TG Therapeutics, Inc. (TGTX) Earnings Call Transcript & Summary

Hi, everybody, it's Alethia Young here. I cover large-cap, small, mid-cap at Cantor, biotech, of course. Very happy to have TG Therapeutics. I have Mike Weiss, who's the Chairman, President and CEO. So we'll do a fireside chat for the next little bit. There's a lot to talk about. So maybe we'll just dive into like, obviously, launch the drug -- well, you know what, Mike, why don't you just level set for 30 seconds or so, and then we'll go into the questions, so that everybody is on the same page.

Yes. Sure. So first, thanks for having us for the conference, as always. It's nice to see you. Yes. Just a quick background around TG. For those of you who are not familiar with the company, we're a B-cell-focused company with big programs in B-cell malignancies and B-cell disorders. So on B-cell malignancy side, we have chronic lymphocytic leukemia, marginal zone lymphoma and follicular lymphoma. And on the autoimmune disorder side, we have a very large program in multiple sclerosis. We have completed Phase III trials across both sides. So we have a large CLL trial that's been completed and is on file with the FDA. And we have a PDUFA date for that indication in March of next year, March 25. And on the MS side, we're in the process of finalizing our BLA submission, which would put us with a PDUFA date probably literally around a year from now-ish, give or take a week or so. And then what we also have, of course, our first drug was approved last year in February -- this year, earlier this year, UKONIQ, formerly known as umbralisib for those who knew the company, who know the company. And that's approved for our later lines of marginal zone lymphoma and follicular lymphoma. So that's been the core for a while. So we've launched, as you know, [indiscernible] marginal and follicular. Pretty small markets but really a good place for us to build our systems, get our team together and get ready for the larger indications of CLL and then further for the larger indications of MS.

Awesome. So maybe just starting with the UKONIQ's launch. Just talk a little bit about initial trends you've seen, how that's going in light of what's going on with COVID.

Yes, it's interesting. When we started out in February, COVID was pretty hot and heavy and access to physicians was pretty limited. We saw a really nice break in the action in the April, May time frame, where physicians were opening up to coming out for dinners and having meetings. And again, just generally being able to have face-to-face interactions with physicians, which is so important when launching a new drug. Those things, again, as Delta -- once the Delta surged, you could watch the access go down. And so we are continuing to work around COVID. We use online systems as much as possible, though the term Zoom fatigue is now becoming quite prevalent around most industries, particularly with all of the physicians. So the teams are doing what they can. They're getting in there. Again every day is important for us as we prepare for the CLL launch and the more engagement and the more physicians who are understanding of UKONIQ before they get to hear about U2 and everyone who uses UKONIQ before they get to U2 is really a home run for us. So every little bit helps and counts. And the teams are out there bustling and working hard to make those face-to-face interactions occur. But it is challenging right now with Delta and restrictions that are around. But we're looking to launch CLL in March. And my crystal ball tells me that we're going to launching ex COVID factors. I think we're going to be in great shape.

I hope so. You talked a little bit about Medicare Part D challenges, the funding. And just maybe talk a little bit about how you think that plays into the commercial landscape longer term.

Yes. So it's interesting. You learn a lot. It's always nice when you study something, but it's much more important when you live it. And so now that I'm living all of these aspects of dealing with insurance reimbursement, Medicare, I have really internalized a lot of things and issues that go around the industry. But what's interesting to note, we had a conference call and people were a little bit confused by this point. There's the difference between insurance coverage and still a patient's ability to pay. So one thing that we don't do well in this country is if you're insured, we still don't make sure that you have, from the insurance side, access to the drugs, right? Because we put such a high co-pay. And it doesn't seem like a lot, but a 10% co-pay on a $100,000 or $200,000 medicine is substantial for most folks in this country. And so while people are insured, most people are insured that come across to look for new drugs in our case. And I imagine we're representative of the greater industry, right, I don't think we're seeing anything different than the overall industry. So what I see is that most people are insured. Our ability to get the insurers to cover our drug, I think we're at -- our target was -- I think there's 40 major, we're 39 or 40 or something. So it's not like there's a payer issue. Almost everyone in this country can get UKONIQ covered by their insurance company. The bigger problem for Americans today is the ability to pay their co-pay, the leftover part after the insurance doesn't pay the rest. And so that piece has been picked up by pharmaceutical companies where they can and by private foundations where the pharmacal companies cannot, right? So filling in that gap, that 10% gap, if you're a -- if you have a private insurance plan, basically, the pharmaceutical company can give you a coupon to basically cover your co-pay, right? If you're on Medicare, by law, the pharmaceutical company cannot give you that coupon, right? By law, you have to pay that yourself, right? I'm not sure exactly what the incentive for that is. It's not like a patient is choosing to go on an expensive medicine because they have cancer. It's not like they're wasting money in the system by negligently going on our drugs. But anyway, it's a policy so that others are taking on and I'm helping to support them. But -- so there is a way if private foundations are available, so charities sometimes have co-pay support programs available for patients to cover those gaps. What we have -- what I have learned, and I'm sure everyone knows this in the industry that, in indications where there's a lot of sales and maybe concentrated sales by one company or a few companies, those companies have a great interest in making sure those charities are fully funded to support the co-pays in diseases or indications where there's no clear market leader, there's a lot of disparity and no one's got a great interest in providing charitable support, you're going to see that less. So by contrast, CLL versus marginal zone and follicular lymphoma, CLL is dominated by a few large players. And apparently, those co-pay support charities are very well funded most of the year. So if you're a CLL patient and you can't afford your co-pay, for the most part, you're going to find a charitable foundation that will be able to give you support. If you are marginal zone or follicular patient, it's almost the exact opposite. Those charitable foundations are open several days a year. So literally, you have to be the lucky lottery winner to get co-pay support. Now don't fret because if you're not one of the lucky lottery winners, most pharmaceutical companies will give you the drug for free anyway, right? And TG is not alone. We've talked about how much free drug we're giving away in this context. And I'm highly confident we are in line with the industry. Our program was designed. It's generous, but it's generous in the way most pharmaceutical companies are generous in their giving away of free drugs. And so if you can't afford to co-pay and there's no foundation to give you the co-pay support, we and most companies will give you that drug for free. And that's what we've been doing. So about 35%, maybe close to 40% of our patients right now in marginal zone and follicular are getting their drug for free. We are completely okay with that. We've always viewed marginal zone and follicular as not the place in which we're going to make a lot of money, but it's a place we're going to build a foundation for UKONIQ. And so we look at that as a very nice way for us to get introduced to physicians and patients for what will hopefully be the place where we will make money for our shareholders, which is in chronic lymphocytic leukemia and further in MS, of course.

Awesome. And then maybe building on that, just this is more on the efficacy and safety, which I think is differentiated from some of the other PI3 kinase deltas out there. Just what have you kind of heard from the community so far about that, like the initial feedback that people are having with the drug now early?

Yes. Look, our data is telling us that patients are not having trouble tolerating the drug. And again, we've seen this through our clinical programs. We historically will have anywhere 10%, 15-ish percent of patients will come off for tolerability reasons. So it's not a perfect drug, no drug is. But the vast majority of patients should have a good experience on the drug, whereas with some of the other compounds in this class, you see more in the 30%, 40%, 50% of patients can't tolerate the drug. And that's been historically the problem for PI3K. So yes, the feedback -- the data for one, right, we do look -- to the extent we can get some of the data, we look at reasons why patients will come off therapy, even in the commercial setting. And it's very minimal when you look at tolerability reasons. And then -- and the feedback we're getting from physicians, both from the ones whom we were just talking to and we showed them the profile to the ones who are using drug, we haven't had any feedback for people having a trouble with the compound. Again, people will have trouble with it. 15% or so are going to have some tolerability issues. We know that clinically. But on average, we feel like it's going quite well in terms of tolerability and the way physicians and nurses are working with the compound.

Awesome. So maybe just as a reminder, how many kind of patients are there in the U.S. for MZ and follicular that you think are going to be your achievable addressable population?

Yes. So we've estimated somewhere probably between 7,000 to 8,000. We've been refining that number. I mean we've had the range of about 7,000 to 10,000 for a while. My guess is it's maybe closer to 7,000 to 8,000. The data coming in also seems to indicate that in marginal zone and follicular, the numbers are down during COVID. So as I say, Delta spike, let patients come in to see their physicians, again, we're talking about chronic diseases where a shift in several months is not likely to have a major impact on mortality. So obviously, getting COVID would be very bad. So we do see that there is trends toward less people being treated during COVID. But again, I think that's -- to me, that's temporary and will resolve itself in a reasonable term. And like I said, I'm predicting by March, it's all going to be pretty straightforward.

Fingers crossed. Okay. Well, obviously, a topic that got a lot of attention was the guidance or the color you gave on 2022 and 2025 on the quarterly call. So I just -- now that there's -- hopefully the dust has settled a little bit amongst everybody, just like I wanted to go back and just, from your words, frame the rationale for providing this. And like what it meant, was it peak or was it not? Or just kind of give us like your perspective in that.

Yes, yes. So I mean, look, we gave guidance clearly to try to reset expectations around early launch. We have always -- as you know, we've been very modest in our expectations for marginal and follicular. I will say that I wasn't anticipating giving away 30% or 40% of the drug, which definitely impacts what the actual dollars are in terms of guidance and revenues. But even when you add that back in and that would meet expectations are very close to, we're still not going to make a lot of money -- selling to marginal and follicular. The indications are too small. They'll grow and there'll be money to be made over time. But it's a service to the patients in marginal and follicular. That's how I view it. And it's always for us -- a way for us to get our launch team together, get our team built, get the systems working, start to engage physicians, make sure everyone's aware. So in terms of the early launch, we always set expectations low, and we wanted to make sure that people were fully on page with us, just to make sure, look, this is not where people should be worried. So we gave some guidance for years 1 and 2 into the launch. And then really, as almost like a cherry on top, we just wanted to be -- we thought we were giving people something to anchor to that would be very exciting because we wanted to show strength in terms of, look, don't worry about this early stuff. This is exactly the way we planned it. This is exactly on plan. Very modest launch, marginal and follicular. Coming to CLL, do much better, but it's going to take a growth curve also. It's not like we're going to walk under the market in CLL. On day 1, we're going to have 20% market share, but we're going to build toward that. And it's a bigger market. And if we're building towards a 20% market share in a U2 only setting that's a major source of revenue for our shareholders. And then obviously, then we build into MS. And I think all that [indiscernible], we're feeling even more and more confident every day about MS. So we threw out some 2025 numbers. Now to us, that's kind of the early launch phase for both CLL and for MS, right? It would be 3, 3.5 years in for both indications. I don't know -- I think people, they're trying to interpret those numbers as peak numbers. But to us, those are pretty early exciting launch numbers, 3 years in, again, we wouldn't anticipate with these indications and these drugs and the length of time that patients could be on certainly MS therapies, the peak would occur probably in year 8 or later. I mean the peak could be in year 10. I mean, it could continue to grow for a very long time. So yes, I think we said something we thought was a relatively near-term state. And we said a number that we thought was achievable and really set us on a course toward a highly -- I mean, one -- that number alone should be super exciting, but I don't care. Any company that can have $1 billion in sales within 3 years of launch, you should be dancing in the streets, right? They don't really exist. So if we're able to achieve that, people should be super excited. And then again, now launched, not a peak number, far from it. We think there's a lot more growth from there. But again, as we sit today, pretty much everything that happened is already gone, right? So people are literally -- were pretty much back to baseline. And all of that was just really market volatility for no reason. People lose their minds. They don't think -- if anyone has thought that day, they would have been buying the stock, not selling the stock. But once one person decides to sell, it creates a chain reaction, which has now basically brought us back today. We're about, what, 1.5 months later, give or take, and we're back to where we started. And it was just silly. It was unfortunate for folks who got scared and sold the stock, but anyone who listened to the call, should have relistened to it after and bought more stock is what I want to say.

That makes sense. Let's talk a little bit about CLL, which obviously is going to be an important launch for you guys in March. One, just maybe frame the prevalence or the addressable population versus what we were talking about in the other 2? And then just I get a lot of questions from people like where do you -- where they think this regimen will take share and like how do we think about that in a space where there are already some medicines that are like firmly entrenched?

Yes. Yes. So I'm going to give you one stat to start the conversation, and I'll go deeply into that question. So the one stat is out of the top 1,000 cancer centers, about 2/3 of them are not using venetoclax today. right? So process that number, and now let's go back to the top. So about -- there's about 30 -- maybe upwards of 40,000 patients seeking a new treatment every year for CLL, okay? So that's sort of the largest portion of the addressable market. And then if we take being aggressive, say, 20%, so it's an 80-20 split. Say 20% are treated in academic centers and 80% are treated in community centers. So we can -- even if we start at 30,000, and we can take out about 20%, about 24,000 patients are being treated in the community, seeking a new treatment every year. Now most of those patients are going to get a BTK inhibitor, right, except for those who have already seen a BTK inhibitor, which we don't really have a good sense of the exact percentage, but it's going to be a pretty good percentage, right? You've got 120,000, 130,000, 140,000 Americans who have now are on or have had a BTK inhibitor. So if you're sitting out in the community and, let's say, 2/3 of those are not being treated with venetoclax as a second line after BTK, there's a pretty big market of patients, who are coming into the community. They either have seen a BTK before, their centers don't use venetoclax for a variety of reasons. And then there's also some of those who have never seen a BTK and again, sitting in centers that don't use venetoclax. We think up to almost 20% of the BTK naive patients are not great candidates for BTK. So our goal is to make sure that physicians are aware that there is an option for their patients with a view as high risk of having some adverse events on a BTK inhibitor. Those are mostly associated with cardiovascular issues and bleeding risks. But there's a number of other issues that kind of rise on BTK. So that's one step. And step two is making sure that everyone in the community is aware that after BTK, they can have a nonchemotherapy alternative. BR is still extremely popular in the community setting after BTKs. And so that to us is a very important part of the market that we're going to go into. So we think there's -- if you narrow it down, take away the 20%, take away the 1/3, we're still 15,000 to 20,000 patients coming into the community at least that are seeking the treatment, that should really be in our target zone. And then we just got to start picking away at our percentages there. Like I said, we're not expecting to be -- well, in some of those settings, we would expect -- anywhere where BR is the next option, we think we should be taking all that business. So we think there's an overall [indiscernible] you look at the top number, we think there's a 10% to 20% market share available off the top number for U2 as U2. And then as we transition into U2 plus venetoclax, we think that, that's a much bigger opportunity, which is somewhat contingent upon venetoclax being more widespread in the community setting, right? And we do think that's going to happen. Again, my crystal ball says over the next 3 to 4 years, we're going to have venetoclax as a much more popular regimen in the community setting, particularly in combination with things like U2 where we can take most of the patients, as we showed in the IWCLL presentation, we take the vast, vast majority, I think, 85%, 90%, maybe even higher and turn them into low-risk patients, which require less monitoring and less risk. And so that's going to help move venetoclax into the community.

Yes. That's another question I kind of get from people is like, where and what's the relevance of kind of U2 plus venetoclax and where will that now fit. And it also seems like in that data that it obviously helped to lower the side effect profile with venetoclax combine it with U2 induction. So just talk about the fit and talk about what you think the impact might be to push venetoclax further into different markets it hasn't haven't been.

Yes. So we think, clearly, first, will be U2 plus ven in academic centers. It's been extremely popular through our clinical trial program. So again we do sense from the clinical trials, what -- where the market is heading. And so the academics, they really like U2 plus ven as a first-line treatment. I'd say a good portion of those centers are now switching to U2 plus ven -- not U2, sorry, a ven-based -- probably U2 plus ven, but they're moving to ven-based first-line treatment for limited-duration therapy. They like it for their patients. And so I think over time, the market probably -- and let's just say that the academics over the next 1.5 years to 2 years, it becomes pretty much a 50-50 split in academic centers, ven-based versus BTK first. My guess is 3 to 4 years later, the community will also start to fall out about a 50-50 starting on BTK or starting on ven-based. So to us, we want to make sure that when U2 plus ven is available and that migration that where the academics meet the community in that 3- to 4-year time frame, we want to make sure that U2 then is the agent of choice in combination with ven. If it is, it's an extremely large opportunity for us.

Awesome. I'm going to switch over to MS. You sound more excited about MS. And so maybe just talk about -- as the data has continued to get out there and you're having conversations, just help us think about like what you're learning and what's driving that excitement.

Yes. I think there's 2 factors that are driving the excitement. One -- and, Alethia, again, you've heard me say this multiple times, we have been predicting that CD20 in 5 years would represent about 40% of the total scripts, new scripts into MS. Our good friends at Roche recently had a conference call with investors. And I think they said that now CD20 uses about 53% to 55%, I can't remember exactly what the number was. So we're already -- the CD20 is a much larger proportion of the new patient starts in MS. And so one that's just going from 40% to 55%, I think improves our share in the marketplace almost by 33%. And that's probably going to grow, right? So each time you add a new participant into the market, and we anticipate that when we come on board, we should be able to help expand the market as well. I think the globes are off on how large the market opportunity is for MS in terms of a percentage of new starts in MS. So that, to me, is something that's super exciting. And again, different -- even different from when we did our conference call 45 days ago, right? Even 45 days ago, we didn't have that piece of information available to us. So that's actually interesting. Now the other is, look, we're out there. We brought on a really fantastic team. I had a full team meeting with the MS squad the end of last week. These folks know what they're doing. It's like an all-star team from you name the major MS player, and we've got an all-star that we were able to take from their team. So -- it's kind of like the Las Vegas Knights when they made the playoffs their first year in the NHL because they got to pick players from every team. We're getting to pick players from every team. So we're like the new expansion club in the MS space. And we're getting to pick some all-stars from around the league and it's going great. So I'm excited about the team. I'm excited about what they're doing. We've got actors coming up. We've been working with the team and the KOLs going through the data, and everyone is very excited about the data. The more we dig in, 2 is the more interesting and exciting guess. And we've got CMSC coming up very soon as well. So there's a lot of conferences. We're really -- and the team is building, and you just feel the excitement and enthusiasm growing.

Awesome. Another question I get periodically is just how to think about KESIMPTA. Who's on with their subcu? And how does like a subcu product interact with like the IV market and all that good stuff? So just maybe talk about how you think about those 2? Are they 2 different worlds? Or what's been the feedback there?

I mean to a certain extent they are different worlds, right? I mean if you're a patient and a physician is comfortable using a subcu, there's only one option, right? So they have a mini monopoly right now in the subcu market. And if that's what you're interested in, they're going to get the business. So -- and in terms of reimbursement, yes, it's a different side of the house. There's been a lot of consolidation in some of these payers. So it's not as distinct as it used to be. There's still -- it could roll into one budget, but they are definitely treated separately and KESIMPTA, they're charging a lot of money for that. I think it's what $95,000 and OCREVUS is currently going high 60s, low 70s at this point. So there's a difference, but they're using -- I think Kesimpta is going to -- they're taking a $95,000 price, but I'm sure they're rebating pretty aggressively to pay the payers. So it's an interesting market dynamic. We're going to come in. We're going to do our best in terms of using price to do really well with the payers. But the market is so large and so open to new therapies and the profile for ublituximab is really resonating with folks. So I'm not worried at all. But yes, it is somewhat of a different world and how they're positioning it.

Maybe one last question for round this out is how do you think about kind of the economics of having quicker infusion times? Like is that a lucrative opportunity for people running clinics. Is it meaningful? I know you guys talk about a lot.

Yes, it's definitely meaningful to -- anyone who runs and operates a clinic, it's extremely meaningful, right? So you've got -- the 1-hour infusion gives you higher throughput. A lot of these infusion suites are very busy and getting patients in and out is definitely a more -- it is just better for them on so many levels. One, just having more patients in, even if it wasn't making them more money, it's just patients need infuses and you don't want them to wait until you get them in. But they made more money that way. Again, they paid their nurses and all the support staff, and so it's better for them for their business. And so yes, if you can infuse 2x as many patients in a day because you're infusing ubli instead of ocre that's great for everybody, for the patients, for the physicians, for their businesses. And then the other side of it, which is extremely important is the first hour of the infusion is -- on a service basis, which is not inconsequential, is charged at the highest rate. I think it's almost 5 or 10 to 1 to the subsequent hours after that. So if you can string together 10 1-hour infusions instead of 5 2-hour infusions, you've made a lot more money on the service side as well. So again, from an economic standpoint, and that's not -- I know investors worry about this thing. Physicians will give the patient the drug that they deserve to get. But I could certainly say with confidence that we're not providing any disincentive to the physician from an economic basis to use our drug for the patients that should be getting it because of the shorter infusion time and potentially low effects.

That's interesting. It makes a lot of sense. Mike, I appreciate the chat as always, and we look forward to the updates in the future.

Thanks, Alethia. We really appreciate it. Thanks for having us.