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Why TG Therapeutics, Inc. Stock Is Dropping Today

By Stocks

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What happened


Shares of TG Therapeutics (NASDAQ: TGTX), a clinical-stage biotech focused on B-cell malignancies and autoimmune diseases, are down by more than 14% as of 11:26 a.m. EDT after news broke that it will be making a few changes to its phase 3 GENUINE clinical trial.


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So what


The GENUINE study was designed to test the company's lead compound TG-1101 as a potential treatment for relapsed/refractory high-riskchronic lymphocytic leukemia (CLL).

Prior to today's announcement, this phase 3 study was designed to have two parts: Part 1 would test TG-1101 in combination withAbbVie'sCLL drugImbruvicaon 200 patients with the primary endpoint being the change in overall response rate (ORR). Part 2 of the study was designed to measurethe combination's effect on progression-free survival.

However, TG Therapeutics announced on Thursday that part 2 of the study is being eliminated and that the target enrollment in part 1 is being reduced to 120 patients.

Management stated that the FDA has agreed to these changes and that it will still be able to file for accelerated approval if the GENUINE study pans out. In addition, this change should save TG Therapeutics more than $10 million in development costs over the next two years.

The company also provided investors with an updated timeline, stating thatenrollment in GENUINE should be completed by year-end and that top-line data should be available in the first half of 2017. If everything works out perfectly, then TG-1101 could be submitted for approval by early 2018.

While these changes sound positive, investors are clearly interpreting this news as a net-negative for the company. That's likely because they believe that the risk of winning approval is now higher since the application will not includeprogression-free survival data.


Now what


TG Therapeutics ended the second quarter with more than $75 million in cash on hand, which the company previously stated should be enough to keep its doors open until the second quarter of 2018. However, it is now likely that management will be now able to extend its runway even further given the estimated $10 million in savings from eliminating part 2 of the GENUINE study. That should be enough time to release top-line results from the study without having to need to tap the markets for additional cash.

TG Therapeutics remains a fascinating company, and if TG-1101 works out, then I could easily see shares returning to their former highs. However, the chances of failure are still quite high, so only investors with a huge tolerance for risk should consider buying on today's dip.

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Brian Feroldi has no position in any stocks mentioned.Like this article? Follow him onTwitter where he goes by the handle@Longtermmindsetor connect with him on LinkedIn to see more articles like this.

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