0.510.691344005001318986260001001316--12-312022Q1false0001001316us-gaap:MeasurementInputExpectedTermMember2022-03-310001001316us-gaap:WarrantMember2021-12-300001001316us-gaap:CommonStockMember2022-01-012022-03-310001001316us-gaap:CommonStockMember2021-01-012021-03-310001001316us-gaap:RetainedEarningsMember2022-03-310001001316us-gaap:AdditionalPaidInCapitalMember2022-03-310001001316us-gaap:RetainedEarningsMember2021-12-310001001316us-gaap:AdditionalPaidInCapitalMember2021-12-310001001316us-gaap:RetainedEarningsMember2021-03-310001001316us-gaap:AdditionalPaidInCapitalMember2021-03-310001001316us-gaap:RetainedEarningsMember2020-12-310001001316us-gaap:AdditionalPaidInCapitalMember2020-12-310001001316us-gaap:TreasuryStockMember2022-03-310001001316us-gaap:CommonStockMember2022-03-310001001316us-gaap:TreasuryStockMember2021-12-310001001316us-gaap:CommonStockMember2021-12-310001001316us-gaap:TreasuryStockMember2021-03-310001001316us-gaap:CommonStockMember2021-03-310001001316us-gaap:TreasuryStockMember2020-12-310001001316us-gaap:CommonStockMember2020-12-310001001316us-gaap:MeasurementInputSharePriceMemberus-gaap:WarrantMember2022-03-310001001316us-gaap:RestrictedStockMember2022-03-310001001316us-gaap:EmployeeStockOptionMember2022-03-310001001316us-gaap:RestrictedStockMember2021-12-310001001316us-gaap:EmployeeStockOptionMember2021-12-310001001316us-gaap:RestrictedStockMember2022-01-012022-03-310001001316us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001001316tgtx:AmendedAndRestated2012IncentivePlanMember2022-03-310001001316us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:WarrantMember2022-01-012022-03-310001001316us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:WarrantMember2022-01-012022-03-310001001316us-gaap:MeasurementInputExercisePriceMemberus-gaap:WarrantMember2022-03-310001001316us-gaap:RestrictedStockMembertgtx:AmendedAndRestated2012IncentivePlanMember2022-03-310001001316us-gaap:EmployeeStockOptionMembertgtx:AmendedAndRestated2012IncentivePlanMember2022-03-310001001316tgtx:Tgr1202Member2021-01-012021-12-310001001316tgtx:Tgr1202Member2021-01-012021-03-310001001316us-gaap:ProductMember2022-01-012022-03-310001001316us-gaap:LicenseMember2022-01-012022-03-310001001316us-gaap:ProductMember2021-01-012021-03-310001001316us-gaap:LicenseMember2021-01-012021-03-310001001316tgtx:Tg1101Member2021-01-012021-03-310001001316us-gaap:RetainedEarningsMember2022-01-012022-03-310001001316us-gaap:RetainedEarningsMember2021-01-012021-03-310001001316tgtx:NcLeaseMember2022-03-310001001316tgtx:OfficeAgreementMember2019-02-280001001316tgtx:OfficeAgreementMember2022-01-012022-03-310001001316srt:RestatementAdjustmentMember2019-01-010001001316tgtx:NjLeaseMember2022-01-012022-03-310001001316tgtx:TermLoanMember2021-12-300001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2022-03-310001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMembertgtx:LongTermInvestmentsMember2022-03-310001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2021-12-310001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMembertgtx:LongTermInvestmentsMember2021-12-310001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMember2021-01-012021-12-310001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMember2022-01-012022-03-310001001316us-gaap:RestrictedStockMember2022-01-012022-03-310001001316us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001001316us-gaap:RestrictedStockMember2022-03-310001001316us-gaap:EmployeeStockOptionMember2022-03-310001001316tgtx:Tg1101Member2022-03-310001001316tgtx:Tg1101Member2021-12-310001001316tgtx:ManhattanAndAristonPharmaceuticalsMergerMember2022-01-012022-03-310001001316tgtx:ManhattanAndAristonPharmaceuticalsMergerMember2010-03-012010-03-310001001316tgtx:ManhattanAndAristonPharmaceuticalsMergerMember2010-03-310001001316srt:MinimumMembertgtx:AmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:PrimeRateMember2021-12-302021-12-300001001316srt:MaximumMembertgtx:AmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:PrimeRateMember2021-12-302021-12-300001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:WarrantMember2021-12-3000010013162020-12-3100010013162021-03-310001001316tgtx:OfficeAgreementMember2014-10-310001001316us-gaap:WarrantMember2022-01-012022-03-310001001316us-gaap:RestrictedStockMember2022-01-012022-03-310001001316us-gaap:ConvertibleDebtSecuritiesMember2022-01-012022-03-310001001316tgtx:StockOptionsMember2022-01-012022-03-310001001316us-gaap:WarrantMember2021-01-012021-03-310001001316us-gaap:RestrictedStockMember2021-01-012021-03-310001001316us-gaap:ConvertibleDebtSecuritiesMember2021-01-012021-03-310001001316tgtx:StockOptionsMember2021-01-012021-03-310001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:WarrantMember2022-01-012022-03-310001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:WarrantMember2021-01-012021-03-310001001316us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001001316tgtx:OfficeAgreementMember2022-03-310001001316us-gaap:WarrantMember2022-03-310001001316us-gaap:WarrantMember2021-03-310001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:WarrantMember2021-12-302021-12-300001001316tgtx:Tg1101Member2022-01-012022-03-310001001316tgtx:Tg1101Member2021-01-012021-12-310001001316tgtx:LfbGroupMember2022-01-012022-03-310001001316tgtx:Tg1101Member2012-12-012012-12-310001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMembertgtx:WithinFirstTwelveMonthsOfClosingDateMember2021-12-302021-12-300001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMembertgtx:AfterTwentyFourMonthsOfClosingDateMember2021-12-302021-12-300001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMembertgtx:AfterTwelveMonthsButOnOrBeforeTwentyFourMonthsMember2021-12-302021-12-300001001316tgtx:OfficeAgreementMember2016-04-012016-04-300001001316us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001001316srt:MaximumMembertgtx:TermLoanMember2019-02-280001001316tgtx:Tgr1202Member2022-01-012022-03-310001001316tgtx:LfbLicenseAgreementMember2022-01-012022-03-310001001316tgtx:LfbLicenseAgreementMember2021-01-012021-03-310001001316srt:MinimumMember2022-01-012022-03-310001001316srt:MaximumMember2022-01-012022-03-310001001316tgtx:TermLoanMember2022-01-012022-03-310001001316tgtx:SharedServicesAgreementMember2022-01-012022-03-310001001316tgtx:SharedServicesAgreementMember2021-01-012021-03-3100010013162022-03-3100010013162021-12-310001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMember2022-03-310001001316tgtx:AmendedAndRestatedLoanAndSecurityAgreementMember2021-12-300001001316tgtx:AtMarket2020Member2019-09-0500010013162021-01-012021-03-310001001316tgtx:NcLeaseMember2021-10-012021-10-310001001316tgtx:NjLeaseMember2019-10-012019-10-310001001316tgtx:OfficeAgreementMember2014-10-012014-10-310001001316tgtx:Tgr1202Member2022-03-310001001316tgtx:LfbLicenseAgreementMember2022-03-310001001316tgtx:LfbGroupMember2022-03-310001001316tgtx:Tg1101Membersrt:MaximumMember2022-03-310001001316tgtx:TermLoanMember2019-02-2800010013162022-05-0600010013162022-01-012022-03-31xbrli:sharesiso4217:USDxbrli:puretgtx:loaniso4217:USDxbrli:sharesutr:sqft

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 March 31, 2022

 

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 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 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 the definitions 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 144,435,369 shares of the registrant’s common stock, $0.001 par value, outstanding as of May 6, 2022.

Table of Contents

TG THERAPEUTICS, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2022

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’ Equity (unaudited)

 

8

 

Condensed Consolidated Statements of Cash Flows (unaudited)

 

9

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

10

 

Item 2

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

 

20

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

 

25

 

Item 4

Controls and Procedures

 

25

 

PART II

OTHER INFORMATION

 

25

 

Item 1

Legal Proceedings

 

25

 

Item 1A

Risk Factors

 

26

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

73

Item 3

Defaults of Senior Securities

73

 

Item 4

Mine Safety Disclosures

73

Item 5

Other Information

73

Item 6

Exhibits

 

74

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 obtain regulatory approval for ublituximab in relapsing forms of multiple sclerosis (RMS) and any other product candidates;
our ability to adapt and expand our commercial infrastructure to successfully launch, market and sell ublituximab in RMS if we obtain regulatory approval in the future;
the success of the potential commercialization of ublituximab or any future products or combinations of products, including the anticipated rate and degree of market acceptance and pricing and reimbursement;
the initiation, timing, progress and results of our pre-clinical studies and clinical trials;
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 and drug candidates;
the scope of protection we are able to establish and maintain for intellectual property rights covering our 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 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.
Our 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.

Risks Related to Commercialization

We cannot predict when or if we will obtain regulatory approval to commercialize our product candidates, including ublituximab in RMS.
We have limited experience operating as a commercial company, and, as a result, the marketing and sale of ublituximab in RMS, if approved, may be less successful than anticipated.
If any of our future product candidates receive approval but do 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 any products for which we may receive approval, including ublituximab in RMS, are smaller than we estimate or if any approval that we obtain is based on a narrower patient population or the labeling includes warnings or limitations that are not acceptable to patients or healthcare providers, 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 to support a potential launch in RMS or expansion into geographies outside the U.S., we may be unable to generate sufficient revenue to sustain our business.
Product liability lawsuits could cause us to incur substantial liabilities and limit product commercialization.

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 Governmental Regulation of the Pharmaceutical Industry

We are subject to extensive regulation, including new legislative and regulatory proposals, that may increase our compliance costs 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.

4

Table of Contents

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 may be significantly 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.
Patients and healthcare providers have raised concerns that immunosuppressive products, like anti-CD20 antibodies and other B-cell targeted agents, may increase the risk of acquiring COVID-19 or lead to more severe complications upon infection. These concerns may impact the commercial potential for ublituximab and other immunosuppressive products that we have in development.

General Risk Factors

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 5% 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)

March 31, 

December 31, 

    

2022

    

2021

(Unaudited)

(Note 1)

Assets

Current assets:

 

  

 

  

Cash and cash equivalents

$

185,676

$

298,887

Short-term investment securities

 

47,525

 

15,876

Accounts receivable, net

903

 

1,389

Prepaid research and development

 

4,092

 

11,929

Other current assets

 

4,020

 

2,884

Total current assets

 

242,216

 

330,965

Restricted cash

 

1,265

 

1,264

Long-term investment securities

47,472

35,533

Right of use assets

8,964

8,629

Leasehold interest, net

 

1,786

 

1,839

Equipment, net

 

526

 

600

Goodwill

 

799

 

799

Total assets

$

303,028

$

379,629

 

  

 

  

Liabilities and stockholders’ equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable and accrued expenses

$

49,668

$

51,294

Other current liabilities

1,873

1,512

Loan payable – current portion

975

Lease liability – current portion

1,492

1,437

Accrued compensation

 

1,623

 

10,166

Total current liabilities

 

54,656

 

65,384

Deferred revenue, net of current portion

 

419

 

457

Loan payable – non-current

67,249

66,788

Lease liability – non-current

10,318

9,847

Total liabilities

 

132,642

 

142,476

Commitments and contingencies

 

  

 

  

Stockholders’ equity:

 

  

 

  

Common stock, $0.001 par value per share (175,000,000 shares authorized, 144,583,334 and 143,292,043 shares issued, 144,542,025 and 143,250,734 shares outstanding at March 31, 2022 and December 31, 2021, respectively)

 

145

 

143

Additional paid-in capital

 

1,568,186

 

1,565,942

Treasury stock, at cost, 41,309 shares at March 31, 2022 and December 31, 2021

 

(234)

 

(234)

Accumulated deficit

 

(1,397,711)

 

(1,328,698)

Total stockholders’ equity

 

170,386

 

237,153

Total liabilities and stockholders’ equity

$

303,028

$

379,629

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

March 31, 

    

2022

    

2021

Revenue:

Product revenue, net

$

1,978

$

755

License revenue

38

38

Total revenue

$

2,016

$

793

 

  

 

  

Costs and expenses:

 

  

 

  

Cost of product revenue

237

139

Research and development:

 

 

  

Noncash compensation

 

1,895

 

7,511

Other research and development

 

46,147

 

55,583

Total research and development

 

48,042

 

63,094

 

 

  

Selling, general and administrative:

 

 

  

Noncash compensation

 

226

 

9,107

Other selling, general and administrative

 

20,383

 

17,655

Total selling, general and administrative

 

20,609

 

26,762

 

 

  

Total costs and expenses

 

68,888

 

89,995

 

  

 

  

Operating loss

 

(66,872)

 

(89,202)

 

  

 

  

Other expense (income):

 

  

 

  

Interest expense

 

2,664

 

1,898

Other income

 

(523)

 

(472)

Total other expense (income), net

 

2,141

 

1,426

 

  

 

  

Net loss

$

(69,013)

$

(90,628)

 

  

 

  

Basic and diluted net loss per common share

$

(0.51)

$

(0.69)

 

  

 

  

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

 

134,400,500

 

131,898,626

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

7

Table of Contents

TG Therapeutics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ 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)

 

 

 

 

Forfeiture of restricted stock

 

(21,643)

 

*

 

*

 

 

 

 

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

    

    

    

Additional

    

    

    

Common Stock

paid-in

Treasury Stock  

Accumulated

Shares

Amount

 capital

Shares

Amount 

Deficit

Total

Balance at January 1, 2022

 

143,292,043

$

143

$

1,565,942

41,309

$

(234)

$

(1,328,698)

$

237,153

Issuance of common stock in connection with exercise of options

30,411

*

125

125

Issuance of restricted stock

 

1,852,626

 

2

 

(2)

 

 

 

 

Forfeiture of restricted stock

 

(591,746)

 

*

 

*

 

 

 

 

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

 

 

 

2,121

 

 

 

 

2,121

Net loss 

 

 

 

 

 

 

(69,013)

 

(69,013)

Balance at March 31, 2022

 

144,583,334

145

1,568,186

 

41,309

(234)

(1,397,711)

170,386

*Amount less than one thousand dollars

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

8

Table of Contents

TG Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Three months ended

March 31, 

    

2022

    

2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

  

 

  

 

  

 

  

Net loss

$

(69,013)

$

(90,628)

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

 

 

  

Noncash stock compensation expense

 

2,121

 

16,618

Depreciation and amortization

 

76

 

59

Amortization of premium on investment securities

 

23

 

127

Amortization of debt issuance costs

461

231

Amortization of leasehold interest

53

53

Noncash change in lease liability and right of use asset

683

479

Change in fair value of notes payable

 

(178)

 

(58)

Changes in assets and liabilities:

 

 

  

Decrease (increase) in other current assets

6,759

(4,107)

Decrease (increase) in accounts receivable

487

(771)

(Decrease) increase in accounts payable and accrued expenses

 

(10,170)

 

904

Decrease in lease liabilities

(492)

(507)

Increase (decrease) in other current liabilities

 

539

(3,717)

Decrease in deferred revenue

 

(38)

 

(38)

Net cash used in operating activities

 

(68,689)

 

(81,355)

 

  

 

  

CASH FLOWS FROM INVESTING ACTIVITIES

 

  

 

  

Proceeds from maturity of short-term securities

 

13,225

 

17,000

Investment in held-to-maturity securities

 

(56,889)

 

(17,447)

Purchases of PPE

 

(7)

 

(67)

Net cash used in investing activities

 

(43,671)

 

(514)

 

  

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

 

  

 

  

Payment of loan payable

(975)

Proceeds from exercise of options

125

128

Offering costs paid

 

 

(183)

Net cash used in financing activities

 

(850)

 

(55)

 

  

 

  

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

(113,210)

 

(81,924)

 

  

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

300,151

 

554,698

 

  

 

  

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$

186,941

$

472,774

 

  

 

  

 

  

 

  

Reconciliation to amounts on condensed consolidated balance sheets:

 

  

 

  

Cash and cash equivalents

$

185,676

$

471,514

Restricted cash

 

1,265

 

1,260

Total cash, cash equivalents and restricted cash 

$

186,941

$

472,774

 

  

 

  

Cash paid for:

 

  

 

  

Interest

$

1,584

$

769

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

9

Table of Contents

TG Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Unless the context requires otherwise, references in this report to “TG,” “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

TG Therapeutics is a biopharmaceutical company focused on the acquisition, development and commercialization of novel treatments for B-cell malignancies and autoimmune diseases. In addition to a research pipeline including several investigational medicines, TG has completed a Phase 3 program for ublituximab, an investigational glycoengineered monoclonal antibody that targets a unique epitope on CD20-expressing B-cells, to treat patients with relapsing forms of multiple sclerosis (RMS). 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, 2021. The accompanying condensed December 31, 2021 balance sheet has been derived from these statements. The results of operations for the three months ended March 31, 2022 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 March 31, 2022, we have an accumulated deficit of $1.4 billion.

Our major sources of cash have been proceeds from private placement and public offering of equity securities, and from our loan and security agreements executed with Hercules Capital, Inc. (Hercules) (see Note 6 for more information). Since inception, we have incurred significant operating losses. Substantially all our operating losses have resulted from costs incurred in connection with our research and development programs and from selling, general and administrative costs associated with our operations, including our commercialization activities. We expect to continue to incur significant expenses and operating losses for the foreseeable future. Because we have withdrawn UKONIQ from sale, we have no marketed products currently. We expect to continue to incur significant research and development expenses and we expect to continue to incur significant commercialization and outsourced-manufacturing expenses as we plan for the possible commercialization of ublituximab in RMS. Because of the numerous risks and uncertainties associated with developing pharmaceuticals, we are unable to predict the extent of any future losses or when we will become profitable, if at all. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis. Our ability to become profitable depends upon our ability to generate substantial revenue.

10

Table of Contents

As of March 31, 2022, we had $280.7 million in cash and cash equivalents, and investment securities. We anticipate that our cash and cash equivalents, and investment securities as of March 31, 2022 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, the costs and timing of clinical and commercial manufacturing supply arrangements for each product and product candidate, and the costs of expanding our sales, distribution and other commercialization capabilities. We are dependent upon significant future financing to provide the cash necessary to execute our long-term operations.

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 2021 Annual Report on Form 10-K, except updated herein or as it relates to the adoption of new accounting standards during the three months ended March 31, 2022. Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

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 the Company realized net income during the period presented. The cumulative amounts of potentially dilutive securities excluded from the calculation were 12,657,717 securities and 12,129,734 securities for the three months ended March 31, 2022 and 2021, respectively.

The following table summarizes our potentially dilutive securities at March 31, 2022 and 2021:

 Three Months Ended

March 31, 

    

2022

    

2021

 Unvested restricted stock

 

9,952,451

 

9,474,026

 Options

 

2,423,991

 

2,490,396

Warrants

262,100

147,058

 Shares issuable upon note conversion

 

19,175

 

18,254

 Total

 

12,657,717

 

12,129,734

11

Table of Contents

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. On April 15, 2022, we announced our voluntary withdrawal of UKONIQ from sale. We record our best estimate for 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 months ended March 31, 2022 and 2021:

(in thousands)

Three months ended

Three months ended

March 31, 2022

March 31, 2021

Gross product revenue

$

3,419

$

906

Gross-to-net adjustments:

Chargebacks and administrative fees

(250)

(75)

Trade discounts and allowances

(220)

(37)

Government rebates and co-payment assistance

(229)

(35)

Sales returns and allowances

(742)

(4)

Total gross-to-net adjustments(1)

$

(1,441)

$

(151)

Net product revenue

$

1,978

$

755

(1) As of March 31, 2022 approximately $1.3 million of estimated gross-to-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. In addtion, as of March 31, 2022, we determined an allowance for expected credit losses related to outstanding accounts receivable was currently not required based upon our review of contractual payment terms and individual customer circumstances.

12

Table of Contents

NOTE 3 INVESTMENT SECURITIES

Our investments as of March 31, 2022 and December 31, 2021 are classified as held-to-maturity. Held-to-maturity investments are recorded at amortized cost.

The following tables summarize our investment securities at March 31, 2022 and December 31, 2021:

March 31, 2022

  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 April 2022 and March 2023) (held-to-maturity)

$

47,525

$

1

$

81

$

47,445

Long-term investments:

 

 

  

 

  

 

  

Obligations of domestic governmental agencies (maturing between April 2023 and February 2024) (held-to-maturity)

47,472

930

46,542

Total short-term and long-term investment securities

$

94,997

$

1

$

1,011

$

93,987

December 31, 2021

    

Amortized

    

Gross

    

Gross

    

cost, as

unrealized

unrealized

Estimated fair

adjusted

holding gains

holding losses

value

Short-term investments:

 

  

 

  

 

  

 

  

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

$

15,876

$

$

4

$

15,872

Long-term investments:

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

35,533

160

35,373

Total short-term and long-term investment securities

$

51,409

$

$

164

$

51,245

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.

As of March 31, 2022 and December 31, 2021, the fair values of cash and cash equivalents, restricted cash, accounts receivable, and loan and interest payable approximate their carrying value.

At the time of our merger (we were then known as Manhattan Pharmaceuticals, Inc. (Manhattan)) 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. We have no obligations under the 5% Notes aside from the conversion feature.

13

Table of Contents

The Company’s financial instruments include cash, cash equivalents consisting of money market funds, accounts receivable, accounts payable and loan payable. Cash, cash equivalents, restricted cash, accounts receivable, accounts payable and interest payable are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature. The carrying value of loan payable on the Company’s balance sheet is estimated to approximate its fair value as the interest rate approximates the market rate for loans with similar terms and risk characteristics.

We have no Level 1 or Level 2 instruments. Our Level 3 instrument amounts represent the fair value of the 5% Notes and related accrued interest. The following table summarizes the changes in Level 3 instruments during the three months ended March 31, 2022:

(in thousands)

Balance at December 31, 2021

360

Interest accrued on face value of 5% Notes

 

262

Change in fair value of Level 3 liabilities

 

(440)

Balance at March 31, 2022

$

182

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 175,000,000 shares of $0.001 par value common stock.

On September 5, 2019, we filed an automatic “shelf registration” statement on Form S-3 (the 2019 WKSI Shelf) as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act, which registered an unlimited and indeterminate amount of debt or equity securities for future issuance and sale. The 2019 WKSI Shelf was declared effective in September 2019. In connection with the 2019 WKSI Shelf, we entered into an At-the-Market Issuance Sales Agreement (the 2020 ATM) with Jefferies LLC, Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (each a 2020 Agent and collectively, the 2020 Agents), relating to the sale of shares of our common stock. Under the 2020 ATM, we paid the 2020 Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock. In November 2020, we entered into an At-the-Market Issuance Sales Agreement (the 2021 ATM) with the same terms and agents (each a 2021 Agent and collectively, the 2021 Agents) as the 2020 ATM. The 2021 ATM has replaced the 2020 ATM as the only active ATM program.

We had no activity on the 2021 ATM during the three months ended March 31, 2022 and 2021.

The 2019 WKSI Shelf is currently our only active shelf-registration statement. We may offer any combination of the securities registered under the 2019 WKSI Shelf 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 2019 WKSI Shelf provides us with the flexibility to raise additional capital to finance our operations as needed.

14

Table of Contents

Equity Incentive Plans

The TG Therapeutics, Inc. Amended and Restated 2012 Incentive Plan (the 2012 Incentive Plan) was approved by stockholders in June 2020. As of March 31, 2022, 11,452,473 shares of restricted stock and 2,423,991 options were outstanding and up to an additional 263,359  shares may be issued under the 2012 Incentive Plan.

Stock-based compensation expense included in the condensed consolidated statements of operations was $2.1 million and $16.6 million for the three months ended March 31, 2022 and 2021, respectively.

Stock Options and Restricted Stock

The following table summarizes the activity for stock options and restricted stock for the three months ended March 31, 2022:

Stock Options

Restricted Stock

Equity awards outstanding, beginning of year

2,467,537

12,032,040

Changes during the year:

Granted

1,852,626

Exercised or vested

(30,411)

(1,840,447)

Expired or Forfeited

(13,135)

(591,746)

Equity awards outstanding, end of period

2,423,991

11,452,473

As of March 31, 2022, total compensation cost related to unvested awards not yet recognized and the weighted-average periods over which the awards are expected to be recognized were as follows:

(in thousands)

Stock Options

Restricted Stock

Unrecognized compensation cost

$

435

$

53,979

Expected weighted-average period in years of compensation cost to be recognized

1.0

2.9

Warrants

The Company’s only outstanding warrants are the warrants issued to Hercules as part of our the Loan Agreement and Amended Loan Agreement (as such terms are defined below) to purchase 147,058 and 115,042 shares of our common stock with exercise prices of $4.08 and $17.95, respectively. See Note 6 for further details. There will not be any ongoing stock compensation expense volatility associated with these warrants.

NOTE 6 LOAN PAYABLE

On February 28, 2019 (the Closing Date), we entered into a term loan facility with Hercules Capital, Inc. (Hercules or Lender), which provided us with the capacity to borrow up to an aggregate principal amount of $60.0 million (Term Loan), the proceeds of which were used for research and development programs and for general corporate purposes. The Term Loan is governed by a loan and security agreement, dated February 28, 2019 (the Loan Agreement), which provides for up to four separate advances. The first advance of $30.0 million was drawn on the Closing Date. An additional $30.0 million under the Term Loan was previously available upon the completion of different milestones and time points that have now lapsed.

On December 30, 2021 (the First Amendment Closing Date), the Company entered into an Amended and Restated Loan and Security Agreement (the Amended Loan Agreement) with Hercules Capital, Inc. The Amended Loan Agreement amended the terms of the Loan Agreement to, among other things, (i) increase the aggregate principal amount of the loan, available at the Company’s option, from $60.0 million to $200.0 million (the Amended Term Loan), (ii) issue a first advance of $70.0 million drawn at the First Amendment Closing Date, a portion of which was used to refinance the current outstanding loan balance of approximately $7.8 million and pay for expenses incurred by the Lender in executing the agreements, (iii) change the draw amounts and dates available in subsequent tranches, (iv) extend the maturity date of the facility from the original March 1, 2022 to January 1, 2026, (v) reset and extend the interest only period from April 1,

15

Table of Contents

2021 to February 1, 2025 and extendable to August 1, 2025 subject to the achievement of certain performance milestones, and (vi) modify the cash interest rate to be the greater of either (a) the “prime rate” as reported in The Wall Street Journal plus 2.15%, and (b) 5.40%. The performance milestones are based on achievement of certain U.S. Food and Drug Administration approvals and impact the potential extension of the interest only period, access to future advances under the Loan Agreement and minimum cash levels required under the Amended Loan Agreement.

The Amended Loan Agreement contains financial covenants from and after October 15, 2022 that require the Company to maintain certain levels of unrestricted cash and additional financial covenants related to market capitalization and unrestricted cash commencing on July 1, 2023 at any time when the Amended Term Loan advances made under the Amended Loan Agreement are greater than $70 million.

The Amended Loan Agreement also contains warrant coverage of 2.95% of the total amount funded. A warrant was issued by the Company to Hercules to purchase 115,042 shares of common stock with an exercise price of $17.95 for the initial amount funded at closing (the Warrant). The Warrant shall be exercisable for seven years from the date of issuance. Hercules may exercise the Warrant either by (a) cash or check or (b) through a net issuance conversion.

In addition, the Company is required to pay a final payment fee equal to 5.95% of the aggregate principal amount of the Term Loan Advances (as defined in the Loan Agreement).

The Company may, at its option, prepay the Amended Term Loan in full or in part, subject to a prepayment penalty equal to (i) 2.0% of the principal amount prepaid if the prepayment occurs prior to the first anniversary of the First Amendment Closing Date, (ii) 1.5% of the principal amount prepaid if the prepayment occurs on or after the first anniversary and prior to the second anniversary of the First Amendment Closing Date, and (iii) 1.0% of the principal amount prepaid if the prepayment occurs on or after the second anniversary and prior to the third anniversary of the First Amendment Closing Date.

The Company evaluated whether the Amended Term Loan entered into in December 2021 represented a debt modification or extinguishment of the Term Loan in accordance with ASC 470-50, Debt – Modifications and Extinguishments. As a result of the repayment and retirement of the Term Loan, the Term Loan was accounted for by the Company under the extinguishment accounting model. The Company recorded a loss on extinguishment of debt of approximately $0.2 million on the Company’s statement of operations for the twelve months ended December 31, 2021, representing the write-off of deferred financing costs.

The Company estimated the fair value of the Warrant using the Black-Scholes model based on the following key assumptions:

Amended Term Loan

Exercise price

    

$

17.95

Common share price on date of issuance

$

19.35

Volatility

184.4

%

Risk-free interest rate

1.44

%

Expected dividend yield

%

Contractual term (in years)

7.00 years

The Company incurred financing expenses of $7.4 million (including the fair value of the Warrant) related to the Amended Loan Agreement which are recorded as debt issuance costs and as an offset to loan payable on the Company’s consolidated balance sheet. The debt issuance costs are being amortized over the term of the debt using the straight-line method, which approximates the effective interest method, and will be included in interest expense in the Company’s consolidated statements of operations. Amortization of debt issuance costs was $0.5 million and $0.2 million for the three months ended March 31, 2022, and 2021, respectively. At March 31, 2022, the remaining unamortized balance of debt issuance costs was $6.9 million.

16

Table of Contents

The loan payable as of March 31, 2022 and December 31, 2021, is as follows:

March 31, 

    

December 31,

(in thousands)

2022

 

2021

Loan payable

$

70,000

$

70,000

End of term fee

 

4,165

 

5,140

 

74,165

 

75,140

Less: unamortized debt issuance costs

 

(6,916)

 

(7,377)

 

67,249

 

67,763

Less: principal payments

Total loan payable

67,249

67,763

Less: current portion

 

 

(975)

Loan payable non-current

$

67,249

$

66,788

NOTE 7 LEASES

In October 2014, we entered into an agreement (the Office Agreement) with Fortress Biotech, Inc. (FBIO) to occupy approximately 45% of the 24,000 square feet of New York City office space leased by FBIO. The Office Agreement requires us to pay our respective share of the average annual rent and other costs of the 15-year lease. We approximate an average annual rental obligation of $1.4 million under the Office Agreement. We began to occupy this new space in April 2016, with rental payments beginning in the third quarter of 2016. The initial commitment period of the 45% rate was for a period of three (3) years. We and FBIO currently determine actual office space utilization annually and if our utilization differs from the amount we have been billed, we will either receive credits or be assessed incremental utilization charges. As of March 31, 2022, the allocation rate is 63% and will be evaluated again in September 2022 for the following rent year. Also in connection with this lease, we have pledged $1.3 million to secure a line of credit as a security deposit for the Office Agreement, which has been recorded as restricted cash in the accompanying condensed consolidated balance sheets.

In October 2019, we finalized a five-year lease for office space in New Jersey (the NJ Lease). We approximate an average annual rental obligation of $0.3 million under the NJ Lease. We took possession of this space in October 2019, with rental payments beginning in November 2019. We incurred rent expense of $0.1 million for the three months ended March 31, 2022.

In October 2021, we finalized a five-year lease for office space in North Carolina (the NC Lease). We approximate an average annual rental obligation of $0.2 million under the NC Lease. We took possession of this space in February 2022, with rental payments beginning in April 2022.

At January 1, 2019, we recognized a lease liability and corresponding Right-of-Use (ROU) asset of $9.5 million and $8.1 million, respectively, based on the present value of the remaining lease payments for all of our leased office spaces, the majority of which is comprised of our New York City office space. The present values of our lease liability and corresponding ROU asset are $11.8 million and $9.0 million, respectively, as of March 31, 2022. Our leases have remaining lease terms of 2 years to 10 years. One lease has a renewal option to extend the lease for an additional term of two years. The following components of lease expense are included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021:

 

March 31, 

March 31, 

(in thousands)

 

2022

    

2021

Operating lease cost

$

514

$

532

Net lease cost

$

514

$

532

As of March 31, 2022, the weighted-average remaining operating lease term was 7.01 years and the weighted-average discount rate for operating leases was 9.94%. Cash paid for amounts included in the measurement of operating lease liabilities during the three months ended March 31, 2022 was $0.5 million.

17

Table of Contents

The balance sheet classification of lease liabilities was as follows:

    

March 31, 

    

December 31,

(in thousands)

 

2022

 

2021

Liabilities

 

  

 

  

Lease liability current portion

$

1,492

$

1,437

Lease liability non-current

 

10,318

 

9,847

Total lease liability

$

11,810

$

11,284

As of March 31, 2021, the maturities of lease liabilities were as follows:

    

Operating

(in thousands)

 

leases

Remainder of 2022

$

1,553

2023

2,125

2024

 

2,162

2025

 

1,899

2026

 

1,932

After 2027

 

8,261

Total lease payments

 

17,932

Less: interest

 

(6,122)

Present value of lease liabilities(*)

$

11,810

(*)

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date and considering the term of the lease to determine the present value of lease payments. We used the incremental borrowing rate of 10.25% on February 28, 2019, for operating leases that commenced prior to that date through December 31, 2021. We used an incremental borrowing rate of 5.65% for the NC lease.

NOTE 8 LICENSE AGREEMENTS

TG-1101 (Ublituximab)

In January 2012, we entered into an exclusive license agreement with LFB Biotechnologies, GTC Biotherapeutics and LFB/GTC LLC, all wholly-owned subsidiaries of LFB Group, relating to the development of ublituximab (the LFB License Agreement). Under the terms of the LFB License Agreement, we have acquired the exclusive worldwide rights (exclusive of France/Belgium) for the development and commercialization of ublituximab. For the three months ended March 31, 2022 and 2021 we incurred approximately zero and $3.0 million, respectively, associated with the LFB license agreement. As of March 31, 2022, we have incurred approximately $13.0 million in expense related to the achievement of certain milestones of the LFB License Agreement.

LFB Group is eligible to receive future payments of up to an aggregate of approximately $18.0 million upon our successful achievement of certain regulatory milestones, in addition to royalty payments on net sales of ublituximab at a royalty rate that escalates from mid-single digits to high-single digits. The license will terminate on a country-by-country basis upon the expiration of the last licensed patent right or 15 years after the first commercial sale of a product in such country, unless the agreement is earlier terminated (i) by LFB if the Company challenges any of the licensed patent rights, (ii) by either party due to a breach of the agreement, or (iii) by either party in the event of the insolvency of the other party.

In November 2012, we entered into an exclusive (within the territory) sublicense agreement with Ildong Pharmaceutical Co. Ltd. (Ildong) relating to the development and commercialization of ublituximab in South Korea and Southeast Asia. Under the terms of the sublicense agreement, Ildong has been granted a royalty bearing, exclusive right, including the right to grant sublicenses, to develop and commercialize ublituximab in South Korea, Taiwan, Singapore, Indonesia, Malaysia, Thailand, Philippines, Vietnam, and Myanmar.

18

Table of Contents

An upfront payment of $2.0 million, which was received in December 2012, net of $0.3 million of income tax withholdings, is being recognized as license revenue on a straight-line basis over the life of the agreement, which is through the expiration of the last licensed patent right or 15 years after the first commercial sale of a product in such country, unless the agreement is earlier terminated, and represents the estimated period over which we will have certain ongoing responsibilities under the sublicense agreement. We recorded license revenue of approximately $38,000 for each of the three months ended March 31, 2022 and 2021, and at March 31, 2022 and December 31, 2021, have deferred revenue of approximately $0.6 million and $0.6 million, respectively, associated with this $2 million payment (approximately $0.2 million of which has been classified in current liabilities at March 31, 2022 and December 31, 2021).

We may receive up to an additional $5.0 million in payments upon the achievement of pre-specified milestones. In addition, upon commercialization, Ildong will make royalty payments to us on net sales of ublituximab in the sublicense territory.

TGR-1202 (Umbralisib or UKONIQ)

In September 2014, we exercised our option to license the global rights to umbralisib, thereby entering into an exclusive licensing agreement (the Umbralisib License) with Rhizen Pharmaceuticals, SA (Rhizen) for the development and commercialization of umbralisib. Prior to this, we had been jointly developing umbralisib in a 50:50 joint venture with Rhizen. As of March 31, 2022, we have incurred approximately $24.0 million in expense related to the achievement of certain milestones of the Umbralisib License.

Rhizen will be eligible to receive additional approval and sales-based milestone payments in the aggregate of approximately $150.0 million payable upon approval in multiple jurisdictions for up to two oncology indications and one non-oncology indication and attaining certain sales milestones. In addition, if umbralisib is co-formulated with another drug to create a new product (a "New Product"), Rhizen will be eligible to receive similar regulatory approval and sales-based milestone payments for such New Product. Additionally, Rhizen receives tiered royalties that escalate from high single digits to low double digits on any net sales of umbralisib and any New Product. During the three months ended March 31, 2022 and 2021, the Company recorded $0.2 million and $0.1 million, respectively, related to the worldwide royalty due under the Umbralisib License in cost of product revenue based on U.S. sales of UKONIQ. As of March 31, 2022 and December 31, 2021, $0.2 million in royalties were payable under the Umbralisib License . Rhizen will also be eligible to participate in sublicensing revenue, if any, based on a percentage that decreases as a function of the number of patients treated in clinical trials following the exercise of the license option. Rhizen will retain global manufacturing rights to umbralisib, provided that they are price competitive with alternative manufacturers. The license will terminate on a country-by-country basis upon the expiration of the last licensed patent right or any other exclusivity right in such country, unless the agreement is earlier terminated (i) by us for any reason, or (ii) by either party due to a breach of the agreement.

NOTE 9 RELATED PARTY TRANSACTIONS

In July 2015, we entered into a Shared Services Agreement (the Shared Services Agreement) with FBIO to share the cost of certain services such as facilities use, personnel costs and other overhead and administrative costs. The Shared Services Agreement requires us to pay our respective share of services utilized. In connection with the Shared Services Agreement, we incurred expenses of approximately $0.1 million and $0.2 million for shared services for the three months ended March 31, 2022, and 2021, respectively, primarily related to shared personnel. Mr. Weiss, our Chairman and Chief Executive Officer, also serves as a director and Executive Vice Chairman, Strategic Development of FBIO.

Please refer to Note 7 - Leases for details regarding the Office Agreement with FBIO.

19

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis contain forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, and our results could differ materially from the results anticipated by our forward-looking statements as a result of many known or unknown factors, including, but not limited to, those factors discussed in Risk Factors. Additionally, many of these risks and uncertainties are currently elevated by and may or will continue to be elevated by the COVID-19 pandemic. See also the Special Cautionary Notice Regarding Forward-Looking Statements set forth at the beginning of this report.

 

You should read the following discussion and analysis in conjunction with the unaudited, condensed, consolidated financial statements and the related footnotes thereto appearing elsewhere in this report, and in conjunction with management’s discussion and analysis and the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

 

OVERVIEW

 

TG Therapeutics is a biopharmaceutical company focused on the acquisition, development and commercialization of novel treatments for B-cell malignancies and autoimmune diseases. In addition to a research pipeline including several investigational medicines, TG has completed a Phase 3 program for ublituximab, an investigational glycoengineered monoclonal antibody that targets a unique epitope on CD20-expressing B-cells, to treat patients with relapsing forms of multiple sclerosis (RMS).  We also actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities.

RECENT UPDATES

UNITY-CLL Phase 3 Trial & Withdrawal of the BLA/sNDA Submission for U2 to Treat Patients with CLL/SLL and Withdrawal of UKONIQ from Sale

UNITY-CLL, a global, Phase 3, randomized, controlled clinical trial, compared the combination of ublituximab and UKONIQ® (umbralisib) (combination referred to as U2), to an active control arm of obinutuzumab plus chlorambucil in patients with both treatment-naïve and relapsed or refractory chronic lymphocytic leukemia (CLL). The trial met its primary endpoint, with U2 significantly prolonging independent review committee (IRC) assessed progression-free survival (PFS) versus. the control arm. The UNITY-CLL Phase 3 trial was conducted under a Special Protocol Assessment (SPA) agreement with the U.S. Food and Drug Administration (FDA). Based on the results of the UNITY-CLL trial, a Biologics License Application (BLA) and supplemental New Drug Application (sNDA) were submitted to the FDA for U2 to treat patients with CLL/small lymphocytic lymphoma (SLL).

In November 2021, the FDA notified the Company that it planned to host an Oncologic Drug Advisory Committee (ODAC) meeting in connection with its review of the pending BLA/sNDA and to discuss the benefit risk of UKONIQ in its approved indications. While the FDA identified a number of concerns, the FDA’s desire to host an ODAC appeared to stem from an early ad hoc analysis of overall survival (OS) from the UNITY-CLL trial.

In this first analysis of OS using a cut-off date of September 2021, there was an imbalance in favor of the control arm (HR: 1.23). However, based on the ad hoc nature of the analysis, approximately 15% of patients had missing or outdated survival data. Further, when excluding deaths related to COVID-19, the two arms were approximately balanced (HR: 1.04). In February 2022, the Company submitted updated OS data with the same September 2021 cut-off date, but with reduced missing data and additional OS events, which showed an improvement from the previously reported OS data. Neither the original preliminary OS results nor the updated preliminary OS results were statistically significant.

20

Table of Contents

On April 15, 2022, we announced that pursuant to a recent information request made by the FDA, updated OS data were collected that showed an increasing imbalance in favor of the control arm, differing from the improved results provided to the FDA in February 2022. Based on these new data, the Company decided to withdraw the pending BLA/sNDA for U2 to treat CLL/SLL and accordingly the April 22, 2022 ODAC meeting was canceled.

We also announced the voluntary withdrawal of UKONIQ from sale for the approved indications of adult patients with relapsed or refractory marginal zone lymphoma (MZL) who have received at least one prior anti-CD20 based regimen and for the treatment of adult patients with relapsed or refractory follicular lymphoma (FL) who have received at least three prior lines of systemic therapy. UKONIQ was granted accelerated approval in these indications in February 2021. Our decision to withdraw UKONIQ from sale was primarily based on the withdrawal of the BLA and sNDA for U2 in CLL.

 

OUR PRODUCTS UNDER DEVELOPMENT

We have leveraged our B-cell platform to develop a drug pipeline of small molecule kinase inhibitors and intravenously delivered immunotherapies that leverage the patients’ own immune system. In connection with the withdrawal of the BLA/sNDA for U2 to treat patients with CLL/SLL and the withdrawal of UKONIQ from sale in its approved indications of relapsed/refractory MZL and FL, we are re-evaluating the clinical development of umbralisib +/- ublituximab and combinations including those medicines in oncology indications and have paused or closed a number of trials related to these indications. The following table summarizes our current focus for the Company’s clinical stage pipeline:

Clinical Drug Candidate:
(molecular target)

Initial Target Disease

Stage of Development
(trial name)

Ublituximab (anti-CD20 mAb) 

Relapsing Forms of Multiple Sclerosis (RMS) 

Phase 3 trials (ULTIMATE I and II) 

Cosibelimab/TG-1501 (anti-PDL1 mAb) 

B-cell cancers 

Phase 1 trial 

TG-1701 (BTK inhibitor) 

B-cell cancers 

Phase 1 trial 

TG-1801 (anti-CD47/CD19 bispecific mAb) 

B-cell cancers 

Phase 1 trial 

Current Phase 3 ULTIMATE Program in Relapsing Forms of Multiple Sclerosis:

ULTIMATE I and ULTIMATE II are two independent Phase 3 trials. Each trial is a global, randomized, multi-center, double-blinded, double-dummy, active-controlled study comparing the efficacy and safety/tolerability of ublituximab (450mg dose administered by one-hour intravenous infusion every 6 months, following a day 1 infusion of 150mg over four hours and a day 15 infusion of 450mg over one hour) versus teriflunomide (14mg oral tablets taken once daily) in subjects with RMS. These trials were conducted under a SPA with the FDA. The ULTIMATE I and II trials were led by Lawrence Steinman, MD, Zimmermann Professor of Neurology & Neurological Sciences, and Pediatrics at Stanford University. Full enrollment was completed in October 2018, with approximately 1,100 subjects enrolled in both studies combined.

In April 2021, data from the ULTIMATE I and II trials were presented at the American Academy of Neurology Annual meeting. Both studies met their primary endpoint with ublituximab treatment demonstrating a statistically significant reduction in annualized relapse rate (ARR) over a 96-week period (p<0.005 in each trial). Key secondary MRI endpoints were also met. Additional data from these trials have been presented at various other medical meetings.

On December 14, 2021, we announced that the FDA accepted a BLA for ublituximab as a treatment for patients with RMS. The FDA set a Prescription Drug User Fee Act (PDUFA) goal date of September 28, 2022 and notified the Company that it is not currently planning to hold an advisory committee meeting to discuss this application.

21

Table of Contents

RESULTS OF OPERATIONS

Comparison of the Quarters Ended March 31, 2022 and 2021

The following table summarizes the results of operations for the quarters ended March 31, 2022 and 2021:

Three Months Ended

March 31,

(in thousands)

2022

2021

Product revenue, net

$

1,978

$

755

License Revenue

38

38

Total Revenue

$

2,016

$

793

Costs and expenses:

Cost of product revenue

237

139

Research and development:

  

Noncash compensation

1,895

7,511

Other research and development

46,147

55,583

Total research and development

48,042

63,094

Selling, General and administrative:

Noncash compensation

226

9,107

Other selling, general and administrative

20,383

17,655

Total selling, general and administrative

20,609

26,762

Total costs and expenses

68,888

89,995

Interest expense

2,664

1,898

Other income

(523)

(472)

Total other expense, net

2,141

1,426

Net Loss

$

(69,013)

$

(90,628)

Product revenue, net. Product revenue, net for the three months ended March 31, 2022 was $2.0 million compared to $0.8 million for the three months ended March 31, 2021. Product revenue, net consisted of net product sales of UKONIQ in the United States. In February 2021, we began commercial sales of UKONIQ within the U.S. following FDA approval. The $1.2 million increase was primarily driven by an increase in product shipments for UKONIQ as a result of greater market penetration. The increase in product shipments is partially offset by the recording of an additional allowance for sales returns in the first quarter of 2022 due to the anticipated increase in returns resulting from the voluntary withdrawal of UKONIQ from the U.S. market announced on April 15, 2022. Any product sales subsequent to the voluntary withdrawal are limited to existing patients that elect to remain on treatment and no shipments for new prescriptions are allowed. Therefore, it is expected product revenue, net will decline significantly throughout 2022 as a result of the voluntary market withdrawal of UKONIQ.

License revenue. License revenue was less than $0.1 million for both the three months ended March 31, 2022 and March 31, 2021.  License revenue for both the three months ended March 31, 2022 and March 31, 2021 is comprised of recognition of a portion of the upfront payment from the ublituximab sublicense agreement with Ildong.

Cost of Product Revenue. Cost of product revenue for the three months ended March 31, 2022 was $0.2 million compared to $0.1 million for the three months ended March 31, 2021. The $0.1 million increase was primarily driven by an increase in the volume of UKONIQ sold, corresponding increases in royalties and other costs during the three month period ended March 31, 2022 as compared to the three month period ended March 31, 2021. Cost of product revenue consists primarily of freight and royalties on net sales of UKONIQ owed to our licensing partner. Based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, the manufacturing costs of

22

Table of Contents

UKONIQ units recognized as revenue during the three months ended March 31, 2022  and March 31, 2021 were expensed as research and development expenses prior to receipt of FDA approval on February 5, 2021, and therefore are not included in costs of product revenue during this period. We expect the cost of product revenue to remain low, as we sell through certain inventory that was expensed prior to FDA approval of UKONIQ in February 2021 and the anticipated decline in product sales resulting from the voluntary market withdrawal of UKONIQ.

Noncash Compensation Expense (Research and Development). Noncash compensation expense (research and development) related to equity incentive grants totaled $1.9 million for the three months ended March 31, 2022, as compared to $7.5 million during the comparable period ended March 31, 2021. The decrease in noncash compensation expense was primarily due to forfeitures of restricted stock as a result of a decrease in headcount during the three months ended March 31, 2022.

Other Research and Development Expense. Other research and development expense decreased for the three months ended March 31, 2022 by approximately $9.4 million to $46.1 million as compared to the comparable period ended March 31, 2021. The decrease in research and development expense is primarily attributable to a decrease in license milestones of $14.0 million, and an $8.6 million decrease in clinical trial expense, partially offset by an increase in manufacturing expense of $16.4 million. The increase in manufacturing expense was primarily due to a one time charge to expense advanced payments related to clinical and commercial batches of UKONIQ as a result of the voluntary withdrawal from the market.

Noncash Compensation Expense (Selling, General and Administrative). Noncash compensation expense (selling, general and administrative) related to equity incentive grants totaled $0.2 million for the three months ended March 31, 2022, as compared to $9.1 million during the comparable period ended March 31, 2021. The decrease in noncash compensation expense was primarily related to forfeitures of stock as a result of a decrease in headcount during the three months ended March 31, 2022.

Other Selling, General and Administrative. Other selling, general and administrative expenses increased for the three months ended March 31, 2022 by approximately $2.7 million to $20.4 million as compared to the comparable period ended March 31, 2021. The increase was due primarily to increased other selling, general and administrative costs associated with the marketing of UKONIQ and planning for the potential launch of ublituximab in RMS.

Interest Expense. Interest expense increased by $0.8 million to $2.7 million for the three months ended March 31, 2022, as compared to $1.9 million for the three months ended March 31, 2021. The increase is mainly due to greater interest expense related to the Amended Loan Agreement entered into in December 2021.

Other Income. Other income increased by less than $0.1 million to $0.5 million for the three months ended March 31, 2022. The increase is mainly due to a decrease in the fair value of notes payable during the three months ended March 31, 2022.

LIQUIDITY AND CAPITAL RESOURCES

Our major sources of cash have been proceeds from private placement and public offering of equity securities, and from our loan and security agreements executed with Hercules Capital, Inc. (Hercules) (see Note 6 for more information). Since inception, we have incurred significant operating losses. Substantially all our operating losses have resulted from costs incurred in connection with our research and development programs and from selling, general and administrative costs associated with our operations, including our commercialization activities. We expect to continue to incur significant expenses and operating losses for the foreseeable future. Because we have withdrawn UKONIQ from sale, we have no marketed products currently. We expect to continue to incur significant research and development expenses and we expect to continue to incur significant commercialization and outsourced-manufacturing expenses as we plan for the possible commercialization of ublituximab in RMS. Because of the numerous risks and uncertainties associated with developing pharmaceuticals, we are unable to predict the extent of any future losses or when we will become profitable, if at all. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis. Our ability to become profitable depends upon our ability to generate substantial revenue.

23

Table of Contents

As of March 31, 2022, we had $280.7 million in cash and cash equivalents, and investment securities. We anticipate that our cash and cash equivalents, and investment securities as of March 31, 2022 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, the costs and timing of clinical and commercial manufacturing supply arrangements for each product and product candidate, and the costs of expanding our sales, distribution and other commercialization capabilities. We are dependent upon significant future financing to provide the cash necessary to execute our long-term operations.

Discussion of Cash Flows

The following table summarizes our cash flows for the three months ended March 31, 2022 and 2021:

Three Months Ended

March 31,

(in thousands)

2022

2021

Net cash used in operating activities

$

(68,689)

$

(81,355)

Net cash used in investing activities

$

(43,671)

$

(514)

Net cash used in financing activities

$

(850)

$

(55)

Cash used in operating activities for the three months ended March 31, 2022 was $68.7 million as compared to $81.4 million for the three months ended March 31, 2021. The decrease in net cash used in operating activities was due primarily to greater expenditures associated with our license milestone agreements and clinical trial expense during the three months ended March 31, 2021.

Net cash used in investing activities for the three months ended March 31, 2022, was $43.7 million as compared to cash used in investing activities of $0.5 million for the three months ended March 31, 2021. The increase in net cash used in investing activities was primarily due to greater investment in short-term and long-term securities during the three months ended March 31, 2022.

Net cash used in financing activities for the three months ended March 31, 2022, was $0.9 million as compared to net cash used in financing activities of $0.1 million for the three months ended March 31, 2021. The increase in net cash used in financing activities was primarily due to the one time payment of the End of Term Charge (as defined in the Loan Agreement) related to our Term Loan during the three months ended March 31, 2022.

OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

CRITICAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operation and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a description of our significant accounting policies, refer to "Part II, Item 8. Financial Statements and Supplementary Data, Note 1 – Organization and Summary of Significant Accounting Policies" in our 2021 Annual Report on Form 10-K. Of these policies, the following are considered critical to an understanding of our Unaudited Condensed Consolidated Financial Statements as they require the application of the most difficult, subjective and complex judgments: stock-based compensation expenses, and fair value measurement of financial liabilities. Refer to “Note 2 Revenue Recognition”, "Note 4 - Fair Value Measurements" and "Note 5 – Stockholders’ Equity" respectively, for more information.

24

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk has not changed materially since our disclosure in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended December 31, 2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of March 31, 2022, management carried out, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2022, our disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We, and our subsidiaries, are not a party to, and our property is not the subject of, any material pending legal proceedings.

25

Table of Contents

ITEM 1A. RISK FACTORS.

You should carefully consider the following risk factors and the other information contained elsewhere in this Quarterly Report before making an investment in our securities. If any of the following risks occur, our business, financial condition or operating results could be materially harmed. An investment in our securities is speculative in nature, involves a high degree of risk, and should not be made by an investor who cannot bear the economic risk of its investment for an indefinite period of time and who cannot afford the loss of its entire investment. The risks described below are not the only ones that our business faces. Additional risks not currently known to us or that we currently deem to be immaterial may adversely impact our business in the future.

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.

 

We have invested substantially all of our efforts and financial resources in the identification, pre-clinical and clinical development of umbralisib as monotherapy and in combination with ublituximab in hematologic conditions (U2), ublituximab in RMS and our other product candidates, including cosibelimab, TG-1701 and TG-1801, and building a commercial infrastructure. On April 15, 2022, we announced our voluntary withdrawal of the pending BLA and sNDA for U2 to treat CLL and SLL and the voluntary withdrawal of UKONIQ from sale for the approved indications. Our decision was based on updated overall survival data collected in response to an FDA information request that showed that a possible increased risk of death in patients receiving U2 compared to the control arm of obinutuzumab plus chlorambucil. Although we are currently planning to continue to follow patients in the UNITY-CLL study to understand the overall survival data as it matures, there is a risk that we decide not to continue to do so. Moreover, we are still assessing the impact of the withdrawal of the BLA and sNDA for U2 and the withdrawal of UKONIQ from sale on our oncology research and development programs. We may determine that there is not a regulatory path forward for UKONIQ as monotherapy or in combination with ublituximab in any hematologic conditions, including CLL, and may stop development of UKONIQ, ublituximab, and our other product candidates for oncology indications. If we were to do so, our oncology pipeline would have little, if any, value, which would have a material and adverse effect on our business, financial condition, and results of operations.

Our ability to generate revenues from product sales will depend on the approval and successful commercialization of ublituximab in RMS. Each of our other product candidates will require additional non-clinical or clinical development, regulatory approval, and sufficient clinical and commercial supply. The success of our development programs and achievement of regulatory approval of our product candidates will depend on several factors, including the following:

successful completion of our clinical programs with positive results that support a finding of effectiveness and an acceptable safety profile of our product candidates in the intended populations within the timeframes we have projected;
INDs and clinical trial applications (CTAs), being cleared/approved such that our product candidates can commence clinical trials;
successful initiation and completion of preclinical studies and successful initiation of, enrollment in and completion of clinical trials;
sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;
receipt of regulatory approvals from applicable regulatory authorities for our product candidates;
establishing commercially viable arrangements with third-party manufacturers for clinical supply and commercial manufacturing; and
obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays in our clinical programs and regulatory submission timelines and may not be able to obtain regulatory approval for our product candidates.

26

Table of Contents

Clinical drug development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete pre-clinical studies and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. It is impossible to predict when or if our product candidates will prove effective and safe in humans or will receive regulatory approval or will have a differentiated safety and tolerability profile. A failure of one or more clinical trials can occur at any stage of testing. Accordingly, our ongoing trials and future clinical trials may not be successful. Even if our clinical trials produce positive results, there can be no guarantee that the positive outcomes will be replicated in future studies either within the same indication as previously evaluated or in alternate indications and settings.

Successful completion of our clinical trials is a prerequisite to submitting a New Drug Application (NDA) or a BLA to the FDA and a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for each product candidate and, consequently, the ultimate approval and commercial marketing of our product candidates. We do not know whether any of our ongoing or future clinical trials for our product candidates will be completed on schedule, if at all.

Whether or not and how quickly we complete clinical trials depends in part upon the rate at which we are able to engage clinical research/trial sites and, thereafter, the rate of enrollment of patients, and the rate at which we collect, clean, lock and analyze the clinical trial database. Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the study, the existence of competitive clinical trials, and whether existing or new drugs are approved for the indication we are studying. We are aware that other companies are currently conducting or planning clinical trials that seek to enroll patients with the same diseases that we are studying. We may experience unforeseen events, such as the COVID-19 pandemic, that could delay or prevent our ability to complete current clinical trials, initiate new trials, receive marketing approval or commercialize our product candidates, including:

the FDA or other regulatory authorities may require us to submit additional data or impose other requirements before permitting us to initiate a clinical trial;
the FDA or other regulatory authorities or institutional review boards (IRBs) or ethics committees (ECs) may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site or in a country; we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
clinical trials of our drug candidates may produce negative or inconclusive results, and we may decide, or regulatory authorities may require us, to conduct additional pre-clinical studies or clinical trials or we may decide to abandon drug development programs;
the number of patients required for clinical trials of our drug candidates may be larger than we anticipate, and enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate;
our third-party contractors, including our clinical trial sites, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators;
we may elect to or regulatory authorities or IRBs or ECs may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;
the cost of clinical trials of our product candidates may be greater than we anticipate;

27

Table of Contents

the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate, including, without limitation, as a result of disruptions to our supply chains caused by global health crises, such as the COVID-19 pandemic, international conflicts, or natural disasters;
regulatory authorities may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate; and
our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulatory authorities, IRBs or ECs to suspend or terminate the trials, or reports may arise from pre-clinical or clinical testing of other therapies in the same or a similar class that raise safety or efficacy concerns about our product candidates.

We also could encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by the Data and Safety Monitoring Board (DSMB) for such trial or by the FDA or other regulatory authorities. Such regulatory authorities may impose a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. For example, in January 2022, the FDA imposed a partial clinical hold on the Company’s clinical trials investigating UKONIQ and ublituximab in CLL and NHL as a result of concerns from an initial overall survival analysis from the UNITY-CLL study that showed a possible increased risk of death in patients receiving U2 compared to the control arm of obinutuzumab plus chlorambucil. This partial clinical hold remains in place. In addition to the FDA, the DSMB for our clinical trials may recommend modification to the study design or closure of the study entirely based on the DSMB’s interpretation of the benefit-risk of the study. While we develop charters that guide the nature of the DSMB meetings, their analysis and interpretation of study data occurs independently from us and is wholly within their control. Even if the DSMB finds no safety concerns and recommends no modifications to the ongoing study, this does not mean the safety profile reported in the study may support a marketing approval or commercial acceptance if marketing approval is granted. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

Negative or inconclusive results from the clinical trials we conduct, unanticipated adverse medical events, or changes in regulatory policy could cause us to have to repeat or terminate the clinical trials. If we are required to repeat or conduct additional clinical trials or other testing of our drug candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our drug candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:

 

be delayed in obtaining marketing approval for our product candidates;
not obtain marketing approval at all;
obtain marketing approval in some countries and not others;
obtain approval for indications or patient populations that are not as broad as intended or desired;
be subject to post-marketing requirements or post-marketing commitments;
be subject to increased pricing pressure; or
have the drug removed from the market after obtaining marketing approval.

In addition, changes in regulatory policy could cause us to have to repeat or conduct additional clinical trials or change our clinical development strategy. For example, in April 2022, the FDA convened an ODAC meeting to discuss the PI3K inhibitor class. The ODAC voted in favor of requiring randomized data to support the evaluation of benefit-risk of PI3K drug candidates in patients with hematologic malignancies. The vote of the ODAC and the views expressed by FDA during the meeting will likely impact any future development of UKONIQ in hematologic malignancies.

28

Table of Contents

Our drug development costs will also increase if we experience delays in testing or regulatory approvals. Certain clinical trials are designed to continue until a pre-determined number of events have occurred in the patients enrolled. Trials such as this are subject to delays stemming from patient withdrawal and from lower-than-expected event rates. Significant clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates. Any delays in our pre-clinical or future clinical development programs may harm our business, financial condition and prospects significantly. We may also incur additional costs if enrollment is increased.

In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site, or the FDA’s willingness to accept such data, may be jeopardized.

Our product candidates may cause undesirable side effects that could delay or prevent their regulatory approval, or impact their availability and commercial potential after approval.

 

Unacceptable or undesirable adverse events caused by any of our product candidates that we take into clinical trials could cause either us, a DSMB, or regulatory authorities to interrupt, delay, modify or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. This, in turn, could prevent us from commercializing the affected product candidate and generating revenues from its sale.

 

As is the case with all drugs, it is likely that there will be side effects associated with the use of our drug candidates. Results of our trials could reveal a higher than expected and unacceptable severity and prevalence of side effects. In such an event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our drug candidates for any or all targeted indications. The drug-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. In addition, data may emerge, from confirmatory or other post-marketing studies, or from pharmacovigilance reporting, as products are used more widely, or for a longer duration, after approval that may affect the commercial potential of our products. Any of these occurrences may harm our business, financial condition and prospects significantly.

Many compounds that initially showed promise in early-stage testing have later been found to cause side effects that prevented further development of the compound. Further, early clinical trials by their nature utilize a small sample of the potential patient population. With a limited number of patients and limited duration of exposure, rare and serious side effects of our drug candidates may only be uncovered when a significantly larger number of patients are exposed to the drug candidate in Phase 3 or registration-directed trials or when the drug candidate is on the market. If any of our product candidates cause unacceptable adverse events in clinical trials, we may not be able to obtain marketing approval and generate revenues from its sale, or even if approved for sale may lack differentiation from competitive products, which could have a material adverse impact on our business and operations.

Many of our clinical studies have involved combinations of UKONIQ and ublituximab in hematologic conditions, which may cause unforeseen toxicities, or impact the severity, duration, and incidence of adverse events observed compared to those seen in the single-agent studies of these agents. With multi-drug combinations, it is often difficult to interpret or properly assign attribution of an adverse event to any one particular agent, introducing the risk that toxicity caused by a component of a combination regimen could have a material adverse impact on the development or regulatory review of the other component of the combination.

29

Table of Contents

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.

 

The clinical development, manufacturing, labeling, packaging, storage, record-keeping, advertising, promotion, import, export, marketing and distribution, and pharmacovigilance and adverse event reporting of our product candidates or any future product candidates are subject to extensive regulation by the FDA in the United States and by comparable regulatory authorities worldwide. In the United States, we are not permitted to market a product candidate until we receive approval of a BLA or NDA from the FDA. The process of obtaining a BLA or NDA approval is expensive, often takes many years, and can vary substantially based upon the type, complexity and novelty of the products involved. In addition, approval policies or regulations may change over time. If we fail to gain approval to commercialize our product candidates from the FDA and other foreign regulatory authorities in the timelines we project or at all, we may be unable to generate the revenues that we may project or generate revenues at levels sufficient to sustain our business.

The FDA and foreign regulatory authorities have substantial discretion in the pharmaceutical product approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. During the regulatory review process, the FDA or other regulatory authorities may disagree with or not accept our clinical trial design, may have questions about the potential impact of our study design on conclusions that can be drawn from the data, may interpret results differently than we do, may apply the results of our trials in one disease to the review of a regulatory application for a different disease even if the doses and therapeutic areas are distinct, and may change its view on the criteria that must be met for approval. This could happen even for a protocol that has received a SPA.

Furthermore, some of our clinical trials may be conducted as open-label studies, meaning that trial participants, investigators, site staff, some employees of our contract research organizations, and our field-level employees (e.g., clinical research associates and monitors), among others, have knowledge of treatment arm assignments on a patient-level, which has the potential to introduce bias into study conduct. Further, even when our clinical trials are double-blind, double-dummy studies, unblinding of treatment arm assignment may occur from time to time, for example, on the occurrence of unexpected safety events which may necessitate understanding of study treatment. While we believe we have put in place adequate firewalls to prevent inappropriate unblinding of study data consistent with standard industry practice for these types of studies, no assurance can be given that issues related to study conduct will not be raised. The FDA may raise issues of safety, study conduct, bias, deviation from the protocol, statistical power, patient completion rates, changes in scientific or medical parameters or internal inconsistencies in the study design or data prior to making its final decision. The FDA may also seek the guidance of an outside advisory committee in evaluating (among other things) clinical data and safety and effectiveness considerations prior to making its final decision. These issues could cause a delay in the FDA’s review, lead the FDA to deny approval, or lead the Company to withdraw a regulatory application, as was the case with the BLA and sNDA for U2 in CLL and SLL.

Other reasons that the FDA or regulatory authorities around the world may delay, limit or deny approval of a product candidate, include:

 

we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is tolerable and effective for an indication;
the FDA may not accept clinical data from trials conducted by individual investigators or in countries where the standard of care is potentially different from that of the United States;
the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;
we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies and/or clinical trials;
the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a BLA, NDA or other marketing authorization submission to obtain regulatory approval in the United States or elsewhere;

30

Table of Contents

the FDA or comparable foreign regulatory authorities may not approve the manufacturing processes or facilities of third-party manufacturers with which we or our collaborators currently contract for clinical supplies and plan to contract for commercial supplies;
during the course of review, the FDA or foreign regulatory authorities may raise issues and request or require additional preclinical, clinical, chemistry, manufacturing, and control (CMC), or other data and information, and the development and provision of these data and information may be time consuming. We may not be able to generate the data within the time period necessary to obtain approval within the established regulatory review timelines, such as by a PDUFA goal date or at all to satisfy the FDA or foreign regulatory authorities;
the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval; or
interruptions or delays in the operations of the FDA and foreign regulatory authorities as a result of global health crises, such as the COVID-19 pandemic, international conflict, or national disasters may negatively impact review, inspection, and approval timelines.

Even if we succeed in obtaining regulatory approval for any of our product candidates, the FDA may require post-marketing studies, including additional clinical trials such as those necessary to assess drug interactions or activity of a product in specific populations, which may be costly. The outcomes of