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TG Therapeutics, Inc. (NASDAQ:TGTX) is an unfortunate story for investors. Just like with Amarin Corporation plc (AMRN), the investment logic here was sound, however, it was ruined by random events. In Amarin’s case, we had one approval, one major label expansion, and then along came Judge Du. In TG’s case, we had one small approval, one major new approval on the horizon, and then they were forced to withdraw the first drug from the market. This killed the buzz around the upcoming approval, which, as we always knew, was the big thing. So the stock has ridden itself all the way down to $6, and nothing seems to be able to move it.
December 28 is the big day, when the FDA will decide on the NDA of ublituximab in multiple sclerosis. There are numerous reasons why we think this will turn out well; and a few reasons it might not. I gave some stats in an earlier article. The Ultimate trials were run under an agreement with the FDA called the Special Protocol Assessment, which means, essentially, that the FDA agrees to the “scientificality” of the clinical endpoints chosen by the company. So if a trial under an SPA met the clinical endpoint – which it did here – the FDA is bound to approve. In about 1000 such SPAs since 1997, the FDA has rescinded its agreement on just 1% of the time. So there’s a 99% chance of approval. That’s one big reason for our optimism.
Ublituximab has consistently scored below 0.1 for the Annualized Relapse Rate or ARR, a feat that none of the other currently approved drugs – not a single one – has been able to achieve in their pivotal trials. ARR is an important metric for calculating drug efficacy in MS trials. It is defined as the number of relapses of MS occurring during a one-year period. Ublituximab not only beat the comparator drug in the Ultimate trials, but it also beat Roche’s (OTCQX:RHHBY) Ocrevus or ocrelizumab, a blockbuster MS drug, on a cross trial basis.
I discussed the 1-hour infusion time earlier. While the company in its earnings call states that this is the foremost differentiator, I am not sure I can agree. Ocrevus has had a 2-hour infusion program approved in December 2020, and given the infusion-related AEs seen in Ultimate, I believe not just the infusion time but also the hospital setting itself matters a lot. I think the company needs to focus on other differentiating factors.
In an earlier article, I wondered whether the Unity-CLL trial will need to be re-analyzed for ublituximab’s contribution to the poor OS data. However, I think that’s kind of moot. Ubli’s central adverse effect is infection, which occurs because it kills B-cells, like it is supposed to. In the Ultimate trials, there were three deaths, all infection related. However, in Unity, infection was not the issue, at least not the issue that led to the poor OS. Umbralisib has its own P13K-related issues. So I doubt ublituximab will have a problem here, and if this was the cause for the 3-month delay in review.
About this delay, in their latest earnings call, the company provided some color:
Since this submission, as is customary during a BLA review process, we have continued to respond to additional FDA information requests, none to my knowledge, specifically related to the submission that resulted in the delay. Generally speaking, my team tells me that they believe the process is moving forward as expected.
Not much of a color, in my opinion, because we still do not know what about the “existing clinical information” required a 3-month delay. Mayank Mamtani of B. Riley was “curious if anything pertaining to standard of care differences in the U.S. and maybe the geographies that [TGTX] may have conducted ULTIMATE I and II” were the causes for the 3-month delay. However, TGTX management avoided answering the question clearly.
Financials
TGTX has a market cap of $918mn and a cash balance of $231mn. The company carried out cost cutting measures in the early part of the year, mostly related to the withdrawal of ukoniq. They reduced their operational loss to $40mn in Q2, almost half of the $78mn from Q2 2021. The company’s selling, general and administrative (SG&A) expenses declined to $12.6M, compared to $34.0M in Q2 2021. The cash they have right now is enough to last them a year, says the company.
Strategy
I do see potential for upside from current levels once we approach the PDUFA date. So it makes sense to double down. However, personally, I am not going to do that because I did that twice before, and I am at a price point which I believe should be crossed if there’s success with the PDUFA. On the other hand, if there’s a problem with the approval, I think there will be major downside from here. I am being defensive with TGTX and just trying to get out without losses at this point. More bullish investors may think differently.
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