Initiating Coverage December 7, 2012 BUY TG...

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TG THERAPEUTICS, INC. (TGTX) Building a Delta for the Treatment of Hematologic Malignancies; Initiating Coverage with a Buy Rating and a $6 Price Target

Highlights We are initiating coverage of TG Therapeutics, Inc. (TGTX) with a BUY

rating and $6 price target. TG is in the process of developing two potential blockbuster products TG‐1101 and TGR‐1202, both indicated for NHL, CLL, and possibly other hematologic malignancies or autoimmune diseases. Our target price is entirely generated from our forecasted sales of TG‐1101. We believe TG’s current valuation offers significant upside potential as we anticipate multiple catalysts in 2013 which could drive the value. The currently ongoing TG‐1101 Phase I trial in NHL patients will have data in mid‐2013 and begin to enroll the Phase II portion as well, with more data expected at ASH 2013. Additionally, a combination trial of TG‐1101 with Revlimid (lenalidomide) will be initiated in 4Q12. TGR‐1202 will also enter Phase I in 1Q13, with data expected in 2013. Therefore, with this plethora of clinical activity we anticipate TG to attract the attention of possible partners, and to continue to de‐risk the product portfolio as more data is generated.

We believe TGTX’s current value is primarily driven by TG-1101, which early data has shown to potentially be superior to Rituxan. Rituxan generates greater than $4 billion in sales annually in the U.S. alone, and we expect TG‐1101 will initially be marketed to Rituxan relapsed and refractory patients. We believe the regulatory pathway for the TG‐1101 as a therapy for relapsed and refractory patients is the pathway with the least resistance. If robust data is generated in earlier line patient populations, demand could also be generated from off label use. This has clearly occurred with other products indicated for NHL and CLL, such as Treanda. In our view, the opportunity in the large and growing NHL and CLL patient populations could easily allow for TG‐1101 to achieve revenue greater than $1 billion annually. Moreover the drug data in single agent Phase I trials and in the preclinical work shows that TG‐1101 is a highly active and well tolerated product with impressive efficacy and a viable mechanism of action.

TGR-1202 represents a significant opportunity as well. TGR‐1202 is a PI3Kδ inhibitor indicated for hematologic malignancies also, and is a sought after mechanism of action right now. The mechanism has been validated by competitor GS‐1101 who is now in three Phase III combination trials, including one in combination with anti‐CD20 mAb rituximab. The market is even more significant than TG‐1101’s, due to the potential applicability to a broader range of indications. Furthermore, we anticipate that TG may run a combination trial with TG‐1101 and TGR‐1202 in the future.

Valuation. We believe TGTX is currently undervalued and have employed multiple valuation techniques to assess the opportunity. Specifically, we employed a sum of parts analysis, EPS multiple analysis, and a DCF analysis with a 35% discount rate, and 9x

multiple of the 2021 EBITDA of $191 million. Our analysis employs only the U.S. revenue generated from TG‐1101 in the relapsed and refractory NHL and CLL patient populations, as well as the current cash position. Potential ex‐U.S. revenues for TG‐1101 and revenues for TGR‐1202 represent upside to our projections as we have not included them in our estimates. We view TGTX, at current prices, as an attractive investment opportunity with multiple potential clinical data catalysts in the next 12 months.

Investment Rating BUY Price Target $6.00 Price closing (12/06/12) $2.05 52 Week Range $0.96 - $50.63 Shares Outstanding 25.1 MM Market Capitalization $52.62 MM Cash (9/30/12) $17.4 MM Long term debt (9/30/12) $0 MM Volume (avg. daily) 0.009 MM

S&P 500 Index (12/06/12) 1,413.94 NASDAQ Composite (12/06/12) 2,989.27

FY (December 31) 2011A 2012E 2013E Revenues (Mil) $0.0 $0.04 $0.156 EPS ($0.10) ($1.29) ($0.56) EPS (Qtr.) 1Q 2Q 3Q 4Q 2011A $0.03 ($0.15) ($0.16) ($0.01) 2012E ($2.03) ($0.16) ($0.16) ($0.15) 2013E ($0.14) ($0.14) ($0.14) ($0.14)

Company Description TG Therapeutics is a biopharmaceutical company focused on the acquisition and development of oncology products with an emphasis on B‐cell malignancies. TGTX’s comparative advantage is to identify quality assets to develop. Lead product candidates are TG‐1101 and TGR‐1202. TG‐1101 is an anti‐CD20 mAb that is indicated for NHL, CLL, and possibly other hematologic malignancies. TGR‐1202 is a PI3Kδ inhibitor that is also indicated for hematologic malignancies, and thus in line with the company’s focus. TG’s management is a significant shareholder and strongly incentivized to achieve share price growth. TG operations are headquartered in New York, NY.

INSTITUTIONAL ACCOUNTS ONLY Industry: Biopharmaceuticals

Initiating Coverage

December 7, 2012 BUY

Matthew L. Kaplan 212.891.5247 [email protected]

Deirdre

RI-RESTRICTED disclaimer

Matt Kaplan 212.891.5247 TG Therapeutics, Inc. (TGTX)

Ladenburg Thalmann & Co. Inc. PAGE - 2 -

COMPANY OVERVIEW

TG Therapeutics, Inc. is a biopharmaceutical company focused on the acquisition and development of oncology products with an emphasis on B‐cell malignancies. TG’s comparative advantage is to identify quality assets to develop. Lead product candidates are TG‐1101 and TGR‐1202. TG‐1101 is an Anti‐CD20 mAB that is indicated for NHL, CLL, and possibly other hematologic malignancies. TGR‐1202 is a PI3Kδ inhibitor that is also indicated for hematologic malignancies, and thus in line with the company focus. TG’s management is a significant shareholder and strongly incentivized to achieve share price growth. TG operations are headquartered in New York, NY.

TG Therapeutics was formed as a reverse merger with Manhattan Pharmaceuticals, Inc, and almost simultaneously (1 month time‐frame) entered into an agreement with GTC LLC (a subsidiary of LFB Biotechnologies), where LFB/GTC made a significant investment in TG Therapeutics as part of the licensing deal to develop TG‐1101. Shareholders of TG were the majority holders and as such TG was the legal acquiree, hence the final company name of TG Therapeutics. The extreme 52‐week range of stock prices for TG may not represent an equivalent swing in market capitalization. In 4Q11 the average share count for Manhattan Pharmaceuticals, Inc. was reported as over 300 million shares, in contrast to the 1Q12 average share count reported of 5.1 million shares outstanding by TG Therapeutics. There was no drug failure or other major event beyond the reverse merger and in‐licensing of TG‐1101 and TGR‐1202 in 2012, from our point of view.

TGTX PIPELINE Preclinica l Approved

T G-1101: Anti-CD20 mAB

Chronic Lymphocytic Leukemia

Non-Hodgkin's lymphoma

Combination treatments

T GR-1202: PI3Kδ Inhibitor

Single agent heme malignancies

Combination treatments

Phase I Phase II Phase III

Source: Company documents & Ladenburg Thalmann & Co.

INVESTMENT THESIS

Initiating Coverage with a BUY Rating and $6 Price Target We are initiating coverage with a Buy rating and $6 target price, as we believe that TG is undervalued based on the potential cash flows which TG‐1101 may be able to generate, and the strength of management’s ability to identify and acquire quality products. We believe that TG‐1101 could be approved in 2016 for relapsed and refractory CLL and NHL patients. Furthermore, we forecast TG to be cash flow positive in 2017 and to be profitable in 2018. Additionally, TG has a second product, TGR‐1202, also a potential blockbuster, which represents an attractive second shot on goal which also may act synergistically with TG‐1101.

TG‐1101 is a 3rd generation anti‐CD20 monoclonal antibody (mAb) indicated for NHL and CLL, we believe with the potential to be a best in class product. TG‐1101 is able to induce superior Antibody‐Dependent Cell‐Mediated Cytotoxicity (ADCC) in comparison to first generation anti‐CD20 mAbs like blockbuster Rituxan (rituximab), and in comparison to second generation anti‐CD20 mAbs. Furthermore TG‐1101 is able to induce complement‐dependent cytotoxicity (CDC) similar to rituximab, whereas the 3rd generation anti‐CD20 mAb competitor is not able to induce robust CDC. Therefore, we feel that TG‐1101 has the potential to be the blockbuster product in this large market.



The NHL market is large with a prevalence of over 520,000 patients, of which we believe about 250,000 are relapsed or refractory B‐cell NHL patients that consist of the initial target market for TG‐1101. The CLL market is smaller with a prevalence of approximately 114,000 patients, although all are entirely B‐cell lineage, and about 68,000 are relapsed or refractory patients. Thus with inflation adjusted pricing of $52,000 for the annual treatment costs and approximately 18,300 NHL patients treated in 2021, TG‐1101 could generate greater than $950 million in revenue. However, based on our forecasted 17% royalty rate TG would receive royalties of about $163 million in 2021. Similarly with about 7,100 CLL patients treated in 2021 TG‐1101 could generate about $375 million, with about $64 million going to TG based on our royalty assumptions.

TGR‐1202 is a PI3 kinase (phosphatidylinositol‐3 kinase) delta inhibitor. PI3Kδ inhibitors are a hot area being explored in the fight against cancer, as the PI3Ks help the cancer cells to proliferate. The efficacy shown by other PI3K inhibitors is promising and we expand on this in the report. It suffices to say that we believe there is a high probability of success for TGR‐1202, based on our analysis. The market opportunity is very similar to TG‐1101, with the only difference being that TGR‐1202 may be applicable to an even broader number of indications than TG‐1101. Furthermore PI3Kδ inhibitors are being explored in combination treatments with rituximab and chemotherapies. Accordingly we are not concerned with its cannibalization of TG‐1101 sales, but are optimistic that TG holds both products that could become the next SOC combination treatment in NHL, CLL and autoimmune diseases.

Valuation. Our $6 price target is supported by a DCF, EPS multiple, and a sum of parts analysis. The DCF analysis applies a 35% discount rate, and a 9x multiple of the 2021 EBITDA of $191 million as the terminal value. The sum of parts (SOP) analysis employs the U.S. revenue generated from TG‐1101 in the relapsed and refractory NHL and CLL patient populations, as well as the current cash position. The first line patients and all the ex‐US markets for TG‐1101 in all indications are also left as upside potential. Furthermore, since no in human data has been generated from TGR‐1202, all potential revenue from TGR‐1202 has been excluded from the valuation and left as upside potential. The SOP analysis utilizes a 35% discount rate for TG‐1101 in both NHL and CLL indications. Thus the weighted average discount rate in the SOP analysis is 35%. The EPS multiple analysis uses the 2021 fully diluted EPS of $2.33, and utilizes a 30x multiple and a 35% discount rate. The fully diluted share count used in the EPS multiple analysis takes into consideration considerable future potential dilution. Specifically, our forecasts show the fully diluted shares to be about 53 million in 2021, which is more than triple the 3Q12 share count of about 16 million shares.

Upside potential. Notably the NHL and CLL markets are large with multiple blockbuster products and yet a remaining unmet clinical need exists as there is no cure. Furthermore, the products in this space are often used as maintenance therapies post treatment, thus extending the product sales. Additionally, the utility of the products in this space extend into multiple indications. Rituximab for example is approved to treat not only NHL and CLL, but also rheumatoid arthritis, Wegener’s granulomatosis, and microscopic polyangiitis. Moreover, products are readily used off label. For example Treanda is not approved for first line treatment in either NHL or CLL, yet the National Comprehensive Cancer Network (NCCN) directly recommends its use in first line CLL patients while in combination with rituximab. Therefore, as we view TG‐1101 to potentially be a superior product to rituximab, we believe that upside revenue potential exists in multiple potential future indications and earlier lines of therapy that are not included in our model. Given that rituximab has sales of $4 billion in the U.S. alone the upside to TG is potential extreme in comparison to its current market cap or our forecasted projections.

Importantly we have also not included any ex‐U.S. territories into our valuation, including the E.U. territories (excluding France), which could double our revenue estimates and more than double our valuation given that additional royalties would include little additional costs. TG recently out licensed the South Korean market, based solely on the Phase I data generated to date, and this is just an example of the future licensing deals that could continue to generate growth for TG. Moreover, this upside potential gives us more comfort in the use of higher multiples for our EPS analysis.

Beyond TG‐1101, TGR‐1202 has the potential to generate significant revenue for TG. TGR‐1202 is assumed to target a similar market as TG‐1101, however, the two products are more likely to be used in combination, than as competitors. Combination therapies are the primary method of treating NHL and CLL. Although TGR‐1202 is too early in development to include in our valuation of TG, it is worth noting that the addition of revenue generated from TGR‐1202 in just the U.S. relapsed and refractory NHL and CLL patient populations could increase our target price to $10 per share.



Importantly, a partnership deal for one or both products could significantly reduce the cost structure that we have built into our financial statement forecasts. This cost reduction could significantly increase the value of TG, and depending on the partner the risk of achieving the forecasted sales could also decrease, thus driving our valuation higher.

Downside risks. The downside risks to the current valuation include the risk of all products failing to generate the anticipated revenue. Furthermore as with any biotech product in development there is also the risk of failure in clinical development.

Table 1. EPS multiple analysis

2021Discount

rates

EPS multiples 15 20 25 30 35 40

10% $16.2 $21.5 $26.9 $32.3 $37.7 $43.1

15% $11.3 $15.0 $18.8 $22.6 $26.3 $30.1

20% $8.0 $10.7 $13.3 $16.0 $18.7 $21.3

25% $5.8 $7.7 $9.6 $11.5 $13.4 $15.3

30% $4.2 $5.6 $7.0 $8.4 $9.8 $11.2

35% $3.1 $4.1 $5.2 $6.2 $7.2 $8.2

40% $2.3 $3.1 $3.8 $4.6 $5.4 $6.1

Target price based on EPS multiple analysis (fully diluted)

Source: Ladenburg Thalmann & Co. Estimates

Table 2. DCF analysis

2021Discount

rates

EBITDA multiples 7 8 9 10 11 12

15.0% $18.23 $20.35 $22.46 $24.58 $26.70 $28.82

20.0% $12.79 $14.29 $15.80 $17.30 $18.80 $20.30

25.0% $9.05 $10.13 $11.21 $12.29 $13.37 $14.45

30.0% $6.43 $7.22 $8.01 $8.80 $9.58 $10.37

35.0% $4.59 $5.17 $5.75 $6.33 $6.91 $7.49

Value Per Diluted Share


Table 3. Sum of parts analysis

Per share value of assets Weighted ave. product discount rate 35.00%

NHL RR pts in the US 3.70$

CLL RR pts in the US 1.41$

Value of net cash 0.66$

TP 5.8$ Source: Ladenburg Thalmann & Co. Estimates



MILESTONES

Timing Compound Event Indication

4Q12 TG‐1101 Initiate Revlamid combination trial NHL, CLL

1Q13 TGR‐1202 Initiate Phase I trial Heme malignancies

2Q13 TG‐1101 Initiate Phase II portion of B‐cell NHL trial NHL

Jun‐13 TG‐1101 ASCO update from Phase I portion of Phase I/II trial NHL

Jun‐13 TG‐1101 ASCO update from Revlamid combo trial NHL, CLL

2H13 TGR‐1202 Initiate Phase I combination trial NHL, CLL

4Q13 TG‐1101 Top‐line data at ASH 2013 from multiple trials NHL, CLL Source: Company documents and Ladenburg Thalmann & Co. Estimates

TG-1101: HIGHLY ACTIVE 3RD

GENERATION ANTI-CD20 MAB

TG‐1101 was developed by Laboratoire francais du Fractionnement et des Biotechnologies (LFB), and is a third generation chimeric anti‐CD20 monoclonal antibody (mAb) similar to Rituxan, but with low fucose content in the Fc region (Br J Haematol. 2008 Mar; 140(6):635‐43), indicated for B‐cell NHL and CLL. In preclinical work TG‐1101 demonstrated superior binding to the Fcγ receptor IIIA (CD16) over rituximab presumably due to the low fucose content. In other words, it has been found that glycosylation has a significant impact on antibody activity and specifically that lower fucose content enables more efficient (increased) ADCC activity of the antibody. Correspondingly, TG‐1101 affected the FcγRIIIA‐dependent effector functions. The Fcγ receptor IIIA genes are non‐polymorphic and expressed in natural killer cells and macrophages. In preclinical testing TG‐1101 was found to affect FcγRIIIA‐mediated interleukin‐2 (interleukin‐2 is a cytokine that regulates white blood cells), and cause a higher ADCC than rituximab in CLL cells. Moreover the ADCC in CLL cells was accomplished with a lower drug concentration than patients usually receive with rituximab, which may enable a better safety profile. Additionally rituximab may require tumor cells to express a significant level of CD20, whereas TG‐1101 is able to induce greater ADCC when cells express low levels of CD20.

The effectiveness of TG‐1101 to induce ADCC in patients expressing low levels of CD20 enables TG‐1101 to treat B‐cell CLL patients, because these patients express low levels of CD20. This is also the reason we believe there is a significant opportunity for TG‐1101 regardless of the large dominate players competing with other anti‐CD20 mAb’s to treat CLL.

Beyond the important comparison to rituximab, other trials of approved products such as ofatumumab we believe indicate that the early efficacy shown by TG‐1101 is potentially more than enough for approval. Specifically, the open label Phase I/II trial of ofatumumab monotherapy in relapsed and refractory patients only showed a 10% ORR and a 22% ORR in rituximab refractory patients. Thus with TG‐1101’s efficacy, that we highlight below, which showed up to a 45% response rate in relapsed and refractory CLL patients at what may be a lower than optimal therapeutic dose, we believe that approval is more likely than not. Notably, ofatumumab (which was approved by the FDA in October 2009) is on track to achieve $100 million in sales annually in 2013, and we consider this drug launch as the possible downside scenario for TG‐1101.

TG owns worldwide rights to TG‐1101, except for France. Recently, TG out‐licensed rights to TG‐1101 to Ildong Pharma for South Korea and Southeast Asia, and received an upfront payment of $2 million, and future sales based milestones and royalties on sales in the territories licensed. Although this is a smaller territory we are encouraged by the licensing activity given that TG‐1101 has only shown Phase I data up to this point. Thus, with positive Phase II data we believe the upfront payment/s, and approval milestones from licensing TG‐1101 in the E.U. could generate an amount of cash that exceeds TG’s current market cap.

Future development: Combination trials for the treatment of CLL and NHL patients are the inevitable future clinical development pathway for TG‐1101. The first combination trial is planned to be initiated this quarter and will dose patients with a combination of TG‐1101 and Revlamid. We expect this initial trial to be in rituximab refractory patients.



Current trial: On September 5th TG initiated an open label Phase I/II trial with TG‐1101 in relapsed and refractory B‐cell NHL patients. Although TG‐1101 demonstrated an ORR of 45% in the most recent Phase I trial at doses of 450mg with 8 infusions, TG believes better efficacy may be demonstrated with an adequate safety profile at even higher doses. Therefore the Phase I portion of this newly initiated trial will dose 15‐20 patients (max 36) in a 3+3 trial design with 4 cohorts dosed at 450mg, 600mg, 900mg and 1200mg. The doses will be given over 4 weeks on day 1, 8, 15, and 22, which will then be followed by a monthly maintenance phase of one dose starting at cycle 3. The Phase I portion should be fully enrolled in 1Q13, with the Phase II portion to potentially begin enrollment in 1Q13 but by our estimates 2Q13 is most likely for the initiation of the Phase II portion. Patients in each cohort of the Phase I portion are required to complete dosing, which takes 30 days, before the next cohort is enrolled. Therefore even with rapid enrollment the Phase I portion could take 4 months or longer to complete enrollment. Previous clinical experience with TG‐1101 and other anti‐CD20 mAbs have shown a high rate of AEs after the first infusion. Thus the length of the Phase I portion could be curtailed, even if the dosing proceeds to the 1200mg dose. The Phase II portion is expected to enroll 30 to 40 patients from 5 to 10 sites. Patients will be stratified by B‐cell lymphoma, as the ultimate goal is to gather enough information to design a Pivotal trial. Given that responses in NHL patients will be able to be seen early, we anticipate that topline data may be presented at ASH 2013.

The current requirements for a partial response (PR), as judged by the National Cancer Institute‐sponsored Working Group (NCI‐WG) on CLL, are the normalization of at least 1 of the blood counts or an increase of ≥50% from base line of either platelets, hemoglobin, or the neutrophil counts for ≥2 months. Also required to obtain a PR is two of following: ≥50% reductions from base line in lymphadenopathy, splenomegaly, hepatomegaly, and/or circulating lymphocyte counts for ≥2 months. Thus with the data seen to date a ≥50% reduction in circulating lymphocyte count should be easily obtainable, and ≥50% reduction in lymph node size was also seen in the most recent Phase I trial in at least 3 patients. Moreover with the reduction in circulating lymphocyte counts we would anticipate that the spleen would return to normal size. With single agent use in the relapsed and refractory patient population, we believe that a PR of ≥20% would be a clinically meaningful response, and given the data to date we believe that should be easily achievable.

TG-1101 first in man Phase I trial in relapsed or refractory CLL patients:

In this open‐label dose‐escalation Phase I trial 21 relapsed or refractory CLL patients were dosed with TG‐1101. The patients were required to have been previously treated with fludarabine, and approximately 57% of the patients were also previously treated with rituximab. Moreover, the median number of prior treatments was 3, with some patients having 6 prior treatments. There were 5 dose cohorts (Table 4) where patients were dosed with up to 450mg of TG‐1101 (range 5mg‐450mg) once a week for 4 weeks, with tumor assessments done at weeks 16, 24, and 52.

Table 4: Dose escalation by cohort

Cohort Patient # Dose 1 (mg) Dose 2 (mg) Dose 3 (mg) Dose 4 (mg) T ota l dose (mg)

A 6 2 10 20 40 75

B 3 20 60 60 60 200

C 3 60 150 150 150 510

D 3 150 300 300 300 1050

E 6 300 450 450 450 1650

Source: Company documents (52nd ASH Poster #2447) & Ladenburg Thalmann & Co.

Efficacy: The primary intent of the Phase I trial is to determine the safety and tolerability of TG‐1101, but the trial also gave a glimpse into the potential efficacy also. Specifically 28% (5 out of 18) of evaluable patients were considered partial responders at week 16, with 3 confirmed PRs at week 24. Additionally a cohort analysis of the decrease in mean circulating lymphocyte count showed a sustained decrease through week 24 in each patient in cohort E (Figure 1). We are impressed with these early results observed in a heavily pre‐treated patient population.



Table 5: TG-1101 cohort response analysis

Cohort Pa tient # Eva luable PR week 16 PR week 24 SD PD

A 6 5 1 1 2 2

B 3 2 2 0 0 0

C 3 3 1 1 2 0

D 3 3 0 0 1 2

E 6 5 1 1 2 2


Figure 1: Sustained decrease in circulating lymphocytes for cohort E


Safety: TG‐1101 was well tolerated in comparison to CLL SOC, with most adverse events occurring after the first infusion and minimally reoccurring after infusions 2 through 4. Notably there were no deaths in this trial, which is encouraging taking into consideration deaths in other CLL trials and the number of prior treatments. Patients who did experience Grade 3‐4 events were able to continue dosing with no reoccurrence of the respective AEs (presumably after a dose interruption). For example 4 patients who experienced Grade 2‐3 hepatic cytolysis were able to continue the trial without any permanent increase in bilirubin levels or impaired protein synthesis, and without the reoccurrence of hepatic cytolysis. Neutropenic events were the most frequent Grade 3‐4 events, with 4 patients experiencing Grade 3 neutropenia and 3 patients experiencing Grade 4 neutropenia. The number of patients experiencing Grade 3‐4 neutropenia decreased with sequential injections with no patients experiencing Grade 3‐4 neutropenia after infusion #4. Furthermore, with other therapies such as Neulasta which are able to assist with the treatment of neutropenia we are less concerned with neutropenia affecting TG‐1101 demand. The 3 patients experiencing Grade 3‐4 infections had prior problems that significantly contributed to the occurrence of the infections.



Figure 2: There were no Grade 3 or 4 AEs corresponding to infusions 3 and 4

Source: Company documents (52nd ASH Poster #2447) Table 6: Patients experiencing Grade 3-4 neutropenia after each infusion Infusion number Pa tients with Grade 3-4 neutropenia

1 4

2 2

3 1

4 0


Figure 3: The drug related AEs significantly decreased after the first infusion

Source: Company documents (52nd ASH Poster #2447)



Table 7: All treatment related adverse events T rea tment re la ted AE Grade s 3-4 (n) All Gra des (n)

Neutropenia 7 10

Infection 5 12

Infusion related reaction 3 12

Hepatic cytolysis 3 4

Pancytopenia 2 2

Thrombocytopenia 1 6

Pyrexia 0 18

Headache 0 11

Chills 0 6

Nausea 0 4

Abdominal pain 0 3

Asthenia 0 2

Anemia 0 2

γGT increase 0 2

anal abscess 0 2


TG-1101 follow up Phase I trial in relapsed or refractory CLL patients:

This open label Phase I trial dosed 12 relapsed or refractory CLL patients at the highest doses given in the first in man Phase I trial for an additional 4 weeks. Specifically, there was only one arm where patients were dosed with 150mg of TG‐1101 the first week, and then administered 450mg for the following 7 weeks, giving a cumulative dose of 3300mg. The response assessment was done at about the same time as in the first in man Phase I trial, which was 16 weeks from the initial dose. The median number of prior treatments was 3, with some patients having 8 prior treatments. Also similar to the first in man Phase I trial patients were required to have been previously treated with fludarabine, and approximately 58% (7) of the patients were also previously treated with rituximab.

Efficacy: The efficacy demonstrated in this small trial was superb, with 45% (5) of the evaluable patients achieving a PR at 4 months and maintaining the PR at one year (Table 8). Moreover, a rapid decrease in circulating lymphocytes was observed, and maintained by all patients through 4 months. Although some patients circulating lymphocytes increased above base‐line levels at 5 months, the majority maintained decreases in comparison to base‐line levels through 12 months (Figure 4). To further analyze the efficacy of TG‐1101, CT scans were done at 2, 4, and 6 months and the majority of patients maintained significant decreases in lymph node volume as shown in Figure 5 below.

Table 8: TG-1101 response analysis

Pa tie nt # Eva luable PR we e k 16 PR wee k 52 SD PD

12 11 5 (45%) 5 (45%) 5 1

Source: Company documents (53rd annual ASH Poster #2862) & Ladenburg Thalmann & Co.



Figure 4: Blood lymphocyte levels from baseline through follow up

Source: Company documents (53rd annual ASH Poster #2862)

Figure 5: Reduction in lymph node size for each patient at months 2, 4, and 6


Safety: Treatment with this high of a dose of TG‐1101 was tolerable and continues to appear to be superior to SOC, but the AEs were more significant in comparison to the lower dose arms in the first in man Phase I trial. Importantly, there has still not been a death in the trial due to the treatment of TG‐1101. Additionally, the majority of the infusion related AEs (9) occurred after the first infusion, with the remaining few occurring after the second infusion (2). Neutropenia has increased with the dose increase, but once again it is easily treated with products like neulasta. The two cases of Grade 3 increases in ALT, GGT, and AST were transient and resolved in a few days for one patient and within about two weeks for the other. Furthermore, the elevated liver enzymes did not reoccur for the remainder of the treatment infusions. Importantly almost all patients recovered from the AEs without any permanent treatment related consequences, with the exception of one patient with concomitant secondary AML who was withdrawn before neutrophil recovery.



Figure 6: Distribution of adverse events by grade and infusion time


Table 9: Treatment related adverse events

T rea tment re la ted AE Grades 3-4 (n) All Grades (n)

Infusion related reaction 4 11

Neutropenia 9 10

Febrile neutropenia 1 1

Pyrexia 6

Thrombocytopenia 5

Chills 2

Increase ALT/AST 2 2

Asthenia 2

Headache 2

Pancytopenia 1 1

Bronchitis 1

Herpes zoster 1

Infection 1

other 12

Source: Company documents (53rd annual ASH Poster #2862) & Ladenburg Thalmann & Co.

Market analysis: We believe the initial demand for TG‐1101 will be driven by Rituxan relapsed or refractory patients. Most patients treated with Rituxan eventually relapse, and Rituxan has only limited benefit on B‐cell NHL patients with aggressive disease. It has been demonstrated that Rituxan relies heavily on CD20 expression in order to induce CDC responses, whereas TG‐1101 appears to induce much greater ADCC even when there is low CD20 expression. Not only was a linear correlation found between Rituxan activity and CD20 expression, but it has also been determined that CD20 was down‐regulated in about 25% of B‐cell NHL relapsed patients. Furthermore, we believe the market for CLL and NHL products is driven by efficacy more than safety (side effect profile) as demonstrated with the sales of Treanda, which are on track to achieve greater than $1 billion in sales. Thus TG’s decision to increase the dose of TG‐1101 going into the NHL trial may help the product to demonstrate a higher ORR as did GA‐101. Thus we are optimistic that TG‐1101 could be demanded based on efficacy, and the demand based on safety and efficacy generated with low doses we believe acts as a floor to our market analysis.

As mentioned, given the current clinical trial data available for TG‐1101 we are limiting our market analysis to the relapsed and refractory NHL and CLL patient populations. NHL is classified according to cell origin as B‐lymphocytes, T‐lymphocytes, or natural killer cells (NK). B‐lymphocytes or B‐cell originating NHL makes



up about 80‐85% of the cases with T‐cells accounting for 15‐20% of NHLs, and NK‐cell origin NHL being very rare. With respect to TG‐1101 our focus is B‐cell NHL. Therefore, with the prevalence of NHL patients being about 0.16% of the population or about 504,000 patients in 2012 the B‐cell patient population is roughly 402,000 in 2012 based on an 80% B‐cell population make up. Furthermore, we conservatively estimate approximately 60% of these patients will eventually be relapsed or refractory to rituximab. This is based on the fact that roughly 30% of patients are initially refractory to rituximab therapy and the fact that the majority of patients eventually relapse. Consequently, 60% of the B‐cell NHL patient population equates to about 241,000 patients in 2012.

We estimate that TG‐1101 will be launched in 2016 and will reach peak sales in 2022. Our patient population estimates in the out years is particularly conservative, because the incidence of NHL increases with age and there is projected to be a growing aging population due to the baby boomers. Subsequently, we would also expect the incidence and prevalence of NHL as a percentage of the population to increase. Below in Figure 7 the incidence of NHL by age is shown, and it is easy to see the dramatic increase in incidence over the age of 60 years old.

Overall this represents a significant market opportunity. However, we understand that TG‐1101 will be competing with established therapies and will have to steal market share. Thus using Treanda as a proxy for efficacy driven usage we have projected the TG‐1101 launch growth to be linear versus the typical hockey stick ramp as seen with the adoption of new and efficacious cancer therapies. Consequently, with less than a 7% penetration rate into the relapsed and refractory NHL market in 2021, and as a result only treating about 18,300 patients, we estimate TG‐1101 could generate >$950 million in sales in 2021, based on an inflation adjusted treatment cost of about $52,000 annually. Importantly, our projection entirely leaves the first line patient population as upside potential.

Given that TG therapeutics is a small company with less than 10 employees we do not anticipate TG will market TG‐1101 on its own. Instead we assume a partnership may be obtained sometime during the development process. Accordingly our revenue projections for TG are based on a tiered double digit royalty that is based on revenue thresholds. Moreover our royalty assumptions are based on what is typically seen in the industry. Specifically a 20 to 30% royalty agreement is achievable along with sales based milestones and we have assumed a maximum royalty of 25%. TG will also owe a mid to high single digit royalty to LFB on the sales of TG‐1101, which we project at 8%. Consequently, we assume a peak royalty rate of 17% for TG that is achieved in 2019. Thus in 2021 TG could realize about $162.5 million in revenue from the NHL patient population. The demand from the CLL patient population should be even greater as a percentage of patients than from the NHL market. This is particularly true since this patient population is entirely a B‐cell population. Furthermore the efficacy in terms of response rate and tumor shrinkage has been significantly demonstrated in only a Phase I trial as a monotherapy and should also be demonstrated in a combination therapy in the future. Additionally the CLL patient population tends to express less CD20, which reduces the efficacy of competitors like rituximab. Our market analysis has shown the prevalence of CLL patients to be approximately 110,000 in 2012 based on the historical prevalence rate of 0.035% of the population, and the relapsed and refractory patient market to consist of about 60% of that population. Consequently, approximately 66,000 relapsed and refractory patients are the target market for TG‐1101 in 2012, and that increases to about 71,500 in 2021 based on the same prevalence rate of 0.035%. Analogous to NHL, CLL is primarily considered a disease of the elderly, and as such will also increase as a percentage of the population as the baby boomer generation continues to age. Therefore, with a penetration rate of 10% into our conservative patient population estimates we forecast TG‐1101 to treat about 7,150 CLL patients in 2021 generating about $375 million in revenue, based on an inflation adjusted treatment cost of about $52,000 annually. Furthermore, our projected royalty rate does not differ based on indication, and is therefore also 17% to TG in the CLL population in 2021 driving revenue of about $63 million to TG in 2021.



Figure 7: Incidence of NHL by Age

0

20

40

60

80

100

120

140

0 10 20 30 40 50 60 70 80 90

Incidence per 100,000

Median patient age

Incidence of NHL by Age

Source: SEER Cancer statistics review 1975‐2008, & Ladenburg Thalmann & Co.

Table 10: Market potential and revenue projection for TG-1101 in NHLs U.S. Market for refractory NHL patients 2016E 2017E 2018E 2019E 2020E 2021E 2022E

Prevalence of NHL patients 521,295 525,987 530,720 535,497 540,316 545,179 550,086

Prevalence of NHL patients originating in B‐cel l s 417,036 420,789 424,576 428,397 432,253 436,143 440,069

Number of pts refractory to Rituxan 250,222 252,474 254,746 257,038 259,352 261,686 264,041

% adoption / penetration rate 0.50% 2% 4% 5% 6% 7% 8%

Patients using TG‐1101 for NHL 1,251 5,049 10,190 12,852 15,561 18,318 21,123

Pricing (inflation adjusted) ('000) $45 $46 $48 $49 $51 $52 $54

Total U.S. revenue for TG‐1101 in NHL patients ('000) $56,325 $234,149 $486,688 $632,250 $788,494 $956,034 $1,135,518

Revenue to LFB Biotechnologies ('000) $4,506 $18,732 $38,935 $50,580 $63,080 $76,483 $90,841

Revenue to TG Therapeutics ('000) $7,886 $35,122 $77,870 $107,482 $134,044 $162,526 $193,038

Tiered double digi t royal ties to TG 14% 15% 16% 17% 17% 17% 17%

TG‐1101 in NHL


Table 11: Market potential and revenue projection for TG-1101 in CLL U.S. Market for first‐line NHL patients 2016E 2017E 2018E 2019E 2020E 2021E 2022E

Incidence of NHL patients 63,749 64,323 64,902 65,486 66,075 66,670 67,270

Incidence of NHL patients originating in B‐cel ls 50,999 51,458 51,921 52,389 52,860 53,336 53,816

% adoption / penetration rate 0.75% 3% 5% 7% 9% 10% 11%

Patients using TG‐1101 for NHL 382 1,544 2,596 3,667 4,757 5,334 5,920

Pricing (inflation adjusted) ('000) $45 $46 $48 $49 $51 $52 $54

Total U.S. revenue for TG‐1101 in NHL patients ('000) $17,220 $71,585 $123,994 $180,408 $241,062 $278,365 $318,226

Revenue to LFB Biotechnologies ('000) $1,378 $5,727 $9,919 $14,433 $19,285 $22,269 $25,458

Revenue to TG Therapeutics (first‐line patients) ('000) $2,411 $10,738 $19,839 $30,669 $40,981 $47,322 $54,098

Tiered double digi t royal ties to TG 14% 15% 16% 17% 17% 17% 17%

TG‐1101 in NHL (first line)


COMPETITIVE LANDSCAPE: FOR ANTI-CD20 MABS

Competition: Below we highlight what we believe to be the realistic competition in the NHL and CLL space. Specifically we compare the safety and efficacy of TG‐1101 monotherapy in relapsed and refractory patients to rituximab, bendamustine (Treanda), and GA101. Many of the lessor demanded products of the past are still in use, but as a last resort in the majority of the cases due to the degree of toxicity and number of deaths in the clinical trials.

The efficacy that rituximab displayed in the monotherapy Phase I trials appears to be comparable to TG‐1101 in the treatment of relapsed and refractory CLL patients, with the very important exception that about 57% of the patients in TG’s Phase I trial were either relapsed or refractory to rituximab. Specifically



the two 4 dose rituximab trials had an average PR of 29%, which is comparable to the 4 dose Phase I response of 28% in the TG‐1101 trial. Similarly the two extended or higher dose Phase I trials had an average PR of 39%, and once again this is comparable to the TG‐1101 Phase I trial with an 8 dose regimen that produced a 45% PR, albeit in only 12 patients. The current Phase I trial for TG‐1101 is testing higher doses in NHL patients, and we believe the response data from this trial could be superior to the CLL data given the dose dependent nature of responses.

In the first rituximab Phase I trial listed below in Table 12. there was 1 treatment related death, and a second death due to infection and septicemia. Overall rituximab treatment may not be recommended for patients with high blood tumor cell counts, as the treatment may be lethal. A treatment protocol for rituximab was instituted that called for treatment only when the circulating tumor cells are below 50.0x10^9/L (50/nL). Furthermore, there were 2 deaths in the 11 dose rituximab trial below, which may further highlight the treatment risk of rituximab versus TG‐1101. Specifically, one patient died on day 3 due to pulmonary hemorrhage, and the other died 1 month after treatment due to septicemia.

Table 12: Phase I efficacy data of rituximab monotherapy in relapsed and refractory CLL patients Rituxima b dose Re la pse d or re fractory First line OR (%) PR (%) CR (%) dura tion (mo)

375mg x 4 30 0 23 23 0 4.6

375mg x 4 23 0 35 35 0 2.9

375mg x 1, and 500‐2250mg x 3 39 1 36 36 0 8

100mg x 1, and 375mg x 11 27 6 45 42 3 10

Averages 30 2 35 34 1 6 Source:Blood 2001; 98: 1326‐31; J Clin Oncol 2001; 19:2153‐64; J Clin Oncol 2001; 19:2165‐70; Eur J Haematol 2002; 69:129‐34 & Ladenburg Thalmann & Co.

Table 13: Comparison of Grade 3 & 4 toxicity between low dose trials of rituximab vs. TG-1101

Hemoglobin 1 3.4%

Hypertension 2 6.9%

Hypotension 1 3.4%

Flulike symptoms 4 13.8%

Alkaline phosphatase 1 3.4%

Hepatic Other 1 3.4% 3 14.3%

Infection 5 17.2% 5 23.8%

Osseous (bone pain) 1 3.4%

Pulmonary 2 6.9%

skin 2 6.9%

Neutropenia 7 33.3%

Infusion related reaction 3 14.3%

Pancytopenia 2 9.5%

Thrombocytopenia 1 4.8%

Low dose TG‐1101

Phase I in CLL

Grade 3&4 events

Treatment related AE Lower dose rituximab

Phase I in CLL

Grade 3&4 events

Source: 52nd annual ASH Poster #2447; Blood 2001; 98: 1326‐31 & Ladenburg Thalmann & Co.



Table 14: Comparison of Grade 3 & 4 toxicity between higher dose trials of rituximab vs. TG-1101

Hypotension 1 3.7%

increase in ALT/AST or ALP 0.0% 2 16.7%

Infection 4 14.8%

Pulmonary 3 11.1%

Neutropenia (inc febrile) 20 74.1% 10 83.3%

Infusion related reaction 2 7.4% 4 33.3%

Pancytopenia 0.0% 1 8.3%

Thrombocytopenia 7 25.9%

Constipation 1 3.7%

Low serum Ca 1 3.7%

Anemia 2 7.4%

Higher dose TG‐1101

Phase I in CLL

Grade 3&4 events Grade 3&4 events

Treatment related AE Higher dose rituximab

(11 doses) Phase I in CLL

Source: 53rd annual ASH Poster #2862; J Clin Oncol 19:2153‐2164 & Ladenburg Thalmann & Co.

GA-101: Perhaps the most significant potential competition for TG‐1101 is GA‐101, which is also a third generation glycoengineered anti‐CD20 mAb. GA‐101 binds with a higher affinity and slower disassociation rate than rituximab and thus induces greater ADCC. We have shown for comparison purposes the efficacy of 3 monotherapy trials in both CLL and NHL patients, all of which produced significant efficacy. Notably the CLL trials produced about a 60% response rate on average, but at the cost of a more severe safety profile. The patient population in the Phase I trial that produced a 62% ORR was comparable to the higher dose TG‐1101 Phase I which enrolled patients with up to 8 prior treatments. However, this GA‐101 trial dosed patients with a much higher dose range of 400mg to 2000mg, which is more similar to the current Phase I/II NHL trial with TG‐1101. The consequence of the higher dosage range is clearly the compromise of the safety profile. Specifically there were only 11 patients out of 13 who were fully evaluable at the end of treatment. There were also 9 patients who had Grade 3/4 neutropenia, one patient with Grade 3/4 febrile neutropenia, and one patient with Grade 3/4 thrombocytopenia. Furthermore there 3 patients with Grade 3 infection and 3 more patients reported multiple severe adverse events (SAEs) of febrile neutropenia, neutropenia, thrombocytopenia, bronchitis, gingivitis, and tumor lysis syndrome. It should be noted that not all patients received the highest dose, and there was not a patient by patient breakdown of the trial data for us to fully evaluate the dose dependent nature of the AEs. We concede that TG‐1101 could show a very similar toxicity profile, but could also display similar or better efficacy than GA‐101. The differences in the mABs could result in very different profiles, but both products induce significant amounts of ADCC. Notably TG‐1101 has the advantage of inducing CDC at a rate similar to rituximab but GA‐101 does not induce CDC.

Table 15: Efficacy of monotherapy GA101 in relapsed and refractory patients

T ria ls of GA101 ORR

CLL 12 patient Phase I/II 58%

CLL 13 patient Phase I/II 62%

NHL 21 patient Phase I 43% Source:2008 ASH annual meeting Abs.# 234; 2009 ASH annual meeting Abs.# 884 & Abs.# 1704

Bendamustine (Treanda): Treanda is a small molecule chemotherapeutic agent generally used in combination with rituximab for indolent NHLs and CLL as can be seen in the treatment flow charts for CLL in Figure’s 12 and 14. Thus, Treanda is perhaps less direct competition than a possible combination partner with TG‐1101. Nonetheless Treanda sales are on track to achieve greater than $900 million in 2013 as shown in Figure 8 below. Moreover the Treanda launch is indicative of what we expect for TG‐1101. The launch ramp is not a hockey stick ramp, but rather almost straight line growth as Treanda steadily steals



market share from existing treatments. Accordingly, if TG‐1101 performs as we anticipate it will have to also steal market share, and we would expect the launch to be more of a straight line ramp.

The efficacy of Treanda appears to be comparable with TG‐1101, as shown in a Phase I/II trial where Treanda achieved a 44% ORR as monotherapy in relapsed and refractory CLL patients. Although the toxicity of Treanda appears to be greater than with TG‐1101 as about 44% (7/16 patients) of Treanda patients had either grade 3 or 4 infections, and 50% (8/16 patients) had grade 3 or 4 leukocytopenia. Overall we believe that the success of Treanda is indicative of the markets desire for higher efficacy even at the cost of safety.

Figure 8: Launch of Treanda (Monthly sales)

$‐

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,0004/1/2008

8/1/2008

12/1/2008

4/1/2009

8/1/2009

12/1/2009

4/1/2010

8/1/2010

12/1/2010

4/1/2011

8/1/2011

12/1/2011

4/1/2012

8/1/2012

Monthly sales of Trean

da

TREANDA

Source: Symphony Technology Group data & Ladenburg Thalmann & Co.

Other products either in development or marketed for CLL and NHLs: Second generation mAbs such as ofatumumab, ocrelizumab, and veltuzumab have no modification in the Fc region, and maybe able to capture some market share in niche populations. Ofatumumab for example has not launched well as it appears that the sales may plateau at around $100 million annually. Although Ofatumumab binds to a different epitope of CD20 and has a lower disassociation rate that may give better CDC activity in comparison to rituximab, its ADCC profile is similar to rituximab, and inferior to third generation anti‐CD20 mAbs. Ocrelizumab, binds to a CD20 epitope that overlaps with rituximab’s epitope binding, but has higher ADCC activity and lower CDC activity. However, we have not seen monotherapy data from as heavily pretreated patients to effectively compare the drug profile, but we would be surprised if ocrelizumab showed a significant advantage over the third generation anti‐CD20 mAbs. We view veltuzumab to be in a similar situation with ocrelizumab, in that it has a similarly superior CDC and ADCC profile versus rituximab, but will offer limited advantages over the third generation anti‐CD20 mAbs.

Table 16: Comparison of ADCC and CDC among anti-CD20 mAbs Anti-CD mAB Product owne r Antibody ge ne ra tion ADCC CDC

rituximab Hoffmann‐La Roche 1st generation Type 1 intermediate cytotoxicity intermediate cytotoxicity

ofatumumab GlaxoSmithKline 1st generation Type 1 intermediate cytotoxicity very high cytotoxicity

veltuzumab Immunomedics 2nd generation Type 1 intermediate cytotoxicity intermediate cytotoxicity

ocrelizumab Hoffmann‐La Roche 2nd generation Type 1 high cytotoxicity low cytotoxicity

GA‐101 Hoffmann‐La Roche 3rd generation Type 2 very high cytotoxicity no cytotoxicity

TG‐1101 TG Therapeutics 3rd generation Type 2 very high cytotoxicity intermediate cytotoxicity Source: Biodrugs 2011; 25(1); BJH, 140, 635‐643; & Ladenburg Thalmann & Co.



Preclinical TG-1101 studies: The preclinical work done with TG‐1101 clearly shows the superior ADCC activity versus rituximab. Below we highlight some of this work. One of the most recent studies was done in Raji cells with Waldenstrom’s Macroglobulinemia (WM). The graphs below in Figure 9. clearly show the enhanced amount of NK cell activity induced by TG‐1101 versus rituximab. CD107a is being used as a marker for NK cell activity, because it is up regulated on the NK cell surface and it correlates with both cytokine secretion and NK cell‐mediated lysis. Figure 10 below also displays the enhanced level of NK cell activity at low concentrations of TG‐1101. The amount of ADCC activity with such a low concentration of mAb, may create a limited downside risk in that TG‐1101 could be used in a niche segment of CLL and NHL patients primarily for the activity/safety profile that could potentially be achieved with such a low mAb concentration.

Figure 9: Degranulation in the presence of Raji cells with WM

Source: LFB poster presentation in partnership with the Pitie‐Salpetriere hospital

Figure 10: ADCC activity in the presence of Raji cells with WM

Source: LFB poster presentation in partnership with the Pitie‐Salpetriere hospital



The percent of ADCC activity in CLL cells incubated with healthy donor NK cells, TG‐1101, and rituximab is shown below (Figure 11). Here TG‐1101 is once again showing superior activity at low concentrations. Figure 11: NK cell-mediated lysis of TG-1101 versus rituximab

Source: British Journal of Haematology, 140, 635‐643 in conjunction with LFB

TGR-1202: A NOVEL PI3K DELTA INHIBITOR

TGR-1202, a novel PI3K delta inhibitor. TGR‐1202 is a novel, oral, small‐molecule PI3Kδ inhibitor being developed as a treatment for various B‐cell proliferative disorders including hematologic cancers such as NHL and CLL and for autoimmune diseases such as RA and SLE. TGTX recently (August 2012) in‐licensed TGR‐1202 (previously called RP5264) from Rhizen Pharmaceuticals SA, a private Swiss biopharmaceutical company. TGR‐1202 is currently in late‐stage pre‐clinical development and we expect TGTX to file an IND with the FDA in 2012 which will facilitate the initiation of clinical development in early 2013. We expect the first clinical study for TGR‐1202 to commence in 1Q 2013 as a single agent, dose escalation trial designed to determine the maximum tolerated dose (MTD) but will also examine responses in relapsed/refractory patients with B‐cell malignancies such as NHL and CLL. Data from the dose‐escalation Phase I could be available for presentation at the American Society of Hematology (ASH) meeting in December 2013. We expect the Phase I trial will be followed by a single agent Phase II study and a Phase II trial of TGR‐1202 in combination with a second targeted therapy in a relapsed/refractory hematologic indication. Depending on the results of the Phase I dose‐escalation trial, we believe the Phase II TGR‐1202 combination study could be initiated by mid‐2013.

TGR-1202 profile. PI3 kinases (phosphatidylinositol‐3 kinases), or PI3Ks represent a potentially therapeutically rich target for the treatment of a range of cancers and autoimmune/inflammatory diseases. PI3Ks are involved in a number of cellular functions which allow cells to survive and even thrive. Specifically, a few cellular functions where PI3Ks are involved include cell survival, cell proliferation, cell differentiation, cell migration and blood vessel growth/formation. Additionally, the PI3K pathway is frequently activated in a variety of cancers (hematologic and solid tumors). There are four PI3K isoforms (PI3Kα, PI3Kβ, PI3Kγ, and PI3Kδ). Inhibition of α and β isoforms of PI3K have been associated with significant side effects (including an increased incidence of insulin resistance has been observed as both the α and β isoforms are involved in insulin signaling). As a result of adverse events observed with PI3kα and PI3kβ or pan‐PI3K inhibitors there has been a move to develop selective PI3Kδ inhibitors and PI3K dual δ and γ inhibitors. The selective inhibitors target a specific cell type without having off‐target (undesirable) effects. In preclinical studies, TGR‐1202 inhibited PI3Kδ activity in enzyme and cell based assays with IC50 and EC50 values of 22.2 and 24.3 nM, respectively. TGR‐1202 also demonstrated a high level of selectivity for the delta isoform over the alpha (>1000 fold), beta (>30‐50 fold), and gamma (>15‐50 fold) isoforms. We are impressed with the preclinical profile of TGR‐1202 as it appears to be a potent and selective inhibitor of PI3Kδ (highly active PI3Kδ inhibitor in a range of pre‐clinical B‐cell lines and multiple myeloma cell lines) with an attractive PK profile (ADME) with high oral bioavailability which could facilitate once per‐day



dosing and a clean safety profile (hERG channel assay; acute oral tox in rodents, dogs, monkeys and 14‐day tox in rodents). We look forward to TGTX filing the IND and launch of clinical studies for TGR‐1202 in the near‐term. See Table 17 below for details. Table 17: PI3Kδ Inhibition and Fold Selectivity Versus Other Isoforms TGR-1202 IC50/EC50 (nM)

PI3Kδ inhibitor PI3Kδ PI3Kα PI3Kβ PI3Kγ

Enzyme/Biochemical 22.2 >10000 >50 >48

Cell Based 24.3 >10000 >34 >17

Source: TG Therapeutics

GS-1101 IC50/EC50 (nM)

PI3Kδ inhibitor PI3Kδ PI3Kα PI3Kβ PI3Kγ

Enzyme/Biochemical 11 >750 >75 >47

Cell Based 7 >750 >73 >230

Source: Calistoga

IPI-145 IC50/EC50 (nM)

PI3Kδ,γ inhibitor PI3Kδ PI3Kα PI3Kβ PI3Kγ

Enzyme/Biochemical 2.5 >640 >33 >10

Cell Based 1 >1545 >170 >40

Source: Infinity

Fold Selectivity

Fold Selectivity

Fold Selectivity

Competitive landscape. In addition to TGR‐1202 there are a number of other selective PI3K inhibitors currently in development, of which GS‐1101 is the latest stage in development. GS‐1101 is a selective PI3Kδ inhibitor in Phase III development for the treatment chronic lymphocytic leukemia (CLL). There are currently three Phase III GS‐1101 combination studies ongoing. The first Phase III study was initiated in February 2012 with top‐line data expected by February 2014. This Phase III study is a randomized, double‐blind, placebo‐controlled trial designed to evaluate the efficacy and safety of GS‐1101 in combination with rituximab in approximately 160 previously treated CLL patients (versus rituximab). GS‐1101 is being dosed at 150mg orally BID and Rituximab is being dosed at 375 mg/m2 week 0 and then 500 mg/m2 weeks 2, 4, 6, 8, 12, 16 and 20. The second Phase III trial was initiated in May 2012 with top‐line data expected in October 2015. This Phase III study is a randomized, double‐blind, placebo‐controlled trial designed to evaluate the efficacy and safety of GS‐1101 in combination with bendamustine and rituximab in approximately 390 previously treated CLL patients (versus rituximab and bendamustine). GS‐1101 is being dosed at 150mg orally BID and Rituximab is being dosed at 375 mg/m2 week 0 and then 500 mg/m2 weeks 4, 8, 12, 16 and 20 and bendamustine (Treanda) is being dosed at 70mg/m2/day on two consecutive days weeks 0, 4, 8, 12, 16 and 20. The third Phase III trial was initiated in November 2012 with top‐line data expected in December 2014. This Phase III study is a randomized, double‐blind, placebo‐controlled trial designed to evaluate the efficacy and safety of GS‐1101 in combination with ofatumumab (Arzerra) in approximately 210previously treated CLL patients (versus ofatumumab dosed at 2000mg). GS‐1101 is being dosed at 150mg orally BID in combination with ofatumumab which is being dosed at 300 mg on day 1 and then 1000 mg weeks 2 through 8, 12, 16, 20 and 24. Ofatumumab in the active control arm is being dosed at 2000mg weeks 2 through 8, 12, 16, 20 and 24.

In Phase I/II development, GS‐1101 demonstrated encouraging single‐agent activity in patients with relapsed/refractory B‐cell malignancies (CLL, NHL, AML and MM). Specifically, the most impressive clinical responses were observed in CLL and NHL where GS‐1101 showed significant lymph node shrinkage and demonstrated an overall response rate of approximately 25%, with durable responses observed in a significant number of patients. We are encouraged by the impressive single‐agent activity and tolerability profile observed with this selective PI3Kδ inhibitor and we believe it bodes well for the next generation of selective PI3Kδ inhibitors including TGR‐1202.

IPI‐145, a selective PI3Kδ,γ inhibitor is currently in a Phase I dose‐escalation study in patients with hematologic malignancies (NHL, CLL, ALL, MCL, iNHL, DLBCL and T‐Cell lymphomas). The trial started in October 2011 and we believe full top‐line data could be available during 2013. The Phase I is designed as a safety and tolerability trial to determine the maximum tolerated dose (MTD) for IPI‐145. IPI‐145 is being dosed BID and the study started dosing patients at 8mg and has subsequently escalated to doses of 15mg,



25mg, 35mg, 50mg and the dose escalation is currently still ongoing as the MTD has not been reached. The trial is designed to enroll up to 5 MTD cohorts of up to 30 patients each. At 25mg BID, the study was expanded to enroll approximately 30 patients with CLL, iNHL and MCL. The results for the Phase I reported to date have been encouraging as the drug has been generally well tolerated (one DLT of transient Grade 4 neutropenia observed at 15mg BID with no DL neutropenia observed at higher doses) with responses observed at each of the lowest doses evaluable for response (8mg, 15mg and 25mg BID) with 3 partial responses (2 CLL/SLL and 1 MCL) and one complete response (1 CR iNHL) for an overall response rate of 4 in the first 11 patients evaluable for activity out of the first 20 patients treated. We are encouraged by the IPI‐145 single‐agent activity observed in this Phase I dose escalation study.

Infinity is also developing IPI‐145 as a treatment for inflammatory/autoimmune indications including asthma and RA. In addition to be in B‐cell and T‐cell activation and function, PI3Kδ also plays a role in Fc receptor signaling in mast cells. Beyond its role in the survival pathway for solid tumors, PI3Kγ plays a role in mast cell activation and immune cell trafficking. In other words, PI3Kδ and PI3Kγ combine to assist in trafficking of immune cells to sites of inflammation. Mast cells play an important role in the inflammatory process and they represent a therapeutic target for indications such as asthma and autoimmune diseases such as RA. IPI‐145 is currently being evaluated in a Phase IIa study as a treatment for asthma. The trial is designed to enroll approximately 30 subjects in a randomized, double‐blind, placebo‐controlled study utilizing a cross‐over design. The primary endpoint for the study is FEV1 and secondary endpoints include tolerability, PK and markers of inflammation. The trial was initiated in July 2012. The Company is also planning to conduct a Phase II study in RA patients.

Table 18: Selective PI3K Inhibitors in Development

Company Compound PI3K Isoform Lead Indications Development Phase

Gilead Sciences GS‐1101 (CAL‐101) Delta CLL and NHL Phase II/III

Infinity Pharmaceuticals IPI‐145 Delta/Gamma Hematologic cancers and autoimmune Phase I/II

Novartis BYL719 Alpha Solid tumors (GI) Phase I/II

Amgen AMG319 Delta Hematologic cancers Phase I/II

TG Therapeutics TGR‐1202 Delta Hematologic cancers Preclinical

Source: NIH, TG Therapeutics, Infinity and Novartis Rhizen agreement: In August 2012, TGTX entered into an exclusive development and commercialization agreement with Rhizen Pharmaceuticals for TGR‐1202, a novel PI3Kδ inhibitor. Under the terms of the agreement, TGTX and Rhizen will jointly develop TGR‐1202 with an initial focus on hematologic malignancies and autoimmune diseases on a world‐wide basis (excluding India). TGTX made an upfront payment to Rhizen of $1 million (recognized in 3Q12 as part of R&D expenses) and TGTX will be responsible for the costs associated with clinical development through Phase II while Rhizen is responsible for CMC associated expenses. Following Phase II, TGTX and Rhizen will split the development costs 50/50. Beyond TGR‐1202, TGTX also has rights to back‐up molecules targeting the PI3K pathway. TGTX and Rhizen both have an exclusive option at specified development times to convert the collaboration into a TGTX licensing deal, the term of which have already been negotiated. Under the terms of the licensing agreement, Rhizen is eligible to receive millstone payments (upfront, development and commercial) in aggregate of approximately $250 million and royalties on net sales (which we estimate to be in the high single‐digit to low double‐digit range). Additionally, TGTX would be responsible for all clinical and regulatory costs. If the program is successful in Phase I and early Phase II, we expect the collaboration could convert into a full licensing deal by 2H 2014.

Market potential for TGR-1202: We anticipate that TGR‐1202 will be initially targeting the same market as TG‐1101, which should include the relapsed and refractory NHL and CLL markets. We have described the market in detail under the TG‐1101 market analysis section of this report and accordingly it can be referred to. Notably, the licensing deal with Rhizen appears to have a slightly higher royalty payment in comparison to LFB for TG‐1101, which we estimate at 9%. In Table 19 below we give our view of the revenue potential of TGR‐1202 albeit currently excluded from our valuation. We estimate that TGR‐1202 is about 9 months behind TG‐1101 in terms of approval, and therefore we forecast it to be approved and marketed in 2H17. Similar to TG‐1101 we believe it has the potential to be a blockbuster product, and more than likely used in combination with anti‐CD20 mAbs.



Table 19: Market potential and projections for TGR-1202

U.S. Market for refractory NHL patients 2017E 2018E 2019E 2020E 2021E 2022E

Preva lence of NHL patients 525,987 530,720 535,497 540,316 545,179 550,086

Preva lence of NHL patients originating in B‐cel ls 420,789 424,576 428,397 432,253 436,143 440,069

Number of pts refractory to Rituxan 252,474 254,746 257,038 259,352 261,686 264,041

% adoption / penetration rate 0.50% 2% 4% 5% 6% 7%

Patients using TGR‐1202 for NHL 1,262 5,095 10,282 12,968 15,701 18,483

Pricing (infla tion adjusted) ('000) $46 $48 $49 $51 $52 $54

Total U.S. revenue for TGR‐1202 in NHL patients ('000) $58,537 $243,344 $505,800 $657,078 $819,458 $993,578

Revenue to Rhizen Pharmaceutica ls ('000) $5,268 $21,901 $45,522 $59,137 $73,751 $89,422

Revenue to TG Therapeutics ('000) $8,781 $38,935 $85,986 $111,703 $139,308 $168,908

Tiered double digi t royal ties to TG 15% 16% 17% 17% 17% 17%

TGR‐1202 in NHL

U.S. Market for refractory CLL patients 2017E 2018E 2019E 2020E 2021E 2022E

Preva lence of CLL patients 114,862 115,896 116,939 117,991 119,053 120,125

Number of pts refractory to Rituxan 68,917 69,538 70,163 70,795 71,432 72,075

% adoption / penetration rate 0.50% 3% 5% 7% 9% 10%

Patients using TGR‐1202 for CLL 345 2,086 3,508 4,956 6,429 7,207

Pricing (infla tion adjusted) ('000) $46 $48 $49 $51 $52 $54

Total U.S. revenue for TGR‐1202 in CLL patients ('000) $15,979 $99,638 $172,584 $251,106 $335,529 $387,450

Revenue to Rhizen Pharmaceutica ls ('000) $1,438 $8,967 $15,533 $22,600 $30,198 $34,871

Revenue to TG Therapeutics ('000) $2,397 $15,942 $29,339 $42,688 $57,040 $65,867

Tiered double digi t royal ties to TG 15% 16% 17% 17% 17% 17%

TGR‐1202 in CLL


CURRENT TREATMENT PARADIGM FOR CLL AND B-CELL NHLS Chronic Lymphocytic Leukemia (CLL): is a cancer of the white blood cells and in the case of CLL it

affects B‐cell lymphocytes. CLL is a slow growing leukemia, and often manifests with little to no symptoms, but signs include persistent minor infections or reduced healing of cuts. CLL is diagnosed by the presence of an excess of B‐cells in the peripheral blood (>5000 mcL). The prognosis for CLL patients is relatively good, with a >80% five year survival rate. However, the prognosis and treatment of CLL is dependent on chromosomal abnormalities, with the most common being 17p, 13q, and 11q deletions, and the +12 addition of chromosome. Notably 11q and 17p deletions are associated with a poor prognosis and the 13q deletion a good prognosis. A technique for the detection of these abnormalities is the fluorescence in‐situ hybridization (FISH). Table 20 below displays the potential prognostic indicators for the classification of CLL disease status. However the primary CLL treatment recommendations are based largely on the patient FISH status, and Figures 12‐14 below diagram the treatment recommendations based on FISH status. Notably if no other treatments are applicable, the last line therapy is allogeneic stem cell transplant.

The 17p deletion is important because the 17 chromosome contains the gene encoding p53. The function of the p53 protein is to regulate the growth and repair of damaged cells. Specifically p53 is able to stop growth and either signal to repair a cell or cause cell death. Importantly when p53 is not functioning properly, cancer cells are able to propagate and chemotherapy is less effective. In the case of the 11q deletion a different protein called ATM is deleted from the long arm of chromosome 11. ATM is typically required for p53 to function properly thus the absence of ATM usually interferes with the effectiveness of chemotherapy.

Table 20: Primary prognostic indicators for the classification of CLL Prognostic indica tor Indole nt Inte rme dia te Aggre ssive

FISH Normal karotype Trisomy 12 17p deletion or 11q deletion

Rai staging Stage 0 and 1 Stage 2 Stage 3 and 4

Binet staging Stage A Stage B Stage C

IgVH Mutated Un‐mutated

CD38 Less than 30% (‐ve) More than 30% (+ve)

Lymphocyte doubling time More than 12 months Less than 12 months Source: Ladenburg Thalmann & Co. research



Initia l CLL type First-line the ra py options If re lapsed or re fra ctory Second-line therapy options

chlorambucil w/o rituximab

bendmustine & rituximab (BR) Repeat First‐line therapy options

cyclophosphamide, prednisone

w/o rituximab

consider chemptherapies with

allopurinol or Rasburicase

alemtuzumab

rituximab

fludarabine w/o rituximab Repeat First‐line therapy options

CLL patient Cladribine

without 11q or 17p

deletions Repeat FISH testing see flow chart for 17p del therapy

fludarabine, cyclophosphamide,

& rituximab (FCR)

fludarabine & rituximab (FR) see flow chart for 11q del therapy

pentostatin, cyclophosphamide,

& rituximab (PCR)

bendmustine & rituximab (BR)

Figure 12: Treatment options for CLL patients without 11q or 17p deletions

Source: NCCN clinical practice guidelines in & Ladenburg Thalmann & Co

>70 yo or with co‐morbidities

<70 yo or without significant co‐morbidities

If patient is frail withsignificant co‐morbidities

If 11q deletion

If 17p deletion

No del. change



Initia l CLL type First-line the rapy options Second-line the rapy options

Clinical trial or observe

repeat first line therapy

Transplant

candidate

Allogeneic stem cell

transplant

< CR

Clinical trial or


& rituximab (FCR)

Not a transplant

candidate

CFAR (cyclophosphamide,

fludarabine, alemtuzumab, &

rituximab)

fludarabine & rituximab (FR) alemtuzumab w/o rituximab

high dose methylprednisolone

(HDMP) & rituximab

R‐CHOP (cyclophosphamide,

doxorubicin, vincristine,

prednisone & rituximab)

alemtuzumab & rituximab HDMP w/o rituximab

or Ofatumumab

Clinical trial No response (NR)

OFAR (oxaliplatin, fludarabine,

cytarabine, rituximab)

HyperCVAD & rituximab

(cyclophosphamide,


dexamethasone alternating

with high‐dose methotrexate

and cytarabine)

CLL patients with

17p deletions

If re lapsed or re fractory


Figure 13: Treatment options for CLL patients with 17p deletions

PR

NR



Initia l CLL type First-line therapy options Second-line thera py options

Clinical trial or observe

chlorambucil w/o rituximab or repeat first line therapy

cyclophosphamide, prednisone

w/o rituximab

Transplant

candidate

Allogeneic stem cell

transplant


alemtuzumab < CR

rituximab Clinical trial or

reduced dose: fludarabine,

cyclophosphamide, & rituximab

(FCR)

Not a transplant

candidate

R‐CHOP (cyclophosphamide,


prednisone & rituximab)

fludarabine & alemtuzumab



& rituximab (FCR)Reduced dose or full dose, FCR

or PCR

bendmustine & rituximab (BR) rituximab w/o HDMP

pentostatin, cyclophosphamide,

& rituximab (PCR)No response (NR)

OFAR (oxaliplatin, fludarabine,

cytarabine, rituximab)

chlorambucil w/o rituximab

alemtuzumab w/o rituximab

HyperCVAD & rituximab

Dose‐adjusted EPOCH

Ofatumumab

HDMP & rituximab

If re lapsed or re fra ctory

CLL patients with

11q deletions


Figure 14: Treatment options for CLL patients with 11q deletions

PR

NR



Non-Hodgkin Lymphomas (NHLs): NHLs are blood cancers that originate in the lymphatic system and consists of multiple types of the disease that differ by the cancer cell associated with each type of disease. Specifically, NHL is classified according to cell origin as B‐lymphocytes, T‐lymphocytes, or natural killer cells (NK). B‐lymphocytes or B‐cell originating NHL makes up about 80‐85% of the cases with T‐cells accounting for 15‐20% of NHLs, and NK‐cell origin NHL being very rare. As mentioned previously, with respect to TG‐1101 we are focused on B‐cell NHL. A list of the most common types of B‐cell NHLs is shown in Table 21 below. In order to accurately diagnosis NHLs a biopsy of either the lymph nodes or bone is necessary. Similar to CLL, NHL often manifests with little to no symptoms, but some symptoms include enlarged lymph nodes, enlarged spleen, various types of pain, rash, fever, cough, night sweats, and unexplained fatigue. The treatment paradigm of the different NHLs consists of a large set of options and is ever expanding. The treatment options for NHLs include many of those used for CLL patients and other harsh chemotherapy options, notably Rituxan is a fundamental part of NHL treatments. The incidence of NHL increases with age and as there is forecast to be a growing aging population, we would also expect the incidence of NHL to increase as well. The prognosis of NHL is relative good, with a median 70% five year survival rate.

Table 21: Major types of B-cell NHLs NHL B-ce ll Lymphomas

Marginal Zone Lymphomas

SPLENIC Marginal Zone Lymphomas

EXTRA NODAL Marginal Zone Lymphomas

NODAL Marginal Zone Lymphomas

Follicular Lymphoma

Gastric Malt Lymphoma

Nongastric Malt Lymphoma

Mantle Cell Lymphoma

Diffuse large B‐CELL LEUKEMIA

Burkitt Lymphoma

Lymphoblastic Lymphoma

AIDS‐related B‐cell Lymphomas

Primary cutaneous B‐cell Lymphomas Source: Ladenburg Thalmann & Co. Research

INTELLECTUAL PROPERTY

TG holds a composition of matter patent that protects TG‐1101 through 2025. With patent extensions TG‐1101 may be able to maintain exclusivity through 2028. Our model currently projects revenue through 2025. Given the nature of biologics and NCE’s we are confident that the patent should hold up against any challenge through 2025.

The patient for TGR‐1202 has not been issued yet, but the composition of matter patent has been applied for. Proving that it is an NCE, the composition of matter patent should not be an issue in our view. Furthermore, TGR‐1202 also has pending patents for several methods of use. Prior to establishing the collaboration and negotiating the terms of the license agreement with Rhizen, TG performed diligence on 1202 patents and found there was clear freedom to operate and that the patentability was strong.



FINANCIAL MODELING ASSUMPTIONS

Revenue. As TG does not actively discover new products through its own internal R&D development,

the Company’s revenue should be generated from products in‐licensed and potentially subsequently out‐

licensed by TG. All the revenues in our current valuation model of TG are from royalties from the potential

out‐licensing of TG‐1101. Products with significant market potential such as TG‐1101 tend to have

substantial developmental and sales milestones associated with them. After TG has progressed TG‐1101 in

the clinic and presumably been somewhat de‐risked from a clinical development and regulatory aspect and

added significant value, a future licensing deal could potentially provide far greater milestones than TG has

agreed to pay to its partners it in‐licensed TG‐1101 from. However, due to the lack of clarity on any future

deal we have not included any such payments within our revenue forecasts. Notably the revenue that is

currently shown on our income statement forecasts through 2015 is the amortization of the upfront

payment from partner Ildong Pharmaceutical Co. Ltd, who recently licensed TG‐1101 from TG for the South

Korean and Southeast Asian territories.

R&D. We expect TG’s R&D expense line fluctuate greatly, but thus is primarily tied directly to clinical

development activity and licensing deal activity. In 2013 the R&D expenses continue to climb due to the

multiple Phase I trials which are expected to be ongoing and the initiation of Phase II trials. However the

100% jump in R&D expenses in 2014 is due to the official in‐licensing of TGR‐1202, which triggers a

payment to Rhizen. We estimate this payment to be approximately $9 million, and to occur on or before

4Q14. We fully anticipate TG‐1101 to be out‐licensed before mid‐2015, but for conservatism we are

projecting TG to incur all the developmental, FDA filing, and milestone costs. However, most post‐Phase II

partnership deals would entail the licensee funding most of these expenses, particularly the costs post a

pivotal trial. Even though a future partnership deal would cause a significant reduction in future R&D

expense, we maintain relatively high future R&D expense, to account for the future acquisition and in‐

license of additional clinical stage products.

G&A. We expect G&A spending to remain relatively flat in 2012 with about $1.3 million anticipated in

4Q12 and about $4.5 million in G&A expenses anticipated for full year 2012. We anticipate modest

personnel expansion and assume most fluctuations in the G&A expenses will be correlated with the stock

price fluctuations, due to the quarterly changes in non‐cash stock compensation expense.

EPS. We anticipate TG to record EPS of ($1.29) in 2012, and EPS of ($0.56) in 2013. Our 2013

assumptions include the dilution of 5 million shares from a potential capital raise in 2013. Overall we

anticipate TG to generate positive EPS in 2017 and to remain profitable thereafter. Additionally, we have

conservatively projected significant share growth, which equates to about 50 million in fully diluted shares

outstanding in 2017. Our share growth assumptions include the growth of the 7.5 million in shares

outstanding as of 3Q12. Though, we believe that a partnership deal by mid‐2014 would significantly curtail

the share growth assumptions in our model.

Balance sheet. TG has non‐recourse long‐term debt of $4.3 million, that is payable on the revenue

generated from legacy products. If these products are not developed, TG may not have to pay off this

debt. We assume that there is a low probability of TG developing these legacy products, and will seek to

out‐license them as they are not synergistic with TG’s B‐cell malignancy focus. TG is in a solid cash position

with $17.4 million in cash and cash equivalents reported as of September 30, 2012. Based on the burn rate

of $2‐3 million a quarter in 2013, we believe TG has at least 18 months of cash, before another capital

infusion is necessary.



MANAGEMENT

The management team of TG has a long list of experience in the development and funding of pharmaceutical products, which can easily be seen from the abbreviated biographies below. Thus we believe this management has the knowledge and expertise to turn TG into a profitable company and a

company which could represent a potentially attractive acquisition candidate.

Michael S. Weiss, J.D., Executive Chairman, Interim President and CEO. Mr. Weiss has held his position at TG since December 29, 2011. Prior to TG Mr. Weiss was the CEO and Chairman at Keryx Biopharmaceuticals Inc. where he successfully grew the company to about $1 billion in terms of market capitalization. Among his accomplishments at Keryx, he raised over $150MM in equity capital through public and private offerings, executed a $100MM+ strategic alliance, negotiated multiple SPA agreements with the FDA and managed multiple large clinical trials. Mr. Weiss’s involvement in the healthcare industry is extensive, before managing Keryx he founded Access Oncology, and has been extensively involved in the funding and investment in the healthcare industry. Mr. Weiss involvement has been both on the legal side as an attorney, and on the finance side as an Investment Banker and Fund Manager in New York City. Mr. Weiss is a Co‐Founder of Opus Point Partners and has been its Managing Partner and Principal since 2008. Michael Weiss earned his J.D. from Columbia Law School and his B.S. in Finance from the State University of New York at Albany.

Sean A. Power, Chief Financial Officer. Sean A. Power, CPA has served as the Company's Chief Financial Officer since December 2011 and currently serves as the CFO of Opus Point Partners. Mr. Power joined the Company from Keryx Biopharmaceuticals, Inc. (KERX), where he served as Corporate Controller from 2006 to 2011. During his tenure there, Mr. Power was involved in all capital raising and licensing transactions. He was also responsible for leading Keryx's compliance with Securities and Exchange Commission rules and regulations. Prior to joining Keryx, he was with KPMG, LLP, independent certified public accountants, where he served as a senior associate. Mr. Power received a BBA in accounting from Siena College and is a member of the American Institute of Certified Public Accountants.

Peter Sportelli, Chief Operating Officer. Chief Operating Officer was previously with Keryx Biopharmaceuticals as their Vice President of Oncology. Prior to joining Keryx, Peter led the commercial launch team for Millennium Pharmaceutical’s Velcade. Peter has more than 20 years of experience in Hematology/Oncology.

Robert Niecestro, PhD., Executive Vice President, Clinical & Regulatory. Robert Niecestro, PhD. has served as the Company's Executive Vice President, Clinical and Regulatory since December 2011. Dr. Niecestro is an experienced professional in the pharmaceutical industry with approximately 26 years of experience in regulatory affairs, and project management. Dr. Niecestro was the Vice President of Clinical and Regulatory Affairs for Keryx Biopharmaceuticals, Inc., where among other things he successfully negotiated six SPA agreements with the FDA. He has previously held numerous senior management positions including serving as Vice President of Clinical Development for Andrx Laboratories, Senior Director, Clinical Development and Therapeutic Head for Gastrointestinal, Oncology and Stroke at Eisai Inc. and as Director, Clinical Operations and NDA Planning for Organon Inc. Dr. Niecestro has been involved in the filing of over 45 Investigational New Drug (IND) applications, has over 60 peer‐reviewed publications and holds three patents. Dr. Niecestro completed his graduate and post‐graduate work at the University of Illinois at Chicago.



PRIMARY RISKS

We think the primary risks to an investment in TG shares include, but are not limited to:

Revenue. There is no assurance that TG will be able to execute its development strategy, and generate the forecasted revenues. Moreover, there is no assurance that competitive products will not out compete TG’s products, or that products not yet in existence or in the public space will be developed that may be superior to TG’s products. TG is a development‐stage biopharmaceutical company, and does not have any commercial products that generate revenues or any other sources of revenue. TG may never be able to successfully develop marketable products. TG’s pharmaceutical development methods are unproven and may not lead to commercially viable products for any of several reasons. TG currently has no marketing and sales organization and no experience in marketing pharmaceutical products. If TG is unable to establish sales and marketing capabilities or fails to enter into agreements with third parties to market and sell any products it may develop, TG may not be able to effectively market and sell its products and generate product revenue. TG also faces product reimbursement risk. Thus there is risk that our revenue forecasts are not met.

Commercial Partnerships. There is no assurance TG will be able to find a partner for products in it existing portfolio or if they are able to find a partner that the financial terms will be attractive to TG. TG focuses on in‐licensing products as its business strategy, and plans to continue to in‐license products. There is no assurance that competitors will not be able to more effectively gain access to additional

attractive product opportunities than TG.

Regulatory. There can be no assurance that the FDA or other regulatory boards approve TG’s current or future products. Furthermore if TG initiates a clinical trial with TGR‐1202 or other future product there can be no assurance these studies will be completed in a timely manner, that results will support the intended regulatory or commercial purpose or that results will favorably impact either regulatory reviews or adoption by clinicians. Delays in the commencement of clinical trials and delays in the receipt of data from preclinical or clinical trials conducted by third parties could significantly impact TG’s product development costs.

Financing. The company’s current financial resources should fund the company to mid‐2014. However, the commercial development of the company’s products will require substantial direct funding from TG. There can be no assurance that revenue will materialize or adequately fund the company. Additionally, should TG require additional financial resources, there is no guarantee the Company will have access to capital in the future on adequate terms, or at all.

Manufacturing. TG relies completely on third parties to manufacture preclinical and clinical pharmaceutical supplies and intends to rely on third parties to produce commercial supplies of any approved product candidate, and TG’s commercialization of any of its product candidates could be stopped, delayed or made less profitable if those third parties fail to obtain approval of the FDA, fail to provide TG with sufficient quantities of pharmaceutical product or fail to do so at acceptable quality levels or prices. Any quality control, manufacturing or stability concerns could negatively impact revenues.

Intellectual Property. TG’s ability to generate revenue is dependent on market exclusivity of its products, such as TG‐1101 and TGR‐1202. There is no guarantee that TG will be able to successfully defend its patent. Should TG’s patents fail to provide market exclusivity there is no assurance that the Company will be able to generate revenue sufficient enough to fund operations.



Table 22: Income Statement

TG THERAPEUTICS, Inc.Income StatementFiscal Year ends December

(All amounts in 000s except per share items)

2010A 2011A 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E

Royalties:

TG-1101 (Ublituximab) 39 156 156 156 10,194 49,659 104,596 148,714 189,085 225,904 TGR-1202 ‐ ‐ ‐ ‐ ‐

Total product revenue and royalties 39 156 156 156 10,194 49,659 104,596 148,714 189,085 225,904 R&D 496 327 21,821 10,196 21,620 22,257 29,662 21,950 22,389 22,837 23,522 24,463 G&A 1,521 555 4,525 5,334 6,215 7,555 9,183 9,642 10,124 10,630 11,162 11,720

Total operating expenses 2,017 882 26,346 15,530 27,835 29,812 38,845 31,592 32,513 33,467 34,684 36,182

Operating income (EBIT) (2,017) (882) (26,307) (15,374) (27,679) (29,656) (28,651) 18,067 72,083 115,247 154,401 189,721 Interest income 548 ‐ 16 15 27 26 24 25 25 26 27 28 Other income (159) ‐ 272 ‐ ‐ ‐ ‐ Interest expense (1,271) (7) (914) (1,036) (1,193) ‐ ‐ ‐ ‐ ‐ ‐ ‐ Change in fair value of notes payable 3,522 ‐ 916 ‐ ‐ ‐ ‐ Total other income (expense), net 2,640 (7) 290 (1,021) (1,166) 26 24 25 25 26 27 28

Consolidated net loss 624 (889) (26,017) (16,395) (28,845) (29,630) (28,627) 18,092 72,109 115,273 154,428 189,749 Net gain (loss) attributable to noncontrolling inte ‐ 36 8,068 ‐ ‐ ‐ ‐

Net gain (loss) attributable to TG Therapeutics 624 (853) (17,950) (16,395) (28,845) (29,630) (28,627) 18,092 72,109 115,273 154,428 189,749 Provision for income taxes ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 7,211 23,055 54,050 66,412

Net income, GAAP 624 (853) (17,950) (16,395) (28,845) (29,630) (28,627) 18,092 64,898 92,218 100,378 123,337

EPS basic 0.006$ (0.01)$ (1.29)$ (0.56)$ (0.89)$ (0.79)$ (0.71)$ 0.44$ 1.54$ 2.15$ 2.29$ 2.76$

EPS diluted, GAAP 0.006$ (0.01)$ (1.29)$ (0.56)$ (0.89)$ (0.79)$ (0.71)$ 0.37$ 1.29$ 1.80$ 1.93$ 2.33$ Basic shares outstanding 111,876 108,349 13,894 29,176 32,283 37,471 40,498 41,308 42,135 42,977 43,837 44,714 Diluted shares outstanding 111,876 108,349 13,894 29,176 32,283 37,471 40,498 49,515 50,342 51,184 52,044 52,921

Source: Company documents and Ladenburg & Co. estimates



Table 23: Quarterly Income Statement

TG THERAPEUTICS, Inc.Income StatementFiscal Year ends December

(All amounts in 000s except per share items)

2010A 2011A 1Q12A 2Q12A 3Q12A 4Q12E 2012E 1Q13E 2Q13E 3Q13E 4Q13E 2013E 2014E

Royalties:

TG-1101 (Ublituximab) 39 39 39 39 39 39 156 156 TGR-1202 ‐ ‐ ‐ ‐

Total product revenue and royalties ‐ ‐ 39 39 39 39 39 39 156 156 R&D 496 327 16,741 1,646 1,561 1,873 21,821 1,967 2,753 2,808 2,668 10,196 21,620 G&A 1,521 555 644 1,459 1,153 1,269 4,525 1,294 1,320 1,346 1,373 5,334 6,215

Total operating expenses 2,017 882 17,385 3,105 2,714 3,142 26,346 3,261 4,073 4,155 4,041 15,530 27,835

Operating income (EBIT) (2,017) (882) (17,385) (3,105) (2,714) (3,103) (26,307) (3,222) (4,034) (4,116) (4,002) (15,374) (27,679) Interest income 548 ‐ 4 4 5 3 16 2 5 4 4 15 27 Other income (159) ‐ 272 ‐ 272 ‐ ‐ Interest expense (1,271) (7) (220) (228) (229) (237) (914) (245) (254) (263) (273) (1,036) (1,193) Change in fair value of notes payable 3,522 ‐ 205 483 228 916 ‐ ‐ Total other income (expense), net 2,640 (7) (11) 531 4 (234) 290 (243) (249) (259) (269) (1,021) (1,166)

Consolidated net loss 624 (889) (17,397) (2,574) (2,710) (3,337) (26,017) (3,465) (4,283) (4,375) (4,271) (16,395) (28,845) Net gain (loss) attributable to noncontrolling inte ‐ 36 7,140 680 248 8,068 ‐ ‐

Net gain (loss) attributable to TG Therapeutics 624 (853) (10,256) (1,895) (2,462) (3,337) (17,950) (3,465) (4,283) (4,375) (4,271) (16,395) (28,845) Provision for income taxes ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Net income, GAAP 624 (853) (10,256) (1,895) (2,462) (3,337) (17,950) (3,465) (4,283) (4,375) (4,271) (16,395) (28,845)

EPS basic 0.006$ (0.01)$ (2.03)$ (0.16)$ (0.16)$ (0.15)$ (1.29)$ (0.14)$ (0.14)$ (0.14)$ (0.14)$ (0.56)$ (0.89)$

EPS diluted, GAAP 0.006$ (0.01)$ (2.03)$ (0.16)$ (0.16)$ (0.15)$ (1.29)$ (0.14)$ (0.14)$ (0.14)$ (0.14)$ (0.56)$ (0.89)$ Basic shares outstanding 111,876 108,349 5,061 11,778 15,810 22,925 13,894 25,217 30,344 30,495 30,648 29,176 32,283 Diluted shares outstanding 111,876 108,349 5,061 11,778 15,810 22,925 13,894 25,217 30,344 30,495 30,648 29,176 32,283

Source: Company documents and Ladenburg & Co. estimates



APPENDIX A: IMPORTANT RESEARCH DISCLOSURES

ANALYST CERTIFICATION

I, Matt Kaplan, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report, provided, however, that:

The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon various factors, including the volume of trading at the firm in the subject security, as well as the firm’s total revenues, a portion of which is generated by investment banking activities.

For details on TG Therapeutics please contact Matt Kaplan.

COMPANY BACKGROUND

TG Therapeutics is a biopharmaceutical company focused on the acquisition and development of oncology products with an emphasis on B‐cell malignancies. TGTX’s comparative advantage is to identify quality assets to develop. Lead product candidates are TG‐1101 and TGR‐1202. TG‐1101 is an anti‐CD20 mAb that is indicated for NHL, CLL, and possibly other hematologic malignancies. TGR‐1202 is a PI3Kδ inhibitor that is also indicated for hematologic malignancies, and thus in line with the company’s focus. TG’s management is a significant shareholder and strongly incentivized to achieve share price growth. TG operations are headquartered in New York, NY.

VALUATION METHODOLOGY

We believe TGTX is currently undervalued and have employed multiple valuation techniques to assess the opportunity. Specifically, we employed a sum of parts analysis, EPS multiple analysis, and a DCF analysis with a 35% discount rate, and 9x multiple of the 2021 EBITDA of $191 million. Our analysis employs only the U.S. revenue generated from TG‐1101 in the relapsed and refractory NHL and CLL patient populations, as well as the current cash position. Potential ex‐U.S. revenues for TG‐1101 and revenues for TGR‐1202 represent upside to our projections as we have not included them in our estimates.

RISKS

We think the primary risks of an investment in TGTX shares include, but are not limited to:

Revenue. There is no assurance that TG will be able to execute its development strategy, and generate the forecasted revenues. Moreover, there is no assurance that competitive products will not out compete TG’s products, or that products not yet in existence or in the public space will be developed that may be superior to TG’s products. TG is a development‐stage biopharmaceutical company, and does not have any commercial products that generate revenues or any other sources of revenue. TG may never be able to successfully develop marketable products. TG’s pharmaceutical development methods are unproven and may not lead to commercially viable products for any of several reasons. TG currently has no marketing and sales organization and no experience in marketing pharmaceutical products. If TG is unable to establish sales and marketing capabilities or fails to enter into agreements with third parties to market and sell any products it may develop, TG may not be able to effectively market and sell its products and generate product revenue. TG also faces product reimbursement risk. Thus there is risk that our revenue forecasts are not met.

Commercial Partnerships. There is no assurance TG will be able to find a partner for products in it existing portfolio or if they are able to find a partner that the financial terms will be attractive to TG. TG focuses on in‐licensing products as its business strategy, and plans to continue to in‐license products. There is no assurance that competitors will not be able to more effectively gain access to

additional attractive product opportunities than TG.

Regulatory. There can be no assurance that the FDA or other regulatory boards approve TG’s current or future products. Furthermore if TG initiates a clinical trial with TGR‐1202 or other future product there can be no assurance these studies will be completed in a timely manner, that results will support the intended regulatory or commercial purpose or that results will favorably impact either regulatory reviews or adoption by clinicians. Delays in the commencement of clinical trials and delays in the receipt of data from preclinical or clinical trials conducted by third parties could significantly impact TG’s product development costs.

Financing. The company’s current financial resources should fund the company to mid‐2014. However, the commercial development of the company’s products will require substantial direct funding from TG. There can be no assurance that revenue will materialize or adequately fund the company. Additionally, should TG require additional financial resources, there is no guarantee the Company will have access to capital in the future on adequate terms, or at all.



Manufacturing. TG relies completely on third parties to manufacture preclinical and clinical pharmaceutical supplies and intends to rely on third parties to produce commercial supplies of any approved product candidate, and TG’s commercialization of any of its product candidates could be stopped, delayed or made less profitable if those third parties fail to obtain approval of the FDA, fail to provide TG with sufficient quantities of pharmaceutical product or fail to do so at acceptable quality levels or prices. Any quality control, manufacturing or stability concerns could negatively impact revenues.

Intellectual Property. TG’s ability to generate revenue is dependent on market exclusivity of its products, such as TG‐1101 and TGR‐1202. There is no guarantee that TG will be able to successfully defend its patent. Should TG’s patents fail to provide market exclusivity there is no assurance that the Company will be able to generate revenue sufficient enough to fund operations.

On top of normal economic and market risk factors that impact most all equities, TGTX is uniquely subject to risks typical for small‐ to mid‐ cap biotech companies: The products the Company is developing may not work, may prove to be unsafe, may never win approval and may never generate meaningful revenues. Changing medical practices, a changing reimbursement environment and/or products introduced by others could shrink the market for the Company’s products. The Company may not be able to enforce its own patents or may find itself infringing on patents held by others. Additionally, in the future the Company may no longer meet the requirements for continued listing on the NASDAQ Capital Market.

The Company has a limited operating history and has incurred substantial operating losses since inception. This trend may continue and the Company may never become profitable. The Company has not yet commercialized any of its drug candidates and cannot be sure if it will ever be able to do so. If it is unable to successfully complete clinical trial programs, or if such clinical trials take longer to complete than expected, its ability to execute on its current business strategy will be adversely affected. Pre‐clinical testing and clinical development are long, expensive and uncertain processes. If drug candidates do not receive the necessary regulatory approvals, the Company will be unable to commercialize its drug candidates. All of its proprietary technologies are licensed to the Company by third parties. Termination of these license agreements would prevent the Company from developing drug candidates. TGTX relies on third parties to manufacture and analytically test its products. If these third parties do not successfully manufacture and test the products, the Company’s business will be harmed. Reliance on third parties, such as clinical research organizations, or CROs, may result in delays in completing, or a failure to complete, clinical trials if such CROs fail to perform under the Company’s agreements with them.

For a full review of TGTX specific risk factors investors should refer to the Company’s most recent forms 10K and 10Q on file with the SEC.

STOCK RATING DEFINITIONS

Buy: The stock’s return is expected to exceed 12.5% over the next twelve months. Neutral: The stock’s return is expected to be plus or minus 12.5% over the next twelve months. Sell: The stock’s return is expected to be negative 12.5% or more over the next twelve months.

Investment Ratings are determined by the ranges described above at the time of initiation of coverage, a change in risk, or a change in target price. At other times, the expected returns may fall outside of these ranges because of price movement and/or volatility. Such interim deviations from specified ranges will be permitted but will become subject to review.

RATINGS DISPERSION AND BANKING RELATIONSHIPS (AS OF 11/30/12)

Buy: 78% (30% are banking clients) Neutral: 21% ( 8% are banking clients) Sell: 1% ( 0% are banking clients)

BIOTECHNOLOGY & HEALTHCARE SECTOR STOCKS UNDER AUTHOR ANALYST COVERAGE (“The Universe”)

Antares Pharma (ATRS), Aradigm (ARDM), Biodel, Inc. (BIOD), BioDelivery Sciences International (BDSI), Cornerstone Therapeutics (CRTX), Dara Biosciences, Inc. (DARA), Flamel Technologies S.A. (FLML), Furiex Pharmaceuticals, Inc. (FURX), IsoRay (ISR), Keryx Biopharmaceuticals (KERX), MAP Pharmaceuticals (MAPP), MediciNova (MNOV), Nile Therapeutics (NLTX), Osteologix (OLGX), Prolor Biotech (PBTH), Repros Therapeutics (RPRX), TG Therapeutics, Inc. (TGTX), United Therapeutics (UTHR) and XOMA Ltd (XOMA).

COMPANY SPECIFIC DISCLOSURES

Ladenburg Thalmann & Co. Inc. makes a market in all of the stocks listed in The Universe with the exception of IsoRay (ISR), UnitedTherapeutics (UTHR) and Prolor Biotech, Inc. (PBTH). Among the companies in The Universe, Ladenburg Thalmann & Co. Inc. during the last 12 months had an investment banking relationship with Keryx Biopharmaceuticals (KERX), Aradigm (ARDM), Repros Therapeutics (RPRX), XOMA Ltd. (XOMA), Prolor Biotech (PBTH), Isoray Inc. (ISR), Antares Pharma (ATRS) and Dara Biosciences, Inc. (DARA) ; Ladenburg Thalmann received compensation for investment banking services from Aradigm (ARDM), Repros Therapeutics (RPRX), Keryx Biopharmaceuticals (KERX), XOMA Ltd. (XOMA), Prolor Biotech (PBTH), Isoray Inc. (ISR), Antares Pharma (ATRS) and Dara



Biosciences, Inc. (DARA) in the last 12 months; Ladenburg Thalmann & Co. Inc. co‐managed public offerings of securities for KERX, PBTH and ATRS in the past 12 months, acted as lead placement agent (Registered Direct Offering) and Lead Manager in secondary offerings for Repros Therapeutics (RPRX), acted as sole placement agent for a secondary offering in Aradigm (ARDM), acted in an advisory capacity for Keryx Biopharmaceuticals (KERX), Aradigm (ARDM) and Xoma Ltd. (XOMA), and acted as a placement agent for a registered direct offering in Isoray Inc. (ISR) and acted as lead placement agent for a registered direct offering and public offering for Dara Biosciences, Inc. (DARA) in the past 12 months; Ladenburg Thalmann & Co. Inc. expects to receive or intends to seek compensation for investment banking services during the next 3 months for all companies listed in The Universe. Among the companies listed in The Universe, the Analyst, or members of the Analyst’s household, own (long position) securities issued by ARDM. A member of an employees household beneficially owns 1% or more of common equity securities of Dara Biosciences, Inc. (DARA). Dara Biosciences, Inc. also has a non‐investment banking securities related services client relationship with Ladenburg Thalmann & Co. Inc.

Antares Pharma (ATRS) and Teva Pharmaceuticals Industries (TEVA‐Not Rated) have joint development interests in several Injection devices. Dr. Philip Frost serves as the Chairman of Teva and as Chairman of Ladenburg Thalmann Financial Services, the parent company of Ladenburg Thalmann & Co. Inc. Dr. Phillip Frost, Chairman of the Board of PBTH, beneficially owns 1% or more of common equity securities of PBTH. Members of the Board of Directors of the subject company have a noninvestment banking securities‐related services client relationship with Ladenburg Thalmann & Co. Inc.

INVESTMENT RATING AND PRICE TARGET HISTORY

GENERAL DISCLAIMERS

Information and opinions presented in this report have been obtained or derived from sources believed by Ladenburg Thalmann & Co. Inc. to be reliable. The opinions, estimates and projections contained in this report are those of Ladenburg Thalmann as of the date of this report and are subject to change without notice.

Ladenburg Thalmann & Co. Inc. accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Ladenburg Thalmann & Co. Inc. This report is not to be relied upon in substitution for the exercise of independent judgment. Ladenburg Thalmann & Co. Inc. may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views and analytical methods of the analysts who prepared them and Ladenburg Thalmann & Co. Inc. is under no obligation to ensure that such other reports are brought to the attention of any recipient of this report.

Some companies that Ladenburg Thalmann & Co. Inc. follows are emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Ladenburg Thalmann & Co. Inc. research reports may not be suitable for some investors. Investors must make their own determination as to the appropriateness of an investment in any securities referred to herein, based on their specific investment objectives, financial status and risk tolerance.



Investing in low priced securities is speculative and carries a high degree of risk. You should independently investigate and understand all risks before making any investment. The markets for small cap stocks are highly speculative and this level of risk may not be appropriate for all investors. Some of the companies listed may be subject to the “Penny Stock Rule”. Under this rule, the SEC has defined a “penny stock” to be any equity security which has a market price of less than $5.00 share, subject to certain exemptions. Such exemptions include an equity listed security listed on NASDAQ and an equity security issued by an issuer which has (i) net tangible assets of at least $2,000,000, if such issuer has been in continuous operational for three (3) years; (ii) net tangible assets of at least $5,000,000, if such issuer has been in continuous operation for less than three (3) years; or (iii) average revenue of at least $6,000,000 for the preceding three (3) years. Unless such exemption is available, regulations require delivery of a risk disclosure document explaining the penny stock market and the risks associated therewith prior to any transaction involving a penny stock. For stock not quoted on NASDAQ or at any time that the company has less than $2,000,000 in net tangible assets, the trading in the common stock is covered under Rule 15g‐9 under the Securities Exchange Act of 1934 for non‐NASDAQ and non‐exchange listed securities. Under such rule, broker‐dealers who recommend covered securities to persons other than established customers and accredited investors must make a written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale. Some securities may not be cleared for sale in all states or other jurisdictions and LTCO assumes no responsibility to apprise you of individual states or jurisdictions’ regulatory restrictions. Stocks in the microcap segment of market have risks that are not as common in other segments of market. These risks include, but are not limited to, liquidity risk, which can lead to higher volatility and low trade volume, company specific risks that contribute to lower valuation, higher probability of financial default and distress. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. The price, value of and income from any of the securities mentioned in this report can fall as well as rise. The value of securities is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities. Investors in securities such as ADRs, the values of which are influenced by currency volatility, effectively assume this risk. Securities recommended, offered or sold by Ladenburg Thalmann & Co. Inc. (1) are not insured by the Federal Deposit Insurance Company; (2) are not deposits or other obligations of any insured depository institution; and (3) are subject to investment risks, including the possible loss of some or all of principal invested. Indeed, in the case of some investments, the potential losses may exceed the amount of initial investment and, in such circumstances; you may be required to pay more money to support these losses.

The information and material presented in this report are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or to buy any securities mentioned herein. This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, without the prior written consent of Ladenburg Thalmann & Co. Inc.

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Initiating Coverage December 7, 2012 BUY TG...

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