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Why TG Therapeutics Is Plunging More Than 40% Today

By James Brumley – Nov 30, 2021 at 12:41PM

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Investors are rattled by the FDA's request for an out-of-the-ordinary meeting dedicated to scrutinizing the company's latest drug approval request.

What happened

Shares of biopharma outfit TG Therapeutics (TGTX -4.49%) are down to the tune of 43.4% as of 11:38 a.m. ET Tuesday after the company announced the U.S. Food and Drug Administration has scheduled a meeting that casts doubt on the approval of a key drug in its pipeline.

So what

It's not a rejection of the therapeutic in question, to be clear. But it doesn't bode well for the drug.

On Tuesday, TG Therapeutics announced that the FDA's Oncologic Drugs Advisory Committee (ODAC) has scheduled a meeting specifically to discuss the company's cancer-fighting combination of ublituximab and Ukoniq, aka umbralisib. The measure doesn't inherently indicate that the therapy aimed at chronic lymphocytic leukemia and small lymphocytic lymphoma can't or won't be approved. The ODAC meeting, however, is not a typical stage of the drug approval process. Such meetings are generally convened only when unexpected questions about efficacy, safety, or trial data itself surface.

Falling chart plotted on a chalkboard.

Image source: Getty Images.

In this particular case, the FDA appears to be concerned about the drug program's overall survival benefits. This data wasn't supplied in the company's initial drug approval application, as it was not part of the scope of the trial. And CEO Michael Weiss commented during a conference call held on Tuesday morning that the overall survivability data TG Therapeutics did gather did not indicate any statistically significant downside compared to the trial's control group.

Investors clearly aren't as convinced.

Now what

While the announcement clearly suggests a risk, today's drubbing brings the stock back to prices last seen in early 2020, and a price more than 70% below its peak, reached early this year. Were the combination of ublituximab and Ukoniq -- or U2 -- the company's only developmental effort, such a sell-off might make sense. In that TG Therapeutics' pipeline consists of 12 different trials looking at a handful of different therapies, though, it's arguable that this big pullback discounts the value of most of this R&D.

Still, there's no denying that a bet on TG Therapeutics here is an incredible speculative trade, with more volatility in the cards. For that reason, it's still not an appropriate pick for most investors. Buyers would effectively be betting that the ODAC meeting is merely a formality that doesn't mean this time what it usually means. Weiss mentioned during Tuesday's call that there's a precedent for FDA approval of drugs that demonstrate U2's relative risk and reward. This defensiveness, however, actually undermines the bullish case.

James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends TG Therapeutics. The Motley Fool has a disclosure policy.

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