TG Therapeutics, Inc. (NASDAQ:TGTX) Q3 2023 Earnings Call Transcript

TG Therapeutics, Inc. (NASDAQ:TGTX) Q3 2023 Earnings Call Transcript November 5, 2023

Operator: Greetings, and welcome to the TG Therapeutics Third Quarter Earnings Update Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jenna Bosco. Thank you, Jenna. You may begin.

Jenna Bosco: Thank you. Welcome, everyone, and thanks for joining us this morning. I’m Jenna Bosco, and with me today to discuss the third quarter of 2023 financial results are Michael Weiss, our Chairman and Chief Executive Officer; Adam Waldman, our Chief Commercialization Officer; and Sean Power, our Chief Financial Officer. Following our safe harbor statement, Mike will provide an overview of our recent corporate developments. Adam will share an update on our commercialization efforts and Sean will give an overview of our financial results before turning the call over to the operator to begin the Q&A session. Before we begin, I’d like to remind everyone that we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements about our anticipated future operating and financial performance, including sales performance, projected regulatory milestones, revenue guidance, clinical development plans and expectations for our future — for our marketed products. TG cautions that these forward-looking statements are subject to risks that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics’ operations include various risk factors that can be found in our SEC filings. In addition, any forward-looking statements made on this call represent our views only as of today, and should not be relied upon as representing our views as of any later date. We specifically disclaim any obligation to update or revise any forward-looking statements.

This conference call is being recorded for audio rebroadcast on TG’s website, www.tgtherapeutics.com, where it will be available for the next 30 days. Now I’d like to turn the call over to Mike Weiss, our CEO.

Michael Weiss: Thanks, Jenna, and good morning, everyone, and thanks for joining us on today’s call. It was another good quarter for TG, and I’m happy to share that our net revenue for the third quarter was $166 million, which includes $140 million that we received as an upfront licensing fee from our ex U.S. partner, and also includes over $25 million of Briumvi net sales in the U.S. Today, I am pleased with the launch and our team’s execution of our launch strategy would be an understatement. We continue to outperform our internal expectations and all external revenue expectations set at or prior to our launch. I believe we’re in a great position to close out the year strong, and I’m excited for the next year and for the future of Briumvi and TG.

Just to remind everybody, Briumvi is the first and only anti-CD20 monoclonal antibody approved to treat patients with relapsing forms of multiple sclerosis that can be administered in the 1-hour fusion twice per year following the starting dose. In clinical trials, Briumvi provided robust efficacy with a safety profile consistent with what is expected of the CD20 class. It’s worth noting that while all anti-CD20s target the same protein, they are not all created the same. Epitope binding and potency of that binding as well as our ability to engage immunofactor cells are different. And we’re seeing these differences begin to resonate amongst health care providers. Putting the whole package together, we see Briumvi as a differentiated anti-CD20 with best-in-class attributes and believe BRIUMVI’s differentiated profile has supported our early and meaningful market share gains.

I don’t need to remind you that we’re only in our second full quarter of sales. So still very early days here for our Briumvi launch, and we believe that we are well positioned for future share gains, ultimately driving us toward our goal to be the no. 1 prescribed anti-CD20 based on dynamic market share. I’d like to spend a few minutes talking about the recent ECTRIMS conference in Milan. ECTRIMS is the premier global MS Conference, and TG had a significant presence there this year. For me personally, it was great to interact with many health care providers and the real-world feedback was overwhelmingly positive. It was really gratifying to hear anecdotes about the tolerability and convenience people experiencing with the use of Briumvi, as well as stories about patients that were early depleters on other anti-CD20s and are now doing well on Briumvi.

In addition to interacting with the health care providers at the conference, we had the opportunity to present additional exploratory analysis from the ULTIMATE I and II Phase III trials of Briumvi in relapsing forms of MS as well as the first data from our ENHANCE Phase IIIb trial, evaluating patients who switch from another IV anti-CD20 therapy to Briumvi. One of the goals of this trial is to understand the safety profile of a patient switching from another IV CD20 to Briumvi without the need for the 150-milligram starting dose as well as to evaluate the speed at which the first infusion before 450-milligram dose may be given safely. The early data presented was very encouraging, demonstrating in 12 patients that we could safely skip the 150-milligram introductory dose and go straight to the 450-milligram dose.

In the first cohort, that was given as a 2-hour infusion, and demonstrated there were no infusion-related reactions reported nor any dose interruptions or delays. The second cohort is now enrolling and is evaluating the 450-milligram dose administered in the ordinary 1-hour infusion. Again, without the need for the 150-milligram introductory dose and we look forward to sharing more data from this trial next year. Interestingly, about 60% of the patients who entered this study, reported to have experienced a wearing off effect or what some people refer to as the crap gap while on their prior IV CD20. So that’s something we’re going to continue to look out for. While we’re in Milan, we also had the opportunity to meet our colleagues from Neuraxpharm, our ex-U.S. partner.

As you may recall, in June, Briumvi was approved in the European Union to treat adult patients with relapsing forms of MS who have active disease defined by clinical or imaging features. Our team has been working closely with the Neuraxpharm team and we continue to be confident in their ability to bring Briumvi to the market in Europe. With their extensive experience in the CNS space, their broad presence in all major European countries and an extensive and growing team dedicated to the Briumvi launch, we believe Briumvi is positioned for success in Europe. We are anxiously awaiting the Briumvi launch, which we believe is still on track for early 2024. We are also happy to share that we just received approval for Briumvi in the United Kingdom.

This is another exciting step forward for Briumvi and for MS patients in the U.K. looking for a new treatment alternative. As we look forward, we are evaluating additional potential indications for Briumvi and our pipeline candidates as well as new product opportunities in MS and autoimmune diseases. Also, as I’ve mentioned before, we’re evaluating the suitability of Briumvi as a subcutaneous injection. And we expect to be able to provide an update early next year as to whether we believe we have a suitable subcu formulation that could be brought forward into the clinic. Based on the current anti-CD20 subcu landscape, we do believe there is room for a more convenient, more tolerable option. We continue to view the subcu market as distinct from the IV market and thus as a potentially attractive expansion opportunity for Briumvi.

Finally, let me discuss some financial matters. Our CFO, Sean Power, will join us in a bit to provide a more detailed financial update, but I just wanted to discuss some revenue expectations and our cash position. First, with respect to revenue expectations, many of you have witnessed the market effects associated with analysts changing their revenue forecast for Briumvi. Some of those changes have been driven by prior quarter sales but some have been driven by intra-quarter sales reporting from distributors, which despite our warnings about the usefulness of this data, has become a source of confusion and price volatility. To address this, beginning on November 1, our distributors will no longer be sharing distributor-level data with third-party companies.

With that, as promised, I’d like to provide some guidance for the fourth quarter of 2023. At this time, we are targeting revenues of approximately $33 million to $37 million. That should put us on target for approximately $82 million to $86 million for our first partial year of sales, which is a bit ahead of the current ’23 consensus of $80 million and well above the consensus of $72 million set around the time of our launch. Now turning to our cash position. As of the end of the third quarter, we had approximately $229 million in cash. As I mentioned on our last quarterly call as our revenues grow, and we continue to operate with a relatively stable OpEx, our cash burn is trending down. And from here, we believe we have a reasonable line of sight to profitability in the near term.

All in all, we feel really confident with our cash position and our ability to execute on our business plan. With that, let me turn the call over to our Chief Commercialization Officer, Adam Waldman, who will provide more detailed information about our Briumvi launch. Adam?

Adam Waldman: Thank you, Mike, and good morning, everyone. I’m pleased to be with you today to share another strong quarter of execution for our Briumvi launch. We continue to deliver results that exceed expectations and set the foundation for future success. The third quarter net sales for Briumvi were $25.1 million, representing 57% growth quarter-over-quarter. This growth was primarily driven by increases in new patient infusions, reduced logistical barriers and continued steady growth in patient demand as represented by over 900 prescriptions into our hub. That brings our launch to date total to approximately 2,200 new patient scripts. And as we have mentioned in the past, we believe this figure is capturing about 80% to 90% of the total new Briumvi scripts written.

As Mike mentioned, with approximately 40,000 MS patients starting at CD20 each year in the U.S., our patient accumulation remains on target. And based on scripts to our hub, we are now capturing a nice portion of the new anti-CD20 patient share at this early point in our launch. And we do believe the CD20 market is growing and will continue to expand going forward. Additionally, in Q3, we saw for the first time patients returning for their week 24 infusions, and we anticipate the number of week 24 infusions will increase significantly in Q4 as more patients are expected to return. From an execution perspective, we remain focused on our initial priorities to drive adoption in the high-volume targeted accounts, provide best-in-class patient support, enable access and educate patients.

And we have made great progress across all of these priorities. The cumulative effects of what we’ve accomplished are certainly helping to drive the momentum we saw from Q2 to Q3, and we expect to see that momentum carry forward into Q4 and into next year. We continue to believe the Briumvi profile is best-in-class, and will eventually be the IV therapy of choice for the relapsing MS market. BRIUMVI’s unique 1-hour infusion every 6 months delivers on patient convenience, reduces health care resource burdens and helps to address the needs of both private practice infusion centers and busy academic centers. The real-world experience with Briumvi continues to grow and the feedback we received is overwhelmingly positive. As we continue to progress towards our goal of making Briumvi the go to IV CD20 therapy, there is nothing more valuable than positive physician and nurse and patient experience.

We believe their growing experience will help reinforce the differentiation of Briumvi and lead to expanded utilization in the future. Encouragingly, we are seeing increases in both breadth and depth with our prescribers. We are seeing more and more prescribers and centers getting their initial experience with the drug and we are now up to approximately 500 total prescribers at more than 325 centers that have used Briumvi. Importantly, the adoption rate at top centers of excellence continues to increase with now 90% of the top 50 centers and 80% of the top 100 centers having utilized Briumvi. Depth is also increasing from early adopters with significant increases in physicians that now have multiple patients on Briumvi. We view increases in repeat users as an important metric as we believe it likely represents a positive experience using the product.

We have always known that the process of accessing Briumvi was going to be critical — a critical success factor for this launch. And we are very pleased with the feedback we’ve received from customers on their interactions with both our people and our patient support services to date. We are very proud of the patient hub programs that we have built to support patients and our field teams have done a tremendous job engaging with our customers. We believe our efforts here are contributing to the positive experience with Briumvi and building confidence in our organization in general. We continue to focus on moving patients from the hub to the infusion as quickly possible — as possible. And we are seeing improvements here over time. Continued improvement in payer coverage is facilitating our ability to do that.

We are now up to 95% coverage for commercial and Medicare lives, exceeding our corporate goal for the year, and we believe this will enhance access to Briumvi moving forward. In addition, the permanent J-Code has now been loaded in the payer systems and our average selling price has been published, all of which should help build confidence in reimbursement. We have made progress — we have also made progress in the quarter with major institutions and health systems. We have secured an increased number of institutional formularies wins for Briumvi. And importantly, we have seen our first scripts in infusion this quarter from several of the top academic institutions and highest volume MS centers. We are confident prescribing at these institutions will expand moving forward as they gain more and more experience and fully integrate Briumvi into their systems.

Finally, our research indicates that patients play an important role in selecting their therapy for MS. With that in mind and now that we’ve made great progress on building awareness with our health care providers and gaining broad insurance coverage, we have significantly increased our patient activation tactics and are starting to see the impacts of those efforts. In September and October, we generated substantial increases in overall impressions through our digital media efforts and we are already seeing the impact in website visits and increases in patient requests for Briumvi. I can say with certainly — with certainty that our team has built a strong foundation for success, and we are determined to build upon this. Going into the fourth quarter, we have solid momentum behind us, 95% coverage in place, decreasing logistical barriers, positive — growing positive experience with Briumvi and an increasing number of patients coming back for the week 24 infusions.

We remain confident in the short run, we’ll see deepening utilization with our current base, and we’ll continue to unlock more and more accounts going forward. We are also confident that in the long term that Briumvi will become the IV CD20 of choice for patients with relapsing forms of MS. We certainly have more work to do but we continue to make progress, and we are ahead of where we thought we’d be at this point and we are extremely motivated to continue to work every day to bring Briumvi to those people living with MS and their families. With that, I’ll now turn the call over to Sean Power, our CFO.

Sean Power: Thank you, Adam, and thanks, everyone, for joining us. Earlier this morning, we reported our detailed third quarter 2023 financial results, which can be viewed on the Investors & Media section of our website. I’ll start today’s call by recapping some of the financial highlights from this morning’s release. For the third quarter, we are pleased to report total net revenue of approximately $166 million, which is comprised of $25.1 million in Briumvi net product sales and $140 million in license revenue, stemming from the upfront payment for our ex-U.S. commercialization agreement with Neuraxpharm. This brings our total net revenue for the 9-month year-to-date period to approximately $190 million, which includes approximately $49 million in Briumvi net product sales.

On the back of the reported revenues, we were able to report net income in both the 3- and 9-month periods. Net income for the 3-month period was approximately $114 million or $0.73 per share — per diluted share and net income of $27 million or $0.19 per diluted share for the 9-month period. Our OpEx during the period has remained well controlled and within previously guided range — ranges. For the third quarter, our R&D and SG&A operating expenses totaled approximately $48 million and approximately $38 million when excluding noncash compensation. Over the course of the year, we have continued to invest in Briumvi inventory, with approximately $34 million now on our balance sheet, of which $24 million is reflected in the current quarter cash burn.

And finally, from a cash standpoint, we ended the quarter with approximately $229 million in cash, cash equivalents and investment securities. As Mike touched on earlier, we feel comfortable that our existing cash when coupled with modest Briumvi revenue assumptions, provides us with sufficient capital to fund our operations to cash flow positivity. With that, I will now turn the call back over to the conference operator to begin the Q&A.

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Q&A Session

Operator: [Operator Instructions] Our first question is from Ed White with H.C. Wainright.

Edward White: Congratulations on a great quarter.

Michael Weiss: Thanks, Ed.

Edward White: So Mike, I just wanted to get your thoughts on the anti-CD20 market penetration within the overall MS treatment landscape and your thoughts on infusion versus subcu injections going forward?

Michael Weiss: Yes. So I’ll do a little bit about subcu. I’ll let Adam take the first half of that question about the growing CD20 market. But yes, I mean my impression of the infusion versus subcu market, the infusion market is growing but the overall market is probably growing faster, and that’s probably because the subcu market is expanding into areas in which the IV market never penetrated. So I think we’re seeing subcu penetrating out into more general neurologists. Again, it’s centers that probably were not already using or very limited use potentially of IV CD20. So we think that the IV market will continue to grow. Our focus continues to be on centers that are involved in IV therapy. And I think we’re leaving for the bigger players here to work on the general neurologists.

And as they expand, they’re using to CD20 and into subcu and potentially into IV, we could then tag along and introduce Briumvi in those centers. Adam, do you want to talk about CD20 as a part of the overall MS treatment landscape?

Adam Waldman: Sure. Yes. So Ed, we estimate about 80,000 patients is about the dynamic market. Those are patients that are either initiating a new treatment for the first time or they are switching from another therapy in a given year. And about 50% of those or about 40,000 patients are going on a CD20. And we believe, as Mike said, that market is — the CD20 market is growing and expanding but that’s where we get — that’s our assumption for the MS market and where CD20s play in that market.

Edward White: Okay. And perhaps you can comment on — you mentioned the ENHANCE trial. I’m just wondering if we can get your thoughts on the real-world number of patients that are switching from other CD20s to Briumvi?

Michael Weiss: Sure. Adam, can you take that one?

Adam Waldman: Yes. So we have seen — I think we’ve said before on this call that we did not expect a lot of patients to be switching from either IV CD20 or subcu CD20. That was not part of our initial estimates or thought process but we have seen it and we’ve said, actually, it surprised us at how much we are seeing. And I will say that a lot of the reasons that we hear from physicians as to why they are doing it is — one is the 1-hour shorter infusion. Of course, that’s the most often referred to attribute of Briumvi that causes a switch. But we also increasingly hear about this wearing off effect or crap gap that it’s called by patients, where there’s an early wearing off effect with other CD20s, and physicians are willing to get Briumvi a try to see if they can get a better response with Briumvi. So we’re seeing that and I guess it has surprised us at how much we are seeing.

Edward White: And perhaps my last question would just be how much free drug through Quick Start — the Quick Start program did you see this quarter? And what are your expectations for that going forward?

Adam Waldman: Sure. Yes, free goods remained at around 20% this quarter, very similar to last quarter. The majority of that is Quick Start. So we do expect now that we have 95% coverage in place, that we will see a drop in free goods going into the fourth quarter and continuing forward. So I can’t exactly tell you how much of a drop but we do think it will be less than what we’re seeing in the first 3 quarters so far.

Operator: Our next question is from Roger Song with Jefferies.

Roger Song: Great. And my congrats for the good quarter. A couple of questions from us. Yes — the first question may be a drill down for the patient composition you have been seeing for you — for the patient to use Briumvi. So like how many of them are — what’s the breakdown between new patient versus switch patients and the renewed patients? Because I believe you start to see some renewed patients. But maybe more interesting is how the recent month in 4Q, you start to see those patients?

Michael Weiss: Yes. Adam, you want to tackle that one? So it’s — you’re saying the composition of new versus returning patients for their infusions?

Adam Waldman: Is that the question, Roger? Or is it visit how many new versus switch patients? Can you just clarify the question before I answer.

Roger Song: Yes, sure. So basically, we have 3 categories of the patients. New patients, new to the CD20, switch from other CD20 and also the renew for the Briumvi patient. Maybe just qualitatively how you will characterize those 3 categories?

Michael Weiss: Got it. Sorry, I misunderstood you. Go ahead, Adam.

Adam Waldman: Sure. So we’ve seen a nice balance between all those 3 groups, right? So we are seeing a good percentage from new to therapy. We are seeing probably the biggest percentage from switches from non-CD20 and we are seeing a decent amount from — as I mentioned before, decent and more than expected from existing CD20s. So relatively balanced across those 3 groups, probably a little bit more in the switching from non-CD20 therapy.

Roger Song: Got it. And another also related to the revenue question is the — you report the prescription you’re getting and also the revenue. From the prescription to the revenue, what are the key factors to play into the final net revenue, because the prescription you’re getting are maybe those patients will have the compliance rate to get — to fulfill those revenue. And of course, we’ll have this free drug and gross to net. Are those being the key factors to convert from prescription to the revenue?

Michael Weiss: Adam, you want to keep going? You’re on a roll here.