In the twisted history of TGTX, the primary focus was always on the development of anti-cancer therapies, which included the oral PI3K inhibitor and its combination with the anti-CD20 monoclonal antibody ublituximab.
The program of ublituximab development for multiple sclerosis (MS) seemed to be a safe plan B that could yield in between a best-in-class follow-on drug and something next to a patented biosimilar.
As the years passed, cancer programs have been cleared, ublituximab has been approved by the FDA for the treatment of MS, and TGTX has become a single-drug MS-focused company.
Consistent Sales Growth and Financial Outlook
TGTX was able to demonstrate consistent sales growth of ublituximab. The company ended 2023 with $89 million in revenue and, in the first quarter of 2024, raised its revenue target to $270-$290 million for 2024.
Despite generating negative net cash flow due to new R&D programs (subcutaneous (SC) formulation of ublituximab and new allogeneic cell therapy for autoimmune disorders), it is anticipated that the current cash position (~$210 million) and positive cash flow from the ublituximab business will fund all operations to cash flow positivity.
Ublituximab in the MS Treatment Context
MS is an autoimmune disease of the brain, driven by immune cells (leukocytes) that destroy the neuronal sheath. Relapsing-remitting MS is the most prevalent phenotype, characterized by relapses and progressive neurological disability.
Disease-modifying therapies (DMTs) aim to prevent relapses and delay disability progression. Monoclonal antibodies (mAbs) are the most effective DMTs, with the FDA approving five for MS treatment: natalizumab, alemtuzumab, ocrelizumab, ofatumumab, and ublituximab.
Ublituximab, an anti-CD20 mAb, depletes B-cells (key pathogenic leukocytes in MS) by binding to their CD20 receptor. Compared to other anti-CD20 mAbs, ublituximab boasts a small competitive edge, including the lowest reported relapse rate, a short infusion time, and lower pricing.
These advantages may provide up to 30% of the market share. Traditional MS treatment approaches are shifting towards early proactive treatment with anti-CD20 mAbs, reducing non-drug-related healthcare costs and increasing the market share for these therapies.
MS Epidemiology
The prevalence of MS is approximately 370 per 100,000 people in the US, corresponding to 900,000 individuals. There are over 1 million people living with MS in Europe and 2.9 million worldwide. These numbers are rising due to improved diagnosis, treatment, and population growth.
Approximately 60% of diagnosed MS patients are treated with DMTs, narrowing the treatable patient population to ~460,000 in the US.
Market of Anti-CD20 mAbs for MS
Anti-CD20 is the only growing mAb class in MS, with combined sales of over $9 billion in 2023. About 40% of DMT-treated patients in the US use anti-CD20 mAbs. Ublituximab has entered a large and growing pharmaceutical market niche, competing with ocrelizumab and ofatumumab.
Future Competition for Ublituximab
The major threats to ublituximab include the entry of ocrelizumab biosimilars, subcutaneous (SC) forms of anti-CD20, and oral BTK inhibitors.
- Biosimilars: Ocrelizumab biosimilars are expected to enter the market by 2029-2030, potentially inducing a 30% drug price decline within three years and reducing the volume sales of the originator by 60-80%.
- SC vs. IV Administration Route: Patients prefer self-injectable SC drugs to intravenous infusions (IV). SC formulations will play a significant role in MS treatment, with SC anti-CD20 drugs having longer IP protection. TGTX’s move towards SC development is a necessity, albeit a bit late.
- BTK Inhibitors: These new treatments may overcome the limitations of anti-CD20 mAbs by targeting B-cells in the brain. However, development has been slow due to liver toxicity concerns and recent phase 3 trial failures. Given the high uncertainty, BTK inhibitors are not considered immediate competition.
Ublituximab NPV and Acquisition Prospects
Using a conservative patient-based model and a discounted cash flow model, the potential NPV of ublituximab is estimated at $2.9 billion at a discount rate of 12%. If TGTX fails to launch the SC formulation and loses biosimilar competition, NPV may decrease to ~$1.9 billion.
Including ex-US royalties, NPV could range between modest 15% and rosy 50% value, leading to an NPV surface stretching across discount rates and ex-US inflows.
Price Prospects and Conclusion
TGTX’s share price fluctuates at the low end of a justifiable fundamental value range. Despite uncertainties around peak sales and takeover potential, TGTX’s consistent sales growth and strategic moves suggest a bright future.
While a grim scenario involves disappointing sales and R&D failures, a bright future with growing sales and successful SC development seems more likely.
Clinical success of BTK inhibitors could limit acquisition prospects, but TGTX remains an intriguing investment target with significant potential for growth and acquisition.
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Faith is an enthusiastic freelancer and regular contributor to numerous finance blogs, creating valuable pieces to educate individuals on finance and fintech options. As a skilled writer, Faith has created content for diverse industries—if it exists, she’s likely written about it!
