Will TherapeuticsMD's Yuvvexy Pass The FDA Muster?

TherapeuticsMD Inc TXMD shares were down 44.4 percent in 2016.

By virtue of an advance seen since late February to early April, the stock trimmed some of the losses only to plunge headlong on the news it has received a letter from the FDA related to its pending application of Yuvvexy, or TX-004HR. The stock hasn't recovered since then and has gone only lower.

TXMD Source: Y Charts

The Letter That Wreaked Havoc

The letter said the FDA has identified deficiencies that prevented discussion of labeling and post-marketing requirements/commitments at that time. The FDA, however, didn't specify the nature of the deficiencies identified by it, making the whole scenario all the more cloudy. Given that the PDUFA date was set at May 7, 2017, the FDA had earlier set a target date of April 9, 2017 for communicating to the company the proposed labeling and/or post-marketing requirements/commitment. However, the letter stated that the notification doesn't reflect a final decision on the information under review. The company expressed confidence in working with the FDA in understanding the nature of the deficiencies and resolving them as quickly as possible.

Not all were as positive as the company.

TheStreet's Adam Feuerstein said in an article, "Barring some miracle turnaround, you can pretty much count on FDA rejecting TX-004HR on or before May 7."

His logic? Even a minor manufacturing defect can take anywhere from three to six months to resolve and a more complicated issue can take the company a year or more to resolve.

The Candidate

Yuvvexy is TherapeuticsMD's applicator-free vaginal estradiol softgel drug candidate for the treatment of moderate to severe dyspareunia, which causes vaginal pain during sexual intercourse. Estradiol is bio-identical estrogen. 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. The symptoms, occurring in and around the vagina, include dryness, itching and burning.

Development History

TherapeuticsMD announced the FDA acceptance of the Yuvvexy NDA on September 19, 2016. The acceptance was based on a complete clinical program. The Phase III Rejoice trial evaluated the efficacy of three doses of Yuvvexy (4mcg, 10 mcg and 25 mcg) compared to plcebo from baseline to week 12.

According to the company's release, the results demonstrated statistically significant and clinically meaningful improvements in dyspareunia, a co-primary endpoint, and vaginal dryness, a secondary endpoint. This trial was completed in December 2015.

The Potential

The drug has the potential to generate peak annual sales of $1 billion, according to a Motley Fool article, quoting experts. However, Feuerstein thinks the company's estimate of Yuvvexy being a $500 million product, five years after the launch, could be a tall order, given that it would be joining a crowded market, where even established players are facing a backlash from generics.

In a presentation, TherapeuticsMD said about 50 percent of all postmenopausal women, roughly 32 million in number, in the U.S. have VVA and only 7 percent of them are treated. Treatment options available, include vaginal creams and vaginal tablets, with mean treatment days for the options at 46 days and 103 days, respectively.

Some of the competing products already in the market include:

• Pfizer Inc.'s PFE Premarin cream
• Allergan plc Ordinary Shares' AGN Estrace
• Novo Nordisk A/S (ADR)'s NVO Vagifem (This has had a generic locking horns with it – Amneal Pharma's Yuvafem, with two more generics in the pipeline)

Recent Financial Results

TherapeuticsMD reported first quarter revenues of $4 million, down from $4.9 million last year and the loss was at $21.2 million, wider than the $20.9 million loss for the year-ago quarter. Earnings came in at a loss of $0.11 per shares, inline with estimates. The balance sheet showed no debt and a cash balance of $113.5 million.

The company said in the releasethat it presented two posters at ENDO 2017, reviewing data from the Replenish Trial, a late-stage trial of TX-001HR, its investigational bio-identical hormone therapy combination of estradiol and progesterone in a single oral softgel for the treatment of moderate-to-severe vasomotor symptoms due to menopause. Feuerstein suggested TX-001HR could face the same marketing challenges as Yuvvexy.

Possible Outcomes and Stock Impact

Premised on its expectations, the FDA will issue its verdict on the NDA, the company has scheduled a conference call May 8, 2017. The probable outcomes could be:

• The FDA approving Yuvvexy, the odds of which are slim The FDA issuing a Complete Response Letter, which happens when the agency completes the review and decides approval can't be granted in the current form;
• The issues identified by the FDA could range from concerns related to manufacturing facilities to wanting additional trials to be carried out.
• The FDA extending the PDUFA date, which often results when a major amendment is made to the NDA, either at the behest of the company or the FDA.

Given the selloff since April 10, when the stock fell close to 25 percent, a negative news could not be very negative for the stock. The stock is now sitting at a long-term support area, the neck level of a head and shoulder formation from 2014. Any further downside from current levels could take it to the $3.50 area.

On the other hand, if the stock pushes ahead in the eventuality of a positive reaction, a break above the $7 level could be in the offing.

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