FDA Expresses Concern On TherapeuticsMD; Oppenheimer Downgrades

Following the FDA issuing a complete response letter, or CRL, in response to TherapeuticsMD Inc TXMD's NDA for TX-004HR, Oppenheimer downgraded the shares of the company.

TX-004HR, or Yuvvexy, is the company's applicator-free vaginal estradiol soft-gel drug candidate for the treatment of moderate to severe dyspareunia, which causes vaginal pain during sexual intercourse. This is typically the symptom of vulvar and vaginal atrophy, or VVA, which is a chronic condition associated with the loss of estrogen due to menopause.

Long-Term Endometrial Safety Data Sought

Analyst Jay Olson noted the issue with the approval was a lack of long-term endometrial safety data beyond the 12-week studies in the pivotal Phase III Rejoice trial. Although no duration was specified, the analyst believes 12 months of safety data could be required by the FDA, given that other hormonal products approved for the treatment of VVA have 12 months of safety data.

The analyst was also surprised that the CRL is the first time the FDA has sought long-term safety data from the company over several years of communication regarding TX-004HR.

Means To Soften The Black Box Warning

Oppenheimer sees the data request as related to the potential for removal or softening the standard black box warning that is currently required for all estrogen products. However, the firm said TX-004HR has little to no systemic exposure.

No Impact On TX-001HR

Oppenheimer believes the TX-004HR CRL has no impact on TX-001HR, with the outcome seen supporting the development program TherapeuticsMD has put in place for TX-001HR.

TX-001HR has already demonstrated clean endometrial safety in a 12-month study, the firm noted. Additionally, the firm said it is encouraged by the lack of any CMC or other issues that could read across.

Way Forward

According to the firm, one option before the firm would be to accept the standard black box warning and seek near-term FDA approval, contingent upon completing a 12-month safety study that could be run post-approval.

"We believe this option could represent a reasonable compromise if the FDA would agree but ultimately that decision would be up to the FDA," the firm said.

Under a worst-case scenario, the firm said the FDA may require a 12-month endometrial safety study, which could potentially lead to a two-year delay in FDA approval. However, the firm views this scenario as unlikely, although it does recognize the risk, given the unexpected request for long-term safety data.

The firm noted management expects to meet with the FDA in about one month and disclose next steps soon afterward.

"We look forward to clarity arising from this meeting and believe it will be favorable," the firm indicated.

"However, given the potential scenarios, we are moving to the sidelines until the path forward is clear."

Downgrading Shares

To reflect the delayed launch of TX-004HR, Oppenheimer said it is updating its model.

As such, Oppenheimer downgraded shares of the company to Perform from Outperform, with no price target assigned, citing the uncertainty resulting from the CRL.

At the time of writing, shares of Therapeutics were up 2.87 percent at $4.30 after losing about 10.5 percent to $4.18 on Monday.

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13 Emerging Biotechs With Catalysts In 2017 _________ Image Credit: By The U.S. Food and Drug Administration (FDA Bldg 31 - Great Room) [Public domain], via Wikimedia Commons