TXMD up 11% overnight, it's on a tear. Shareholders have...

TXMD up 11% overnight, it's on a tear. Shareholders have confidence that Mayne will hit the milestones and that TherapeuticsMD will succeed in its pivot to being a royalty-only company.

TherapeuticsMD has worn the cost and cash burn of product launch to get established in the US market (similar to where MYX is with Nexstellis now.) The products give Mayne a revenue stream equivalent to (if not more than) Metrics for a fraction of the price, and the potential to grow much further, combined with synergies to accelerate Nexstellis' market penetration.

The announcement made clear that this new acquisition will be "Immediately additive to net profit after tax." My feeling is that it will offset the Nexstellis cash burn for now (rather than bleed a slow death funding it for years before it hits critical mass, as well as servicing a massive debt pile with covenant risks.) The women's health business should be self-sustaining with a long runway of growing profits from FY24.

Their other businesses need to stabilise and return reliable profits, but combined with assets this may make Mayne an attractive target for somebody looking to enter this space and divest the parts they don't want (especially if the market valuation keeps plummeting,) if not now, then further down the track. (Otherwise, Mayne may do this themselves at some point if the opportunity exists.)

One thing that shouldn't be overlooked is the investment from Rubric Capital. The interest on the convertible note is only 2.5%, redeemable at 29.5c, which they must see as fair value, especially as they are holders of "preferred stock" in TherapeuticsMD, which they are now effectively exchanging for equity in MYX. Surely they could get a better deal elsewhere if they didn't still believe in the products or think the valuation was fair?