Why TG Therapeutics Rallied 15.7% Today

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What happened

Shares of TG Therapeutics (NASDAQ: TGTX) jumped 15.7% Thursday after management updated the progress it's making with its cancer drug pipeline at the JP Morgan healthcare conference earlier in the day.

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So what

The clinical-stage biotech's stock tumbled last fall because investors' optimism began to dim about the prospects of its drug candidate, TG-1101, securing an accelerated FDA OK based on objective response rates.

In early 2017, expectations for such an early FDA OK swelled after TG Therapeutics reported that adding TG-1101, or ublituximab, to AbbVie's (NYSE: ABBV) and Johnson & Johnson's (NYSE: JNJ) top-selling Imbruvica resulted in an objective response rate (ORR) of 78% in chronic lymphocytic leukemia patients. On its own, the ORR for Imbruvica was 45%.

On Thursday, management presented its latest thoughts on ublituximab's future at the JP Morgan conference, and apparently assuaged some of the concern that there may be a long road ahead to the FDA. Specifically, management updated its ORR results, reporting that they improved to 81%. Additionally, the percentage of complete responders to ublituximab inched up to 10% from 8% previously.

Management also told investors that it expects data from its doublet study of ublituximab plus umbralisib in the second quarter. If that data is positive, then the drug combination could offer an attractive alternative to existing options in new and relapsing CLL because of a potentially better safety profile.

Now what

There's a big need for new CLL treatments, so it's possible that the FDA will consider a surrogate endpoint like ORR, rather than require progression-free survival or overall survival data.

If the FDA is willing, that could clear the way for two new drug filings for approval this year. First, ublituximab could get filed as early as the third quarter for high-risk CLL. Second, if data from the company's doublet trial is good, then management plans to file for a go-ahead by the end of 2018.

TG Therapeutics' CLL drugs appear to be delivering solid efficacy and safety, and since treating that cancer subclass is already a 10-figure market, there's certainly an opportunity for commercial success. However, there's still a chance its plans will get derailed, and that makes this a bit risky of a stock to buy. Nevertheless, I think that TG Therapeutics $650 million market cap may undervalue the peak sales potential of its drugs, so aggressive investors might want to consider picking up some shares.

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Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Johnson & Johnson. The Motley Fool has a disclosure policy.