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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2019

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission File Number 000-30929

___________________

TG THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

36-3898269

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

2 Gansevoort Street, 9th Floor

New York, New York 10014

(Address including zip code of principal executive offices)

 

(212) 554-4484

(Registrant’s telephone number, including area code)

Securities filed pursuant to Section 12(b) of the Act:

 

Title of Class

Trading Symbol(s)

Exchange Name

Common Stock, par value $0.001

TGTX

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

Non-accelerated filer (Do not check if smaller reporting company)

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes No

 

There were 94,755,151 shares of the registrant’s common stock, $0.001 par value, outstanding as of August 2, 2019.

 

 
 

TG THERAPEUTICS, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2019

 

TABLE OF CONTENTS

 

 

3

 

 

 

 

 

4

 

 

 

 

 

 4

 

 

 

 

 

 

 4

 

 

 

 

 

 

 5

 

 

 

 

 

 

 6

 

 

 

 

 

 

 7

 

 

 

 

 

 

8

 

 

 

 

 

 22

 

 

 

 

 

29

 

 

 

 

 

29

 

 

 

 

 

30

 

 

 

 

 

30

 

 

 

 

 

30

 

 

 

 

 

65

 

2

 

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain matters discussed in this report, including matters discussed under the captions “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” or the negative of these words or other comparable terminology, although not all forward-looking statements contain these identifying words. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements about our:

 

 

expectations for increases or decreases in expenses;

 

expectations for the clinical and pre-clinical development, manufacturing, regulatory approval, and commercialization of our pharmaceutical product candidates or any other products we may acquire or in-license;

 

use of clinical research centers and other contractors;

 

expectations as to the timing of commencing or completing pre-clinical and clinical trials and the expected outcomes of those trials;

 

expectations for incurring capital expenditures to expand our research and development and manufacturing capabilities;

 

expectations for generating revenue or becoming profitable on a sustained basis;

 

expectations or ability to enter into marketing and other partnership agreements;

 

expectations or ability to enter into product acquisition and in-licensing transactions;

 

expectations or ability to build our own commercial infrastructure to manufacture, market and sell our drug candidates;

 

products being accepted by doctors, patients or payors;

 

ability to compete against other companies and research institutions;

 

ability to secure adequate protection for our intellectual property;

 

ability to attract and retain key personnel;

 

availability of reimbursement for our products;

 

estimates of the sufficiency of our existing cash and cash equivalents and investments to finance our operating requirements, including expectations regarding the value and liquidity of our investments;

 

stock price and its volatility; and

 

expectations for future capital requirements.

 

The forward-looking statements contained in this report reflect our views and assumptions only as of the date this report is signed. Except as required by law, we assume no responsibility for updating any forward-looking statements.

 

We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, those discussed under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, as well as other factors which may be identified from time to time in our other filings with the Securities and Exchange Commission, or the SEC, or in the documents where such forward-looking statements appear. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or enter into.

 

You should read this report and the documents that we have filed as exhibits to this report completely and with the understanding that our actual future results, performance or achievements may be materially different from what we expect. Any forward-looking statements contained in this report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. The forward-looking statements contained in this report reflect our views and assumptions only as of the date this report is signed. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

 

This report also contains estimates, projections and other information concerning our industry, our business and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

 

3

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL INFORMATION

 

TG Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

  June 30, 2019  

 

 

  December 31, 2018  

 

 

 

  (Unaudited)

 

 

  (Note 1)  

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

57,228

 

 

$

41,958

 

Short-term investment securities

 

 

27,748

 

 

 

26,943

 

Prepaid research and development

 

 

8,478

 

 

 

9,691

 

Other current assets

 

 

987

 

 

 

439

 

Total current assets

 

 

94,441

 

 

 

79,031

 

Restricted cash

 

 

1,246

 

 

 

1,241

 

Leasehold interest, net

 

 

2,203

 

 

 

2,294

 

Equipment, net

 

 

237

 

 

 

251

 

Right of use asset

 

 

7,659

 

 

 

 

Goodwill

 

 

799

 

 

 

799

 

Total assets

 

$

106,585

 

 

$

83,616

 

 

 

 

    

 

 

 

    

 

Liabilities and stockholders’ equity

 

 

    

 

 

 

    

 

Current liabilities:

 

 

    

 

 

 

    

 

Accounts payable and accrued expenses

 

$

31,498

 

 

$

36,377

 

Other current liabilities

 

 

21,478

 

 

 

219

 

Lease liability – current portion

 

 

1,283

 

 

 

 

Accrued compensation

 

 

1,708

 

 

 

2,258

 

Total current liabilities

 

 

55,967

 

 

 

38,854

 

Deferred rent

 

 

 

 

 

1,462

 

Deferred revenue, net of current portion

 

 

838

 

 

 

914

 

Long-term debt

 

 

28,513

 

 

 

 

Lease liability – non current

 

 

8,062

 

 

 

 

Long-term liabilities

 

 

 

 

 

18,350

 

Total liabilities

 

 

93,380

 

 

 

59,580

 

Commitments and contingencies

 

 

    

 

 

 

    

 

Stockholders’ equity:

 

 

    

 

 

 

    

 

Preferred stock, $0.001 par value per share (10,000,000 shares authorized, none issued and outstanding as of June 30, 2019 and December 31, 2018)

 

 

 

 

 

 

Common stock, $0.001 par value per share (150,000,000 shares authorized, 93,405,248 and 83,911,855 shares issued, 93,363,939 and 83,870,546 shares outstanding at June 30, 2019 and December 31, 2018, respectively)

 

 

93

 

 

 

84

 

Additional paid-in capital

 

 

613,059

 

 

 

552,531

 

Treasury stock, at cost, 41,309 shares at June 30, 2019 and December 31, 2018

 

 

(234

)

 

 

(234

)

Accumulated deficit

 

 

(599,713

)

 

 

(528,345

)

Total stockholders’ equity

 

 

13,205

 

 

 

24,036

 

Total liabilities and stockholders’ equity

 

$

106,585

 

 

$

83,616

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

4

 

TG Therapeutics, Inc.

Condensed Consolidated Statements of Operations

 (in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License revenue

 

$

38

 

 

$

38

 

 

$

76

 

 

$

76

 

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Costs and expenses:

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Research and development:

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

    Non-cash stock expense associated with in–licensing agreements

 

 

100

 

 

 

3,000

 

 

 

100

 

 

 

4,000

 

Noncash compensation

 

 

1,352

 

 

 

888

 

 

 

2,841

 

 

 

3,747

 

Other research and development

 

 

31,414

 

 

 

34,812

 

 

 

62,310

 

 

 

65,971

 

Total research and development

 

 

32,866

 

 

 

38,700

 

 

 

65,251

 

 

 

73,718

 

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

General and administrative:

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Noncash compensation

 

 

405

 

 

 

3,375

 

 

 

797

 

 

 

7,854

 

Other general and administrative

 

 

2,311

 

 

 

2,308

 

 

 

4,260

 

 

 

4,426

 

Total general and administrative

 

 

2,716

 

 

 

5,683

 

 

 

5,057

 

 

 

12,280

 

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Total costs and expenses

 

 

35,582

 

 

 

44,383

 

 

 

70,308

 

 

 

85,998

 

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Operating loss

 

 

(35,544

)

 

 

(44,345

)

 

 

(70,232

)

 

 

(85,922

)

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Other (income) expense:

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Interest expense

 

 

1,077

 

 

 

223

 

 

 

1,851

 

 

 

436

 

Other income

 

 

(408

)

 

 

(426

)

 

 

(715

)

 

 

(687

)

Total other (income) expense, net

 

 

669

 

 

 

(203

)

 

 

1,136

 

 

 

(251

)

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Net loss

 

$

(36,213

)

 

$

(44,142

)

 

$

(71,368

)

 

$

(85,671

)

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Basic and diluted net loss per common share

 

$

(0.42

)

 

$

(0.59

)

 

$

(0.85

)

 

$

(1.18

)

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

    

 

Weighted average shares used in computing basic and diluted net loss per common share

 

 

86,800,017

 

 

 

74,256,348

 

 

 

84,002,700

 

 

 

72,456,657

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

5

 

TG Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

 

 

  Common Stock  

 

 

 

 

 

  Treasury Stock  

 

 

 

 

 

 

 

 

 

 

  Shares  

 

 

 

Amount 

 

 

 

Additional paid-in capital  

 

 

 

  Shares  

 

 

 

Amount 

 

 

 

  Accumulated Deficit  

 

 

 

  Total  

 

Balance at January 1, 2018

 

 

73,181,750

 

 

$

73

 

 

$

422,017

 

 

 

41,309

 

 

$

(234

)

 

$

( 354,863

)

 

$

66,993

 

Issuance of restricted stock

 

 

87,500

 

 

 

*

 

 

 

*

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Forfeiture of restricted stock

 

 

(123,911

)

 

 

*

 

 

 

*

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Issuance of common stock in At-the-Market offerings (net of offering costs of $0.9 million)

 

 

3,989,344

 

 

 

4

 

 

 

52,426

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

52,430

 

Compensation in respect of restricted stock granted to employees, directors and consultants

 

 

--

 

 

 

--

 

 

 

7,337

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

7,337

 

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(41,529

)

 

 

(41,529

)

Balance at March 31, 2018

 

 

  77,134,683

 

 

  77

 

 

  481,781

 

 

 

  41,309

 

 

 (234

)  

 

 (396,392

)  

 

  85,232

 

Issuance of restricted stock

 

 

1,333,011

 

 

 

1

 

 

 

 (1

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Forfeiture of restricted stock

 

 

(6,750

)

 

 

 *

 

 

 

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Issuance of common stock in At-the-Market offerings (net of offering costs of $1.9 million)

 

 

3,744,605

 

 

 

4

 

 

 

52,018

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

52,022

 

Compensation in respect of restricted stock granted to employees, directors and consultants

 

 

--

 

 

 

--

 

 

 

4,264

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

4,264

 

Shares issued in connection with in-licensing agreements

 

 

333,868

 

 

 

*

 

 

 

4,000

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

4,000

 

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(44,142

)

 

 

(44,142

)

Balance at June 30, 2018

 

 

82,539,417

 

 

$

82

 

 

$

542,062

 

 

 

41,309

 

 

$

(234

)

 

$

(440,534

)

 

$

101,376

 

 

 

 

  Common Stock  

 

 

 

 

 

  Treasury Stock  

 

 

 

 

 

 

 

 

 

 

  Shares  

 

 

 

Amount 

 

 

 

Additional paid-in capital  

 

 

 

  Shares  

 

 

 

Amount 

 

 

 

  Accumulated Deficit  

 

 

 

  Total  

 

Balance at January 1, 2019

 

 

83,911,855

 

 

$

84

 

 

$

552,531

 

 

 

41,309

 

 

$

(234

)

 

$

(528,345

)

 

$

24,036

 

Issuance of restricted stock

 

 

23,000

 

 

 

*

 

 

 

*

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Warrants issued with debt financing

 

 

--

 

 

 

--

 

 

 

993

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

993

 

Forfeiture of restricted stock

 

 

 (67,628

)  

 

 

 *

 

 

 

 *

 

 

 

 --

 

 

 

 --

 

 

 

 --

 

 

 

 --

 

Issuance of common stock in public offering (net of offering costs of $0.2 million) 

 

 

  4,715,000

 

 

 

  5

 

 

 

  27,494

 

 

 

 --

 

 

 

 --

 

 

 

 --

 

 

 

  27,499

 

Compensation in respect of restricted stock granted to employees, directors and consultants 

 

 

 --

 

 

 

 --

 

 

 

 1,882

 

 

 

 --

 

 

 

 --

 

 

 

 --

 

 

 

1,882

 

Net loss 

 

 

 --

 

 

 

 --

 

 

 

 --

 

 

 

 --

 

 

 

 --

 

 

 

 (35,156

)  

 

 

 (35,156

)  

Balance at March 31, 2019

 

 

88,582,227

 

 

 

89

 

 

 

582,900

 

 

 

41,309

 

 

 

( 234

)

 

 

(563,501

)

 

 

19,254

 

Issuance of restricted stock

 

 

1,245,080

 

 

 

1

 

 

 

 ( 1

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Forfeiture of restricted stock

 

 

(38,418

)

 

 

 *

 

 

 

 *

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Issuance of common stock in public offering 

 

 

--

 

 

 

--

 

 

 

11

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

11

 

Issuance of common stock in At-the-Market offerings (net of offering costs of $0.5 million)

 

 

3,616,359

 

 

 

3

 

 

 

28,392

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

28,395

 

Compensation in respect of restricted stock granted to employees, directors and consultants

 

 

--

 

 

 

--

 

 

 

1,757

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

1,757

 

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(36,212

)

 

 

(36,212

)

Balance at June 30, 2019

 

 

93,405,248

 

 

$

93

 

 

$

613,059

 

 

 

41,309

 

 

$

(234

)

 

$

(599,713

)

 

$

13,205

 

  * Amount less than one thousand dollars.

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

6

 

TG Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

(Unaudited)

 

 

 

  Six months ended June 30,  

 

 

 

 

2019

 

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

   

 

 

 

   

 

Net loss

 

$

(71,368

)

 

$

(85,671

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

    

 

 

 

    

 

Noncash stock compensation expense

 

 

3,639

 

 

 

11,601

 

Noncash licensing expense 

 

 

100

 

 

 

4,000

 

Depreciation

 

 

46

 

 

 

41

 

Amortization of premium on investment securities

 

 

(149

)

 

 

 (9

Amortization of debt issuance costs

 

 

308

 

 

 

 

Non-cash change in lease liability and right-of-use asset

 

 

902

 

 

 

 

Change in fair value of notes payable and accrued interest

 

 

78

 

 

 

82

 

Changes in assets and liabilities:

 

 

 

 

 

 

    

 

Decrease (increase) in prepaid research and development and other current assets

 

 

663

 

 

 

(1,213

)

Decrease in leasehold interest

 

 

91

 

 

 

53

 

(Increase) decrease in accrued interest receivable 

 

 

(10

)

 

 

22

 

(Decrease) increase in accounts payable and accrued expenses

 

 

(5,588

)

 

 

8,898

 

Decrease in lease liability

 

 

(678

)

 

 

 

Increase in interest payable

 

 

443

 

 

 

 

Increase in other current liabilities

 

 

2,388

 

 

 

 

Increase in deferred rent

 

 

 

 

 

46

 

Decrease in deferred revenue

 

 

(76

)

 

 

(76

)

Net cash used in operating activities

 

 

(69,211

)

 

 

(62,226

)

 

 

 

    

 

 

 

    

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

    

 

 

 

    

 

Purchases of equipment

 

 

(32

)

 

 

(58

)

Investment in held-to-maturity securities

 

 

(14,146

)

 

 

(6,965

)

Proceeds from maturity of short-term securities

 

 

13,500

 

 

 

14,400

 

Net cash (used in) provided by investing activities

 

 

(678

)

 

 

7,377

 

 

 

 

    

 

 

 

    

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

    

 

 

 

    

 

Proceeds from sale of common stock, net

 

 

55,965

 

 

 

104,453

 

Proceeds from debt financings

 

 

29,679

 

 

 

 

Financing costs paid

 

 

(480

)

 

 

 

Net cash provided by financing activities

 

 

85,164

 

 

 

104,453

 

 

 

 

    

 

 

 

    

 

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

15,275

 

 

 

49,604

 

 

 

 

    

 

 

 

    

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

 

43,199

 

 

 

57,305

 

 

 

 

    

 

 

 

    

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

 

$

58,474

 

 

$

106,909

 

 

 

 

    

 

 

 

    

 

Reconciliation to amounts on consolidated balance sheets:

 

 

    

 

 

 

    

 

Cash and cash equivalents

 

$

57,228

 

 

$

105,672

 

Restricted cash

 

 

1,246

 

 

 

1,237

 

Total cash, cash equivalents and restricted cash 

 

$

58,474

 

 

$

106,909

 

 

 

 

    

 

 

 

    

 

NONCASH TRANSACTIONS

 

 

    

 

 

 

    

 

Accrued offering costs

 

$

60

 

 

$

 

Deferred financing costs

 

$

988

 

 

$

 

Warrants issued with debt financing

 

$

993

 

 

$

 

Shares to be issued in connection with in-licensing

 

$

100

 

 

$

--

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

7

 

TG Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

 

Unless the context requires otherwise, references in this report to “TG,” the “Company,” “we,” “us” and “our” refer to TG Therapeutics, Inc. and our subsidiaries.

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Description of Business

 

We are a biopharmaceutical company dedicated to developing and delivering medicines for patients with B-cell mediated diseases, including Chronic Lymphocytic Leukemia (CLL), non-Hodgkin Lymphoma (NHL) and Multiple Sclerosis (MS). We have developed a robust B-cell directed research and development (R&D) platform for identification of key B-cell pathways of interest and rapid clinical testing. Currently, we have five B-cell targeted drug candidates in clinical development, with the lead two therapies, ublituximab (TG-1101) and umbralisib (TGR-1202), in pivotal trials for CLL and NHL, with ublituximab also in pivotal trials for MS. Ublituximab is a novel anti-CD20 monoclonal antibody (mAb) that has been glycoengineered for enhanced potency over first generation antibodies. Umbralisib is an oral, once daily inhibitor of PI3K delta. Umbralisib also uniquely inhibits CK1-epsilon, which may allow it to overcome certain tolerability issues associated with first generation PI3K delta inhibitors. When used together in combination therapy, ublituximab and umbralisib are referred to as “U2”. Additionally, we have recently brought into Phase 1 clinical development TG-1501, an anti-PD-L1 monoclonal antibody, TG-1701, a covalently-bound Bruton’s Tyrosine Kinase (BTK) inhibitor, and TG-1801, an anti-CD47/CD19 bispecific antibody.

 

We also actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities. To date, we have not received approval for the sale of any of our drug candidates in any market and, therefore, have not generated any product sales from our drug candidates.

 

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Exchange Act. Accordingly, they may not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments that are, in the opinion of management, of a normal recurring nature and are necessary for a fair presentation of the condensed consolidated financial statements have been included. Nevertheless, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018. The accompanying condensed December 31, 2018 balance sheet has been derived from these statements. The results of operations for the six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.

 

In December 2018, the Company created an Australian corporation, TG Therapeutics AUS Pty Ltd, as a wholly-owned subsidiary. This corporation’s functional currency, the Australian dollar, is also its reporting currency, and its financial statements are translated to U.S. dollars, the Company’s reporting currency, prior to consolidation. The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, and all intercompany accounts and transactions have been eliminated in consolidation.

 

Liquidity and Capital Resources

 

We have incurred operating losses since our inception, expect to continue to incur operating losses for the foreseeable future, and may never become profitable. As of June 30, 2019, we have an accumulated deficit of approximately $599.7 million.

 

Our major sources of cash have been proceeds from the private placement and public offering of equity securities, as well as debt financings. We have not yet commercialized any of our drug candidates and cannot be sure if we will ever be able to do so. Even if we commercialize one or more of our drug candidates, we may not become profitable. Our ability to achieve profitability depends on many factors, including our ability to obtain regulatory approval for our drug candidates; successfully complete any post-approval regulatory obligations; and successfully commercialize our drug candidates alone or in partnership. We may continue to incur substantial operating losses even if we begin to generate revenues from our drug candidates.

 

As of June 30, 2019, we had $85.0 million in cash and cash equivalents, and investment securities. The Company believes its cash, cash equivalents, and investment securities on hand as of June 30, 2019 along with the additional capital raised in the third quarter of 2019 (see Note 5) will be sufficient to fund the Company’s planned operations into the fourth quarter of 2020. The actual amount of cash that we will need to operate is subject to many factors, including, but not limited to, the timing, design and conduct of clinical trials for our drug candidates. We are dependent upon significant future financing to provide the cash necessary to execute our current operations, including the commercialization of any of our drug candidates.

 

Our common stock is listed on the Nasdaq Capital Market and trades under the symbol “TGTX.”

 

8

 

 

Recently Issued Accounting Standards

 

In July 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-11, “Leases - Targeted Improvements” (“ASU 2018-11”) as an update to ASU 2016-02, Leases (“ASU 2016-02” or “Topic 842”) issued on February 25, 2016. ASU 2016-02 is effective for public business entities for fiscal years beginning January 1, 2019. ASU 2016-02 required companies to adopt the new leases standard at the beginning of the earliest period presented in the financial statements, which is January 1, 2017, using a modified retrospective transition method where lessees must recognize lease assets and liabilities for all leases even though those leases may have expired before the effective date of January 1, 2017. Lessees must also provide the new and enhanced disclosures for each period presented, including the comparative periods.

 

ASU 2018-11 provides an entity with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease standard will continue to be in accordance with ASC 840, “Leases” (“ASC 840”). An entity that elects this additional (and optional) transition method must provide the required ASC 840 disclosures for all periods that continue to be in accordance with ASC 840. The amendments do not change the existing disclosure requirements in ASC 840.

 

ASU 2018-11 is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with earlier adoption permitted. The Company adopted ASU 2018-11 on January 1, 2019 using a modified retrospective method and will not restate comparative periods. We elected the package of practical expedients permitted under the transition guidance, which allows us to carryforward our historical lease classification and our assessment on whether a contract is or contains a lease. The adoption of this guidance resulted in the addition of material balances of right of use assets and lease liability to our consolidated balance sheets at January 1, 2019, primarily relating to our lease of office space (see Note 8). The impact to our consolidated statements of operations was not material as a result of this standard.

 

In June 2018, the FASB issued ASU No. 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 expands the scope of FASB Topic 718, Compensation – Stock Compensation (“Topic 718”) to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should only remeasure equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date. The entity must not remeasure assets that are completed. Disclosures required at transition include the nature of and reason for the change in accounting principle and, if applicable, quantitative information about the cumulative effect of the change on retained earnings or other components of equity.

 

ASU 2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company adopted ASU 2018-07 on January 1, 2019. The adoption of ASU 2018-07 did not have a material effect on our consolidated financial statements as of January 1, 2019. The adoption of ASU 2018-07 had no impact on nonemployee performance awards as they are measured based on the outcome that is probable.

 

Other pronouncements issued by the FASB or other authoritative accounting standards group with future effective dates are either not applicable or not significant to our consolidated financial statements.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the applicable reporting period. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and stock-based compensation. Actual results could differ from those estimates. Such differences could be material to the financial statements.

 

 

9

 

 

Cash and Cash Equivalents

 

We treat liquid investments with original maturities of less than three months when purchased as cash and cash equivalents.

 

Restricted Cash

 

We record cash pledged or held in trust as restricted cash. As of June 30, 2019 and December 31, 2018, we have approximately $ 1.2 million of restricted cash pledged to secure a line of credit as a security deposit for an Office Agreement (see Note 8) .

 

Investment Securities

 

Investment securities at June 30, 2019 and December 31, 2018 consist of short-term government securities. We classify these securities as held-to-maturity. Held-to-maturity securities are those securities in which we have the ability and intent to hold the security until maturity. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective interest method.

 

A decline in the market value of any investment security below cost, that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value. The impairment is charged to operations and a new cost basis for the security is established. Other-than-temporary impairment charges are included in interest and other income (expense), net. Unrealized gains, if determined to be temporary, are included in accumulated other comprehensive income in equity. Dividend and interest income are recognized when earned.

 

Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and short-term investments. The Company maintains its cash and cash equivalents and short-term investments with high-credit quality financial institutions. At times, such amounts may exceed federally-insured limits.

 

Revenue Recognition

 

Effective January 1, 2018, the Company began recognizing revenue under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. The impact of adopting the new revenue standard was not material to our consolidated financial statements and there was no adjustment to beginning retained earnings on January 1, 2018. The core principle of this new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

 

 

Step 1: Identify the contract with the customer

 

Step 2: Identify the performance obligations in the contract

 

Step 3: Determine the transaction price

 

Step 4: Allocate the transaction price to the performance obligations in the contract

 

Step 5: Recognize revenue when the company satisfies a performance obligation

 

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

 

 

The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct).

 

The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

 

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

 

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

 

The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

 

 

10

 

 

Research and Development Costs

 

Generally, research and development costs are expensed as incurred. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered or the related services are performed, subject to an assessment of recoverability. We make estimates of costs incurred in relation to external clinical research organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period. We review and accrue CRO expenses and clinical trial study expenses based on work performed and rely upon estimates of those costs applicable to the stage of completion of a study. Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these contracts may be uneven, and depend on factors such as the achievement of certain events, the successful recruitment of patients, the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of expenses in our financial statements to the actual services received and efforts expended. As such, expense accruals related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific clinical study or trial contract.

 

Prepaid research and development in our consolidated balance sheets includes, among other things, certain costs to third party service providers related to development and manufacturing services as well as clinical development. These agreements often require payments in advance of services performed or goods received. Accordingly, as of June 30, 2019 and December 31, 2018, we recorded approximately $8.5 million and $9.7 million, respectively, in prepaid research and development related to such advance agreements.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. If the likelihood of realizing the deferred tax assets or liability is less than “more likely than not,” a valuation allowance is then created.

 

We, and our subsidiaries, file income tax returns in the U.S. Federal jurisdiction and in various states. We have tax net operating loss carryforwards that are subject to examination for a number of years beyond the year in which they were generated for tax purposes. Since a portion of these net operating loss carryforwards may be utilized in the future, many of these net operating loss carryforwards will remain subject to examination. We recognize interest and penalties related to uncertain income tax positions in income tax expense.

 

Stock-Based Compensation

 

We recognize all stock-based payments to employees and non-employee directors (as compensation for service) as noncash compensation expense in the condensed consolidated financial statements based on the fair values of such payments. Stock-based compensation expense recognized each period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

 

In addition, because some of the options, restricted stock and warrants issued to employees, consultants and other third-parties vest upon achievement of certain milestones, the total expense is uncertain. Compensation expense for such awards that vest upon the achievement of milestones is recognized when the achievement of such milestones becomes probable.

 

Basic and Diluted Net Loss Per Common Share

 

Basic net loss per share of our common stock is calculated by dividing net loss applicable to the common stock by the weighted average number of our common stock outstanding for the period. Diluted net loss per share of common stock is the same as basic net loss per share of common stock since potentially dilutive securities from stock options, stock warrants and convertible preferred stock would have an antidilutive effect either because we incurred a net loss during the periods presented or because such potentially dilutive securities were out of the money and the Company realized net income during the periods presented. The amounts of potentially dilutive securities excluded from the calculation were 7,844,712 and 5,165,890 for the three and six months ended June 30, 2019 and 2018, respectively.

 

The following outstanding shares of potentially dilutive securities were excluded from the computation of net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:

 

 

 

Three and Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Unvested restricted stock

 

 

5,137,196

 

 

 

4,589,940

 

Stock options

 

 

2,543,710

 

 

 

560,000

 

Warrants

 

 

147,058

 

 

 

--

 

Shares issuable upon note conversion

 

 

16,748

 

 

 

15,950

 

Total

 

 

7,844,712

 

 

 

5,165,890

 

 

11

 
 

Long-Lived Assets and Goodwill

 

Long-lived assets are reviewed for potential impairment when circumstances indicate that the carrying value of long-lived tangible and intangible assets with finite lives may not be recoverable. Management’s policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating performance criteria as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event, we make certain assumptions in determining the impairment amount. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized.

 

Goodwill is reviewed for impairment annually, or earlier when events arise that could indicate that an impairment exists. We test for goodwill impairment using a two-step process. The first step compares the fair value of the reporting unit with the unit’s carrying value, including goodwill. When the carrying value of the reporting unit is greater than fair value, the unit’s goodwill may be impaired, and the second step must be completed to measure the amount of the goodwill impairment charge, if any. In the second step, the implied fair value of the reporting unit’s goodwill is compared with the carrying amount of the unit’s goodwill. If the carrying amount is greater than the implied fair value, the carrying value of the goodwill must be written down to its implied fair value. We will continue to perform impairment tests annually, at December 31, and whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable.

 

NOTE 2 – CASH AND CASH EQUIVALENTS

 

The following tables summarize our cash and cash equivalents at June 30, 2019 and December 31, 2018:

 

(in thousands)

 

  June 30, 2019  

 

 

  December 31, 2018  

 

 

 

 

 

 

 

 

 

 

Checking and bank deposits

 

$

54,997

 

 

$

39,268

 

Money market funds

 

 

2,231

 

 

 

2,690

 

Total

 

$

57,228

 

 

$

41,958

 

NOTE 3 – INVESTMENT SECURITIES

 

Our investments as of June 30, 2019 and December 31, 2018 are classified as held-to-maturity. Held-to-maturity investments are recorded at amortized cost.

 

The following tables summarize our investment securities at June 30, 2019 and December 31, 2018:

 

(in thousands)

 

  June 30, 2019  

 

 

 

Amortized cost, as adjusted

 

 

Gross unrealized holding gains

 

 

  Gross unrealized holding losses

 

 

Estimated fair value

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of domestic governmental agencies (maturing between July 2019 and June 2020) (held-to-maturity)

 

$

27,748

 

 

$

45

 

 

$

 

 

$

27,793

 

Total short-term investment securities

 

$

27,748

 

 

$

45

 

 

$

 

 

$

27,793

 

 

 

 

  December 31, 2018  

 

 

 

Amortized cost, as adjusted

 

 

Gross unrealized holding gains

 

 

Gross unrealized holding losses

 

 

Estimated fair value

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of domestic governmental agencies (maturing between January 2019 and November 2019) (held-to-maturity)

 

$

26,943

 

 

$

2

 

 

$

10

 

 

$

26,935

 

Total short-term investment securities

 

$

26,943

 

 

$

2

 

 

$

10

 

 

$

26,935

 

NOTE 4 – FAIR VALUE MEASUREMENTS

 

We measure certain financial assets and liabilities at fair value on a recurring basis in the condensed consolidated financial statements. The fair value hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

 

Level 1 – quoted prices in active markets for identical assets and liabilities;

 

 

Level 2 – inputs other than Level 1 quoted prices that are directly or indirectly observable; and

 

 

Level 3 – unobservable inputs that are not corroborated by market data.

 

12

 

As of June 30, 2019 and December 31, 2018, the fair values of cash and cash equivalents, restricted cash, and notes and interest payable, approximate their carrying value.

 

At the time of our merger (we were then known as Manhattan Pharmaceuticals, Inc.) with Ariston Pharmaceuticals, Inc. (“Ariston”) in March 2010, Ariston issued $15.5 million of five-year 5% notes payable (the “5% Notes”) in satisfaction of several note payable issuances. The 5% Notes and accrued and unpaid interest thereon are convertible at the option of the holder into common stock at the conversion price of $1,125 per share. Ariston agreed to make quarterly payments on the 5% Notes equal to 50% of the net product cash flow received from the exploitation or commercialization of Ariston’s product candidates, AST-726 and AST-915. We have no obligations under the 5% Notes aside from (a) 50% of the net product cash flows from Ariston’s product candidates, if any, payable to noteholders; and (b) the conversion feature, discussed above.

 

The cumulative liability to the Ariston subsidiary including accrued and unpaid interest of the 5% Notes was approximately $18.8 million at June 30, 2019 and $18.4 million at December 31, 2018. No payments have been made on the 5% Notes since the merger and through June 30, 2019.

 

In December 2011, we elected the fair value option for valuing the 5% Notes. The fair value option was elected in order to reflect in our financial statements the assumptions that market participants use in evaluating these financial instruments.

 

As of December 31, 2013, as a result of expiring intellectual property rights and other factors, it was determined that net product cash flows from AST-726 were unlikely. As we have no other obligations under the 5% Notes aside from the net product cash flows and the conversion feature, the conversion feature was used to estimate the 5% Notes’ fair value as of June 30, 2019 and December 31, 2018. The assumptions, assessments and projections of future revenues are subject to uncertainties, difficult to predict, and require significant judgment. The use of different assumptions, applying different judgment to inherently subjective matters and changes in future market conditions could result in significantly different estimates of fair value and the differences could be material to our condensed consolidated financial statements.

 

The following tables provide the fair value measurements of applicable financial liabilities as of June 30, 2019 and December 31, 2018:

 

(in thousands)

 

  Financial liabilities at fair value as of June 30, 2019  

 

 

 

  Level 1  

 

 

  Level 2  

 

 

  Level 3  

 

 

  Total  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5% Notes

 

$

--

 

 

$

--

 

 

$

145

 

 

$

145

 

Total

 

$

--

 

 

$

--

 

 

$

145

 

 

$

145

 

 

 

 

  Financial liabilities at fair value as of December 31, 2018  

 

 

 

  Level 1  

 

 

  Level 2  

 

 

  Level 3  

 

 

  Total  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5% Notes

 

$

--

 

 

$

--

 

 

$

67

 

 

$

67

 

Total

 

$

--

 

 

$

--

 

 

$

67

 

 

$

67

 

 

The Level 3 amounts above represent the fair value of the 5% Notes and related accrued interest.

 

The Company’s financial instruments include cash, cash equivalents consisting of money market funds, accounts payable and debt. Cash, cash equivalents, accounts payable and debt are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature.

 

13

 

 

 

The following table summarizes the changes in Level 3 instruments during the six months ended June 30, 2019:

 

(in thousands)

 

    

 

 

 

 

    

 

Fair value at December 31, 2018

 

$

67

 

Interest accrued on face value of 5% Notes

 

 

456

 

Change in fair value of Level 3 liabilities

 

 

(378

)

Fair value at June 30, 2019

 

$

145

 

 

The change in the fair value of the Level 3 liabilities is reported in other (income) expense in the accompanying condensed consolidated statements of operations.

 

NOTE 5 - STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

Our amended and restated certificate of incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock, $ 0.001 par value, with rights senior to those of our common stock, issuable in one or more series. Upon issuance, we can determine the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock.

 

Common Stock

 

Our amended and restated certificate of incorporation authorizes the issuance of up to 150,000,000 shares of $ 0.001 par value common stock.
 
In May 2017, we filed a shelf registration statement on Form S-3 (the “2017 S-3”), which was declared effective in June 2017, replacing the 2015 S-3. Under the 2017 S-3, the Company may sell up to a total of $300 million of its securities. In connection with the 2017 S-3, we entered into an At-the-Market Issuance Sales Agreement (the “2017 ATM”) with Jefferies LLC, Cantor Fitzgerald & Co., FBR Capital Markets & Co., SunTrust Robinson Humphrey, Inc., Raymond James & Associates, Inc., Ladenburg Thalmann & Co. Inc. and H.C. Wainwright & Co., LLC (each a “2017 Agent” and collectively, the “2017 Agents”), relating to the sale of shares of our common stock. Under the 2017 ATM we pay the 2017 Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock.
 
In March 2019, we completed an underwritten public offering of 4,100,000 shares of our common stock (plus a 30-day underwriter overallotment option to purchase up to an additional 615,000 shares of common stock, which was exercised), at a price of $5.87 per share. Proceeds from this offering, including the overallotment, after underwriting discounts and offering expenses were approximately $27.5 million.
 
During the six months ended June 30, 2019, we sold a total of 3,616,359 shares of common stock under the 2017 ATM for aggregate total gross proceeds of approximately $28.9 million at an average selling price of $7.99 per share, resulting in net proceeds of approximately $28.4 million after deducting commissions and other transactions costs.
 
Subsequent to the second quarter, from July 1, 2019 through August 6, 2019, we sold an aggregate of 1,473,692 shares of common stock pursuant to the 2017 ATM for aggregate total gross proceeds of approximately $11.9 million at an average selling price of $8.05 per share, resulting in net proceeds of approximately $11.6 million after deducting commissions and other transactions costs.
 
 The 2017 S-3 is currently our only active shelf registration statement. After deducting shares already sold there is approximately $68.1 million of common stock that remains available for sale under the 2017 S-3. We may offer the securities under the 2017 S-3 from time to time in response to market conditions or other circumstances if we believe such a plan of financing is in the best interests of our stockholders. We believe that the 2017 S-3 provides us with the flexibility to raise additional capital to finance our operations as needed.

 

14

 

Equity Incentive Plans

 

The TG Therapeutics, Inc. Amended and Restated 2012 Incentive Plan (“2012 Incentive Plan”) was approved by stockholders in June 2018. As of June 30, 2019, 6,637,199 shares of restricted stock and 2,543,710 options were outstanding and up to an additional 1,427,369 shares may be issued under the 2012 Incentive Plan.

 

Effective as of January 1, 2017, we entered into an amendment (the “Amendment”) to the employment agreement entered as of December 15, 2011 (together with the Amendment, the “Employment Agreement”) with Michael S. Weiss, our Executive Chairman and Chief Executive Officer and President. Under the Amendment, Mr. Weiss will remain as Chief Executive Officer and President, removing the interim status. Simultaneously, we entered into a Strategic Advisory Agreement (the “Advisory Agreement”) with Caribe BioAdvisors, LLC (the “Advisor”) owned by Mr. Weiss to provide the services of Mr. Weiss as Chairman of the Board and as Executive Chairman. As part of the Amendment, Mr. Weiss also agreed to forfeit 3,381,866 restricted shares previously granted under the Employment Agreement that were predominantly subject to time-based vesting over the next three years. Simultaneously, (i) Mr. Weiss was issued 418,371 restricted shares under the Employment Agreement that vest in 2018 and 2019 and (ii) the Advisor was issued 2,960,000 restricted shares under the Advisory Agreement that vested on market capitalization thresholds ranging from $375 million to $750 million. In accordance with GAAP, there was no incremental stock compensation expense recognition as a result of the modification.

 

Stock Options

 

The following table summarizes stock option activity for the six months ended June 30, 2019:

 

 

 

Number of shares

 

 

Weighted- average exercise price

 

 

Weighted- average Contractual Term

 

 

Aggregate

Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

 

  (in years)  

 

 

 

 

 

Outstanding at December 31, 2018

 

 

1,916,900

 

 

$

6.50

 

 

 

9.75

 

 

$

 

Granted

 

 

740,000

 

 

 

6.90

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(113,190

)

 

 

6.33

 

 

 

 

 

 

 

 

 

Expired

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at June 30, 2019