TG Therapeutics' drug pipeline may not be as marketable as many investors believe it will be, according to Goldman Sachs analyst Corinne Jenkins. She downgraded the stock to a sell on Monday, citing limited revenue potential of its planned portfolio that's mostly being built around a single drug called umbralisib.
While the kinase inhibitor has already been proven and approved as a treatment for certain forms of lymphoma, and is showing promise as a therapy for multiple sclerosis, Jenkins argues that umbralisib's underlying mechanism of action is apt to be effective for a narrower range of indications than the company suggests and investors expect.
Some investors may be eyeing the stock as a prospective purchase due to the sheer scope of this year's sell-off. Shares were already down more than 40% from February's peak before today; Monday's steep plunge drives that loss to more than 50%. Such setbacks are relatively rare, and are often unwound without any real warning.
That's a bet, however, that wouldn't be wise to make in this particular situation.
Goldman's Jenkins may well be right -- the potential of TG Therapeutics' flagship research and development may be overestimated. The thing is, it doesn't entirely matter. The company remains deep in the red in the meantime, and in that it may also be years before its pipeline and portfolio are driving their peak revenue, it will likely remain in the red for the foreseeable future. None of this supports a bullish argument for the stock, but instead leaves it vulnerable to more of the same bearish rhetoric that's been driving it lower since early this year.