Summary
Due to the FDA uncertainty, TG Therapeutics shares took a big hit earlier this month. Nevertheless, the stock is showing signs of a rebound going into Fiscal 2022.
The upcoming U2 approval for chronic lymphocytic leukemia and small lymphocytic lymphoma is a crucial development.
By 2H next year, you can also expect approval of ublituximab in servicing the vast multiple sclerosis market.
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luismmolina/E+ via Getty Images People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences – Peter Lynch In biotech investing, you have to conquer volatility in order to enjoy huge profitability. As you can see, volatility is closely connected to the prevailing market sentiment. If the market believes there is uncertainty relating to a regulatory binary event (i.e., an FDA approval), the stock usually tumbles. Now, if you can forecast approval, building shares amid this big drop can lead to substantial gains once the sentiment is reversed.
On that note, TG Therapeutics ( TGTX ) suffered from extreme volatility earlier this month due to the market misinterpretation of the upcoming U2 approval for chronic lymphocytic leukemia and small lymphocytic lymphoma. Nevertheless, the fundamentals remain solid. As such, I strongly believe that the stock would rebound going into 2022 with approval. In this research, I’ll provide a fundamental update on TG and provide my expectations on this Phillip Fischer growth equity. Figure 1: TG chart (Source: StockCharts ) About The Company
As usual, I’ll present a brief corporate overview for new investors. If you are familiar with the firm, I suggest that you skip to the subsequent section. Headquartered in New York, TG Therapeutics is focused on the innovation and commercialization of stellar medicines to serve the unmet needs in blood cancers and autoimmune diseases.
Viewing the pipeline, you can see that there are two molecules: ublituximab (TG-1101 or “Ubli”) and umbralisib (TGR-1202 or “Umbra”). As you can see, Umbra is already approved for the treatment of relapsed/refractory (R/R) marginal zone lymphoma (“MZL”) and follicular lymphoma (“FL”) back in February 2021. Interestingly, Ubli is also being developed for the debilitating condition, multiple sclerosis (i.e., MS).
To boost further growth, TG is assessing Umbra and Ubli for various blood cancers. For instance, the Umbra/Ubli (U2) combo is being developed for chronic lymphocytic leukemia (CLL) and small lymphocytic lymphoma (SLL). There are also other medicines that deepen this pipeline. They include 1501 (cosibellimab), TG-1601 (i.e., a BET inhibitor), -1701 (BTK inhibitor), and -1801 (CD47/CD19 bispecific antibody). Figure 2: Therapeutic pipeline (Source: TG ) Intriguing Business Model
From the figure below, you can appreciate that TG is highly focused on B-cell diseases. As you can imagine, a company highly specialized in a particular niche would deliver much value. For instance, a heart surgeon is extremely good at what he does because that’s all he’s done for many years. Doing too many things would dilute your effectiveness. By focusing solely on B-cell diseases, TG would gain that specialized knowledge to ensure both clinical trials as well as regulatory and launch success for B-cell-related conditions. Figure 3: B-cell disease focus (Source: TG )
That aside, it’s interesting that various medicines powering this pipeline have complementary mechanisms of action (MOA) which boosted the estimated total addressable market. That is to say, if various molecules all have the same mechanism of action, they would cannibalize one another market share. In attacking the related diseases with different MOAs, TG’s medicines can expand rather than contract their market shares. After all, there is always a strong demand for novel drugs.
Leveraging a prudent business model and riding strong management, TG has enjoyed substantial share price appreciation in 2020. Despite the robust fundamental improvement in 2021, the share price action did not appreciate much this year due to the FDA uncertainty regarding CLL/SLL. Assuming upcoming approval for CLL/SLL, the mismatch between market value and the stock’s true worth is likely to set up TG for a bull run in 2022. Figure 4: Catalytic development (Source: TG ) Ukoniq Label Expansion To Cover CLL/SLL
Whether Ukoniq would be approved for CLL/SLL is pretty much dependent on the published clinical results. Based on the Phase 3 UNITY data, you can see that patients treated with the U2 combo enjoyed much higher progression-free survival at the 36.7 months median follow-up than conventional drugs.
Simply put, the U2 combo achieved superb efficacy data. […]
source TG Therapeutics: Elucidating The Upcoming Binary Event
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