What happened

Shares of TherapeuticsMD (NASDAQ:TXMD) gained more than 25% last month, according to data provided by S&P Global Market Intelligence. The pharmaceutical company, which focuses on women's health, published an investor update in mid-September reporting solid progress for its drug portfolio. 

According to that update, large insurance companies are continuing to add the company's drug products to their coverage lists, Imvexxy maintained prescription momentum in August, and the CEO bought $280,000 in stock in the third quarter. All of those points contributed to investor optimism that pushed shares of the pharmaceutical company higher again after they hit a more-than-five-year low in early August. (They remain, however, about 40% below their 12-month peak.)

A businessman drawing an ascending yellow step chart.

Image source: Getty Images.

So what

TherapeuticsMD is still in the early stages of commercializing its treatments. The business reported just $6.1 million in revenue in the second quarter, and current full-year guidance is for revenue of at least $29.4 million. But the company has three drugs on the market with ample growth potential.

Imvexxy (launched in August 2018), Bijuva (launched in April 2019), and Annovera (launching in Q1 2020) have combined peak annual sales potential of $1.85 billion. It will take time to get those drugs covered by major insurance programs, navigate the patchwork system of state laws relating to women's health, and increase awareness about the new treatments among doctors and the patients who could potentially benefit from them. However, TherapeuticsMD appears to be making progress.

Now what

Investors are growing more optimistic about the company's ability to ramp up sales in the near future, but it might be best to keep expectations in check. Growing prescriptions for a new drug is expensive -- the company burned through $88.7 million in cash in the first half of 2019 -- and TherapeuticsMD's offerings are competing against a number of other treatment options. If progress occurs too slowly, investors could lose their taste for the money-losing enterprise, especially if it reaches the point where it needs to raise more cash.