TGTX Stock is Good to Buy After Q3 2024 Earnings

Investing in biopharmaceutical companies is often a mix of risk and high reward, especially when those companies are on the brink of developing breakthrough treatments. TGTherapeutics, Inc. (NASDAQ: TGTX), a clinical-stage biopharmaceutical firm, has recently garnered attention for its advancements in multiple sclerosis (MS) treatments. With its innovative pipeline, improving financials, and market performance, TGTX stock may be a promising option. However, investors should consider the company's risks alongside its potential for future growth. This article explores TG Therapeutics’ current standing and evaluates whether its stock is worth buying.

1. Overview of TG Therapeutics

TG Therapeutics, Inc., based in New York, focuses on developing treatments for B-cell diseases such as multiple sclerosis and certain cancers. After founding in 2012, the company’s major milestone came with the development of Briumvi (ublituximab), an FDA-approved monoclonal antibody treatment for relapsing forms of multiple sclerosis. Briumvi’s launch significantly enhanced TG Therapeutics' positioning within the MS market, aligning the company alongside industry giants like Roche’s Ocrevus. By targeting unmet needs within MS and autoimmune diseases, TG Therapeutics aims to provide therapies that improve patient outcomes and quality of life.

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2. Company Financial Performance

For the third quarter ending September 30, 2024, TG Therapeutics reported a quarterly revenue of $83.88 million, which reflects a year-over-year revenue growth rate of 39.53%, bringing the company's trailing twelve-month (TTM) revenue to $264.79 million. While this growth is significant, TG Therapeutics has faced financial hurdles, reporting a net loss of $14.36 million over the last twelve months. This loss, primarily driven by high R&D and operational costs typical of biotech firms, translates to a negative EPS of $0.10​.

Despite these losses, TG Therapeutics maintains a gross margin of 88.31%, indicating strong profitability potential if operational efficiencies improve. The company’s balance sheet also shows a cash reserve of approximately $217.25 million and a manageable debt of $112.92 million, giving a debt-to-equity ratio of 0.64, which is relatively low for its industry. This capital structure provides a cushion to support ongoing research and development expenses and Briumvi’s market expansion​.

3. Stock Price Performance and Valuation

TGTX has been a standout performer in the stock market, with its share price rising by approximately 134.99% to $27.17 over the past year. This increase is largely due to Briumvi’s successful launch and the company’s continued efforts to secure greater market share. Currently, TG Therapeutics’ price-to-sales (P/S) ratio stands at 13.32, which is high but not uncommon in the biotech sector where companies often trade at elevated multiples due to growth potential​.

Additionally, the forward price-to-earnings (P/E) ratio of 36.29 reflects the market's optimistic outlook on the company’s future earnings. This valuation might appear steep but is justified if TG Therapeutics can sustain Briumvi's momentum and expand its revenue base with pipeline products. Compared to competitors in the biotech industry, the valuation remains within a reasonable range, suggesting the stock is attractively priced given its potential for revenue growth and limited debt obligations​.

4. Company Growth Potential

The primary growth driver for TG Therapeutics lies in Briumvi and its potential to capture a significant share of the MS market. Currently, the multiple sclerosis therapeutics market is projected to grow at a compound annual growth rate (CAGR) of around 3.5%, driven by rising MS prevalence and demand for advanced treatments. Briumvi, with its unique 30-minute infusion and positive five-year clinical data, stands out as a strong competitor against established MS treatments.

In addition to MS, TG Therapeutics continues to explore opportunities for B-cell malignancy treatments and autoimmune diseases. Future growth may also come from expanding product indications or seeking partnerships with established pharmaceutical companies to leverage broader distribution networks. The recent supply agreement with Fujifilm Diosynth for Briumvi's production will help TG Therapeutics meet the expected demand, particularly if Briumvi continues to perform well in market trials.

5. Risks

As with many biopharmaceutical stocks, TGTX carries risks. The primary concern is the company’s dependency on a single product (Briumvi) for its revenue, which makes the stock vulnerable to competitive pressures from larger players like Roche. Regulatory risk is also notable, as any delay or issue with FDA compliance could hinder the company’s cash flow. Furthermore, TG Therapeutics’ high operating costs for ongoing R&D and marketing efforts can strain finances, especially if Briumvi fails to capture a meaningful market share. Lastly, volatility in the stock market and potential pricing pressures on MS therapies could affect future revenue.

Despite these risks, TG Therapeutics' recent success with Briumvi and the potential for expansion in MS and other markets provides a promising outlook. Investors who understand the volatile nature of biopharmaceutical investments may find TGTX stock’s risk-reward profile compelling.

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Conclusion

TG Therapeutics has established itself as a noteworthy player in the biopharmaceutical space, focusing on critical unmet needs in MS treatment. With the launch of Briumvi, the company is positioned for significant revenue growth, and its financials, while not yet fully profitable, reflect steady improvement. The stock's robust performance over the past year and its strong growth potential make TGTX an attractive buy, especially for investors willing to accept the associated risks. However, due diligence is essential, as the company remains reliant on Briumvi's success and faces competitive and regulatory hurdles. For investors seeking exposure to the innovative therapies segment within biopharma, TG Therapeutics offers both promise and potential for reward.