2023-07-13 17:49:16 ET
Summary
- TG Therapeutics, Inc.'s Briumvi, a treatment for multiple sclerosis, faces competition from Roche's Ocrevus, which has shown positive results in a Phase 3 trial.
- Briumvi's intravenous administration could be a disadvantage compared to Ocrevus' 10-minute subcutaneous injections, potentially limiting Briumvi's market share.
- Despite the competition, TG Therapeutics has shown strong financial health, and the choice of therapy in MS is complex, considering multiple factors, which could still favor Briumvi.
- Although the 15% drop in TG Therapeutics' share price might be an overreaction, the news reaffirms my "Sell" recommendation. Investors should look out for detailed Ocrevus data and Q2 Briumvi earnings moving forward.
Introduction
TG Therapeutics, Inc. ( TGTX ), a biopharmaceutical company, is committed to developing and commercializing innovative treatments for B-cell malignancies and autoimmune diseases. Their principal product, Briumvi, has received FDA approval and serves as a monoclonal antibody therapy for several types of adult multiple sclerosis [MS], including clinically isolated syndrome, relapsing-remitting condition, and active secondary progressive disease.
Reflecting on my previous analysis of TG Therapeutics, I highlighted the promise of Briumvi in the MS treatment market, despite suggesting a wider consideration of factors beyond its initial quarterly success. While the first-quarter performance was notable, I stressed the need to analyze enduring trends and balance business growth with fiscal stability. My initial evaluation seemed too negative, leading to a recommendation revision from "Strong Sell" to "Sell," though I maintained my $500 million peak revenue prediction. I committed to monitoring developments, and suggested investors consider capitalizing on current profits. Since my “Sell” recommendation, TGTX trades 36% lower.
Recent developments: TG Therapeutics' shares dropped ~15% Thursday, July 13, 2023, following Roche Holding AG's (RHHBY) announcement that its rival MS drug, a subcutaneous formulation of Ocrevus, met primary goals in a Phase 3 trial.
Q1 2023 Earnings
In a brief overview of their Q1 2023 financial report , TG Therapeutics experienced a considerable rise in net product revenue, reaching roughly $7.8 million, mainly due to Briumvi's sales in the U.S. This is a significant increase from the $2.0 million in Q1 2022, which came from UKONIQ™ sales before its withdrawal. The company saw a decrease in R&D expenses to $15.9 million, primarily from reduced manufacturing, clinical trial costs, and smaller staff numbers. However, SG&A expenses rose to $28.1 million due to costs related to Briumvi's approval. The net loss for the quarter was $39.2 million, a decrease from $69.0 million in Q1 2022. With $139.7 million in cash and securities and an additional $20.0 million from their term loan facility, TG Therapeutics is expected to have adequate funds until mid-2024.
Ocrevus' Subcutaneous Injection: Advancing Multiple Sclerosis Treatment
Roche has announced positive results from its Phase III OCARINA II trial for Ocrevus (ocrelizumab) as a twice-yearly, 10-minute subcutaneous injection in patients with relapsing or primary progressive multiple sclerosis ((MS)). The trial confirmed the injection's comparable efficacy and safety to intravenous (IV) administration, offering the potential for wider use in MS centres lacking IV infrastructure or facing capacity limits. The new method maintains the same twice-yearly regimen as IV Ocrevus, providing a more flexible delivery option for patients and healthcare professionals. The detailed results will be submitted to health authorities worldwide and presented at an upcoming medical conference.
The OCARINA II trial's confirmation of comparable efficacy and safety of Ocrevus as a subcutaneous injection to its intravenous ((IV)) counterpart opens up significant opportunities for more widespread adoption of this treatment method. The main points of comparison were pharmacokinetics (drug levels in the blood) over a 12-week period, and the control of MRI lesion activity in the brain during the same period. The fact that the trial met its primary and secondary endpoints suggests that the drug's effectiveness was not compromised by the new mode of administration.
Subcutaneous administration can be more convenient and less resource-intensive than IV administration, which could expand access to treatment. IV administration generally requires dedicated medical personnel, equipment, and a sterile environment, making it more complex and costly. This method also demands significant patient time, as the drug must be delivered slowly into a vein, often over several hours.
In contrast, subcutaneous injections can be administered quickly, often in less than 15 minutes. This has the potential to make treatments more accessible and less burdensome for patients, particularly in regions where access to healthcare facilities with IV infrastructure may be limited.
The subcutaneous formulation could also alleviate capacity constraints at medical centers that administer multiple sclerosis treatments. As the global MS patient population grows, many treatment centers struggle to meet demand due to limited IV administration capacity. Subcutaneous administration could potentially allow these centers to treat more patients in the same timeframe.
Additionally, the twice-yearly dosing schedule of Ocrevus remains unchanged with the subcutaneous injection, which is favorable in terms of patient compliance. Maintaining treatment consistency is crucial in managing a chronic condition like MS, and having a less burdensome, but equally effective, administration route can contribute significantly to patient adherence to the therapy regimen.
Ocrevus' Subcutaneous Formulation: Impact on Briumvi in the MS Market
The positive results from the OCARINA II trial indicating comparable efficacy and safety between Ocrevus' subcutaneous and IV formulations could have notable implications for TG Therapeutics' Briumvi in the multiple sclerosis market. The key factor lies in the delivery method of these two competing treatments, both of which are anti-CD20 therapies.
Currently, Briumvi is available solely as an intravenous administration, with its first and second infusions requiring a 4-hour and 1-hour time slot, respectively. Subsequent doses, given every 24 weeks, also require about an hour. This time-intensive IV administration could prove to be a competitive disadvantage in comparison to Ocrevus' newly confirmed 10-minute subcutaneous injections, given twice yearly.
The simplified and quicker administration of Ocrevus as a subcutaneous injection can bring significant benefits to patients and healthcare providers alike. It may increase patient comfort, reduce time spent in clinical settings, and improve treatment adherence due to its relative convenience. For healthcare providers, especially in MS centers with limited IV capacities, subcutaneous administration could alleviate pressure on their resources and allow for more patients to be treated in the same timeframe.
While Briumvi's dosing schedule - every 24 weeks - aligns closely with Ocrevus' twice-yearly schedule, the shorter administration time of Ocrevus may tip the scale in its favor in the eyes of both patients and healthcare providers. This could potentially limit Briumvi's market share and growth in the MS market.
To maintain competitiveness, TG Therapeutics might need to consider the development of alternative delivery methods for Briumvi, such as a subcutaneous formulation, if scientifically feasible and regulatory acceptable. This could help counter the appeal of Ocrevus' new subcutaneous option and maintain Briumvi's market potential.
In the meantime, Briumvi's clinical efficacy, tolerability, and unique pharmacological profile could still retain its appeal for certain patient populations. Also, decisions around therapy choice are complex and consider multiple factors, including individual patient characteristics, response to prior treatments, and physician's experience with the drug. These could play to Briumvi's advantage, despite the competitive pressures posed by Ocrevus' subcutaneous administration.
My Analysis & Recommendation
In conclusion, the field of MS treatments has seen recent progress, particularly with the successful Phase III trials of Roche's Ocrevus, which is administered as a 10-minute, twice-yearly subcutaneous injection. This development could present substantial competition for TG Therapeutics' Briumvi, as both are anti-CD20 therapies. The convenience and potential for wider distribution of Ocrevus' subcutaneous administration might put it at an advantage over Briumvi's intravenous method.
Yet, the recent 15% drop in TG Therapeutics' share price might be an overly drastic reaction. While Ocrevus' successful trial does introduce competition, it's crucial to remember that the choice of therapy in MS is a complex decision that takes into account multiple factors, including the drug's clinical efficacy, tolerability, the patient's response to prior treatments, and the physician's familiarity with the drug. Briumvi's robust performance, unique pharmacological properties, and potential appeal for certain patient populations shouldn't be undervalued.
Moreover, TG Therapeutics has demonstrated strong financial health in its recent Q1 2023 report , with an increase in revenue driven by Briumvi sales and a decrease in R&D expenses. Along with the projection of having sufficient funds until mid-2024, the company is in a sound financial position.
Investors should keep an eye on further data from the Ocrevus trial and track Briumvi's sales figures in the upcoming months. These metrics will offer further insights into how the introduction of subcutaneous Ocrevus, which isn't expected to become available until the second half of next year, may impact Briumvi's market share. It will also be of interest to see how TG Therapeutics might strategically respond to this heightened competitive landscape, potentially by exploring alternative delivery methods for Briumvi.
Taking these factors into consideration, I reaffirm my previous recommendation of "Sell." Given the evolving competitive dynamics in the MS treatment market and the potential impact of Ocrevus' subcutaneous administration on Briumvi's market share, it may be prudent for investors to consider selling at this point.
Risks to Thesis
When the facts change, I change my mind.
While I maintain my "Sell" recommendation for TG Therapeutics, it's important to note that this investment outlook comes with certain risks.
Firstly, the MS market is highly dynamic, and the relative competitiveness of Briumvi could change rapidly with further clinical data or breakthroughs in treatment methods. For instance, if TG Therapeutics develops an alternative delivery method for Briumvi, such as a subcutaneous injection, this could alter its competitive position and increase its appeal to both patients and healthcare providers.
Secondly, Briumvi's current performance and its financial health indicate a solid base from which the company could further grow. Future announcements of higher-than-expected sales or new partnerships could potentially drive the stock's value up, contradicting my current "Sell" recommendation.
Lastly, regulatory decisions can often have a significant impact on a pharmaceutical company's stock performance. Any future positive regulatory changes in favor of Briumvi, such as approval in additional markets or for additional indications, could increase the drug's potential and lead to upward movement in the stock's price.
It's also worth noting that the timing of my TG Therapeutics, Inc. "Sell" recommendation is based on the current competitive landscape and expected future trends. Any unexpected shifts in the market, whether due to changes in competitor drugs or broader economic or industry factors, could impact the validity of this recommendation.
For further details see:
Ocrevus Challenges Briumvi: A Closer Look At TG Therapeutics' Position