Why TherapeuticsMD Could Still Rise Almost 200%

TherapeuticsMD Inc. (NYSE: TXMD) is a very speculative women’s health care company. Its shares were given heavier attention on Thursday after an analyst report suggested that the stock could have up to almost 200% upside if things work out.

Be advised that this company is far from fully established. In fact, it is very risky and has not been in the $1 billion market cap club for very long. TherapeuticsMD also conducted a capital raise in January by selling about 17.4 million common shares above the current market now. That was at $8.25 per share, for gross proceeds of approximately $144 million, versus under $7.00 on Thursday.

Jefferies was the firm with the big target on Thursday. For whatever it is worth, Jefferies was not among the lead managers in the underwriting syndicate for the January offering. Those firms were listed as Goldman Sachs, Cowen, Stifel and Guggenheim.

As far as the Jefferies call, this is a reiterated call for the stock to be worth $18.00. Still, the update is after having investor meetings with the company and compounding KOL. Jefferies said that three main topics were discussed:

1) ‘004 launch – management believes features of convenience, efficacy & pot’l removal of black-box warnings will drive meaningful market share;

2) ongoing pivotal ‘001 trial – management sees trial as low risk due to known activity of E&P doses;

3) compounding pharmacies – management/KOL believes it is easy to incentivize compounding pharmacies to distribute TherapeuticsMD products and that this in turn will drive rapid market adoption of ‘001.

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The first issue brought up was the timing and strategy of ‘004 (vaginal estrogen [E], aka Vagicap) commercial launch. In the fourth quarter of 2015, the company was said to have reported positive, pivotal top-line results for ‘004 and management continues to expect to present a full dataset for this trial at the Endocrine society meeting from April 1 to April 4 in Boston and to submit the new drug application in mid-2016 for an implied approval in mid-2017.

Commercially, TherapeuticsMD expects to add about 100 sales people and sees ‘004 convenience of both product and packaging driving higher adoption rates. Another issue is the removal of black box warnings for either the class or ‘004 specifically is positive by growing the overall market.

Between ‘001 and ‘004 product sales down the road, the company’s combined revenue estimates at Jefferies are as follows:

• $89.8 million in 2017
• $236.9 million in 2018
• $393.7 million in 2019
• $605.2 million in 2020

For all practical purposes, this company has no real revenue to speak of. Revenue was $15 million in 2014, and estimates are almost $20.0 million for 2015 and $23.3 million for 2016.

TherapeuticsMD shares closed at $6.80 ahead of the call, and this stock has fought between being positive and negative on Thursday. Again, this is a reiterated rating, despite such a huge $18.00 target price. The stock’s 52-week trading range is $4.05 to $11.26.