TherapeuticsMD Inc (NYSEMKT:TXMD) Is A Biotech Runner

TherapeuticsMD Inc (NYSEMKT:TXMD) has had a strong few month. The company is up more than 35% on its share price this time three months ago and just shy of 20% across the last thirty days alone. The run comes on the back of a degree of uncertainty lifting from the company's lead regulatory program and the impact that this lifting is having on sentiment. There still remains some risk driven pressure, however, and we think that while the company is up as described above, there's plenty more upside on offer for anyone looking to pick up an exposure to the regulatory program in question before it plays out to maturity.Here's what we're thinking.This is a biotechnology play that is trying to develop and commercialize an asset called TX-004HR in a target indication of TX-004HR for the treatment of moderate-to-severe vaginal pain during sexual intercourse (dyspareunia), a symptom of vulvar and vaginal atrophy (VVA) due to menopause.This is a common condition in the US and for a variety of reasons, it often goes either undiagnosed or untreated post diagnosis. There's a large market on offer for a company that can address one or both of these issues and with its TX-004HR asset, TherapeuticsMD is trying to do just that. A relatively robust (we'll come back to this) development program served up some strong safety and efficacy data and the company submitted for approval to the US Food and Drug Administration (FDA) on the back of this data.Pretty soon after submission, however, the agency issued a Complete Response Letter (CRL) citing a lack of long term safety data as justification for the application not being approvable in its current format. This isn’t an unusual complaint from the agency, especially with an asset in this sort of indication, but there is an element of the whole situation that does ring as unusual. Specifically, TherapeuticsMD was in pretty close discussions with the agency throughout the development program and – as the program matured – the agency never mentioned that TherapeuticsMD would need said safety data if it wanted to get approval for the product.In a recent conference call, TherapeuticsMD CEO Robert Finizio referred to the failure of the FDA to notify the company of this requirement "an unintentional oversight".Anyway, whatever the reason, markets sold off on TherapeuticsMD when the FDA issued the CRL and the company has failed to regain a large portion of the lost strength since that date.And herein lies our bull thesis on the stock: the long term safety data requirement is a hoop that TherapeuticsMD has to jump through, but that's all. There's plenty of legacy data already available that points to the long term safety of this sort of asset and there doesn’t look to be any obvious reason why TherapeuticsMD won't be able to get the asset approved eventually.For us, it's not about if, it's about when. And this brings us to the latest news. The company reported recently that it has sat down with the FDA to try and resolve the issue and that, on the back of these discussions, it has submitted a package containing some existing safety data and a protocol for a post-approval twelve-month safety study to the agency. If the FDA feels this is sufficient, this asset could pick up approval near term. If not, TherapeuticsMD will have to carry out a twelve-month safety study and this will delay any approval by that period. Delay, not negate.A tentative meeting date has been set for November 3, 2017, at which the company will sit down and discuss the submission with the agency. It's on this data that we'll likely find out whether we're looking at a 2018 or a 2019 approval. If it’s the former, TherapeuticsMD is going to close the gap on its pre CRL pricing right away. If it's the latter, the gap will still close, but far slower and weighted toward safety study conclusion.Cash at the end of the second quarter of 2017 was circa $96.5 million, which should be plenty to conduct the study if required, removing any near term dilution risk.We will be updating our subscribers as soon as we know more. For the latest updates on TXMD, sign up below!Image courtesy of staud70 via FlickrDisclosure: We have no position in TXMD and have not been compensated for this article.