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Table of Contents

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 September 30, 2021

 

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 001-32639

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

(Registrants telephone number, including area code)

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

Title of Class

Trading Symbol(s) 

Exchange Name

Common Stock, par value $0.001

TGTX

Nasdaq Capital Market

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 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

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 142,943,139 shares of the registrant’s common stock, $0.001 par value, outstanding as of November 3, 2021.

Table of Contents

TG THERAPEUTICS, INC.

FORM 10-Q

FOR THE QUARTER ENDED September 30, 2021

TABLE OF CONTENTS

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

 

3

SUMMARY RISK FACTORS

4

 

 

 

PART I

FINANCIAL INFORMATION

 

6

 

Item 1

Financial Statements:

 

6

 

Condensed Consolidated Balance Sheets

 

6

 

Condensed Consolidated Statements of Operations (unaudited)

 

7

 

Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (unaudited)

 

8

 

Condensed Consolidated Statements of Cash Flows (unaudited)

 

10

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

11

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

24

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

 

31

 

Item 4

Controls and Procedures

 

31

 

PART II

OTHER INFORMATION

 

31

 

Item 1

Legal Proceedings

 

31

 

Item 1A

Risk Factors

 

32

 

Item 6

Exhibits

 

83

2

Table of Contents

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 ability to establish and maintain a commercial infrastructure and to successfully launch, market and sell UKONIQ® (umbralisib) in the U.S. and any products for which we obtain regulatory approval in the future;
the success of the ongoing commercialization of UKONIQ and potential commercialization of any future products, including the anticipated rate and degree of market acceptance and pricing and reimbursement;
the timing of and our ability to complete regulatory submissions for our product candidates and additional indications for UKONIQ, and acceptance and review of those submissions by regulatory authorities, including those in the U.S. and in additional geographies;
our ability to obtain and maintain regulatory approvals for our product candidates, including ublituximab in combination with UKONIQ in chronic lymphocytic leukemia (CLL) and small lymphocytic lymphoma (SLL) and ublituximab in relapsing forms of multiple sclerosis (RMS);
the initiation, timing, progress and results of our pre-clinical studies and clinical trials, including, without limitation, UNITY-CLL Phase 3 clinical trial, ULTIMATE I and II Phase 3 clinical trials, UNITY-NHL Phase 2b clinical trial, and ULTRA-V Phase 3 clinical trial;
our ability to advance drug candidates into, and successfully complete, clinical trials;
our ability to establish and maintain contractual relationships, on commercially reasonable terms, with third parties for manufacturing, distribution and supply, and a range of other support functions for our clinical development and commercialization efforts;
the implementation of our business model, strategic plans for our business, drug candidates and technology;
the scope of protection we are able to establish and maintain for intellectual property rights covering our products and product candidates;
estimates of our expenses, future revenues, capital requirements and our needs for additional financing;
our ability to maintain and establish collaborations and enter into strategic arrangements, if desired;
our ability to meet any of our financial projections or guidance, including without limitation short and long-term revenue projections or guidance and changes to the assumptions underlying those projections or guidance;
our financial performance and cash burn management; and
developments relating to our competitors and our industry.

3

Table of Contents

SUMMARY RISK FACTORS

Our business is subject to a number of risks of which you should be aware before making an investment decision. The risks described below are a summary of the principal risks associated with an investment in us and are not the only risks we face. You should carefully consider these risks, the risk factors in Item IA, and the other reports and documents that we have filed with the Securities and Exchange Commission (SEC).

Risks Related to Commercialization

We have limited experience as a commercial company, and the marketing and sale of UKONIQ or any future approved products may be less successful than anticipated or unsuccessful.
The COVID-19 pandemic and related response measures to control it have impacted our sales and marketing efforts for UKONIQ and could have an adverse impact on our commercial launch of ublituximab, if approved.
If UKONIQ or any future approved product does not achieve broad market acceptance among physicians, patients, payors, and the medical community, the revenues that we generate from product sales will be limited.
If the market opportunities for UKONIQ and future approved products are smaller than we estimate or if any approval that we obtain is based on a narrower patient population, our revenue will be adversely affected.
We face substantial competition for treatments for our target indications, which may result in others commercializing drugs before or more successfully than we do, resulting in the reduction or elimination of our commercial opportunity.
If we are unable to establish additional commercial capabilities and infrastructure, we may be unable to generate sufficient revenue to sustain our business.
Product liability lawsuits could cause us to incur substantial liabilities and limit commercialization of any of our products.

Risks Related to our Financial Position and Need for Additional Capital

We have incurred significant operating losses since our inception and anticipate that we will continue to incur losses for the foreseeable future.
We will need to raise substantial additional funding. If we are unable to raise capital when needed, we will be forced to delay, reduce, or eliminate some of our drug development programs or commercialization efforts.
Our level of indebtedness and debt service obligations could adversely affect our financial condition and may make it more difficult for us to fund our operations.

Risks Related to Drug Development and Regulatory Approval

If we are unable to obtain regulatory approval for our product candidates and ultimately cannot commercialize one or more of them, or experience significant delays in doing so, our business will be materially harmed. No assurance can be given that the U2 combination will be approved for any indication, including without limitation, treatment naïve and/or relapsed/refractory CLL/small lymphocytic lymphoma (SLL) or that ublituximab will be approved for the treatment of relapsing forms of multiple sclerosis. In addition, our business will also be materially harmed if we are unable to maintain approval of any products for which we receive approval, including UKONIQ, which received accelerated approval from the U.S. Food and Drug Administration (FDA) for patients with marginal zone lymphoma and follicular lymphoma. Continued approval for these indications is contingent upon verification and description of clinical benefit in a confirmatory trial.
Our products and product candidates may cause undesirable side effects that could delay or prevent their regulatory approval or significantly limit their commercial profile following marketing approval, if any.
Because results of preclinical studies and early clinical trials are not necessarily predictive of future results, any product candidate we advance may not have favorable results in later clinical trials. Moreover, interim, “top-line,” and preliminary data from our clinical trials that we announce or publish may change, or the perceived product profile may be impacted, as more patient data or additional endpoints are analyzed.
Any product candidates we may advance through clinical development are subject to extensive regulation, which can be costly and time consuming, cause unanticipated delays, or prevent the receipt of the required approvals. Although we have received orphan drug designation for UKONIQ and for some of our drug candidates for specified indications and may seek additional orphan drug designations, we may be unsuccessful in obtaining or maintaining the benefits associated with orphan drug status.

4

Table of Contents

Risks Related to Governmental Regulation of the Pharmaceutical Industry

We are subject to extensive regulation, including new legislation, regulatory proposals and third-party payor initiatives, that may increase our costs of compliance and adversely affect our ability to market our products, obtain collaborators and raise capital.
If we fail to comply with various healthcare laws and regulations, we may incur losses or be subject to liability.
If we fail to comply with regulatory requirements, any product for which we obtain marketing approval could be subject to restrictions or withdrawal from the market and we may be subject to penalties.

Risks Related to our Dependence on Third Parties

If the third parties on which we rely to conduct our clinical trials and generate clinical, preclinical and other data necessary to support our regulatory applications do not perform their services as required, we may not be able to obtain regulatory approval for or commercialize our product candidates when expected or at all.
Our reliance on third parties for commercial and clinical supply of our products and product candidates increases the risk that we will not have sufficient quantities of our products or product candidates or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.
Because we have in-licensed our products and product candidates from third parties, any dispute with or non-performance by our licensors will adversely affect our ability to develop and commercialize the applicable product.

Risks Related to Intellectual Property

Our success depends upon our ability to obtain and protect our intellectual property, and if the scope of our patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be impaired.
Our patent protection could be reduced or eliminated for non-compliance with various procedural and other requirements imposed by governmental patent agencies.
We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
If we or our partners are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in that litigation would have a material adverse effect on our business.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed.

Risks Related to COVID-19

Public health issues, and specifically the pandemic caused by COVID-19, could have an adverse impact on our financial condition and results of operations and other aspects of our business.

General Risks Related to Our Business Organization and Governance, Strategy, Employees and Growth Management

We will need to develop and expand our business, and we may encounter difficulties in managing this development and expansion.
Our ability to continue our clinical development and commercialization activities will depend on our ability to attract and maintain key management and other personnel.
Certain of our executive officers, directors and other stockholders own more than 10% of our outstanding common stock and may be able to influence our management and the outcome of matters submitted to shareholders for approval.
Certain anti-takeover provisions in our charter documents and Delaware law could make a third-party acquisition more difficult, which could limit the price investors might be willing to pay for our common stock.
Our stock price is, and we expect it to remain, volatile, which could limit investors’ ability to sell stock at a profit and could subject us to securities and shareholder derivative litigation.

The foregoing is only a summary of some of our risks. These and other risks are discussed more fully in the section entitled “Risk Factors” in Part II, Item IA and elsewhere in this Quarterly Report on Form 10-Q (our Risk Factors).

5

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TG Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

September 30, 

December 31, 

    

2021

    

2020

    

(Unaudited)

(Note 1)

 

Assets

Current assets:

 

  

 

  

Cash and cash equivalents

$

326,512

$

553,439

Short-term investment securities

 

30,338

 

51,987

Accounts receivable, net

1,384

 

Prepaid research and development

 

11,043

 

5,231

Other current assets

 

2,502

 

1,083

Total current assets

 

371,779

 

611,740

Restricted cash

 

1,263

 

1,259

Long-term investment securities

24,550

Right of use assets

8,804

9,312

Leasehold interest, net

 

1,892

 

2,051

Equipment, net

 

600

 

481

Goodwill

 

799

 

799

Total assets

$

409,687

$

625,642

 

  

 

  

Liabilities and stockholders’ equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable and accrued expenses

$

44,702

$

37,014

Other current liabilities

12,628

18,236

Loan payable – current portion

15,999

22,179

Lease liability – current portion

1,468

1,669

Accrued compensation

 

12,858

 

8,456

Total current liabilities

 

87,655

 

87,554

Deferred revenue, net of current portion

 

495

 

610

Loan payable – non-current

-

7,716

Lease liability – non-current

10,020

10,412

Total liabilities

 

98,170

 

106,292

Commitments and contingencies

 

  

 

  

Stockholders’ equity:

 

  

 

  

Common stock, $0.001 par value per share (175,000,000 shares authorized, 142,984,448 and 140,617,606 shares issued, 142,943,139 and 140,576,297 shares outstanding at September 30, 2021 and December 31, 2020, respectively)

 

143

 

141

Additional paid-in capital

 

1,546,967

 

1,500,040

Treasury stock, at cost, 41,309 shares at September 30, 2021 and December 31, 2020

 

(234)

 

(234)

Accumulated deficit

 

(1,235,359)

 

(980,597)

Total stockholders’ equity

 

311,517

 

519,350

Total liabilities and stockholders’ equity

$

409,687

$

625,642

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

6

Table of Contents

TG Therapeutics, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

Three months ended

Nine months ended

September 30, 

September 30, 

    

2021

    

2020

    

2021

    

2020

    

Revenue:

Product revenue, net

$

1,992

$

$

4,254

$

License revenue

38

38

114

114

Total revenue

$

2,030

$

38

$

4,368

$

114

 

  

 

  

 

  

 

  

Costs and expenses:

 

  

 

  

 

  

 

  

Cost of product revenue

292

580

Research and development:

 

 

  

 

 

  

Noncash compensation

 

4,534

 

4,618

 

19,061

 

8,150

Other research and development

 

47,433

 

45,846

 

140,872

 

114,785

Total research and development

 

51,967

 

50,464

 

159,933

 

122,935

 

 

  

 

 

  

Selling, general and administrative:

 

 

  

 

 

  

Noncash compensation

 

9,463

 

23,712

 

27,857

 

38,618

Other selling, general and administrative

 

25,436

 

11,584

 

67,821

 

25,373

Total selling, general and administrative

 

34,899

 

35,296

 

95,678

 

63,991

 

 

  

 

 

  

Total costs and expenses

 

87,158

 

85,760

 

256,191

 

186,926

 

  

 

  

 

  

 

  

Operating loss

 

(85,128)

 

(85,722)

 

(251,823)

 

(186,812)

 

  

 

  

 

  

 

  

Other expense (income):

 

  

 

  

 

  

 

  

Interest expense

 

1,038

 

1,610

 

4,559

 

5,038

Other income

 

(529)

 

(169)

 

(1,619)

 

(687)

Total other expense (income), net

 

509

 

1,441

 

2,940

 

4,351

 

  

 

  

 

  

 

  

Net loss

$

(85,637)

$

(87,163)

$

(254,763)

$

(191,163)

 

  

 

  

 

  

 

  

Basic and diluted net loss per common share

$

(0.65)

$

(0.73)

$

(1.93)

$

(1.70)

 

  

 

  

 

  

 

  

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

 

132,353,119

 

119,176,336

 

132,109,912

 

112,380,784

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

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TG Therapeutics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity

(in thousands, except share and per share amounts)

(Unaudited)

    

    

    

Additional

    

    

    

Common Stock

paid-in

Treasury Stock  

Accumulated

Shares

Amount

 capital

Shares

Amount 

Deficit

Total

Balance at January 1, 2021

 

140,617,606

$

141

$

1,500,040

41,309

$

(234)

$

(980,597)

$

519,350

Issuance of common stock in connection with exercise of options

31,245

*

128

128

Issuance of restricted stock

 

893,488

 

1

 

(1)

 

 

 

 

Warrants issued with debt financing

 

  

 

  

 

  

 

  

 

  

 

  

 

Forfeiture of restricted stock

 

(21,643)

 

*

 

*

 

 

 

 

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

 

 

 

 

 

 

 

Offering costs paid

(183)

(183)

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

 

 

 

16,618

 

 

 

 

16,618

Net loss 

 

 

 

 

 

 

(90,628)

 

(90,628)

Balance at March 31, 2021

 

141,520,696

142

1,516,602

 

41,309

(234)

(1,071,225)

445,285

Issuance of common stock in connection with exercise of options

9,364

*

38

38

Issuance of common stock in connection with conversion of notes payable

Issuance of restricted stock

 

1,356,151

 

1

 

(1)

 

 

 

 

Forfeiture of restricted stock

 

(12,416)

 

*

 

*

 

 

 

 

Issuance of common stock in public offering (net of offering costs of $10.9 million)

 

 

 

 

 

 

 

Issuance of common stock in At-the-Market offerings (net of offering costs of $1.4 million)

 

 

 

 

 

 

 

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

 

 

 

16,304

 

 

 

 

16,304

Net loss

 

 

 

 

 

 

(78,497)

 

(78,497)

Balance at June 30, 2021

 

142,873,795

143

1,532,943

 

41,309

(234)

(1,149,722)

383,130

Issuance of common stock in connection with exercise of options

12,085

50

50

Issuance of restricted stock

 

214,223

*

*

 

Forfeiture of restricted stock

 

(115,655)

*

*

 

Offering costs paid

(22)

(22)

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

 

13,996

 

13,996

Net loss

 

(85,637)

 

(85,637)

Balance at September 30, 2021

 

142,984,448

$

143

$

1,546,967

 

41,309

$

(234)

$

(1,235,359)

$

311,517

*Amount less than one thousand dollars

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

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Additional

    

    

    

    

Common Stock

paid-in

Treasury Stock  

Accumulated

Shares

Amount 

capital

Shares

Amount

Deficit

Total

Balance at January 1, 2020

 

109,425,243

$

109

$

739,956

 

41,309

$

(234)

$

(701,216)

$

38,615

Issuance of common stock in connection with exercise of options

19,750

*

80

80

Issuance of restricted stock

 

774,300

 

1

 

(1)

 

 

 

 

Forfeiture of restricted stock

 

(10,000)

 

*

 

*

 

 

 

 

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

 

 

 

11,068

 

 

 

 

11,068

Net loss 

 

 

 

 

 

 

(51,116)

 

(51,116)

Net loss

 

 

 

 

 

 

(51,116)

 

(51,116)

Balance at March 31, 2020

 

110,209,293

110

751,103

 

41,309

(234)

(752,332)

(1,353)

Issuance of common stock in connection with exercise of options

3,750

16

16

Issuance of restricted stock

 

2,208,529

2

(2)

 

Forfeiture of restricted stock

 

(41,666)

 

*

 

 

 

 

Issuance of common stock in public offering

9,775,000

10

165,032

165,042

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

 

4,535,608

 

5

 

76,031

 

 

 

76,036

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

 

 

 

7,370

 

 

 

7,370

Net loss

 

 

 

 

 

(52,884)

 

(52,884)

Balance at June 30, 2020

 

126,690,514

127

999,550

41,309

(234)

(805,216)

194,227

Issuance of common stock in connection with exercise of options

9,347

38

38

Issuance of restricted stock

 

915,000

 

1

 

(1)

 

 

 

Forfeiture of restricted stock

 

(65,000)

 

*

 

 

 

 

Issuance of common stock in offerings (net of offering costs of $10.9 million)

(1)

(1)

Issuance of common stock in At-the-Market offerings (net of offering costs of $2.0 million)

 

1,410,000

 

1

 

35,226

 

 

 

35,227

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

 

 

 

28,330

 

 

 

28,330

Net loss

 

 

 

 

 

(87,163)

 

(87,163)

Balance at September 30, 2020

 

128,959,861

$

129

$

1,063,142

41,309

$

(234)

$

(892,379)

$

170,658

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TG Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Nine months ended

September 30, 

    

2021

    

2020

    

CASH FLOWS FROM OPERATING ACTIVITIES

 

  

 

  

 

 

  

 

  

 

Net loss

$

(254,763)

$

(191,163)

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

 

 

  

Noncash stock compensation expense

 

46,918

 

46,768

Depreciation and amortization

 

202

 

105

Amortization of premium on investment securities

 

421

 

(75)

Amortization of debt issuance costs

694

694

Amortization of leasehold interest

159

163

Noncash change in lease liability and right of use asset

1,422

1,364

Change in fair value of notes payable

 

(315)

 

286

Changes in assets and liabilities:

 

 

  

(Increase) decrease in other current assets

(7,255)

2,503

Increase in accounts receivable

(1,384)

Increase in accounts payable and accrued expenses

 

12,090

 

5,893

Decrease in lease liabilities

(1,507)

(1,360)

Decrease in other current liabilities

 

(5,293)

(27,545)

Decrease in deferred revenue

 

(114)

 

(114)

Net cash used in operating activities

 

(208,725)

 

(162,481)

 

  

 

  

CASH FLOWS FROM INVESTING ACTIVITIES

 

  

 

  

Proceeds from maturity of short-term securities

 

40,000

 

35,250

Investment in held-to-maturity securities

 

(43,299)

 

(7,482)

Purchases of PPE

 

(321)

 

(202)

Net cash (used in) provided by investing activities

 

(3,620)

 

27,566

 

  

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

 

  

 

  

Payment of loan payable

(14,590)

Proceeds from sale of common stock, net

276,303

Proceeds from exercise of options

216

135

Offering costs paid

 

(204)

 

Net cash (used in) provided by financing activities

 

(14,578)

 

276,438

 

  

 

  

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

(226,923)

 

141,523

 

  

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

554,698

 

113,888

 

  

 

  

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$

327,775

$

255,411

 

  

 

  

 

  

 

  

Reconciliation to amounts on consolidated balance sheets:

 

  

 

  

Cash and cash equivalents

$

326,512

$

254,154

Restricted cash

 

1,263

 

1,257

Total cash, cash equivalents and restricted cash 

$

327,775

$

255,411

 

  

 

  

Cash paid for:

 

  

 

  

Interest

$

2,698

$

3,447

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

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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 on a consolidated basis.

NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

TG Therapeutics is a fully integrated, commercial stage biopharmaceutical company focused on the acquisition, development and commercialization of novel treatments for B-cell malignancies and autoimmune diseases. In addition to an active research pipeline including five investigational medicines across these therapeutic areas, UKONIQ received accelerated approval from the FDA for the treatment of adult patients with relapsed or refractory MZL who have received at least one prior anti-CD20-based regimen and adult patients with relapsed or refractory FL who have received at least three prior lines of systemic therapies. Currently, we have three programs in Phase 3 development for the treatment of patients with RMS and patients with CLL and several investigational medicines in Phase 1 clinical development. We also actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (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, 2020. The accompanying condensed December 31, 2020 balance sheet has been derived from these statements. The results of operations for the three and nine months ended September 30, 2021 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. (TG AUS), 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 activities of TG AUS result in immaterial currency translation adjustments and, thus, are included in Other Income/Expense on the Company’s condensed consolidated statement of operations. The accompanying condensed 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 and expect to continue to incur operating losses for the foreseeable future and may never become profitable. As of September 30, 2021, we have an accumulated deficit of $1.2 billion.

Our major sources of cash have been proceeds from private placements and public offerings of equity securities. In February of 2021, umbralisib, now referred to as UKONIQ, was granted accelerated approval in the United States for the treatment of adult patients with relapsed or refractory MZL who have received at least one prior anti-CD20 based regimen and adult patients with relapsed or refractory FL who have received at least three prior lines of systemic therapy. Commercial sales of UKONIQ commenced in the first quarter of 2021. We have generated limited revenues to date from product sales. Even with the commercialization of UKONIQ and the potential future commercialization of our other drug candidates, we may not meet revenue guidance or become profitable. Our ability to achieve profitability depends on many factors, including our ability to generate revenue, our ability to obtain regulatory approvals for our drug candidates, our ability to successfully complete any post-approval regulatory obligations and our ability to successfully commercialize

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our drug candidates. We may continue to incur substantial operating losses even as we begin to generate revenues from our drug candidates.

As of September 30, 2021, we had $381.4 million in cash and cash equivalents, and investment securities. We anticipate that our cash and cash equivalents, and investment securities as of September 30, 2021 will provide sufficient liquidity for more than a twelve-month period from the date of filing this Quarterly Report on Form 10-Q. The actual amount of cash that we will need to operate is subject to many factors, including, but not limited to, our UKONIQ commercialization efforts, preparations for the potential commercialization of our other drug candidates, and 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 ongoing and future operations, including the commercialization of any of our drug candidates.

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

Summary of Significant Accounting Policies

Our significant accounting policies are described in Note 1 of Notes to Consolidated Financial Statements included in our 2020 Annual Report on Form 10-K, except as it relates to revenue recognition, accounts receivable, inventory, cost of product revenue, and the adoption of new accounting standards during the nine months ended September 30, 2021, as discussed below.

Revenue Recognition

Pursuant to Topic 606, we recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, Topic 606 includes provisions within a five-step model that includes i) identifying the contract with a customer, ii) identifying the performance obligations in the contract, iii) determining the transaction price, iv) allocating the transaction price to the performance obligations, and v) recognizing revenue when, or as, an entity satisfies a performance obligation.

At contract inception, we assess the goods or services promised within each contract and assess whether each promised good or service is distinct and determine those that are performance obligations. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.

Product Revenue, Net – The Company recognizes product revenues, net of variable consideration related to certain allowances and accruals, when the customer takes control of the product, which is typically upon delivery to the customer. Product revenue is recorded at the net sales price, or transaction price. The Company records product revenue reserves, which are classified as a reduction in product revenues, to account for the components of variable consideration. Variable consideration includes the following components, which are described below: chargebacks, government rebates, trade discounts and allowances, product returns, and co-payment assistance.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is expected to be settled with a credit against the Company's customer account) or a liability (if the amount is expected to be settled with a cash payment). The Company's estimates of reserves established for variable consideration are calculated based upon a consistent application of the expected value method, which is the sum of probability-weighted amounts in a range of possible consideration amounts. These estimates reflect the Company's current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. The amount of variable consideration that is included in the transaction price may be subject to constraint and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration received may ultimately differ from the Company's estimates. If actual results vary, the Company adjusts these estimates, which could have an effect on earnings in the period of adjustment.

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Chargebacks and Administrative Fees: Chargebacks for discounts represent the Company's estimated obligations resulting from contractual commitments to sell product to qualified healthcare providers and government agencies at prices lower than the list prices charged to the customers who directly purchase the product from the Company. The customers charge the Company for the difference between what the customers pay the Company for the product and the customers’ ultimate contractually committed or government required lower selling price to the qualified healthcare providers. As part of the Company's contractual commitments to sell product to qualified healthcare providers, the Company pays fees for administrative services, such as account management and data reporting.

Government Rebates: Government rebates consist of Medicare, Tricare, and Medicaid rebates. These reserves are recorded in the same period the related revenue is recognized. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe a rebate under the Medicare Part D program.

GPO and Payor Rebates: the Company contracts with various private payor organizations and group purchasing organizations (GPO), primarily insurance companies, pharmacy benefit managers and clinics, for the payment of rebates with respect to utilization of our product.  The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability.

Trade Discounts and Allowances: The Company provides its customers with discounts that are explicitly stated in the contracts and are recorded in the period the related product revenue is recognized. In addition, the Company also receives sales order management, inventory management, and data services from its customers in exchange for certain fees.

Product Returns: Consistent with industry practice, the Company generally offers customers a limited right of return for product that has been purchased from the Company. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate in the period the related product revenue is recognized. The Company currently estimates product return liabilities based on data from similar products and other qualitative considerations, such as visibility into the inventory remaining in the distribution channel.

Subject to certain limitations, the Company’s return policy allows for eligible returns of UKONIQ for credit under the following circumstances:

receipt of damaged product;
shipment errors that were a result of an error by the Company;
expired product that is returned during the period beginning three months prior to the product’s expiration and ending six months after the expiration date;
product subject to a recall; and
product that the Company, at its sole discretion, has specified can be returned for credit.

As of September 30, 2021, the Company has not received any returns.

Co-Payment Assistance Programs: Co-payment assistance is provided to qualified patients, whereby the Company may provide financial assistance to patients with prescription drug co-payments required by the patient's insurance provider. Reserves for co-payment assistance are recorded in the same period the related revenue is recognized.

Accounts Receivable

In general, accounts receivable consists of amounts due from customers, net of customer allowances for cash discounts, product returns and chargebacks. Our contracts with customers have standard payment terms. We analyze accounts that are past due for collectability, and regularly evaluate the creditworthiness of our customers so that we can properly assess and respond to changes in their credit profiles. As of September 30, 2021, we determined an allowance for

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expected credit losses related to outstanding accounts receivable was currently not required based upon our review of contractual payment terms and individual customer circumstances.

Cost of Product Revenue

Cost of product revenue consists primarily of materials and third-party manufacturing costs, as well as freight and royalties owed to our licensing partner for UKONIQ sales. Based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, the manufacturing costs of UKONIQ units recognized as revenue during the three and nine months ended September 30, 2021 were expensed prior to receipt of FDA approval on February 5, 2021, and therefore are not included in costs of product revenue during the current period.

Inventory

Prior to regulatory approval, we expense costs relating to the production of inventory as research and development expense in the period incurred. Following regulatory approval, costs to manufacture those approved products will be capitalized. Inventories are stated at the lower of cost or estimated net realizable value with cost based on the first-in-first-out method. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in clinical trials.

Prior to the approval of UKONIQ, all manufacturing and other potential costs related to the commercial launch of UKONIQ were expensed to research and development expense in the period incurred.

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 period presented or because such potentially dilutive securities were out of the money and should the Company realize net income during the period presented. The cumulative amounts of potentially dilutive securities excluded from the calculation were 13,126,038 securities and 11,103,701 securities for the nine months ended September 30, 2021 and 2020, 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:

 Nine Months Ended

September 30, 

    

2021

    

2020

 

 Unvested restricted stock

 

10,492,731

 

8,409,696

 

 Options

 

2,467,537

 

2,529,133

 

Warrants

147,058

147,058

 Shares issuable upon note conversion

 

18,712

 

17,814

 

 Total

 

13,126,038

 

11,103,701

 

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (FASB) issued ASU No 2019-12, Income Taxes

(Topic 740): Simplifying Accounting for Income Taxes (ASU 2019-12). ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocations, calculating income taxes in interim periods, and adds certain guidance to remove complexity in certain areas. ASU 2019-12 is effective for all entities for annual and interim periods beginning after December 15, 2020. Early adoption of either the entire standard or only those provisions that eliminate or modify requirements is permitted. Adoption of ASU 2019-12 did not have any impact to our condensed consolidated financial statements.

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In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The standard has tiered effective dates, starting in 2020 for calendar-year public business entities PBEs that meet the definition of an SEC filer, excluding smaller reporting companies. Early adoption is permitted for annual and interim goodwill impairment testing dates after 1 January 2017. Adoption of ASU 2017-04 did not have any impact to our condensed consolidated financial statements.

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

NOTE 2 REVENUE RECOGNITION

Gross-to-Net Sales Adjustments

To date, our only source of product revenue has been from the U.S. sales of UKONIQ, which we began shipping to our customers in February 2021. We record our best estimate of sales discounts and allowances to which customers are likely to be entitled. The reconciliation of gross product sales to net product sales by each significant category of gross-to-net adjustments was as follows for the three and nine months ended September 30, 2021:

(in thousands)

Three months ended

Nine months ended

September 30, 2021

September 30, 2021

Gross product revenue

$

2,528

$

5,167

Gross-to-net adjustments:

Chargebacks and administrative fees

(292)

(487)

Trade discounts and allowances

(128)

(222)

Government rebates and co-payment assistance

(103)

(179)

Sales returns and allowances

(13)

(25)

Total gross-to-net adjustments(1)

$

(536)

$

(913)

Net product revenue

$

1,992

$

4,254

(1) As of September 30, 2021 approximately $0.4 million of estimated gross-net-accruals have been recorded as a reduction of accounts receivable, net and within accounts payable and accrued expenses on the condensed consolidated balance sheets.

NOTE 3 INVESTMENT SECURITIES

Our investments as of September 30, 2021 and December 31, 2020 are classified as held-to-maturity. Held-to-maturity investments are recorded at amortized cost.

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The following table summarize our investment securities at September 30, 2021 and December 31, 2020:

September 30, 2021

  Amortized

  Gross

  Gross

cost, as

unrealized

unrealized

  Estimated

(in thousands)

    

adjusted

    

holding gains

    

holding losses

    

fair value

Short-term investments:

 

  

 

  

 

  

 

  

Obligations of domestic governmental agencies (maturing between October 2021 and April 2022) (held-to-maturity)

$

30,338

$

3

$

1

$

30,340

Long-term investments:

 

 

  

 

  

 

  

Obligations of domestic governmental agencies (maturing between February 2023 and June 2023) (held-to-maturity)

24,550

1

12

24,539

Total short-term and long-term investment securities

$

54,888

$

4

$

13

$

54,879