TherapeuticMD's (TXMD) vagina hormone pill is in double trouble.

Problem No. 1: The FDA. TherapeuticsMD was expecting good news from the FDA on or before May 7 about the approval of TX-004HR, an estrogen therapy for postmenopausal women. But now, the regulatory outlook looks grim. On Wednesday, TherapeuticsMD said the FDA has identified "deficiencies" with the new drug application for TX-004HR.

What are the specifics of the TX-004HR deficiencies found by the FDA? TherapeuticsMD didn't provide any details, even though the company says it's been communicating back and forth with the agency.

TherapeuticsMD's inability to tell investors why FDA has problems with TX-004HR seems odd, even implausible, but it doesn't really matter at this point. FDA does not approve deficient drugs. Barring some miracle turnaround, you can pretty much count on FDA rejecting TX-004HR on or before May 7.

TherapeuticsMD will have an opportunity to correct the problems with TX-004HR found by FDA. Without knowing the nature of the deficiencies, it's impossible to predict with accuracy how long a remediation effort will take, or if it will be successful. Even a minor manufacturing problem can take three to six months to resolve. Anything more complicated could easily cost TherapeuticsMD a year or more of lost time.

Time is the last thing TherapeuticsMD can waste because of Problem No. 2: TX-004HR is a me-too female hormone product entering a mature treatment market where Big Pharma competitors are already coming under selling pressure from a generic entry.

TherapeuticsMD has told investors TX-004HR can be a $500 million product five years after launch. That's a fantasy. The company will be lucky to deliver a small fraction of those sales.

TX-004HR is a capsule filled with estradiol (bioidentical estrogen) that menopausal women insert into their vaginas to deal with the bothersome vaginal changes -- dryness, itching, pain during sex -- that can occur when the body's own estrogen levels fall.

If approved, TherapeuticsMD intends to sell TX-004HR under the brand name Yuvvexy. [That's not a joke, although it should be.]

Postmenopausal women already have a broad menu of locally administered estrogen therapy products to treat vulvar and vaginal atrophy.

Pfizer (PFE) sells Premarin cream. The company doesn't break out cream sales but the full Premarin product family generated $1 billion in sales last year.

Allergan (AGN) also sells a estradiol cream under the brand name Estrace. 2016 sales totaled $379 million.

More directly applicable to TherapeuticsMD is Vagifem, an estradiol tablet sold by Novo Nordisk (NVO) . Vagifem sales in 2016 totaled $431 million, or which $314 million were from the U.S.

Last October, Amneal Pharmaceuticals launched Yuvafem, a generic version of Novo's Vagifem, which has "led to a rapid erosion of Vagifem sales in the United States during the fourth quarter of 2016," warned Novo in its most recent annual report filed with the SEC. "The erosion is expected to continue in 2017," Novo added. [Two more generic versions of Vagifem could launch.]

TherapeuticsMD stands little chance of making any money at all from TX-004HR in a market where generics are already eroding sales of branded products. A follow-on female hormone product, a combination of bioidentical estrogen and progesterone known as TX-001HR faces the same marketing challenges.

The company's $1 billion market cap is built on shaky ground.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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