TG Therapeutics Steps Into the Batter’s Box
Here's how to play a fast-growing biopharma name with advantages over competitors.
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For our latest covered call trade idea, we return to the biotech/biopharma arena once again. The play is around a mid-cap name trading at a reasonable valuation after a 20% pullback from recent highs in May.
The recent decline has come despite the company’s management raising 2025 sales guidance with its first-quarter earnings report. Its flagship product also came to market early in 2023, eliminating FDA approval risk. The drug is powering impressive revenue growth for the company as well.
The company is question is TG Therapeutics TGTX, whose main asset is a monoclonal antibody called ublituximab, better known by its brand name Briumvi. It became approved for the treatment of relapsing forms of multiple sclerosis, or RMS, at the close of 2022 and hit the market soon thereafter.
Briumvi is positioned within an evolving competitive environment but has some advantages over competitors including around cost. In addition, TG has taken a multi-prong approach to growing its presence in this space, featuring five-year open-label extension data from its two Phase 3 trials. This revealed that 92% of patients were free from disability progression after five years of treatment with a microscopic ARR of 0.02, equivalent to one relapse occurring every 50 years of patient treatment. Furthermore, no new safety signals emerged.
Company management is also pursuing a subcutaneous or SC version of Briumvi as well as evaluating its flagship drug for other indications. Albeit these are early-stage efforts.
First-quarter results showed that Briumvi achieved year-over-year revenue growth of 135% in U.S. net sales that came in a tad under $120 million. Management also raised its 2025 net sales guidance for the drug to $560 million from $525 million.
What dinged the stock a bit following those results was the bottom line was below expectations as management is more focused on growing market share right now. TG does have funding in place to reach profitability later this year without the need for any capital raises. In addition, Briumvi is manufactured in South Korea and is subject to the Trump administration’s ever evolving tariff policies. That said, this monoclonal antibody’s cost of goods sold is quite small compared to the list price of Briumvi.
It also should be noted that Briumvi is just starting to hit the market in Europe via a commercial agreement the company recently reached and that should soon start generating considerable milestone payouts and royalites.
The current analyst firm consensus has both revenues and profits scaling impressively over the next few years with the company generating north of $3.50 a share of earnings in 2028. The stock currently trades around $36.
I don’t mind holding this name over the longer term within my portfolio. Still, I wouldn’t mind a lower entry price or just another consistent single with a covered call trade that ends up expiring in the money.
Option Strategy
This is how one can initiate a holding in TGTX with a covered call order. As a reminder, covered call orders involve buying an equity and simultaneously selling just out of the money call strikes against the new position.
Using the November $30 call strikes, fashion a covered call order with a net debit in the $26.25 to $26.75 a share range (net stock price - option premium).
This strategy provides downside protection of just over 25% with upside potential of around 13% even if this equity trades down significantly over the option duration.
Note: For those investors looking for more potential upside while accepting less downside protection, use the November $35 call strikes with a net debit range of between $29.00 to $29.50 a share.
At the time of publication, Jensen was long TGTX.
