This Biotech is Still a Great ‘Core’ of Small Cap Satellite Portfolio

Written by GSCR Staff   
Friday, 27 June 2014 08:56

Earlier this week we commented on ETF and features of the core and satellite portfolios in the Market Monitor.

One of the staples in the satellite portfolios are small cap biotech stocks, a sector that appears to be coming back in favor based on the Russell Microcap reconstitution preliminary list which we cited in this week’s Guide. Whether this is coincidence or a great segue, there was a big jump this week in one of our Market Monitor picks from January 2014.

 

TG Therapeutics (NASDAQ – TGTX - $9.47) is a development stage biopharmaceutical that has some innovative products in its pipeline geared primarily toward the treatment of cancer. This past week’s 18% jump is just the tip of the iceberg. The stock has more than doubled over the last month on tremendous deal flow. We featured the stock at $5.10 and called for a $6.75 level sometime this quarter. Now that the stock has skyrocketed past this level, the question is what to do next with TGTX.

 

Here is a refresher on TG Therapeutics. The Company is developing two advanced therapies targeting hematological malignancies. The TGTX-1101 (ublituximab) is a novel, third generation monoclonal antibody that targets a specific and unique epitope on the CD20 antigen found on mature B-lymphocytes, or antibody agents, which is in clinical development for patients with relapsed and refractory non-Hodgkin's lymphoma. The TGR-1202 is an orally available PI3K delta inhibitor believed to be important in the proliferation and survival of B-lymphocytes.

 

Looking at TGTX from a technical perspective, the stock is trading above both the 20 and 50 day DMA, a very bullish indication. The deal flow remains steady as well. Earlier this week TG Therapeutics signed a deal Global Licensing Agreement with Ligand Pharmaceuticals (NASDAQ – LGND) for the development of Inhibitors of IRAK4. The clinical phase testing is also producing steady positive news. In late May the Company issued positive news for Phase I results for its TGTX-1101 treatment. Finally, the revenue potential is coming into focus as consensus analysts’ estimates forecast that the Company will start to generate some significant revenue in 2015 approaching $13 million in market that has the potential to reach $100 billion.

 

The deal flow and positive clinical results will keep the momentum going on TGTX. The stock could reach $12 by the end of 3Q.

 

Have a great weekend!

 

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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