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Is This Why Shares of TherapeuticsMD Inc. Rose Today?

By Brian Feroldi – Nov 4, 2016 at 3:55PM

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Shareholders saw something that they liked in the company's third-quarter earnings report.

What happened

After the company reported third-quarter earnings, shares of TherapeuticsMD (TXMD 1.35%) rose by as much as 12% in afternoon trading on Friday.

Image source: Getty Images.

So what

It was a busy quarter for the women's health company. Here's a look at the financial highlights from the period:

  • Net revenue grew by 7% to $5.5 million.
  • Spending on clinical trials fell during the quarter, which helped to lower research and development costs. However, the company continued to invest in its sales, marketing, and regulatory personnel during the period in anticipation of its future commercialization launch. As a result, operating expenses rose 26% to $29.4 million.
  • TherapeuticsMD's net loss was $25.0 million, or $0.13 per share. That was higher than the $19.5 million loss that was reported in the year-ago quarter and was $0.02 worse than analysts were expecting.
  • The company ended September with $147.5 million in cash.

Financials aside, the company also had a few other updates to share with investors:

  • Yuvvexy, the company's hopeful treatment of vulvar and vaginal atrophy in postmenopausal women, was officially accepted for review by the FDA in September. A PDUFA date of May 7, 2017 has been set.
  • TX-001HR, the company's hopeful combination therapy for treating severe vasomotor symptoms due to menopause, is on track to deliver top-line results from its phase 3 Replenish Trial in the fourth quarter.
  • The company hired two new senior executives to help launch the two drugs, should they win approval. These two executives have backgrounds at other pharma giants like Pfizer and Teva Pharmaceutical.
  • Management expects to hire an additional 100 sales reps in January to assist with the upcoming launches.

It is hard to tell what happened in this report that has the markets so excited. Perhaps the markets are bidding up shares in response to the new executive hires. It is also possible that the company simply picked a good day to report. After all, the SPDR S&P Biotech ETF (XBI 2.06%) is up more than 3% in afternoon trading.

Now what

It is an exciting time to be an investor in TherapeuticsMD. We're less than six months away from a go/no-go decision from the FDA on Yuvvexy, and late-stage data from TX-001HR should be available in roughly 60 days. If the company gets good news on either front, then shares would likely soar. That's especially true when you consider that the company's stock has fallen by more than 50% since the start of the year.

Still, the future of both drugs remains very much up in the air. Bulls and bears alike should approach this stock with caution.

Brian Feroldi has no position in any stocks mentioned. Like this article? Follow him on Twitter where he goes by the handle @Longtermmindset or connect with him on LinkedIn to see more articles like this.

The Motley Fool recommends Teva Pharmaceutical Industries. 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.

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