UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended |
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SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address including zip code of principal executive offices)
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Securities registered pursuant to Section 12(b) of the Act:
Title of Class | Trading Symbol(s) | Exchange Name |
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.
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).
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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.
☒ | Accelerated filer ☐ |
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Non-accelerated filer ☐ | Smaller reporting company |
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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
There were
TG THERAPEUTICS, INC.
FORM 10-Q
FOR THE QUARTER ENDED June 30, 2023
TABLE OF CONTENTS
2
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this report, including matters discussed under the captions “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” or the negative of these words or other comparable terminology, although not all forward-looking statements contain these identifying words.
All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements about:
3
SUMMARY RISK FACTORS
Our business is subject to a number of risks of which you should be aware before making an investment decision. The risks described below are a summary of the principal risks associated with an investment in us and are not the only risks we face. You should carefully consider these risks, the risk factors in Item IA, and the other reports and documents that we have filed with the Securities and Exchange Commission (SEC).
Risks Related to Commercialization
● | If we are unable to maintain current approval of BRIUMVI our business will be materially harmed. |
● | We cannot predict when or if we will obtain regulatory approval to commercialize our product candidates, including TG-1701 and TG-1801 in B-cell disorders. |
● | We have limited experience operating as a commercial company, and, as a result, the marketing and sale of BRIUMVI in RMS may be less successful than anticipated. |
● | If BRIUMVI or any of our future product candidates (if approved) do not achieve broad market acceptance among physicians, patients, payors, or the medical community, the revenues that we generate from product sales will be limited. |
● | If the market opportunities for BRIUMVI and any future products for which we may receive approval, including TG-1701 or TG-1801 in B-cell disorders, are smaller than we estimate or if any approval 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, including from companies with greater resources than we have, which may result in others commercializing drugs before or more successfully than we do, which could result in the reduction or elimination of our commercial opportunity. |
● | If we are unable to generate sufficient revenue, we may need to raise substantial additional capital to sustain our business. |
● | Product liability lawsuits could cause us to incur substantial liabilities and limit product commercialization. |
Risks Related to Drug Development and Regulatory Approval
● | If we are unable to obtain or maintain regulatory approval for our product or product candidates and ultimately cannot commercialize one or more of them, or if we experience significant delays in doing so, our business will be materially harmed. |
● | Our product and product candidates may cause undesirable side effects that could delay or prevent their regulatory approval or significantly limit their commercial profile following marketing approval, if any, or result in withdrawal from the market if approved. |
● | 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 products or 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 Governmental Regulation of the Pharmaceutical Industry
● | We are subject to extensive regulation, including new legislative and regulatory proposals, including efforts to control, set or cap pricing for approved drugs, which 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 civil or criminal liability. |
● | If we fail to comply with regulatory requirements, any product candidate may fail to receive regulatory approval and 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
Risks Related to our Dependence on Third Parties
● | Our reliance on third parties for commercial and clinical supply of our product and product candidates increases the risk that we will not have sufficient quantities of our product or product candidates or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts. |
● | 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 or product candidates when expected or at all. |
● | Because we have in-licensed our product 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 to defend against such lawsuits, and an unfavorable outcome in any such lawsuit 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 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 may need to raise substantial additional funding. If we are unable to raise capital, if needed, we may be required to delay, limit, 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. |
General Risk Factors
● | Public health issues including an epidemic or global pandemic, 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 BRIUMVI and other immunosuppressive products that we have in development. |
● | 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. |
● | Significant disruptions of information technology systems, breaches of data security, or unauthorized disclosures of sensitive data could harm our business and subject us to liability or reputational damage. |
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
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TG Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
June 30, | December 31, | |||||
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(Unaudited) | (Note 1) | |||||
Assets | ||||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Short-term investment securities |
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Accounts receivable, net | |
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Inventories | | — | ||||
Prepaid research and development |
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Other current assets |
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Total current assets |
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Restricted cash |
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Leasehold interest, net |
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Equipment, net |
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Goodwill |
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Total assets | $ | | $ | | ||
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable and accrued expenses | $ | | $ | | ||
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Accrued compensation |
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Total current liabilities |
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Deferred revenue, net of current portion |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Treasury stock, at cost, |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | |
The accompanying notes are an integral part of the condensed consolidated financial statements.
6
TG Therapeutics, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)
Three months ended | Six months ended | |||||||||||
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Revenue: | ||||||||||||
Product revenue, net | $ | | $ | | $ | | $ | | ||||
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Total revenue | $ | | $ | | $ | | $ | | ||||
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Costs and expenses: |
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Research and development: |
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Other research and development |
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Total research and development |
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Selling, general and administrative: |
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Other selling, general and administrative |
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Total selling, general and administrative |
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Total costs and expenses |
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Operating loss |
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Other expense (income): |
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Interest expense |
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Other income |
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Total other expense (income), net |
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Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
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Basic and diluted net loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||
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Weighted-average shares used in computing basic and diluted net loss per common share |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
7
TG Therapeutics, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(in thousands, except share and per share amounts)
(Unaudited)
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Common Stock | paid-in | Treasury Stock | Accumulated | ||||||||||||||||
Shares | Amount | capital | Shares | Amount | Deficit | Total | |||||||||||||
Balance at January 1, 2022 |
| | $ | | $ | | | $ | ( | $ | ( | $ | | ||||||
Issuance of common stock in connection with exercise of options | | * | | — | — | — | | ||||||||||||
Issuance of restricted stock |
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Forfeiture of restricted stock |
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Compensation in respect of restricted stock granted to employees, directors and consultants |
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Net loss |
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Balance at March 31, 2022 |
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Issuance of common stock in connection with exercise of options | | * | | — | — | — | | ||||||||||||
Issuance of restricted stock |
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Forfeiture of restricted stock |
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Compensation in respect of restricted stock granted to employees, directors and consultants |
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Net loss |
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Balance at June 30, 2022 |
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Shares | Amount | capital | Shares | Amount | Deficit | Total | |||||||||||||
Balance at January 1, 2023 |
| | $ | | $ | | | $ | ( | $ | ( | $ | | ||||||
Issuance of common stock in connection with exercise of options | | * | | — | — | — | | ||||||||||||
Issuance of restricted stock |
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Warrants issued with debt financing |
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Forfeiture of restricted stock |
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Compensation in respect of restricted stock granted to employees, directors and consultants |
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Net loss |
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Balance at March 31, 2023 |
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Issuance of common stock in connection with exercise of options | | * | | — | — | — | | ||||||||||||
Issuance of restricted stock |
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Forfeiture of restricted stock |
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Issuance of common stock in public offering (net of offering costs of $ |
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Compensation in respect of restricted stock granted to employees, directors and consultants |
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Net loss |
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Balance at June 30, 2023 |
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*Amount less than one thousand dollars
The accompanying notes are an integral part of the condensed consolidated financial statements.
8
TG Therapeutics, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six months ended | ||||||
June 30, | ||||||
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Amortization of premium (discount) on investment securities |
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Amortization of debt issuance costs | | | ||||
Amortization of leasehold interest | | | ||||
Noncash change in lease liability and right of use asset | | | ||||
Change in fair value of notes payable |
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Changes in assets and liabilities: |
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Increase in inventory | ( | — | ||||
(Increase) decrease in other current assets | ( | | ||||
(Increase) decrease in accounts receivable | ( | | ||||
Increase (decrease) in accounts payable and accrued expenses |
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Decrease in lease liabilities | ( | ( | ||||
Increase in other current liabilities |
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Decrease in deferred revenue |
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Net cash used in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Proceeds from maturity of short-term securities |
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Investment in held-to-maturity securities |
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Purchases of PPE |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Payment of loan payable | — | ( | ||||
Issuance of common stock, net | | — | ||||
Proceeds from exercise of options | | | ||||
Proceeds from debt financings | | — | ||||
Financing costs paid |
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Net cash provided by (used in) financing activities |
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NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD |
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | | $ | | ||
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Reconciliation to amounts on condensed consolidated balance sheets: |
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Cash and cash equivalents | $ | | $ | | ||
Restricted cash |
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Total cash, cash equivalents and restricted cash | $ | | $ | | ||
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Cash paid for: |
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Interest | $ | | $ | | ||
NONCASH TRANSACTIONS |
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Deferred financing costs | $ | | $ | — | ||
Warrants issued with debt financing | $ | | $ | — |
The accompanying notes are an integral part of the condensed consolidated financial statements.
9
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 fully-integrated, commercial stage, biopharmaceutical company focused on the acquisition, development and commercialization of novel treatments for B-cell diseases. In addition to a research pipeline including several investigational medicines, TG has received approval from the United States Food and Drug Administration (FDA) for BRIUMVI (ublituximab-xiiy) for the treatment of adult patients with relapsing forms of multiple sclerosis (RMS), to include clinically isolated syndrome, relapsing-remitting disease, and active secondary progressive disease, in adults. TG has also received approval for BRIUMVI by the European Commission (EC) for the treatment of adult patients with RMS who have active disease defined by clinical or imaging features. TG continues to actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities.
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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, 2022. The accompanying condensed December 31, 2022 balance sheet has been derived from these statements. The results of operations for the three and six months ended June 30, 2023 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 June 30, 2023, we have an accumulated deficit of
billion.Our major sources of cash have been proceeds from private placement and public offering of equity securities, from our loan and security agreements executed with Hercules Capital, Inc. (Hercules) (see Note 7 for more information), and from our commercialization agreement executed with Neuraxpharm Pharmaceuticals, S.L. (Neuraxpharm) (see Note 11 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. As of June 30, 2023, we had generated $
10
maintain or obtain regulatory approval for our drug candidates. We may continue to incur substantial operating losses even if we begin to generate revenues from our drug candidates.
As of June 30, 2023, we had $
The actual amount of cash that we will need to operate is subject to many factors, including, but not limited to, our commercialization efforts for BRIUMVI, preparations for the potential commercialization of our other drug candidates, and the timing, design and conduct of clinical trials for our drug candidates. We may be dependent upon significant future financing to provide the cash necessary to execute our ongoing and future operations, including the commercialization of any of our drug candidates.
Our common stock is quoted on the Nasdaq Capital Market and trades under the symbol “TGTX.”
Summary of Significant Accounting Policies
Our significant accounting policies are described in Note 1 of Notes to Consolidated Financial Statements included in our 2022 Annual Report on Form 10-K, except updated herein or as it relates to revenue recognition, accounts receivable, inventory, cost of product revenue, and the adoption of new accounting standards during the six months ended June 30, 2023. 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.
Revenue Recognition
Pursuant to Topic 606, we recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To achieve this core principle, Topic 606 includes provisions within a five-step model that includes i) identifying the contract with a customer, ii) identifying the performance obligations in the contract, iii) determining the transaction price, iv) allocating the transaction price to the performance obligations, and v) recognizing revenue when, or as, an entity satisfies a performance obligation.
At contract inception, we assess the goods or services promised within each contract and assess whether each promised good or service is distinct and determine those that are performance obligations. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.
Product Revenue, Net - The Company recognizes product revenues, net of variable consideration related to certain allowances and accruals, when the customer takes control of the product, which is typically upon delivery to the customer. Product revenue is recorded at the net sales price, or transaction price. The Company records product revenue reserves, which are classified as a reduction in product revenues, to account for the components of variable consideration. Variable consideration includes the following components, which are described below: chargebacks, government rebates, trade discounts and allowances, product returns, and co-payment assistance.
These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is expected to be settled with a credit against the Company’s customer account) or a liability (if the amount is expected to be settled with a cash payment). The Company’s estimates of reserves established for variable consideration are calculated based upon a consistent application of the expected value method, which is the sum of probability-weighted amounts in a range of possible consideration amounts. These estimates reflect the Company’s current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. The amount of variable consideration that is included in the transaction price may be subject to constraint and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual
11
amounts of consideration received may ultimately differ from the Company’s estimates. If actual results vary, the Company adjusts these estimates, which could have an effect on earnings in the period of adjustment.
Chargebacks: Chargebacks for discounts represent the Company’s estimated obligations resulting from contractual commitments to sell product to qualified healthcare providers and government agencies at prices lower than the list prices charged to the customers who directly purchase the product from the Company. The customers charge the Company for the difference between what the customers pay the Company for the product and the customers’ ultimate contractually committed or government required lower selling price to the qualified healthcare providers.
Government Rebates: Government rebates consist of Medicare, Tricare, and Medicaid rebates. These reserves are recorded in the same period the related revenue is recognized. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe a rebate under the Medicare Part D program.
Trade Discounts and Allowances: The Company provides its customers with discounts that are explicitly stated in the contracts and are recorded in the period the related product revenue is recognized. In addition, the Company also receives sales order management, inventory management, and data services from its customers in exchange for certain fees.
Product Returns: Consistent with industry practice, the Company generally offers customers a limited right of return for product that has been purchased from the Company. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate in the period the related product revenue is recognized. The Company currently estimates product return liabilities based on data from similar products and other qualitative considerations, such as visibility into the inventory remaining in the distribution channel.
Subject to certain limitations, the Company’s return policy allows for eligible returns of BRIUMVI for credit under the following circumstances:
●receipt of damaged product;
●shipment errors that were a result of an error by the Company;
●expired product that is returned during the period beginning three months prior to the product’s expiration and ending six months after the expiration date;
●product subject to a recall; and
●product that the Company, at its sole discretion, has specified can be returned for credit.
As of June 30, 2023, the Company has not received any returns related to sales of BRIUMVI.
Co-Payment Assistance Programs: Co-payment assistance is provided to qualified patients with commercial insurance, whereby the Company may provide financial assistance to patients with prescription drug co-payments required by the patient's insurance provider. Reserves for co-payment assistance are recorded in the same period the related revenue is recognized.
Accounts Receivable
In general, accounts receivable consists of amounts due from customers, net of customer allowances for cash discounts, product returns and chargebacks. Our contracts with customers have standard payment terms. We analyze accounts that are past due for collectability, and regularly evaluate the creditworthiness of our customers so that we can properly assess and respond to changes in their credit profiles. As of June 30, 2023, 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.
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Cost of Product Revenue
Cost of product revenue consists primarily of third-party manufacturing costs, distribution, overhead and royalties owed to our licensing partner for BRIUMVI sales. Cost of sales may also include costs related to excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances. Based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, a portion of the costs of producing BRIUMVI sold to date was expensed as research and development prior to the FDA approval of BRIUMVI and therefore it is not reflected in the cost of product revenue.
Inventory
Prior to regulatory approval, we expense costs relating to the production of inventory as research and development expense in the period incurred. Following regulatory approval, costs to manufacture those approved products will be capitalized. Inventories are stated at the lower of cost or estimated net realizable value with cost based on the first-in-first-out method (FIFO). Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in clinical trials.
Prior to the approval of BRIUMVI, all manufacturing and other potential costs related to the commercial launch of BRIUMVI were expensed to research and development expense in the period incurred.
Net Loss Per Common Share
Basic net loss per share of our common stock is calculated by dividing net loss applicable to the common stock by the weighted-average number of our common stock outstanding for the period. Diluted net loss per share of common stock is the same as basic net loss per share of common stock since potentially dilutive securities from stock options, restricted stock, 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
The following table summarizes our potentially dilutive securities at June 30, 2023 and 2022:
Six Months Ended | |||||
June 30, | |||||
| 2023 |
| 2022 |
| |
Unvested restricted stock |
| |
| |
|
Options |
| |
| |
|
Warrants | | | |||
Shares issuable upon note conversion |
| |
| |
|
Total |
| |
| |
|
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NOTE 2 NET PRODUCT REVENUE
For the three and six months ended June 30, 2023 our only source of product revenue has been from U.S. sales of BRIUMVI which we began shipping to our customers in January 2023. For the three and six months ended June 30, 2022 our only source of product revenue was from the U.S. sales of UKONIQ, which we began shipping to our customers in February 2021. The voluntary withdrawal of UKONIQ from the U.S. market was announced on April 15, 2022. Effective May 31, 2022, UKONIQ was officially withdrawn from the market.
As of June 30, 2023, approximately $
NOTE 3 INVESTMENT SECURITIES
Our investments as of June 30, 2023 and December 31, 2022 are classified as held-to-maturity. Held-to-maturity investments are recorded at amortized cost.
The following tables summarize our investment securities at June 30, 2023 and December 31, 2022:
June 30, 2023 | ||||||||||||
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 July 2023 and February 2024) (held-to-maturity) | $ | | $ | — | $ | | $ | | ||||
Total short-term investment securities | $ | | $ | — | $ | | $ | | ||||
December 31, 2022 | ||||||||||||
| 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 2023 and December 2023) (held-to-maturity) | $ | | $ | — | $ | | $ | | ||||
Long-term investments: |
|
|
|
|
|
| ||||||
Obligations of domestic governmental agencies (maturing between January 2024 and February 2024) (held-to-maturity) | | — | | | ||||||||
Total short-term and long-term investment securities | $ | | $ | — | $ | | $ | |
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NOTE 4 INVENTORY
The following table presents our inventory as of June 30, 2023 (in thousands):
June 30, 2023 | |||
Raw Materials | $ | | |
Work in Process | | ||
Finished Goods | | ||
Total Inventory | $ | |
Inventory is stated at the lower of cost or net realizable value and consists of raw materials, work-in-process and finished goods. Cost is determined using a standard cost method, which approximates actual cost, and assumes a FIFO flow of goods. At June 30, 2023, all of our inventory was related to BRIUMVI, which was approved by the FDA on December 28, 2022, at which time we began to capitalize costs to manufacture BRIUMVI. The Company has not recorded any inventory write downs since that time. Prior to the FDA approval of BRIUMVI, all costs related to the manufacturing of BRIUMVI and related material were charged to research and development expense in the period incurred.
NOTE 5 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. |
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 $
The Company’s financial instruments include cash, cash equivalents consisting of money market funds, accounts receivable, accounts payable and loan payable. As of June 30, 2023 and December 31, 2022, the fair values of cash and cash equivalents, restricted cash, accounts receivable, and loan and interest payable approximate their carrying value. 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.
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We have no Level 1 or Level 2 instruments. Our Level 3 instrument amounts represent the fair value of the
(in thousands) | |||
Balance at December 31, 2022 | | ||
Interest accrued on face value of 5% Notes |
| | |
Change in fair value of Level 3 liabilities |
| ( | |
Balance at June 30, 2023 | $ | |
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 6 STOCKHOLDERS’ EQUITY
Preferred Stock
Our amended and restated certificate of incorporation authorizes the issuance of up to
Common Stock
Our amended and restated certificate of incorporation authorizes the issuance of up to
On September 2, 2022, we filed an automatic “shelf registration” statement on Form S-3 (the 2022 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 2022 WKSI Shelf was declared effective in September 2022. In connection with the 2022 WKSI Shelf, we entered into an At-the-Market Issuance Sales Agreement (the 2022 ATM) with Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (each a 2022 Agent and collectively, the 2022 Agents), relating to the sale of shares of our common stock. Under the 2022 ATM, we will pay the 2022 Agents a commission rate of up to
During the six months ended June 30, 2023, we sold a total of
Equity Incentive Plans
The TG Therapeutics, Inc. 2022 Incentive Plan (the 2022 Incentive Plan) was approved by stockholders in June 2022 with
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The TG Therapeutics, Inc. Amended and Restated 2012 Incentive Plan (the 2012 Incentive Plan) was approved by stockholders in June 2020. As of June 30, 2023,
Stock-based compensation expense included in the condensed consolidated statements of operations was
Stock Options and Restricted Stock
The following table summarizes the activity for stock options and restricted stock for the six months ended June 30, 2023:
Stock Options | Restricted Stock | |||
Equity awards outstanding, beginning of year | | | ||
Changes during the year: | ||||
Granted | — | | ||
Exercised or vested | ( | ( | ||
Expired or Forfeited | ( | ( | ||
Equity awards outstanding, end of period | | |
As of June 30, 2023, 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 | $ | | $ | | |
Expected weighted-average period in years of compensation cost to be recognized |
Warrants
The Company’s only outstanding warrants are the warrants issued to Hercules as part of the Loan Agreement, the Amended Loan Agreement and the First Amendment (as such terms are defined below) to purchase
NOTE 7 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 $
On December 30, 2021 (the Amended Loan Agreement 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 $
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period from April 1, 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
On March 31, 2023 (the First Amendment Effective Date), the Company entered into a First Amendment to the Amended and Restated Loan and Security Agreement (the First Amendment) with Hercules. The First Amendment amended the terms of the Amended Loan Agreement to, among other things, (i) issue an advance of $
The First Amendment also contains warrant coverage of
In addition, the Company is required to pay a final payment fee equal to
The Company may, at its option, prepay the Amended Term Loan in full or in part, subject to a prepayment penalty equal to (i)
The Company evaluated whether the First Amendment 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 modification of terms and no repayment or retirement of the Term Loan, the Term Loan was accounted for by the Company under the modification accounting model. The Company capitalized the facility charge from the First Amendment advance to debt issuance costs and expensed third party fees in the Company’s statement of operations for the six months ended June 30, 2023.
The Company estimated the fair value of the First Amendment Warrant using the Black-Scholes model based on the following key assumptions:
Amended Term Loan | ||||
Exercise price |
| $ | | |
Common share price on date of issuance | $ | | ||
Volatility | | % | ||
Risk-free interest rate | | % | ||
Expected dividend yield | — | % | ||
Contractual term (in years) |
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The Company incurred financing expenses of $
The loan payable as of June 30, 2023 and December 31, 2022, is as follows:
June 30, |
| December 31, | ||||
(in thousands) | 2023 |
| 2022 | |||
Loan payable | $ | | $ | | ||
Add: Accreted Liability of final payment fee |
| |
| | ||
| |
| | |||
Less: unamortized debt issuance costs |
| ( |
| ( | ||
| |
| | |||
Less: principal payments | — | — | ||||
Total loan payable | | | ||||
Less: current portion |
| — |
| — | ||
Loan payable non-current | $ | | $ | |