercial launch, contributed to a decline in the stock’s price. The company has also been selling shares to fund its commercialization and developmental activities. So, EVFM’s prospects look bleak in the coming months.

Click here to checkout our Healthcare Sector Report for 2021

Here’s what we think could shape EVFM’s performance in the near term:

Commercialization of Phexxi

Phexxi was launched commercially on September 8, 2020, following FDA approval in May 2020. EVFM also launched a national direct-to-consumer (DTC) campaign, ‘Get Phexxi’, in February 2021 to spread awareness about the product. The campaign garnered more than 173 million views in its  first three weeks following the launch and the number of healthcare providers prescribing Phexxi grew 25% in February versus the prior month.

However, Phexxi has certain limitations. For instance, women with a history of repeated urinary tract infections or other urinary tract problems are advised to avoid it. Furthermore,  despite the marketing campaign, EVFM’s net loss for the first quarter, ended March 31, 2021, increased 141% year-over-year to $46.15 million. Its loss per share for the quarter came in at $0.56 compared to $0.40 in the prior-year period.

Poor Profitability

In terms of trailing-12-month gross profit margin, EVFM’s 43.65% is 21.3% lower than the 55.43% industry average. The company’s 0.03% trailing-12-month asset turnover ratio  is 91.4% lower than the 0.35% industry average. Also, its trailing-12-month return on total capital and return on total assets are negative.

Share Dilution

On May 21, 2021, EVFM priced a public offering of 50 million shares of its common stock and accompanying two-year warrants to purchase an aggregate of up to 50 million shares of common stock. The offering generated roughly $46.6 million in net proceeds. The company also generated roughly $30 million in gross proceeds from the sale of 17,142,857 shares of its common stock. EVFM is expected to use the proceeds to fund  commercialization activities related to Phexxi, for  the continuation of its ongoing EVOGUARD Phase 3 clinical trial evaluating EVO100, and for general corporate purposes and other capital expenditures.

POWR Ratings Reflect Bleak Prospects

EVFM has an overall F rating, which equates to Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight different categories. EVFM has a D grade for Momentum, which is consistent with its 42.1% loss over the past six months and 56.9% decline over the past three months.

The stock has an F grade for Quality, in sync with its significantly lower-than-industry profitability ratios. It has an F grade for Stability also.

EVFM is ranked #472 of 486 stocks in the Biotech industry. Click here to see the additional POWR Ratings for EVFM (Sentiment, Growth and Value).

Better than EVFM: Click here to access 30 top-rated stocks in the same industry.

Bottom Line

Although EVFM’s Phexxi was commercially launched in September 2020, the company has  yet to generate income from it. Analysts expect its EPS to remain negative in its fiscal years 2021 and  2022. So, we think it is wise to avoid the stock now. 

Click here to checkout our Healthcare Sector Report for 2021

EVFM shares fell $0.03 (-2.48%) in premarket trading Wednesday. Year-to-date, EVFM has declined -49.79%, versus a 13.91% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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