Guggenheim says buy TherapeuticsMD selloff on 'rehash' short thesis
With TherapeuticsMD (TXMD) plunging double-digits following a presentation at the Robin Hood investment conference where the stock was pitched as a short idea, research firm Guggenheim stepped in to defend the stock, calling today's short thesis a "rehash" that fails to recognize nuanced strength of the company's upcoming feminine health products. GUGGENHEIM SAYS CONCERNS MISPLACED, OLD: Guggenheim's Louise Chen defended TherapeuticsMD in an intra-day flash note, calling today's weakness a "compelling buying opportunity." The analyst says the short thesis reportedly presented at the Robin Hood conference by Lakewood's Anthony Bozza, which appears to be driving the selloff, "sounds like a rehash" of a prior thesis published on trading blog Seekingalpha.com in 2012 and 2014. Responding to the "sensational claims" about the company's structure and management, Chen reiterates there is "nothing inherently wrong" with reverse mergers or TherapeuticsMD's executive team, and all would-be issues have been disclosed in regulatory filings. Addressing the bear thesis against the company's drugs, the analyst says any comparisons between its vaginal pain treatment Yuvvexy and Shionogi's Osphena are incorrect, as the Japan-developed competitor needs to be taken a full 12 weeks before producing any results and physicians dislike its systemic nature. Additionally, Chen's research suggests Osphena has secured insurer coverage despite its drawbacks, and she has no reason to believe Yuvvexy, which should gain traction with physicians as an "enhanced next generation product," wouldn't receive coverage. Turning to criticism of TherapeuticsMD's broader menopause drug TX-001HR, which combines estradiol and progesterone to relieve symptoms such as hot flashes, the analyst says FDA approval of the first-in-kind drug would make current combination products prepared under loose regulations by compounding pharmacies "fall foul of DQSA regulations and TX-001HR should take market share." Net-net, Chen says today's bargain could be an "early holiday gift for investors" ahead of what she believes will be positive Q4 data on TX-001HR and potential approval of Yuvvexy in May, both of which she believes "have blockbuster potential that are underappreciated by the Street." PRICE ACTION: After falling sharply shortly after market open, shares of TherapeuticsMD remain down about 16% at $5.73 in afternoon trading.