Evofem Biosciences, the buzzy but controversial women’s health startup that spent the past year trying to stay afloat, has finally found a buyer.
The San Diego company, which makes the contraceptive gel Phexxi, has agreed to sell itself to biotech firm Aditxt, the companies announced Tuesday. Aditxt will assume some of Evofem’s substantial debt in a deal worth approximately $100 million.
“It gives us a second chance,” Evofem CEO Saundra Pelletier told me Tuesday afternoon, in a joint Zoom interview with Aditxt cofounder and CEO Amro Albanna.
The sale is a long-awaited lifeline for Evofem and Pelletier, who has spent the past year trying to take her company off “life support.” Evofem launched Phexxi to great fanfare in 2020, becoming one of only a handful of pharmaceutical companies that have recently introduced a new type of prescription contraception for the 47 million U.S. women who use birth control.
But insurance companies have widely refused to pay for Phexxi and other newer contraceptives, despite a federal law requiring them to do so, a Fortune investigation found in April. That industrywide hostile insurance landscape has made it hard for small pharma companies like Evofem to recoup the money they spent developing such innovative products or to turn a profit. The stalemate with insurance companies—as well as some of Pelletier’s own decisions—ultimately doomed Evofem’s finances and its ability to survive independently.
While Pelletier’s company sold almost $13.4 million worth of Phexxi in the first nine months of 2023, it ended that period with merely $400,000 in cash and cash equivalents. Meanwhile, some of Evofem’s aggressive marketing tactics backfired: This fall, the U.S. Food and Drug Administration said Evofem had “overstate[d] the benefits” and efficacy of Phexxi in a digital patient brochure.
But Evofem’s finances were crumbling long before the regulatory smackdown, largely owing to the insurance-related problems hurting its sales. The company was delisted from the Nasdaq in 2022, and Pelletier has been publicly looking for a buyer for Evofem since February. Now she’s found one in Aditxt, a publicly traded company that is developing immunotherapy-related products and that wants Pelletier to continue running Evofem under its roof. CEO Albanna told Fortune he wants his new purchase to become the core of a new women’s health unit for Aditxt.
“We saw the need in the marketplace, and we saw what Phexxi can address, but the most important thing for us is the team,” Albanna says, adding that Pelletier is bringing to his company “a team that overcame a lot of challenges to get to where they are today.”
Many of those challenges are hurting Evofem’s entire industry—and tens of millions of American women, especially in a post-Roe landscape where abortion is increasingly restricted and access to contraception has a heightened importance for women’s reproductive health.
Large health insurance providers are widely ignoring federal law and refusing to fully pay for U.S. women to use Phexxi and other new (and usually more expensive) kinds of contraception. Because there are so many older, generic, and cheaper kinds of birth control on the market, insurers have a financial incentive to reject coverage requests for newer products—even if those products better address some women’s health needs. The federal government has issued rules telling insurers that they’re still supposed to cover prescriptions that a woman’s doctor deems medically necessary, but in practice, doctors and patients tell Fortune, insurers still reject many such requests. As a result, most of the small pharma companies that are innovating in this market have struggled to stay alive as women often wind up sticking to the older pills and other contraceptives that their insurance pays for.
The widespread insurance problems around birth control have drawn the attention of President Joe Biden, who in June issued an executive order telling federal agencies to look into the issue. Up to 49 million U.S. women could benefit from increased access to no-cost birth control if the agencies take action, according to an analysis released last week by Democrats on the House Committee on Oversight and Accountability.
Pelletier says that Evofem has seen improved coverage among insurers since the president issued his executive order this summer. But other contraception startups are still hoping for more government action.
For example, another small company called Agile Therapeutics started selling its Twirla contraceptive around the same time that Evofem launched Phexxi—and has run into many of the same insurance problems. Today, the company continues to see “increased demand for our product,” according to Kimberly Whelan, Agile’s vice president of policy, advocacy, and access. However, patients are still running into problems getting insurance providers to fully pay for their prescriptions to Twirla, she adds.
“We have not seen any meaningful change in insurer behavior” since Biden issued his executive order in June, Whalen wrote in an email to Fortune Tuesday.
