Agile Therapeutics Inc. (NASDAQ: AGRX) shares took a dip on Tuesday after the company announced a key U.S. Food and Drug Administration (FDA) approval for its new weekly contraceptive patch. While this is a definitive win for the company, investors seem to be treating this as a chance to “sell the news.” One analyst sees great long-term potential for this approval, targeting the stock to more than double.

The FDA approved the Twirla transdermal system with a 14 to 1 recommendation vote (only one abstention). Agile Therapeutics plans to launch Twirla in the fourth quarter of this year with a sales force that eventually will include up to 100 representatives.

Janney Capital reiterated a Buy rating and raised its price target to $9 from $4, which implies upside of 121% from the most recent closing price of $4.07. Overall, the firm believes that there is a huge market opportunity for Agile Therapeutics.

In its report, Janney detailed:

The potential addressable market for Twirla (Combined Hormonal Contraception) is $3.8 billion and the total US contraceptive market is approximately $5.6 billion. Combined Hormonal Contraception (CHC) includes the pill (48% share), ring (15% share), and patch (Xulane has 5% share). We assume the same price as Xulane ($122 for 3 patches). Our model conservatively estimates 4% peak penetration in the non-obese population translating to $365 million in US net sales. Agile’s commercial strategy includes hiring a sales force of up to 70-100 reps, which will target OBGYNs and physician extenders, such as physician assistants and nurse practitioners. We estimate US launch in 4Q20.

It’s worth pointing out that Twirla is approved for women with a body mass index (BMI) less than 30, but contains a limitation of use in overweight women. The language in the label addresses the higher risk of unintended pregnancies and venous thromboembolic events in obese women, a factor that is already well known and discussed between physicians and patients.

Despite the limitation of use in overweight women, Janney believes physicians will still prescribe Twirla for those who are at the lower end of the BMI range of 25 to 30. Given the sizable addressable market, Janney still reaches $365 million in net peak sales at a conservative penetration rate of 4%.

Shares of Agile Therapeutics traded down about 5% at $3.86 Tuesday morning, in a 52-week range of $0.35 to $4.76. The consensus price target is $5.00.

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