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

So now at least can we all agree that I've convinced you that it's not a good idea to worry about 2031 today, right? Can we agree that 2031 is not a shortable event for today?

Okay.

All right. So now I've just got to figure out how to convince you on the short term. Well, I'm going to keep going. Let's go. Keep going. You ask the questions now.

No, I think -- and we've said this, I think one quarter is not enough to draw a line, right? 2 is enough to draw a line, but that line could be false. So probably 3, 4 data points will paint a better picture. So everyone trying is trying to from their imagination paint what that line is going to look like, which is why my next question is on the payer access, right? Because that's going to feed into the second half dynamics presumably. You've said 50% payer access already. You've said that the goal is 80% of covered lives by the end of this year. At a high level, how have these discussions been going so far?

I think great. I mean, I haven't been in any of them. So I can't say firsthand what's happened, but the result has been great, right? And one thing that we said from the very beginning is if we can use price to get priority access -- I know you were expecting -- I don't know why because we didn't say it. You were expecting priority access, right? But we've said all along, if we can get priority access with the leading IV drug, that we'd be in great shape. And so if you look at our coverage policies today, that 50% or more, 95% to 99% is all priority access, right? So we're doing everything that we said and faster. And we said the goal of taking a lower price was to accelerate that access as quickly as we could, and we even beat the projections that we had, which were 50% access by midyear and 80% by the end of the year. So I think it's hard to say anything but objectively that it's gone very well.

Okay. And that sort of feeds into my next question in terms of the formulary positioning. Are there specific payers that you're looking to at least get that priority access that you think are maybe more important for people to focus on given the dynamics of the uptake?

So everything we have is priority basically right now. So we've achieved everything in the access. People that we haven't talked to yet, but still cover are some PBMs. I know that you noted in one of your report that some people were making some, hey, PBMs represent about 5% of the IV business, so it's not meaningful. So we haven't even started conversations with folks. So they picked up coverage without any conversation from us at all. And I think 1 out of the 3 were behind OCREVUS, 2 were priority with KESIMPTA and one were all behind Casimta, us and OCREVUS. So again, we're talking about such a small portion of the business. And KESIMPTA is a pharmacy benefit drug. So you'd expect them to have priority access. I mean they're striking deals with those guys left and right, right? That's their bread and butter business. So yes, so that's a very small portion of the business, but we would expect at some point when we turn our attention to the PBMs, if it's meaningful, we will. But it's -- like I said, it's less than 5% of our anticipated business. But everyone else, the medical side and the buy and bill, we've got priority coverage and off to the races.

Great. And you said that you expect the second half inflection for BRIUMVI. What are sort of the underlying drivers of this? Is it the J-code, which you now have? Is it getting more payers online? Is it pent-up demand, or maybe a mix of all that?

Well, so we have a J-code, but it doesn't go into effect until July 1. So once that's in effect, sites can start using that J-code, and there are a lot of sites that will not use a temporary J-code. So yes, we do think that's part of the reason for an acceleration. And then, yes, it's the payer coverage, which will continue to grow, and it's formulary access at these academic institutions. Some of them get it done in a few weeks, some a few months and some more than just a few months, so yes. So as we knock down each of these hurdles, we expect to see a bigger ramp in the second half. Again, I know that one of your thesis is that there was some sort of bolus that came in. And then in the second half, we're going to see a flattening of demand because of that. Obviously, we have different opinions of what's going to happen in the second half. But I will say that your $75 million number has to imply significant growth in the second half, right? So it's hard to say that you're going to see flattening, but your model says it's going to actually increase quite dramatically. So we're going to have to reconcile that. And once you do that, then I think your model will change a little bit and your DCF will change, but we're going to get to that.

Okay.

So we are going to save some time for the fun stuff. Do you want to take a field from the audience or you want to keep going?

Do we see a hand?

Sure. What do I think the stock's worth? I think it will be worth what the revenues tell us at some point, but I think it's worth a lot more than it is today. I've been in this business for 30 years, investing in biotech. I've watched these companies. I know the multiples. If you have a biologic with a very long exclusivity period, you're going to see multiples -- typical multiples are going to be 10x, 15x sales. So if we're at $1 billion, we've got 2x to 3x from here. If we are at $2 billion, it's going to grow further. If we're at $3 billion, I don't know what the answer is, but I know it's a lot more than it is today because we're barely touching basically $500 million in sales at peak. Alec who's very negative has $1 billion in peak and we're not even close. So to me, there's a lot more to go. It will depend, of course, on where the revenues go. If I'm wrong and the revenues hit the skids, then yes, then all bets are off, then I'm wrong, right? I think the potential is north of $1 billion, of course.

Yes. Maybe just piggybacking off that, and we've spoken to both bulls and bears since the launch. One of the bull comments we've gotten is an analogy to Eylea and comparing you guys to Regeneron. Do you think there's a copy paste nature to what you're going through versus Roche like Eylea, Lucentis? Or is it maybe a little bit different dynamic?

Well, I mean, there's always going to be different dynamics, right? I mean we can't claim that there's going to be a copy and paste. But, I mean, there are similarities for sure. I think the bottom line for us is we just got to make sure that the value proposition is understood across the doctor landscape and just do a good job in making sure that happens and we'll get the sales. So people can take that position. I think it's not an unreasonable comp to look at, but everything is -- yes, every situation is always going to be different.

Right. All right. And one question I've got. I haven't heard a lot of pushback on the $1 billion sales from you. What do you think it would take for you to get there? And when could it reach that point? Or do you just not have enough visibility?

So it doesn't take much because what I think -- again, your model doesn't address and if you're going to help them in this model later, I want you to take this note, please. So what the model doesn't address is when a patient goes on BRIUMVI, how long they're going to be on BRIUMVI, right? So right now, the estimate for OCREVUS is that they're going to be on the drug an average of about 5 years. right? So in your model for this year, you have 4,162, I believe, give or take, as the number of patients that will go on. Next year, you have 4,882. I'm pretty close. I'm not there, but you can check, right? So that implies that we're only going to put on about 800 patients in year 2. Is that what you meant to do? Did you mean that in year 2, we're only going to get 800 new patients?

Got to think back. It sounds like you've taken a more recent look at our model than I have.

I studied it pretty good before I got here. No, but I think it's -- one thing that is important for everyone to recognize and which is why -- so if we take just your assumptions of 4,000 new patients and then 4,800 new patients, in year 2, we're not going to be at 4,800. We're going to be at 4,000 less some loss factor, which is probably less than 10%, plus the new patients, you'll be at 9,000 in the second year, not 4,800. And then when you roll forward to the next year, the same thing is going to happen. So if you have -- in that year, I think you have 5,500 or 5,400, you got the 5,400. You've got 10% less of the 4,800 and then you have 10% -- 20% less of the 4,100, you stack them all together in year 3. And now you're not at what you're putting in your model at 5,000, you're at almost 12,000, right? And so that will just keep going on. So when you just keep doing that math going forward, you could assume that we're going to get 10% share. I think we're going to get a lot more of the CD20 share for sure. Actually, your model today infers that in our first year, we're going to have 10% of the CD market share because 4,000 is about 10%. We think there's 40,000 patients who will start a CD20 every year. So we're already at 10% in the first year in your model. I actually think that's kind of aggressive for first year, but who knows, we might get there. We'll see how the numbers roll out for the rest of the year. But again, those same patients are going to be -- most of those patients are going to be with us the following year. And then if you just keep compounding those 10% for the next -- up till year 2031, until things start to go south for us, you're going to be well over $1 billion. So for the question of -- so yes -- and do I think we're going to do better than 10% market share? Of course, I think we're going to do better, right? I think we're going to do a lot better than 10%. But do I know for sure? How could I? I don't have a crystal ball. So I could be as wrong as the next guy. But I do know mathematics that the compounding is true. So whatever that is, it will have to compound because these patients don't disappear in a year. They're going to have an average of 5 years, which means some of them could be on for 10 years, and so which goes back to 2031, for those of you who do want to short the stock for that 2031 event. When we get there -- and let's say that no patient ever goes on BRIUMVI again, it's going to take a good 10 years to go down, right? Because no one in their right mind is really going to force a patient on BRIUMVI to go on biosimilar OCREVUS. This is not a thing that's going to happen? So then you got to assume in your model that degradation at a minimum is about 10% a year over 10 years. And that's going to assume that not one single patient ever goes back on BRIUMVI after that. So I don't think that degradation that is helping you try to get to a $3 valuation is in the right ballpark.

Okay. And obviously, international expansion could add either to the launch trajectory or to the peak. You've had a positive CHMP opinion still seeking approval in EU. I guess how are you approaching international expansion? Would you seek to keep all the economics yourself? Or could this be a partnership opportunity?

Yes. So we're working on that now. As you mentioned, we've got a positive opinion from the CHMP. And then the final approval, if it gets approved, should be early June. Our current plan is to continue to evaluate whether we go-it-alone. If we do go-it-alone, it will be a pretty focused strategy of the worldwide utilization of CD20s. About 20% to 25% is ex-US and about 80% of that is in Europe, and the vast majority of that is in Germany. So I think we would take a very focused approach where we set up a marketing team in Germany, probably set up a pan-European team otherwise. So that's option 1. And option 2, not in that order necessarily, option 2 is we do a partnership. Our issue with partnerships have been, for strategic reasons, we tried to avoid locking up major territories. So that's something that we've been cautious about. So I think we're trying to see if we can keep optionality available to us and still get the drug launched in Europe. So I think time will tell.

Okay. And just the last line of thought that I had is just around the cash runway. You've guided to mid '24 some pretty fine needle to thread. Would a partnership feed like -- would that be a strategy to extend that? And I guess a follow-up, what are sort of the different tools you're considering to help extend runway if you need to?

Yes. So this is not just you. I'm not going to blame you for this one. Everyone worries about cash, right? And I get it in most situations, but this is one where I've basically assured everyone. I'm not concerned. We are potentially 1 or 2 quarters away from cash flow breakeven in terms of our runway. So we're saying that we have cash right now to mid-2024. It's plausible that within now to then, we will have cash flow breakeven. In your model at $200 million next year, we would basically be cash flow breakeven by next year, right? So that's the start of this conversation, right? So we don't really worry too much about the money because we just assume if we need it, we're going to get it. At this current valuation, if we need to get at today's valuation, whether it's 1 quarter, $50 million or 2 quarters, that will be anywhere between 1% and 2% dilution. So we're not talking about a hole that needs to be filled. It's not like we're a company that's so far away from profitability that we're going to either raise another $1 billion. We're literally a stone throw away. I said it earlier today. And if I needed to, I could self-fund it through the -- that interim period, and I'd be willing to do that, of course. If that were the only method to do it, it would be easy to do. So if we do, in fact, do raise money, which I'm sure we will, we're not going to take the cash down to 0, of course, right to the very end. But we're most likely to use the ATM. And like I said, we're talking about 1% or 2% dilution if we do that. And yes, I don't think it's anything to lose sleep over. If people want to lose sleep over it, it's okay. They're going to wake up one day. They're going to see the balance sheet has another $50 million or $100 million in it, and they're not going to know where it came from. I could tell you where it came from. It came from the ATM. And if it doesn't come from there, it will come from me. I mean I -- yes, I won't go much further than that. But not a concern for our company is cash. I'd like to say, you may think we have 99 problems, I think we have none, but cash ain't one.

Nice. We're out of time, but let's go one more question from the audience.

What are your thoughts on potential acquisitions?

Yes. So look, we recognize that we're a biotech company in a position where most companies like ours at some point do get acquired. So we assume that, that's a conversation that will happen sooner or later. But for us, it's really just about extracting the value out of what we've created, and we see this as a very large opportunity. And so some of that requires some proving and some of it doesn't. So we'll see. But we recognize, I mean, Celgene was acquired, Alexion was acquired. Every -- most biotech companies get acquired at some point. So we're not in any rush to be acquired if that's the question. I would say that, yes, so we're not in any rush. We'll let it all play out the way it should play out. But the value we believe in would have to be realized for us to do anything.

Okay. So with that, we're going to have to leave it there. But Mike, I appreciate the candid discussion. Thanks for joining the conference.

Thanks, Alec.