Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.

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I had expected EVFM to close at or above $1 to mark the third out of the 10 consecutive days of $1+ price at close to again be in compliance with NASDAQ’s rules. Too long out of compliance results in delisting. The last 15 minutes looked like this:

The stock price had gone up from below $0.90 in the last 10 minutes to above $1.02, but wasn’t without extreme resistance.

With under seven minutes to go and about 89.6 million shares changing hands, a block of 71,519 shares looked to slow down the rise.

Within five minutes of close and a stock price of soooo close to $1, blocks of shares were thrown up likely to slow down a runaway stock price. No one interested in the stock price going up would want to contain gains.

And the stock price stayed in the $1+ range until 40 seconds before close of market. It dropped down to about $0.94, at which point the rush to get it back over $1 kicked in.

But at the closing bell, a block of 518,750 shares were purchased, and it seems like offering more than half a million shares for below a dollar at the end was probably the work of those darned shorts!

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Why the dollar?

I believe I have correctly identified the dollar mattering, but now I think it’s more than just the delisting. From Evofem’s financial statements:

In April 2020, we entered into the Baker Bros. Purchase Agreement with certain institutional investors and their designated agent pursuant to which we issued and sold secured convertible promissory notes in an aggregate principal amount of $25.0 million and warrants to purchase shares of our common stock. In October 2020, we entered into the Adjuvant Purchase Agreement pursuant to which we issued and sold to certain institutional investors unsecured convertible promissory notes in an aggregate principal amount of $25.0 million. Our failure to make payments as due under these notes would likely amount to an event of default. Pursuant to the terms of the Baker Bros. Purchase Agreement and the Adjuvant Purchase Agreement, events of default also include, but are not limited to, a material breach of representations, our failure to comply with our obligation to convert the related promissory notes, certain defaults of indebtedness and failure to perform or observe, and in certain instances, cure, certain covenants, including, but not limited to, covenants requiring us to maintain the listing of shares of our common stock on the Nasdaq Capital Market and to achieve cumulative net sales of Phexxi of at least $100.0 million by June 30, 2022. These agreements also limit our ability to incur debt, merge or, declare dividends. In particular and pursuant to the Baker Bros. Purchase Agreement, if an event of default occurs, each purchaser could elect, at its option pursuant to the agreement, to require us to repurchase all or any portion of the notes in cash at a repurchase price equal to the sum of (i) three times the sum of the outstanding balance, plus (ii) the aggregate value of future interest that would have accrued under the call principal amount from the period commencing on the date on which this amount is declared to be due and payable through the fifth anniversary of the initial closing pursuant to the Baker Bros. Purchase Agreement. This repurchase would materially and adversely impact our business, results of operations and financial condition, as well as increase our need to raise additional capital.

https://www.sec.gov/ix?doc=/Archives/edgar/data/1618835/000161883521000240/evfm-20210930.htm

Will they get to the $100.0M in sales by tomorrow? I don’t know, but that doesn’t matter because that deadline was extended.

On March 21, 2022 (the “Amendment Effective Date”), Evofem Biosciences, Inc. (the “Company”), certain institutional investors (the “Purchasers”) and Baker Bros. Advisors LP as the designated agent of the Purchasers (the “Designated Agent”) entered into a second amendment (the “Second Amendment”) to the Securities Purchase and Security Agreement by and among the Company, the Purchasers and the Designated Agent, dated as of April 23, 2020 (the “Agreement”), as amended by that First Amendment to the Agreement, dated as of November 20, 2021. The Second Amendment amends the Agreement as follows: (i) effective as of the next date the Company completes a marketed and underwritten public offering by the Company of equity securities after the Amendment Effective Date resulting in aggregate gross proceeds to the Company of at least $20 million (the “Qualified Financing Threshold”), the covenant in the Agreement currently requiring Evofem to achieve $100 million of cumulative net sales of Phexxi® (lactic acid, citric acid, and potassium bitartrate) (“Phexxi”) on or prior to June 30, 2022 be amended to require the Company to achieve $100 million in net sales of Phexxi on or prior to October 31, 2022, and (ii) notwithstanding (i) above, effective as of the next date the Company meets the Qualified Financing Threshold and the publication by the Company of top-line results from its EVOGUARD clinical trial (the “Clinical Trial Milestone”), the covenant in the Agreement currently requiring Evofem to achieve $100 million of cumulative net sales of Phexxi on or prior to June 30, 2022 be amended to require the Company to achieve $100 million in cumulative net sales of Phexxi on or prior to June 30, 2023.

https://www.sec.gov/Archives/edgar/data/0001618835/000161883522000069/evfm-20220321.htm

So I feel like my thoughts are correct that anything below $1/share of EVFM is underpricing the stock. And I picked up a bunch more shares today in sub-$0.90 territory.

We’re back to Day 0 of the 10 consecutive needed to be in compliance with NASDAQ’s rules, but everything indicates that the push for that 10-day streak is there.