We came across a bullish thesis on TG Therapeutics Inc (TGTX) on ValueInvestorsClub by Bohr. In this article we will summarize the bulls’ thesis on TGTX. TG Therapeutics shares were trading at $14.71 when this thesis was published, vs. closing price of $23.51 on Aug 29.
A laboratory technician researching a sample of cells in a biotechnology laboratory.
TG Therapeutics (TGTX) stands out as a biopharmaceutical company specializing in the acquisition, development, and commercialization of innovative treatments for B-cell mediated diseases. Headquartered in Morrisville, NC, the company’s key product, Briumvi, has recently emerged as a notable treatment for Multiple Sclerosis (MS). The company also has other products in its portfolio, including Umbralisib, an oral inhibitor for certain lymphomas, TG-1701, a selective BTK inhibitor, and TG-1801, a bispecific antibody, but Briumvi is currently its flagship product.
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Briumvi, a newly FDA-approved anti-CD20 monoclonal antibody, targets specific types of MS. MS is a chronic, progressive autoimmune disorder affecting the central nervous system, leading to a variety of physical and cognitive symptoms. Briumvi’s approval and entry into the market mark a significant milestone for TG Therapeutics, particularly as it targets the growing market for MS treatments. This market is substantial, with the overall MS drug market projected to reach $35 billion by 2029. Anti-CD20 therapies, in particular, are expected to capture a significant share of this market, with sales projected to grow from $9 billion in 2024 to $20 billion over the next decade.
The uniqueness of Briumvi lies in its targeting of a specific region of the B-cell CD20 protein, which is distinct from other therapies on the market. This specificity allows Briumvi to focus on B cells that are most likely contributing to the pathology of MS. Compared to its competitors, Briumvi offers a more convenient administration schedule with fewer side effects, positioning it favorably in the market. The treatment requires an initial loading dose, followed by infusions once every six months, with a relatively short administration time and minimal post-infusion monitoring after the first dose. This makes it more convenient than Roche’s Ocrevus, which requires longer infusion times and more frequent monitoring, and potentially more attractive than Novartis’s Kesimpta, which is administered at home but requires monthly injections.
In terms of financials, TG Therapeutics is showing strong growth potential. In 2023, Briumvi generated $89 million in sales, and the company projects revenues of $220-$260 million for 2024. The recent commercialization agreement with Neuraxpharm, which includes an upfront payment of $140 million and potential additional payments based on milestones, further solidifies the company’s financial position. Moreover, the agreement includes an option for TG Therapeutics to buy back the rights in Europe, which could position the company for a lucrative acquisition.
Despite the competition from well-established players like Roche and Novartis, TG Therapeutics has captured approximately 10% of the anti-CD20 therapy market. With the MS treatment market continuing to grow and Briumvi’s unique attributes, there is significant potential for further market share gains. If Briumvi captures even 30% of the anti-CD20 market, sales could reach around $600 million by 2025.
Valuation suggest that TG Therapeutics could be worth $3 billion, or $20 per share, based on conservative estimates. Should the company continue to expand its market share or successfully develop a subcutaneous formulation of Briumvi, the stock could see substantial upside. Furthermore, the potential for a buyout by a larger pharmaceutical company remains a key catalyst. While there are risks, including competition from new entrants and the possibility of Roche’s subcutaneous formulation gaining traction, the growth prospects for TG Therapeutics make it an attractive investment.
TGTX is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held TGTX at the end of the second quarter which was 29 in the previous quarter. While we acknowledge the potential of TGTX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as TGTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
