TherapeuticsMD Paddles Like a Duck Today (TXMD)

Another day and another company announces the offering of more common shares to bolster its finances. Last night after the markets closed, TherapeuticsMD (OTC: TXMD) let the word out that it had entered into an agreement for the private placement of common stock. The deal calls for TherapeuticsMD to sell 3,953,489 shares of common stock for a price of $2.15. The company expects to receive gross proceeds of about $8.5 million from the transaction.

The money will be used to fund pharmacokinetic trials, which the Food and Drug Administration (FDA) requires before the company can begin Phase III trials on three new drugs. The drugs are all related to relieving the symptoms of menopause. Additionally, TherapeuticsMD plans to launch three generic multivitamins later this year through its subsidiary, BocaGreenM. These multivitamins are designated for expectant mothers or woman planning on becoming pregnant.

Unlike public offerings where shares become available to the market almost immediately, private placements usually carry a lock up period that specifies the earliest date when shares can be sold on the open market. In a private placement, public buyers of the stock cannot purchase the additional shares in the near term, so a private placement usually results in less downward pressure on share prices than a public offering.

Initial reaction to the private placement news drove share prices down as the stock gapped down 16 cents from the closing price on Wednesday. From the opening print at $3.30, the stock drifted to the daily low of $3.25. By the time the first hour of trading had been completed, the stock had rebounded to positive territory and it set an intraday high of $3.50. Shares of TherapeuticsMD traded sporadically during the day with some periods of the trading session not recording a single exchange of stock. Shares ended the day down a penny to close at $3.45. The number of shares exchanging hands during the trading session exceeded 4.4 million. Interestingly, traders only engaged in 24 separate transactions to generate the large amount of volume. On an average day, the stock trades just a mere 3,300 shares (yes, that is the correct number). Traders will have the coming weekend to figure out the meaning of the heavy volume combined with little movement in the stock price.

Over the last year, share prices have steadily climbed from an annual low set last November when the stock traded for $0.51. Yesterday saw shares reach a fresh 52-week high at $3.60, which means the stock has gained nearly 600% in 11 months.

In other news, the company released fourth quarter financials on August 18, 2012. The company showed $819,000 of revenues for the period and an operating loss of $3,975,000.

TherapeuticsMD is a pharmaceutical company that focuses on the development of over-the-counter and prescription drugs aimed at women’s health issues. Under the company’s vitaMedMD brand, the company offers medical products and nutritional supplements for menopause, pregnancy and childbirth. The company distributes its products to the customer directly or through pharmacies. The Boca Raton, Florida, company was founded in 2008.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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