TherapeuticsMD Inc (NYSEMKT:TXMD) has drawn a lot of market attention over the last couple of quarters based on a new drug application (NDA) submission for its lead candidate Yuvvexy. The drug is an investigational capsule for the treatment of moderate-to-severe vaginal pain during sexual intercourse (a condition called dyspareunia), which is generally a symptom of vulvar vaginal atrophy (VVA) in postmenopausal women. The market potential for this one is large (we’re talking multi billions of dollars), and an approval come PDUFA would be a real win for the company. However, there is a nearer term catalyst worth keeping an eye on; one that has the potential to serve up some upside momentum before the year draws to a close, and consolidate any potential market capitalization gains as the FDA turns its attention to the above-mentioned Yuvvexy.

We are talking about the company’s secondary candidate, a drug called TX-001HR.

TX-001HR is targeting moderate to the severe hot flushes that occur as the result of female menopause. The drug has taken something of a backseat to Yuvvexy as far as speculative volume is concerned, but an approval would open up an even larger market than would Yuvexxy, and as such, while it is slightly behind the latter in the development scope, it is just as – if not more – important than its peer asset.

So, what are we looking at from TX-001HR?

Well, TherapeuticsMD just announced that it is set to report topline data from a pivotal phase 3 trial during the final quarter of 2016. If it gets approval, the product will be the first and only bio-identical FDA approved combination product in this space (we’ll get to what this means in a little more detail shortly), and the company would be targeting a market of more than 36 million women in the US, with a revenues potential of more than $25 billion. Positive topline in the upcoming release would underpin an early-2017 registration submission, and that’s why it’s so important.

The science behind this one is not complicated. Essentially, when women undergo menopause, they turn to hormonal replacement therapies in order to treat the symptoms. The current two lead placements are a progesterone replacement and an estradiol replacement. Before 2002, women would take a combination treatment (both of these two aforementioned hormones in one pill), however the hormones this combination treatment contained were synthetic. In 2002, a study came out supporting the hypothesis that synthetic hormones can have some pretty terrible side effects, including cardiovascular issues, stroke, etc., and so patients shifted to individual pills rather than the combination therapies (individual pills are natural, not synthetic). TherapeuticsMD’s TX-001HR is a combination of the two natural hormones in one pill, and represents the only pill of its type to contain two natural hormones.

Basically, what we’ve got here, is a treatment that the vast majority of menopausal women used to take all of a sudden not being taken anymore because of side effects. These women shifted to a less convenient alternative, and have remained on this alternative for the last fifteen years. TherapeuticsMD has come in and replicated the old version, yet removed the side effects.

That’s why the potential is so big, because the assumption is that the current market would entirely shift to take the combination therapy, as opposed to the current two-pill administration, because it’s far more convenient. They did it once, and that was with a synthetic version. They will do it again, and TherapeuticsMD is probably not going to have to spend much to make them shift (education is not necessary, and many of the physicians that prescribed the old combo will be familiar with the new one).

So, with topline slated for Oct-Dec, what are we looking for from the trial?

Well, we need to see an efficacy comparability, but this shouldn’t be too much of an issue. We’re looking more at the safety profile of the combination. Historically, there have been some safety related issues with these drugs (hence the failure of one to hit markets since patients shifted to single hormone pills). TherapeuticsMD’s candidate hasn’t demonstrated any severe issues across the previous investigations carried out by the company, but this doesn’t mean something won’t crop up as part of the larger investigation.

All said, it’s not guaranteed, but if topline comes out safe and effective, there’s a real chance this one could be more of an upside driver than its Yuvvexy counterpart.