Just last week, TherapeuticsMD Inc (NASDAQ:TXMD) had investors sending shares dipping 6% after the biotech company’s team revealed the FDA made its TX-004 CRL response subject to Class 2 review. The company’s vaginal softgel capsule designed to treat moderate-to-severe vaginal pain during sexual intercourse (dyspareunia), a vulvar and vaginal atrophy (VVA) symptom from menopause, now has six months tagged onto the review, with a new PDUFA date set for May 29th of the new year.
Cantor analyst William Tanner is not leaving the bulls on this biotech player, reiterating an Overweight rating on TXMD stock, but he has scaled back his 12-month expectations for the company. As such, the analyst the price target from $31 to $28, which still positively implies a 377% upside from where the shares last closed. (To watch Tanner’s track record, click here)
“FDA may not be as accommodating as it seemed,” Tanner writes, noting: “TXMD’s press release noted that the submission of endometrial safety data ‘was outside of an official review cycle, thus procedurally designating a Class 2 response.’ We suppose the ability to gain approval without the need to generate endometrial safety data, de novo, could be regarded as a positive, but the fact is that TX-004 will likely be launched at least a year after it could have been with a first cycle approval. The inability to do so has had the obvious effect of deferring incremental FCF generation and creating dilution from financing activities.”
Meanwhile, are bears out celebrating the news? “Best-case scenario might have precipitated some short covering. Had the FDA accepted the resubmission for Class 1 review, two months, we believe shorts may have needed to contemplate an exit strategy. Now with an ‘extra’ four months, we would not be surprised if bears were to breathe something of a sigh of relief,” Tanner highlights.
The analyst concludes noting that “another financing could be in the cards” for TherapeuticsMD, believing the team needs the right capitalization to sustain its options, offer a foothold for TX-001, the biotech firm’s oral combination product, 17ß-estradiol and progesterone designed to treat vasomotor symptoms in postmenopausal women; especially in case of the FDA rejecting TX-004, even if this seems “unlikely.” The goal moving forward is to evade “even-greater” prospective shareholder dilution, Tanner contends.
TipRanks shows a strong bullish analyst consensus backing TherapeuticsMD, with all 7 analysts polled in the last 3 months unanimously bullish on the biotech stock. With a meaningful return potential of 160%, the stock’s consensus target price stands at $15.29.