Looking For The Positives In TherapeuticsMD's Recently Received FDA Letter

TherapeuticsMD Inc TXMD shares are down another 7.0 percent on Tuesday after a 19.4 percent drop Monday on news that the company received a letter from the U.S. Food and Drug Administration noting “deficiencies” in the company’s TX-004 drug candidate. TX-004 is an estrogen vaginal soft gel capsule used for the treatment of severe dyspareunia resulting from Vulvar Vaginal Atrophy.

Market Reactions; Voices From The Street

While the company itself is still not completely clear on the specific deficiencies the FDA mentions in the letter, the market has certainly assumed the worst, sending shares of TherapeuticsMD down 28.7 percent in three days.

However, Jefferies analyst Matthew Andrews says traders shouldn’t rush to judgment. According to Andrews, the company has indicated that the FDA concerns may not be a big deal.

“In our call with the company, TXMD characterized FDA dialog through the ‘004 review cycle as ‘benign’ discussions, possibly suggesting the deficiencies may be minor in nature,” Andrews explained.

TherapeuticsMD is currently in the process of setting up a meeting with FDA officials to gain some clarity on the issues.

Surprise Letter, But Why?

Andrews said the FDA letter was likely a complete surprise to company management. A Jefferies consultant with a background at the FDA indicated four theoretical justifications for such a late-stage issue:

1. Documentation errors relating to clinical data quality.
2. Longer-term safety data from REJOICE could have raised red flags.
3. Concerns about the drug’s long-term shelf-life stability.
4. An issue with chemistry, manufacturing and controls (CMC).

Until the company provides an update, Jefferies remains bullish on the stock. The firm has a Buy rating and $18 price target for TherapeuticsMD.

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