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Agile Therapeutics: Billion Dollar Buy-Out Is On The Horizon

May 01, 2020 8:45 AM ETAgile Therapeutics, Inc. (AGRX)AGN, JNJ, MRK, VTRS54 Comments


  • Agile Therapeutics is currently trading substantially below its fair value of $6.36/shr on a stand-alone basis.
  • Agile's leading drug, Twirla, is much more valuable in the hands of a Big Pharma company, like J&J, who has the resources and footprint to maximize sales.
  • A company like J&J could commercialize Twirla rapidly, exploit synergies, scale both domestically and globally, and potentially achieve upwards of 16%+ market share.
  • A buy-out is the best way to maximize value for Agile shareholders and I believe an acquisition nearing $1 billion could occur before end of 2020.


Agile Therapeutics (NASDAQ: NASDAQ:AGRX) is a women’s healthcare company focused on patch-based contraceptive options. Their lead product, Twirla, is a once-a-week contraceptive patch containing a combined dose of levonorgestrel and ethinyl estradiol. Twirla was recently approved by the FDA on February 14, 2020 for women with a BMI < 30 kg/m2 and is contraindicated in women with a BMI > 30 kg/m2.

Twirla endured a long and difficult path to approval, including several CRLs and a scathing set of briefing documents issued by the FDA prior to their AdComm in October 2019. Agile's stock has experienced some gut-wrenching volatility along the way:

agrx chartSource: Charles Schwab

Agile shares, currently trading at $2.40, appear to be substantially undervalued. In 2019, the hormonal contraceptive market was valued at nearly $7 billion and is expected to grow at a CAGR of 4.2% through 2027. Furthermore, the US market alone is expected to grow at a CAGR of 4.8% reaching $5.2 billion by 2027. 67% of sexually active women use a contraceptive, based on data from the CDC.

contraceptive market sizeSource: Grand View Research

Agile estimates the potential addressable market for Twirla, the CHC pills/ring/patch segment, to be $3.7 billion. This is consistent with independent research reports forecasting similar market size.

twirla market share

Source: Agile Therapeutics

Twirla’s main competitor, Xulane (the generic version of Ortho-Evra, which was discontinued), is a birth control patch manufactured by Mylan. For a bit of historical context, Ortho-Evra, previously manufactured by Johnson and Johnson, was approved in 2002 and rapidly captured nearly 11% of the CHC market. However, after reports in 2004 of seventeen deaths of women aged 17-30 tied to Ortho-Evra, for reasons such as heart attacks, blood clots, and strokes, the FDA issued a safety warning. Market share subsequently plummeted to 1.3%, leading to Ortho-Evra being discontinued. Xulane, the only patch left on the market, has recovered slightly recording sales

This article was written by

Eugene Capital Advisors is a long/short equity fund geared towards the biotechnology and life sciences industries. We primarily invest in small to mid cap firms that have experienced significant downward corrections that we consider unwarranted, or whose shares are undervalued based on conservative fundamental analysis. Our investment horizon is always long term.

Analyst’s Disclosure: I am/we are long AGRX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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