15 Reasons to Invest in Evofem Biosciences - EVFM
Disclaimer: This post does not constitute financial advice. Author has a long position in EVFM. Do your own due diligence before making an investment.
Evofem Biosciences is biotech company with an FDA-approved non-hormonal contraceptive (Phexxi.) They’re also running clinical trials looking to expand the use of Phexxi to preventing STDs.
By many metrics, EVFM appears criminally undervalued.
Here are some reasons you might want to invest in the company.
1. Prescriptions and refill numbers for Phexxi are growing every quarter.
2. There was a 68% increase in net product sales from Q1 to Q2 in 2021. (An impressive number considering the Delta wave of Covid-19 in the US.)
3. A celebrity advertising campaign is scheduled to begin in September 2021. (The celebrity is rumored to be Annie Murphy.) We believe she would be a perfect fit for this product. Annie has 1.7 million followers on Instagram, so her reach is significant.
4. Evofem has hired multiple lobbyists and is attempting to get a new contraceptive category added to the ACA (Obamacare.) This is important because most insurers will cover one product from each category 100%. Since this new category would be a “vaginal pH modulator”, Phexxi would be the only product in that category. If this happens, and the CEO said they’re hoping to see it before 2022, it could result in a monster boost in sales.
5. Evofem is in talks with companies outside the US for licensing deals. Management has said they expect to close one before 2022. This would be great because it would likely involve an upfront payment. (More cash, less drama.)
6. Phexxi is a great product because it hands control of single-use contraception to the women. Yes, men can bring a condom, but condoms can slip off, be taken off, punctured, etc. Phexxi is a gel (which also seems to work as lube.) Once correctly applied, it can’t be manipulated like a condom. See: Stealthing.
7. Phexxi users can still have that “bareback” experience, without the huge risk of getting pregnant.
8. After the last offering, EVFM has roughly 61M in liquidity.
9. They recently lowered operating costs by 9.5M/year.
10. The average stock price target is $4.25.
11. Morgan Stanley recently bought a 10.1% (13 million-ish) stake in Evofem. Since Morgan Stanley isn’t in the business of lighting money on fire, we can assume they did their due diligence on this one.
12. Other institutions have also been adding to their EVFM position.
13. The company estimates that the total sales opportunity, per year, from Phexxi is 4.5 billion (pdf). The company is currently valued at only 129 million. So even if they’re off by 95%, Evofem is still undervalued.
14. Short interest is very high. (Great news could trigger a short squeeze.)
15. Given how undervalued Evofem is relative to their potential, a buyout is not impossible. Phexxi would be a great fit for several companies, especially ones with lots of cash to use for marketing.
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