It’s been a turbulent day of trading for Mayne Pharma Group Ltd [ASX:MYX].
The MYX share price opened 22% higher this morning following a favourable announcement. But this early bullishness has waned as the trading day has gone on.
At time of writing, Mayne Pharma shares are still in the green, but only up 7.6% for the session. Paring back a lot of the early gains as profit taking and wider market pessimism takes hold.
Nevertheless though, it is a big win for the company moving forward.
Let’s take a closer look at the details…
First new estrogen drug in over half a century
In conjunction with Mithra Pharmaceuticals (a Brussels-based partner), Mayne Pharma has secured approval from the US FDA for NEXTSTELLIS, an oral drug that acts as a contraceptive.
More importantly though, as Mayne Pharma emphasises, it is the first and only drug of its kind to contain estetrol. A plant derived and native type of estrogen. The first new type of estrogen to make it into the US market in more than 50 years.
As such, the duo is hoping it will be well received in the US. With an estimated US$3.6 billion worth of sales over the course of 2020. Sales that NEXTSTELLIS will hopefully be able to grab a market share of.
Because as Mitchell Creinin of the University of California notes, NEXTSTELLIS has very few negative effects:
‘When speaking with patients about their contraceptive options, one of the most common concerns is side effects. NEXTSTELLIS is a new innovative contraceptive that has been shown in clinical trials to be not only safe and effective but also well tolerated with a desirable bleeding profile and minimal impact on triglycerides, cholesterol and glucose, as well as weight and endocrine markers.’
So, with that in mind, Mayne Pharma is no doubt looking forward to its commercial launch. Providing a desirable alternative to the currently available range of products.
And with a 20-year exclusive license to supply NEXTSTELLIS to both the US and Australia, this could be a lucrative win for the company. Although, the drug is still under review locally by the TGA.
But, with this FDA win, it is hard to imagine it will be rejected.
What’s next for Mayne Pharma investors?
There is little doubt that today’s news is good for Mayne Pharma’s forward-looking revenue. The only question investors will need to ask themselves though, is whether it will be enough to turn around the companies fortunes?
As we’ve seen in the company’s most recent half-year update, revenues are trending down along with gross profit. Dragged even lower by the impact of unfavourable currency conversion.
However, on the plus side, (reported) earnings are improving.
So, if NEXTSTELLIS can live up to expectations, it could be a key driver of sales. A result that should hopefully improve both Mayne Pharma’s top and bottom line.
Investors will simply need to decide if they’re comfortable with speculating on this potential.
Because if not, then we’d suggest looking for stocks with more value to their name. A task that might seem challenging in the small-cap space, but can certainly be done.
In fact, we’ve put together a free report of four of our favourite undervalue picks. Companies that could be ripe for investors looking for upside potential with a good foundation.
To learn more, including the names of these four stocks, check out the full report, right here.
For Money Morning