Shares of TherapeuticsMD surged 12 percent Tuesday, a day after the company announced positive results for a hormone therapy drug in phase 3 trials.
The drug, aimed at post-menopausal women, is for the treatment of moderate to severe vasomotor symptoms like hot flashes and night sweats.
Annabel Samimy, analyst at Stifel, said in a note Tuesday that TherapeuticsMD's bioidentical combination of and progesterone (E+P) would not only be the first E+P clinically tested and potentially approved therapy to come to market, but would be the first "continuous" combined E+P drug. Samimy said the drug's safety is also clear, with no incidence of hyperplasia, beating the U.S. Food and Drug Administration's standard of less than 1 percent.
The analyst said she believes the drug's prospects for commercial penetration are also high given the following current market dynamics:
- A declining synthetic market and supplanted by a rising compounding market based on patient demand;
- The FDA's clear and continued lack of support for unapproved bioidentical products;
- The loss of reimbursement by compounders for its unapproved bioidentical formulations with patients now paying out of pocket;
- Liability concerns for physicians who prescribe compounding when an approved product is available.
Samimy raised her target price for TherapeuticsMD to $17 from its previous target of $14.
The health care company's stock has shed 32 percent year to date.
TherapeuticsMD co-founder and CEO Robert Finizio will be on CNBC's "Mad Money" on Tuesday at 6 p.m. ET.