What happened
Shares of TG Therapeutics (TGTX -3.16%) were crashing 50.4% lower as of 11:12 a.m. ET on Tuesday. The huge sell-off came after the company announced its second-quarter results.
Total net product revenue was $16 million in the second quarter. Multiple sclerosis (MS) drug Briumvi, which launched in the U.S. in late January, generated all of the product sales in the quarter.
CEO Michael Weiss said in TG Therapeutics' press release that Briumvi sales "exceeded our expectations." But the MS drug's sales were well below the analysts' consensus estimate of nearly $17.5 million.
The other big news from TG Therapeutics was that it inked a deal with Neuraxpharm to commercialize Briumvi outside of the U.S. TG will receive more than $150 million in up-front and near-term milestone payments plus tiered double-digit royalties of up to 30%.
So what
The smartest strategy for a company is to underpromise and overdeliver. In this case, analysts overpromised about TG Therapeutics' prospects for the quarter, and the drugmaker underdelivered.
In particular, Cantor Fitzgerald analyst Prakhar Agrawal said in early July that he looked for Briumvi's sales to be between $24 million and $32 million in the quarter. Agrawal based his estimate on June data compiled by Symphony Health.
As for the licensing deal with Neuraxpharm, some investors could be worried that it will get in the way of a potential acquisition of TG Therapeutics. However, the company stated that the terms of its agreement provide an option to buy back all rights to Briumvi for a period of two years if TG is acquired.
Now what
It's possible that the biotech stock could rebound after the immediate shock of missing sales estimates so badly and announcing the commercialization deal outside the U.S. The sure-fire way for that to happen quickly would be for a big drugmaker to try an acquisition.
If that doesn't occur, TG Therapeutics will need to win back investors the old-fashioned way: by growing its sales by leaps and bounds.
