Please ensure Javascript is enabled for purposes of website accessibility

Why TherapeuticsMD Inc. Is Tanking Today

By Brian Feroldi - Jan 6, 2016 at 3:39PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are not pleased with the company's decision to raise capital.

What: Shares of TherapeuticsMD (TXMD 0.21%)a drug manufacturer with a focus on women's health, were down by more than 10% as of 3:00 p.m ET Wednesday after news broke that the company was raising capital via a share offering.

So what: The Florida-based company announced that it plans to sell $125 million worth of its common stock in a secondary share offering. It also will be providing the deal's underwriters a 30-day option to purchase up to an additional 15% of the shares of common stock, which could bring the total deal value to roughly $143 million.

TherapeuticsMD management is planning to use the proceeds to help fund commercialization activities related to TX-004HR, its lead compound that is being researched as a treatment for moderate to severe dyspareunia, or vaginal pain during sexual intercourse.

Investors do not appear to be thrilled with the news that they are being tapped for more money, hence shares are tanking today.

Now what: Its been a rough day to have money invested in the healthcare space as many exchange-traded funds that focus on the industry are being sold off. For example, the First Trust NYSE Arca Biotech ETF (FBT 0.67%), which holds a collection of biotech stocks, is off by more than 3% today so it's possible that TherapeuticsMD simply picked a bad day to raise capital.

Still, even after this downward move, shareholders of TherapeuticsMD have done quite well for themselves over the past year. Shares have nearly doubled in value after the company released good clinical news related to TX-004HR, which leaves the returns of the First Trust NYSE Arca Biotech ETF in the dust.

FBT Chart

If you are a long-term believer in the future prospects of TX-004HR, then I see no reason to be concerned with today's sell-off.

Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

TherapeuticsMD, Inc. Stock Quote
TherapeuticsMD, Inc.
TXMD
$9.31 (0.21%) $0.02
First Trust Exchange-Traded Fund - First Trust NYSE Arca Biotechnology Index Fund Stock Quote
First Trust Exchange-Traded Fund - First Trust NYSE Arca Biotechnology Index Fund
FBT
$150.25 (0.67%) $1.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.