TG Therapeutics, Inc. (NASDAQ:TGTX)

FDA Approval Anticipated for TG's Ublituximab
Summary

* TG Therapeutics (TGTX) is approaching its Prescription Drug User Fee Act (PDUFA) goal date of December 28, 2022 for ublituximab for the treatment of relapsing forms of multiple sclerosis (RMS).
* TG appears to be launching ublituximab under the trade name “BRIUMVI”.
* More information about approval is anticipated at the annual American Society of Hematology (ASH) Meeting, December 10-13, 2022.

What's happening:

TG is approaching its PDUFA goal date of December 28, 2022 for ublituximab. Ublituximab met its primary endpoint in the ULTIMATE I and II Phase 3 trials with treatment demonstrating a statistically significant reduction in annualized relapse rate (ARR) compared to teriflunomide in patients with RMS. Overall, ublituximab demonstrated excellent efficacy and a well-tolerated safety profile.

How we got here:

It’s been a tough year for TG Therapeutics, and ublituximab’s approval should revitalize faith in management, and the stock.

Ukoniq (umbralisib), TG’s PI3K inhibitor class drug for the treatment marginal zone lymphoma (MZL) and follicular lymphoma (FL) was pulled from the market over safety concerns. Despite being well-tolerated with a safety profile better than first-generation PI3K inhibitors, with manageable toxicities and a relatively low number of AE-related discontinuations, Ukoniq suffered with broader FDA scrutiny on the entire PI3K inhibitors class. Regrettably, Ukoniq trials were also not powered for overall survival (OS), and available data analyzed in response to FDA questions on OS were not favorable. PI3K inhibitors offer significant promise – and umbralisib may see market success in some form – but further study will be necessary. TG voluntarily pulled Ukoniq from the market in April 2022.

PI3K inhibitor safety concerns also affected TG’s separate Biologics License Application (BLA) to treat chronic lymphocytic leukemia (CLL) and small lymphocytic lymphoma (SLL) with the combination of Ukoniq and ublituximab (U2). As a result, TG also voluntarily withdrew its pending BLA for U2 in April 2022.

TG was right to put umbralisib and its entire cancer program on hold, and to focus solely on getting ublituximab to market for Multiple Sclerosis. Ublituximab in MS has always been TG’s best chance at blockbuster commercial success.

What they're saying:

The science behind ublituximab is convincing, ublituximab demonstrated excellent efficacy and a well-tolerated safety profile. As a 3rd generation anti-CD20 monoclonal antibody, ublituximab is glycoengineered to enhance its potency, especially antibody-dependent cell-mediated cytotoxicity (ADCC) activity, and offers patients excellent care with the fast infusions and marketing leading ARR (below 0.10) among anti-CD20 drugs. Ublituximab is the first anti-CD20 therapy with an annualized relapse rate (ARR) below the 0.1 threshold in clinical trials.

The Company tipped off investors to its progress for approval on its Q3 2022 earnings call with CEO Michael Weiss stating,
“We can confirm that we have completed the late cycle meeting and labeling discussions have recently commenced. We remain hopeful that ublituximab will be approved.” Michael Weiss, TG Therapeutics

Investors cheered “labeling” as a signal for approval, sending the stock 63% higher on November 10, 2022. To be fair, shares of TGTX have suffered mightily this year, down more 60% year-to-date, and the $3 price move was only a small bounce, relatively speaking.

Why it matters:

As TG transitions from development-stage to commercial-stage, investor attention shifts to launch execution.

It appears that ublituximab will launch under the trade name “BRIUMVI”. BRIUMVI came across our radar from public trademark filings. We believe TG will offer direct purchase discounts through TG approved distributors and a direct purchase program called BRIUMVIdirect.

TG management says they are ready to go with a comprehensive commercialization strategy, including plenty of available supply and launch pricing strategies. The Company currently offers no sales guidance, but we expect ublituximab sales to be very meaningful in the coming quarters, accelerating to a $300 million run rate by the end of 2023.

TG has cash, cash equivalents and investment securities of $197.7 million as of September 30, 2022, and expects to burn approximately $40 to $50 million of cash per quarter. In its 3Q 2022 earnings release the Company says "its current cash, cash equivalents, investment securities and capital available under its debt facility on ublituximab’s approval will be sufficient to fund our planned operations into 2024."

Revenues in the first year can also extend the Company’s burn, as CEO Michael Weiss explained: "I think we are feeling quite good about the cash position... we are expecting to drive some revenues in the first year, which will also extend by 2024 burn number." Michael Weiss, TG Therapeutics

What’s next?

With the stage set, the amount of revenue the Company can achieve in year one of sales is the big question. Taking into consideration Roche's first year sales for Ocrevus (ocrelizumab), ublituximab’s most comparable competitor, we believe a $300 million sales run rate for ublituximab is very reasonable by year end 2023.

Ocrevus, also an anti-CD20 drug administered by intravenous infusion, was approved by the FDA on March 28, 2017. U.S. sales of Ocrevus totaled $510 million from launch through September 30, 2017 and achieved full year 2017 sales of CHF 0.9 billion (or roughly $1 billion), per company reports. Roche has massive scale and well-established marketing and distribution channels – so our expectations for TG should be tempered.

In its October 18, 2022 earnings release Roche reported global Ocrevus sales of CHF 4.4 billion, including both relapsing and primary progressive forms of multiple sclerosis. (TG is currently only seeking approval in RMS.) Roche notes: "The demand for this treatment in both indications remained strong." Ocrevus vs ublituximab will be an interesting battle in 2023, and we expect ublituximab to gain significant market share and favor among patients as a 3rd generation option with higher potency, 1 hour infusion times, and a statistically meaningful efficacy and safety profile.

The big picture:

Trying to precisely value pre-revenue companies like TG is very challenging, particularly in this market. The efficacy of ublituximab in MS, and its addressable market data certainly suggest that TG a year from now will be a significant player in the MS market. As they win over payors, providers, and patients, they will certainly attract big pharma suitors.

TG is well positioned to capture more than $1 billion in U.S. based sales with ublituximab. Anti-CD20 monoclonal antibodies are critically important to patient care in MS, and drug class is growing into a $10 billion+ market.

Ublituximab's glycoengineered efficacy is differentiated and meaningful. We estimate that TG can achieve blockbuster status of $1 billion in ublituximab sales by the end of 2024 and $2 billion in sales in 2025. TG's entire future is tied to the success of ublituximab, and we believe its future is convincingly bright.

We assign a target market value of $5 billion to $8 billion, or $37 to $59 a share to shares of TGTX. Our estimate value is based on a multiple of 2.5 to 4 times 2025 sales. Our value range also considers comparable market transactions, such as Gilead's acquisition of Forty Seven for $4.9 billion and Novartis's $8.7 billion buyout of AveXis. With shares at approximately $8 at the time of write this article, shares of TGTX could see appreciation of 3.6X to 6.4X.

Why not? It's a beauty!