TherapeuticsMD, Inc. Has "Multiple Catalysts" in 2015/16 As Products Develop, Says Cowen and Company

February 25, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor

Specialty women's health company TherapeuticsMD has “multiple catalysts in 2015/2016” that could see its shares “appreciate considerably” as its two significantly differentiated late-stage products in development come to the fore, said analysts at Cowen & Co. this week.

The two products are TX-001HR for vasomotor symptoms and TX-004HR for VVA.

“We believe the programs have low clinical risk and favorable market dynamics, which increases the likelihood of success,” wrote biotech analyst Ken Cacciatore in a note to investors. “With multiple catalysts in 2015/2016, we expect TXMD shares to appreciate considerably.”

Cowen said TX-001HR, the first ever oral combination of bioidentical estrogen (17ß-estradiol) and bioidentical progesterone for the treatment of moderate to severe vasomotor symptoms, has the most potential.

“TX-001HR has demonstrated successful Phase I PK data and the Phase III REPLENISH program is currently enrolling patients (n=1,750) and is expected to report top-line data in second quarter of 2016,” he wrote. “We estimate an NDA will be filed shortly after with an expected approval and launch in the second half of 2017.”

However, Cowen said there are still “significant concerns” associated with prescribing separate estrogen and progesterone pills (non-compliance of the progesterone component can lead to increased risk for endometrial cancer), and therefore an U.S. Food and Drug Administration (FDA) approved combination of bioidentical estrogen and progesterone would be extremely well-received.

“Additionally, with the passing of the Drug Quality and Security Act in 2013, compounding pharmacies will not be able to produce copies of TX-001HR once approved, suggesting that it could be the preferred product to capitalize on the $1.5 billion compounded hormone replacement therapy market opportunity,” said Cacciatore.

Thus far, Phase I PK data demonstrated the potential for lower drug concentrations than current treatments for VVA and a Phase II study was “statistically significant for several endpoints” being moved forward in the TX-004HR pivotal trial. The TX-004HR Phase III REJOICE program is expected to complete enrollment in second quarter of 2015 (n=700), with top-line data in the third quarter of 2015.

“An NDA should be filed by year-end 2015, with an expected approval and launch at the beginning of 2017,” said Cacciatore. “Our consultants note that with hormone replacement guidelines recommending use of the lowest effective dose due to potential increased cancer and CV risk, if the lower systemic exposure profile for TX-004HR is replicated in the Phase III study, it should be a best-in-class product.”

The valuation is attractive at these levels, said analysts. Cowen said its base case valuation model assumes a U.S. approval and subsequent launch of TX-001HR by mid-2017 and U.S. peak sales reaching approximately $850 million. “For TX-004HR, we assume U.S. approval and launch in early 2017 and peak U.S. sales reaching $450 million,” wrote Cacciatore. “Moderate market penetration for both products brings our DCF valuation to $13, which is the basis of our price target. Of note, we do not model any ex-U.S. opportunities or the company’s transdermal program.”

In addition, Cacciatore predicts a base case valuation model that assumes a U.S. approval and subsequent launch of TX-001HR by mid-2017. With an estimated net price of $100 per prescription, that could put U.S. peak sales at approximately $850 million for the treatment of menopausal symptoms, assuming a penetration of roughly 20 percent of total U.S. HRT prescriptions (FDA approved and compounded) by 2023.

“For TX-004HR, we assume U.S. approval and launch in early 2017 with pricing in the range of $200 per prescription,” wrote Cacciatore. “Assuming a 15 percent penetration of U.S. VVA prescriptions, we model peak U.S. sales potential of $450 million. We do not model any additional product approvals including the Company’s transdermal program, which will provide Phase I/II data by year-end.”

Cowen said that for operating spend, their “base case scenario” assumes sales force expansion starting in 2016 for both products launches and margins ultimately reaching “around 85 percent with SG&A and R&D costs within the range of normal industry.”

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