tgtx20230930_10q.htm
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Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 

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

SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

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.)

 ​

3020 Carrington Mill Blvd, Suite 475

Morrisville, North Carolina 27560

(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 151,410,073 shares of the registrant’s common stock, $0.001 par value, outstanding as of November 1, 2023.

 ​

 

 

TG THERAPEUTICS, INC.

FORM 10-Q

FOR THE QUARTER ENDED September 30, 2023

 

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

23

     

Item 3

Quantitative and Qualitative Disclosures About Market Risk

31

   

Item 4

Controls and Procedures

31

     

PART II

OTHER INFORMATION

31

     

Item 1

Legal Proceedings

31

   

Item 1A

Risk Factors

32

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

82

Item 3

Defaults of Senior Securities

82

     

Item 4

Mine Safety Disclosures

82

Item 5

Other Information

82

Item 6

Exhibits

83

 

 ​

 

 

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 and maintain regulatory approvals for our product candidates, including TG-1701 and TG-1801, as well as any other product candidates, and our ability to maintain regulatory approval of BRIUMVI® (ublituximab) in relapsing forms of multiple sclerosis (RMS) in the United States (U.S.) and in the European Union (EU);

● our ability to adapt and expand our commercial infrastructure to successfully launch, market and sell BRIUMVI and our other product candidates; 

● our ability to maintain a reliable supply of our products that meets market demand; 

● the success of the ongoing commercialization of BRIUMVI 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 develop, formulate, manufacture and commercialize our product candidates; 

● our ability to establish and maintain contractual relationships and partnerships, on commercially reasonable terms, with third parties for manufacturing, distribution, marketing and supply, and a range of other support functions for our clinical development and commercialization efforts; 

● the implementation of our business model and, 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 and product candidates; 

● estimates of our expenses, future revenues, capital requirements and our needs for additional financing; 

● our ability to maintain and establish collaborations and enter into strategic arrangements, if desired; 

● our ability to meet any of our financial projections or guidance, including without limitation short and long-term revenue projections or guidance and changes to the assumptions underlying those projections or guidance; 

● our ability to obtain sufficient capital to fund our planned operations; 

● our financial performance and cash burn management;  

● our ability to maintain or obtain adequate product liability and other insurance coverage; and  

● developments relating to our competitors and our industry. 

 

 

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.

 

 

 

 

 ​

 

 

Risks Related to our Dependence on Third Parties

  Our reliance on third parties for commercial and clinical supply of raw materials and 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 we may incur losses in the future.
  While we don’t expect to need to raise additional capital, we may need to do so. 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).

 ​

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

TG Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

September 30,

  

December 31,

 

 

2023

  

2022

 

 

(Unaudited)

  

(Note 1)

 

Assets

 

     

Current assets:

 

  

 

Cash and cash equivalents

 $150,902  $102,304 

Short-term investment securities

  78,257   59,374 

Accounts receivable, net

  39,320    

Inventories

  33,553    

Prepaid research and development

  5,001   4,237 

Other current assets

  12,081   2,359 

Total current assets

  319,114   168,274 

Restricted cash

  1,282   1,273 

Long-term investment securities

     12,404 

Right of use assets

  8,271   8,888 

Leasehold interest, net

  1,468   1,627 

Equipment, net

  133   307 

Goodwill

  799   799 

Total assets

 $331,067  $193,572 

        

Liabilities and stockholders’ equity

        

Current liabilities:

        

Accounts payable and accrued expenses

 $39,741  $42,019 

Other current liabilities

  1,217   1,017 

Lease liability – current portion

  1,479   1,581 

Deferred revenue - current portion

  6,903   152 

Accrued compensation

  8,338   8,432 

Total current liabilities

  57,678   53,201 

Deferred revenue, non-current portion

  190   305 

Loan payable – non-current

  98,908   71,135 

Lease liability – non-current

  9,522   10,344 

Total liabilities

  166,298   134,985 

Commitments and contingencies

          

Stockholders’ equity:

        

Common stock, $0.001 par value per share (175,000,000 shares authorized, 151,490,731 and 146,426,697 shares issued, 151,449,422 and 146,385,388 shares outstanding at September 30, 2023 and December 31, 2022, respectively)

  151   146 

Additional paid-in capital

  1,664,797   1,585,708 

Treasury stock, at cost, 41,309 shares at September 30, 2023 and December 31, 2022

  (234)  (234)

Accumulated deficit

  (1,499,945)  (1,527,033)

Total stockholders’ equity

  164,769   58,587 

Total liabilities and stockholders’ equity

 $331,067  $193,572 

 

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

 

 

 

TG Therapeutics, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

 

 

Three months ended

   

Nine months ended

 

 

September 30,

   

September 30,

 

 

2023

   

2022

   

2023

   

2022

 

Revenue:

                               

Product revenue, net

  $ 25,068     $ 56     $ 48,868     $ 2,591  

License, milestone and other revenue

    140,747       38       140,823       114  

Total revenue

  $ 165,815     $ 94     $ 189,691     $ 2,705  

                               

Costs and expenses:

                               

Cost of revenue

    3,509       2       6,277       262  

Research and development:

 

           

         

Noncash compensation

    2,915       3,249       10,162       7,471  

Other research and development

    11,838       17,552       48,581       88,246  

Total research and development

    14,753       20,801       58,743       95,717  

 

           

         

Selling, general and administrative:

 

           

         

Noncash compensation

    6,269       3,740       18,386       663  

Other selling, general and administrative

    26,500       10,514       73,167       46,840  

Total selling, general and administrative

    32,769       14,254       91,553       47,503  

 

           

         

Total costs and expenses

    51,031       35,057       156,573       143,482  

                               

Operating income (loss)

    114,784       (34,963 )     33,118       (140,777 )

                               

Other expense (income):

                               

Interest expense

    3,713       1,648       10,184       7,329  

Other income

    (2,859 )     (793 )     (4,154 )     (2,765 )

Total other expense (income), net

    854       855       6,030       4,564  

                       

Net income (loss)

  $ 113,930     $ (35,818 )   $ 27,088     $ (145,341 )

                               

Net income (loss) per common share:

                               

Basic

  $ 0.80     $ (0.26 )   $ 0.19     $ (1.08 )

Diluted

  $ 0.73     $ (0.26 )   $ 0.19     $ (1.08 )
                                 

Weighted-average shares outstanding:

                               

Basic

    142,871,227       135,327,035       141,571,785       134,839,207  

Diluted

    155,871,749       135,327,035       145,952,913       134,839,207  

 

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

 

 

 

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, 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  

Issuance of common stock in connection with exercise of options

    33,044       *       135                         135  

Issuance of restricted stock

    1,830,320       2       (2 )                        

Forfeiture of restricted stock

    (1,248,640 )     (2 )     1                         (1 )

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

                (975 )                       (975 )

Net loss

                                  (40,510 )     (40,510 )

Balance at June 30, 2022

    145,198,058       145       1,567,345       41,309       (234 )     (1,438,221 )     129,035  

Issuance of common stock in connection with exercise of options

    67,152       *       275                         275  

Issuance of restricted stock

    368,660       1                               1  

Forfeiture of restricted stock

    (234,726 )     (1 )                             (1 )

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

                6,989                         6,989  

Net loss

                                  (35,818 )     (35,818 )

Balance at September 30, 2022

    145,399,144       145       1,574,609       41,309       (234 )     (1,474,039 )     100,481  

 

 ​

          

Additional

                 
  

Common Stock

  

paid-in

  

Treasury Stock

  

Accumulated

     

 

Shares

  

Amount

  

capital

  

Shares

  

Amount

  

Deficit

  

Total

 

Balance at January 1, 2023

  146,426,697  $146  $1,585,708   41,309  $(234) $(1,527,033) $58,587 

Issuance of common stock in connection with exercise of options

  66,701  

​*

   363           

363

 

Issuance of restricted stock

  3,017,736  

3

   (3)            

Warrants issued with debt financing

        595           

595

 

Forfeiture of restricted stock

  (73,787) 

​*

                

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

        7,120           

7,120

 

Net loss

                 (39,232) 

(39,232

)

Balance at March 31, 2023

  149,437,347  

149

   1,593,783  

41,309

   (234)  (1,566,265) 

27,433

 

Issuance of common stock in connection with exercise of options

  76,955  

​*

   751           

751

 

Issuance of restricted stock

  95,000  

​*

   *             

Forfeiture of restricted stock

  (25,679)  *                 

Issuance of common stock in public offering (net of offering costs of $0.8 million)

  1,385,700  

2

   46,295           

46,297

 

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

        13,582           

13,582

 

Net loss

                 (47,610) 

(47,610

)

Balance at June 30, 2023

  150,969,323  

151

   1,654,411  

41,309

   (234)  (1,613,875) 

40,453

 

Issuance of common stock in connection with exercise of options

  102,500  *   420          420 

Issuance of restricted stock

  457,501  *   *           

Forfeiture of restricted stock

  (38,593) *   *           

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

       9,966          9,966 

Net income (loss)

               113,930  113,930 

Balance at September 30, 2023

  151,490,731  151   1,664,797  41,309   (234)  (1,499,945) 164,769 

 ​

*Amount less than one thousand dollars

 ​

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

 ​

 

 

TG Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

Nine months ended

 

 

September 30,

 

 

2023

   

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

   

 

 

   

 

Net income (loss)

  $ 27,088     $ (145,341 )

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

 

   

 

Noncash stock compensation expense

    28,548       8,134  

Depreciation and amortization

    173       230  

Amortization of premium (discount) on investment securities

    (704 )     (172 )

Amortization of debt issuance costs

    1,739       1,383  

Amortization of leasehold interest

    159       159  

Noncash change in lease liability and right of use asset

    1,473       2,205  

Change in fair value of notes payable

    (71 )     (241 )

Changes in assets and liabilities:

 

         

Increase in inventory

 

(31,432

)      

(Increase) decrease in other current assets

    (10,365 )     7,842  

(Increase) decrease in accounts receivable

    (39,320 )     1,389  

Decrease in accounts payable and accrued expenses

    (2,372 )     (27,436 )

Decrease in lease liabilities

    (1,780 )     (1,741 )

Increase in other current liabilities

    2,024       1,403  

Increase (decrease) in deferred revenue

    6,637       (114 )

Net cash used in operating activities

    (18,203 )     (152,300 )

               

CASH FLOWS FROM INVESTING ACTIVITIES

               

Proceeds from maturity of short-term securities

    72,551       67,005  

Investment in held-to-maturity securities

    (78,447 )     (103,276 )

Purchases of PPE

          (11 )

Net cash used in investing activities

    (5,896 )     (36,282 )

               

CASH FLOWS FROM FINANCING ACTIVITIES

               

Payment of loan payable

          (975 )

Issuance of common stock, net

    46,297        

Proceeds from exercise of options

    1,534       535  

Proceeds from debt financings

    25,000        

Financing costs paid

    (125 )      

Net cash provided by (used in) financing activities

    72,706       (440 )

               

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

    48,607       (189,022 )

         

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

    103,577       300,151  

               

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

  $ 152,184     $ 111,129  

               

               

Reconciliation to amounts on condensed consolidated balance sheets:

               

Cash and cash equivalents

  $ 150,902     $ 109,860  

Restricted cash

    1,282       1,269  

Total cash, cash equivalents and restricted cash

  $ 152,184     $ 111,129  

               

Cash paid for:

               

Interest

  $ 6,338     $ 3,908  
                 

NONCASH TRANSACTIONS

               

Deferred financing costs

  $ 1,238     $  

Warrants issued with debt financing

  $ 595     $  

 

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

 ​

 

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) in the European Union (EU), and the Medicines and Healthcare Products Regulatory Agency (MHRA) in the United Kingdom (UK), 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.

.

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 nine months ended September 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

 

Historically, we have incurred operating losses since our inception; however, the Company experienced a net profit during the three and nine months ended September 30, 2023 due to a $140.0 million non-refundable upfront payment recognized as license revenue in the third quarter of 2023 as part of our ex-U.S. commercialization agreement (the Commercialization Agreement) with Neuraxpharm Pharmaceuticals, S.L. (Neuraxpharm) (see Note 2 for more information). We expect to continue to incur operating losses in the near term and may never become profitable. As of September 30, 2023, we have an accumulated deficit of $1.5 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 the upfront payment from the Commercialization Agreement (see Note 2 for more information). 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 September 30, 2023, we had generated $48.9 million in product revenue from drug sales of BRIUMVI. BRIUMVI first became commercially available in the United States in January of 2023. Even with the commercialization of BRIUMVI and the possible future commercialization of our other drug candidates, we may not become profitable. Our ability to achieve profitability depends on our ability to generate revenue and many other factors, including our ability to successfully commercialize our drug candidates alone or in partnership; successfully complete any post-approval regulatory obligations; and our ability to maintain or obtain regulatory approval for our drug candidates. We may continue to incur operating losses even now that we are generating revenues from BRIUMVI.

 

10

 

As of September 30, 2023, we had $229.2 million in cash and cash equivalents, and investment securities. The Company believes its existing cash, cash equivalents, and investment securities, combined with projected revenues associated with the sale of BRIUMVI in the U.S. and ex-U.S., will be sufficient to fund its anticipated operating cash requirements for at least twelve months following the date of this filing.

.

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 as well as the costs associated with licensing or otherwise acquiring new product 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 revenue, and the adoption of new accounting standards during the nine months ended September 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 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.

 

11

 

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 September 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.

 

License Agreements

 

The Company generates revenue from license or similar agreements with pharmaceutical companies for the development and commercialization of certain products. Such agreements may include the transfer of intellectual property rights in the form of licenses. Payments made by the customer may include non-refundable upfront fees, payments based upon the achievement of defined milestones, and royalties on sales of products.

Licenses of intellectual property: If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes the transaction price allocated to the license as revenue upon transfer of control of the license. All other promised goods or services in the agreement are evaluated to determine if they are distinct. If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct.

 

Milestone payments: Contingent milestones at contract inception are estimated at the amount which is not probable of a material reversal and included in the transaction price using the most likely amount method. Milestone payments that are not within the Company's control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore the variable consideration is constrained. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each reporting period, the Company re-evaluates the probability of achieving development or sales-based milestone payments that may not be subject to a material reversal and, if necessary, adjust the estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment.

 

Sales-based royalties: For arrangements that include sales-based royalties and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, revenue is recognized at the later of when the related sales occur or when the performance obligation to which some or all of the royalties have been allocated has been satisfied (or partially satisfied).

 

Other Revenue

 

Revenue is also generated from service-based fees recognized for providing regulatory support & development services to customers. Service fee revenue is recognized overtime as the services are transferred to the customer.

 

Deferred Product Revenue

 

When consideration is received, or such consideration is unconditionally due, from a customer prior to the Company completing its performance obligation to the customer under the terms of a contract, a contract liability is recorded as deferred revenue. Deferred revenues expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current liabilities. Deferred revenues not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as long-term liabilities.

 

Accounts Receivable

 

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

 

12

 

Cost of Revenue

 

Cost of revenue consists primarily of third-party manufacturing costs, distribution, overhead and royalties owed to our licensing partner for BRIUMVI sales.  Cost of revenue 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 revenue.  Our cost of revenue also relates to providing regulatory support & development services to customers.

 

 

Inventory

 

Inventories are stated at the lower of cost or estimated net realizable value with cost based on the first-in-first-out method (FIFO). 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. 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 Income (Loss) Per Common Share

 

Basic net income (loss) per share of our common stock is calculated by dividing net income (loss) applicable to the common stock by the weighted-average number of our common stock outstanding for the period. Diluted net income (loss) per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options, and restricted stock, which would result in the issuance of incremental shares of common stock. The impact of these items is anti-dilutive during periods of net loss. Therefore, basic and diluted net income (loss) per share were the same for all periods presented in the unaudited condensed consolidated statement of operations, except for the three and  nine months ended September 30, 2023, as the Company had net income for those periods.

.

 

The following table summarizes our potentially dilutive securities at September 30, 2023 and 2022:

 

 

As of

 

 

September 30,

 

 

2023

  

2022

 

Unvested restricted stock

  8,454,545   10,901,797 

Options

  4,697,029   5,153,737 

Warrants

  312,272   262,100 

Shares issuable upon note conversion

  20,646   20,135 

Total

  13,484,492   16,337,769 

 

The computation of basic and diluted EPS is as follows:

 

 

Three months ended

 

Nine months ended

 September 30, September 30,

(in thousands, except share and per share data)

 

2023

 

2022

 

2023

 

2022

Net income (loss)

 

113,930

 

(35,818)

 

27,088

 

(145,341)

Weighted-average common shares outstanding

 

142,871,227

 

135,327,035

 

141,571,785

 

134,839,207

Dilutive effect of potential common shares

 

13,000,522

 

-

 

4,381,128

 

-

Weighted-average common shares outstanding assuming dilution

 

155,871,749

 

135,327,035

 

145,952,913

 

134,839,207

        

Net income (loss) per share - basic

 

0.80

 

(0.26)

 

0.19

 

(1.08)

Net income (loss) per share - diluted

 

0.73

 

(0.26)

 

0.19

 

(1.08)

 

13

 
 

NOTE 2 REVENUE

 

Product revenue, net

 

For  the three and nine months ended September 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 nine months ended September 30, 2022 our only source of product revenue was from the U.S. sales of UKONIQ, which was voluntarily withdrawn from the U.S. market effective May 31, 2022.

 ​

As of September 30, 2023, approximately $6.1 million of 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.

 

License Agreements

 

Neuraxpharm Commercialization Agreement

 

On July 28, 2023, the Company entered into an ex-U.S. commercialization agreement (the Commercialization Agreement) with Neuraxpharm. The Company granted Neuraxpharm the exclusive right to commercialize BRIUMVI in territories outside the United States, Canada, and Mexico, which are retained by the Company, and excluding certain Asian countries previously partnered (the Territory). As part of the overall arrangement, the Company has agreed to supply BRIUMVI to Neuraxpharm throughout the term of the Commercialization Agreement. In addition, the Company will perform certain development and regulatory activities for Neuraxpharm to support its obligations under the Commercialization Agreement to secure and maintain the regulatory approvals required to sell BRIUMVI in the Territory.

 

In consideration for entering the Commercialization Agreement, the Company received a non-refundable upfront payment of $140.0 million. The Company will also receive tiered double-digit royalties up to 30% on net product sales in the Territory and is eligible to receive sales-based or other milestone payments totaling up to $505.0 million.  The consideration for the supply of BRIUMVI is reimbursement of cost plus a reasonable overhead, which the Company has determined approximates the price that a customer in the Territory would be willing to pay for these goods.


 

The Company evaluated the Commercialization Agreement under ASC 606 and concluded that Neuraxpharm represents a customer in the transaction. In accordance with this guidance, the Company identified the following commitments under the arrangement: (i) exclusive right to develop, sell, offer to sell and import the Product in the Territory (the “License”); (ii) development and regulatory activities (“Development and Regulatory Activities”); and (iii) the requirement to supply Neuraxpharm with the Licensed Product at certain agreed amounts (the “Supply of Licensed Product”). The Company determined that these three commitments represent distinct performance obligations for purposes of recognizing revenue and will recognize revenue as it fulfills these performance obligations.

 

The License to the Company’s intellectual property represents a distinct performance obligation, therefore, the $140 million non-refundable upfront payment related to this performance obligation was recognized as License Revenue in the third quarter of 2023. 

 

The Development and Regulatory Activities performance obligation is satisfied over time because Neuraxpharm simultaneously receives and consumes the benefits provided by the Company’s performance of the services. Therefore, revenue is recognized as the activities are completed by the Company.  For the three and nine months ended September 30, 2023, the Company recognized Other Revenue of $0.7 million related to the Development and Regulatory Activities.

 

The performance obligation related to the Supply of Licensed Product is met when control of the product passes to Neuraxpharm. The consideration received from Neuraxpharm for the supply of BRIUMVI will be recognized by the Company as a component of product revenue, net.  As of September 30, 2023, the Company has an unconditional right to receive $6.8 million in consideration from Neuraxpharm related to the performance obligation to supply BRIUMVI, that is recorded as accounts receivable, net. The related performance obligation to supply BRIUMVI has not yet been satisfied, therefore, as of September 30, 2023, $6.8 million has been recorded as deferred revenue. The Company will reevaluate the consideration received, and performance obligations satisfied at the end of each reporting period. Such reevaluations may result in a change to the amount of product revenue, net, recognized and deferred revenue.

 

The remaining forms of consideration are variable because they are dependent on the achievement of sales-based or other milestones. The Company evaluated the constraint on variable consideration and concluded that the milestone payments are highly dependent on factors outside of the Company’s control. Therefore, at contract inception, the milestones are not included in the transaction price as it is not probable that a significant reversal of revenue would not occur. Sales-based milestones will be recognized as revenue in the period when the related sales threshold is met. All other milestones will be recognized as revenue immediately in the period the achievement of the underlying milestone is probable. Any consideration related to sales-based royalties will be recognized when the related sales occur. No royalty revenue was recognized during the three and nine months ended September 30, 2023.


 

 

 

 

 ​ 

 

NOTE 3 INVESTMENT SECURITIES

 

Our investments as of September 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 September 30, 2023 and December 31, 2022:

 

 

September 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 October 2023 and March 2024) (held-to-maturity)

 $78,257  $10  $243  $78,024 

Total short-term investment securities

 $78,257  $10  $243  $78,024 

 

 

December 31, 2022

 

 

Amortized

  

Gross

  

Gross

  

 

 

cost, as

  

unrealized

  

unrealized

  

Estimated

 

 

adjusted

  

holding gains

  

holding losses

  

fair value

 

Short-term investments:

 

  

  

  

 

Obligations of domestic governmental agencies (maturing between January 2023 and December 2023) (held-to-maturity)

 $59,374  $  $1,053  $58,321 
                 

Long-term investments:

                

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

  12,404      429   11,975 

Total short-term and long-term investment securities

 $71,778  $  $1,482  $70,296 

 

14

 
 

NOTE 4 INVENTORY

 

The following table presents our inventory as of September 30, 2023 (in thousands):

 

 

September 30, 2023

 

Raw Materials

 $1,228 

Work in Process

  31,713 

Finished Goods

  612 

Total Inventory

 $33,553 

 

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 September 30, 2023, all 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. No costs related to the manufacturing of BRIUMVI and the related material were incurred between the approval date and year end 2022, therefore, inventory is not included in the December 31, 2022 condensed consolidated balance sheets. Inventory that is used for clinical development purposes is expensed to research and development expense when consumed. At September 30, 2023, we determined that a reserve related to BRIUMVI inventory is not required. We currently use a limited number of third-party contract manufacturing organizations (CMOs) to produce our inventory.

 

 

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 $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.

 

The Company’s financial instruments include cash, cash equivalents consisting of money market funds, accounts receivable, accounts payable and loan payable. As of September 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.

 

15

 

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 nine months ended September 30, 2023:

 

(in thousands)

    

Balance at December 31, 2022

  243 

Interest accrued on face value of 5% Notes

  844 

Change in fair value of Level 3 liabilities

  (915)

Balance at September 30, 2023

 $172 

 

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 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 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 3.0% of the gross proceeds from the sale of any shares of common stock.

 

During the nine months ended September 30, 2023, we sold a total of 1,385,700 shares of common stock under the 2022 ATM for aggregate total gross proceeds of approximately $47.1 million at an average selling price of $34.01 per share, resulting in net proceeds of approximately $46.3 million after deducting commissions and other transactions costs. The 2022 WKSI Shelf is currently our only active shelf-registration statement. We may offer any combination of the securities registered under the 2022 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 may need to file additional shelf-registration statements in the future to provide us with the flexibility to raise additional capital to finance our operations as needed.

 

Equity Incentive Plans

 

The TG Therapeutics, Inc. 2022 Incentive Plan (the 2022 Incentive Plan) was approved by stockholders in June 2022 with 17,000,000 shares available to be issued, of which not more than 10,000,000 shares may be issued pursuant to “full-value awards.” Full-value awards include any award other than an option or stock appreciation right and which is settled by the issuance of stock. As of September 30, 2023, 4,856,672 shares of restricted stock and 2,272,500 options were outstanding and up to an additional 8,742,674 shares were available to be issued under the 2022 Incentive Plan.

 

16

 

The TG Therapeutics, Inc. Amended and Restated 2012 Incentive Plan (the 2012 Incentive Plan) was approved by stockholders in June 2020. As of September 30, 2023, 5,097,904 shares of restricted stock and 2,424,529 options were outstanding, and no additional shares were available to be issued under the 2012 Incentive Plan as the 2022 Incentive Plan is now the only active incentive plan.

 

Stock-based compensation expense included in the condensed consolidated statements of operations was $9.2 million and $7.0 million for the three months ended September 30, 2023 and 2022, respectively, and $28.5 million and $8.1 million for the nine months ended September 30, 2023 and 2022, respectively. The  $9.2 million and the $28.5 million for the three and nine months ended September 30, 2023, respectively, is net of $0.8 million and $2.1 million of stock-based compensation expense that was capitalized into inventory, respectively.

 

Stock Options and Restricted Stock

 

The following table summarizes the activity for stock options and restricted stock for the nine months ended September 30, 2023:

 

 

Stock Options

  

Restricted Stock

 

Equity awards outstanding, beginning of year

  5,135,685   8,732,286 

Changes during the year:

 

  

 

Granted

     3,570,237 

Exercised or vested

  (246,156)  (2,209,888)

Expired or Forfeited

  (192,500)  (138,059)

Equity awards outstanding, end of period

  4,697,029   9,954,576 

 

As of September 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

 $5,063  $36,978 

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

  2.7   2.8 

 

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 (please refer to Note 7 – Loan Payable) to purchase 147,058, 115,042 and 50,172 shares of our common stock with exercise prices of $4.08, $17.95 and $14.70, respectively. See Note 7 for further details. There will not be any ongoing stock compensation expense volatility associated with these warrants.

 

 

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 $60.0 million (Term Loan). 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 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 $60.0 million to $200.0 million (the Amended Term Loan), (ii) issue a first advance of $70.0 million drawn at the Amended Loan Agreement 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, 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%. In addition to the cash interest rate, the principal balance accrues paid-in-kind interest at a rate of 3.45%, which amount will be capitalized and added to the outstanding principal balance of the Amended Term Loan and payable at the maturity date of the Amended Loan Agreement.

 

17

 

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 $25.0 million drawn at the First Amendment Effective Date (the Tranche 3A Advance), (ii) formal expiration of Tranche 2, (iii) change the draw amounts and dates available under subsequent tranches, including splitting the remaining balance of Tranche 3 into two additional advances in an aggregate principal amount of up to $20.0 million, in increments of $10.0 million (each a Tranche 3B Advance and Tranche 3C Advance), decreasing the amount available under Tranche 4 from $65.0 million to $60.0 million, and adding a Tranche 5 of $25.0 million, subject to the achievement of revenue related performance milestones, (iv) extend the interest only period from February 1, 2025 to August 1, 2025, and (v) modify the cash interest rate to be the greater of either (a) the “prime rate” as reported in The Wall Street Journal plus 1.20%, and (b) 8.95%. In addition to the cash interest rate, the principal balance will accrue paid-in-kind interest at a rate of 2.25%, which amount will be capitalized and added to the outstanding principal balance of the Amended Term Loan and payable at the maturity date of the Amended Loan Agreement. The First Amendment contains financial covenants that require the company to maintain certain levels of unrestricted cash and additional financial covenants related to market capitalization. As of September 30, 2023, we are in compliance with all financial covenants.

 

The First Amendment also contains warrant coverage of 2.95% of each advance amount funded. A warrant was issued by the Company to Hercules to purchase 50,172 shares of common stock with an exercise price of $14.70 for the amount funded pertaining to the Tranche 3A Advance (the First Amendment Warrant). The First Amendment Warrant shall be exercisable for seven years from the date of issuance. Hercules may exercise the First Amendment 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) plus 4.95% of the aggregate principal amount of all other advances.

 

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

 

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 nine months ended September 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

 $14.70 

Common share price on date of issuance

 $15.04 

Volatility

  0.88%

Risk-free interest rate

  3.6%

Expected dividend yield

  %

Contractual term (in years)

  7.00 

 

18

 

The Company incurred financing expenses of $2.0 million (including the fair value of the First Amendment Warrant) related to the First Amendment 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 $0.6 million and $0.5 million for the three months ended September 30, 2023, and 2022, respectively and $1.7 million and $1.4 million for the nine months ended September 30, 2023 and 2022, respectively. At September 30, 2022, the remaining unamortized balance of debt issuance costs was $6.0 million. At September 30, 2023, the remaining unamortized balance of debt issuance costs was $5.8 million.

 ​

The loan payable as of September 30, 2023 and December 31, 2022, is as follows:

 

 

September 30,

  

December 31,

 

(in thousands)

 

2023

  

2022

 

Loan payable

 $95,000  $70,000 

Add: Accreted Liability of final payment fee

  9,659   6,667 

  104,659   76,667 

Less: unamortized debt issuance costs

  (5,751)  (5,532)

  98,908   71,135 

Less: principal payments

      

Total loan payable

  98,908   71,135 

Less: current portion

      

Loan payable non-current

 $98,908  $71,135 

 

 

NOTE 8 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 $1.8 million under the Office Agreement. We began to occupy this space in April 2016, with rental payments beginning in the third quarter of 2016. Also in connection with this Office Agreement, 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 rental expense of $0.2 million for the nine months ended September 30, 2023.

 

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. We incurred rental expense of $0.1 million for the nine months ended September 30, 2023.

 

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 $11.0 million and $8.3 million, respectively, as of September 30, 2023. Our leases have remaining lease terms of 1 year to 8 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 and nine months ended September 30, 2023 and 2022:

 

 

Three months ended

  

Nine months ended

 

 

September 30,

  

September 30,

  

September 30,

 

(in thousands)

 

2023

  

2022

  

2023

  

2022

 

Operating lease cost

 $535  $1,062  $1,632  $2,100 

Net lease cost

 $535  $1,062  $1,632  $2,100 

 

19

 

As of September 30, 2023, the weighted-average remaining operating lease term was 6.0 years and the weighted-average discount rate for operating leases was 9.99%. Cash paid for amounts included in the measurement of operating lease liabilities during the nine months ended September 30, 2023 was $1.8 million. The balance sheet classification of lease liabilities was as follows:

 

 

September 30,

  

December 31,

 

(in thousands)

 

2023

  

2022

 

Liabilities

 

  

 

Lease liability current portion

 $1,479  $1,581 

Lease liability non-current

  9,522   10,344 

Total lease liability

 $11,001  $11,925 

 

As of September 30, 2023, the maturities of lease liabilities were as follows:

 

 

Operating

 

(in thousands)

 

leases

 

Remainder of 2023

 $594 

2024

  2,388 

2025

  2,100 

2026

  2,080 

2027

  1,913 

After 2028

  6,542 

Total lease payments

  15,617 

Less: interest

  (4,616)

Present value of lease liabilities(*)

 $11,001 

 


 

(*)

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 9 LICENSE AGREEMENTS

 

BRIUMVI (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. As of September 30, 2023, we have incurred approximately $31.0 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 $12.0 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. During the three and nine months ended September 30, 2023, the Company recorded $2.4 million and $4.8 million, respectively, related to the worldwide royalty due under the LFB License Agreement in cost of revenue based on U.S. sales of BRIUMVI. As of September 30, 2023, $2.4 million in royalties were payable under the LFB License Agreement.

 ​

20

 

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.

 

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 September 30, 2023 and 2022 and approximately $114,000 for each of the nine months ended September 30, 2023 and 2022. At September 30, 2023 and December 31, 2022, we have deferred revenue of approximately $0.3 million and $0.5 million, respectively, associated with this $2 million payment (approximately $0.2 million of which has been classified in current liabilities at September 30, 2023 and December 31, 2022).

 

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.

 

In July 2023, the Company entered into the Commercialization Agreement with Neuraxpharm. The Company granted Neuraxpharm the exclusive right to commercialize BRIUMVI in territories outside the United States, Canada, and Mexico, which are retained by TG, and excluding certain Asian countries previously partnered. Under the terms of the Commercialization Agreement, the Company received a one-time, non-refundable payment of $140.0 million upon contract execution (please refer to Note 2 – Revenue). The Company is eligible to receive an additional $12.5 million upon first key market commercial launch in the EU and up to an additional $492.5 million in milestone-based payments on achievement of certain launch and commercial milestones. In addition, TG will receive tiered double-digit royalties on net product sales up to 30%. In the event of a change of control of the Company (as defined in the Commercialization Agreement), the Company retains an option to buy back all rights under the Commercialization Agreement for a period of two years thereafter.

 

UKONIQ (umbralisib)

 

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 September 30, 2023, we have incurred approximately $24.0 million in expense related to the achievement of certain milestones of the Umbralisib License.

 ​

Under the terms of the Umbralisib License, Rhizen is eligible to receive approval and sales-based milestone payments in the aggregate of approximately $175 million payable. Additionally, Rhizen receives tiered royalties that escalate from high single digits to low double digits on any net sales of umbralisib. During the year ended December 31, 2022, the Company recorded $0.2 million related to the worldwide royalty due under the Umbralisib License in cost of revenue based on U.S. sales of UKONIQ and as of December 31, 2022, approximately $3,000 in royalties were payable under the Umbralisib License. As of September 30, 2023,  no royalties were payable under the Umbralisib License and as a result of the withdrawal of UKONIQ from the U.S. market and discontinuation of all commercialization activities,  we do not expect to incur any additional costs related to this license agreement.

 ​

21

 
 

NOTE 10 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 $0.7 million and $0.6 million for the nine months ended September 30, 2023 and 2022, 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 8 – Leases for details regarding the Office Agreement with FBIO.

 ​ 

 

 

ITEM 2. MANAGEMENTS 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. 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, 2022. 

 

OVERVIEW 

  ​

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 FDA for BRIUMVI (ublituximab-xiiy) for the treatment of adult patients with 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) in the European Union (EU), and the Medicines and Healthcare Products Regulatory Agency (MHRA) in the United Kingdom (UK), 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.

 

Recent Business Update Highlights

 

BRIUMVI Ex-U.S. Commercialization & Recent UK Approval

 

On August 1, 2023, we announced an agreement with Neuraxpharm, a leading European specialty pharmaceutical company focused on the treatment of central nervous system (CNS) disorders, for the Ex-U.S. commercialization of BRIUMVI.

 

On November 1, 2023, we announced that we also received approval by the MHRA for BRIUMVI to treat adult patients with RMS with active disease defined by clinical or imaging features in the UK.

 

 

 

OUR PRODUCTS

 

We currently license worldwide development and commercial rights, subject to certain limited geographical restrictions, for all of our products under development. The following table summarizes the current clinical trial status for our lead drug candidates as of October 2023. 

 

Clinical Drug Candidate:  
(molecular target)  

Initial Target Disease  

Stage of Development 
(trial name) 

Ublituximab (anti-CD20 mAb)  

Relapsing Forms of Multiple Sclerosis (RMS)  

APPROVED

TG-1701 (BTK inhibitor)  

B-cell disorders

Phase 1 trial  

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

B-cell disorders

Phase 1 trial  

 ​

BRIUMVI (ublituximab-xiiy) Overview
 

BRIUMVI is the first and only anti-CD20 monoclonal antibody approved for the treatment of RMS, to include clinically isolated syndrome, relapsing-remitting disease, and active secondary progressive disease, in adults, that can be administered in a twice yearly, one-hour infusion following the starting dose.

 

The BRIUMVI approvals were primarily based on the ULTIMATE I and ULTIMATE II Phase 3 trials. Each trial was an independent  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 special protocol assessment (SPA) with the FDA. The ULTIMATE I and II trials were led by Lawrence Steinman, MD, Zimmermann Professor of Neurology and Neurological Sciences, Pediatrics, and Genetics at Stanford University. Full enrollment was completed in October 2018, with approximately 1,100 subjects enrolled in both studies combined. 

 

 

In December 2020, we announced positive topline results from the ULTIMATE I & II trials. Both studies met their primary endpoint of significantly reducing ARR over a 96-week period (p<0.005 in each study) with BRIUMVI demonstrating an ARR of <0.10 in each of the studies. Relative reductions of approximately 60% and 50% in ARR over teriflunomide were observed in ULTIMATE I & II, respectively.  Key secondary MRI endpoints were also met.

 

On August 22, 2022, the full results from the ULTIMATE I & II trials were published in the New England Journal of Medicine.

 

In addition to presenting various exploratory data sets from the ULTIMATE I & II trials at major medical meetings, on October 11, 2023 we also presented the first data from the ENHANCE Phase 3b trial evaluating RMS patients who switch from a IV anti-CD20 therapy to BRIUMVI at the 2023 European Committee for Treatment and Research in Multiple Sclerosis Annual Meeting.

 

U.S. Commercialization of BRIUMVI
 

On December 28, 2022, we announced the FDA approval of BRIUMVI for the treatment of RMS, to include clinically isolated syndrome, relapsing-remitting disease, and active secondary progressive disease, in adults, primarily based on results from the ULTIMATE I & II Phase 3 trials. On January 26, 2023, we announced the U.S. commercial launch of BRIUMVI, making it available to physicians and patients.
 

 

Our commercialization efforts focused on engaging targeted neurology accounts with multi-channel promotional programming, sales engagements, infusion training and education. We also worked closely with payers to begin to secure insurance coverage for BRIUMVI.  The first patient received a BRIUMVI infusion on February 1, 2023.

 

On July 1, 2023, the permanent J-Code for BRIUMVI (J2329) became effective.

 

Ex-U.S. Commercialization of BRIUMVI

 

On June 1, 2023, we announced that the EC granted approval of BRIUMVI for the treatment of adult patients with RMS who have active disease defined by clinical or imaging features. With this approval, the centralized marketing authorization is valid in all EU member states, Iceland, Norway and Liechtenstein.

 

On August 1, 2023, we announced an agreement with Neuraxpharm, a leading European specialty pharmaceutical company focused on the treatment of CNS disorders, for the Ex-US commercialization of BRIUMVI. Under the terms of the commercialization agreement, we received an upfront payment of $140 million, and are eligible to receive an additional $12.5 million upon launch in the first EU country and up to an additional $492.5 million in milestone-based payments on achievement of certain launch and commercial milestones. The total deal is valued at up to $645 million in upfront and milestone payments. In addition, we will receive tiered double-digit royalties on net product sales up to 30%. In exchange, Neuraxpharm will have the exclusive right to commercialize BRIUMVI in territories outside the United States, Canada and Mexico, which are retained by TG, and excluding certain Asian countries previously partnered. We retain an option to buy back all rights under the commercialization agreement for a period of two years in the event of a change in control of TG.

 

On November 1, 2023, we announced that we also received approval by the MHRA for BRIUMVI to treat adult patients with RMS with active disease defined by clinical or imaging features in the UK.

 

For more information, please refer to our Annual Report on Form 10-K for the quarter and year ended December 31, 2022.

 

 

RESULTS OF OPERATIONS

 

The following table summarizes the results of operations for the three months ended September 30, 2023 and 2022:

 

   

Three months ended

 
   

September 30,

 

(in thousands)

 

2023

   

2022

 

Product revenue, net

  $ 25,068     $ 56  

License, milestone and other revenue

    140,747       38  

Total Revenue

  $ 165,815     $ 94  
                 

Costs and expenses:

               

Cost of revenue

    3,509       2  

Research and development:

               

Noncash compensation

    2,915       3,249  

Other research and development

    11,838       17,552  

Total research and development

    14,753       20,801  
                 

General and administrative:

               

Noncash compensation

    6,269       3,740  

Other selling, general and administrative

    26,500       10,514  

Total general and administrative

    32,769       14,254  
                 

Total costs and expenses

    51,031       35,057  
                 

Interest expense

    3,713       1,648  

Other income

    (2,859 )     (793 )

Total other expense, net

    854       855  
                 

Net income (loss)

  $ 113,930     $ (35,818 )

 

Product Revenue, net. Product revenue, net was approximately $25.1 million for the three months ended September 30, 2023, compared to $0.1 million for the three months ended September 30, 2022. Product revenue, net for the three months ended September 30, 2023, consisted of net product sales of BRIUMVI in the United States. In January 2023, we began commercial sales of BRIUMVI within the U.S. following FDA approval. Product revenue, net for the three months ended September 30, 2022, consisted of net product sales of UKONIQ, which was officially withdrawn from the market in May of 2022.

 ​

License Revenue. License revenue was $140.0 million and less than $0.1 million for the three months ended September 30, 2023 and September 30, 2022, respectively. License revenue for the three months ended September 30, 2023 is predominantly comprised of recognition of license revenue from the one-time payment under the Neuraxpharm Commercialization Agreement. License revenue for the three months ended September 30, 2022 is comprised of recognition of a portion of the upfront payment from the ublituximab sublicense agreement with Ildong.

 

Other Revenue. Other revenue was $0.7 million and zero for the three months ended September 30, 2023 and September 30, 2022, respectively.  Other revenue for the three months ended September 30, 2023 is comprised of consideration received for development and regulatory activities performed on behalf of Neuraxpharm in accordance with the Commercialization Agreement.

 ​

Cost of Revenue. Cost of revenue for the three months ended September 30, 2023 was $3.5 million compared to approximately $2,000 for the three months ended September 30, 2022.  Cost of revenue for the three months ended September 30, 2023 consists primarily of third-party manufacturing, distribution, overhead costs and royalties owed to our licensing partner for BRIUMVI sales. 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 revenue. We expect the cost of revenue for BRIUMVI to increase in relation to product revenues as we deplete these inventories and we expect to use the remaining pre-commercialization inventory for product sales through the end of 2024. A portion of the cost of revenue for the three months ended September 30, 2023 includes costs related to delivering regulatory support & development services to Neuraxpharm in accordance with the Commercialization Agreement. Cost of revenue for the three months ended September 30, 2022 primarily relates to freight and royalties owed to our licensing partner for UKONIQ sales.

 

 

Noncash Compensation Expense (Research and Development). Noncash compensation expense (research and development) related to equity incentive grants totaled $2.9 million for the three months ended September 30, 2023, as compared to $3.2 million during the comparable period ended September 30, 2022.

 

Other Research and Development Expense. Other research and development expense decreased for the three months ended September 30, 2023, by approximately $5.8 million to $11.8 million as compared to the comparable period ended September 30, 2022. The decrease in R&D expense during the three months ended September 30, 2023 was primarily attributable to reduced manufacturing expense and clinical trial related expenses. Prior to the approval of BRIUMVI, manufacturing costs pertaining to BRIUMVI were expensed to research and development expense in the period incurred, and following approval are reflected in inventory.

 

Noncash Compensation Expense (Selling, General and Administrative). Noncash compensation expense (selling, general and administrative) related to equity incentive grants totaled $6.3 million for the three months ended September 30, 2023, as compared to $3.7 million during the comparable period ended September 30, 2022. The increase in noncash compensation expense was primarily due to greater vesting of equity grants and a decrease in forfeitures during the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

 

Other Selling, General and Administrative. Other selling, general and administrative expenses totaled $26.5 million for the three months ended September 30, 2023, as compared to $10.5 million during the comparable period ended September 30, 2022. The increase was primarily due to other selling, general and administrative costs, including personnel and consultants, associated with the commercialization of BRIUMVI, as well as increase in advisory fees pertaining to the Commercialization Agreement with Neuraxpharm during the three months ended September, 30, 2023.

 

Interest Expense. Interest expense increased by $2.1 million to $3.7 million for the three months ended September 30, 2023, as compared to $1.6 million for the three months ended September 30, 2022. The increase is mainly due to greater interest expense related to the First Amendment to the Amended Loan Agreement.

 

Other Income. Other income increased by $2.1 million to $2.9 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The increase is mainly due to higher interest income received from our money market investments, as well as a research & development tax credit refund received by our Australian subsidiary during the three months ended September 30, 2023.

 ​

 

The following table summarizes the results of operations for the nine months ended September 30, 2023 and 2022:

 

   

Nine months ended

 
   

September 30,

 

(in thousands)

 

2023

   

2022

 

Product revenue, net

  $ 48,868     $ 2,591  

License, milestone and other revenue

    140,823       114  

Total Revenue

  $ 189,691     $ 2,705  
                 

Costs and expenses:

               

Cost of revenue

    6,277       262  

Research and development:

               

Noncash compensation

    10,162       7,471  

Other research and development

    48,581       88,246  

Total research and development

    58,743       95,717  
                 

General and administrative:

               

Noncash compensation

    18,386       663  

Other selling, general and administrative

    73,167       46,840  

Total general and administrative

    91,553       47,503  
                 

Total costs and expenses

    156,573       143,482  
                 

Interest expense

    10,184       7,329  

Other income

    (4,154 )     (2,765 )

Total other expense, net

    6,030       4,564  
                 

Net income (loss)

  $ 27,088     $ (145,341 )

 

Product Revenue, net. Product revenue, net was approximately $48.9 million for the nine months ended September 30, 2023, compared to $2.6 million for the nine months ended September 30, 2022. Product revenue, net for the nine months ended September 30, 2023, consisted of net product sales of BRIUMVI in the United States. In January 2023, we began commercial sales of BRIUMVI within the U.S. following FDA approval. Product revenue, net for the nine months ended September 30, 2022, consisted of net product sales of UKONIQ, which was officially withdrawn from the market in May of 2022.

 ​

License Revenue. License revenue was $140.1 million and less than $0.1 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. License revenue for the nine months ended September 30, 2023 is predominantly comprised of recognition of license revenue from the one-time payment under the Neuraxpharm Commercialization Agreement. License revenue for the nine months ended September 30, 2022 is comprised of recognition of a portion of the upfront payment from the ublituximab sublicense agreement with Ildong.

 

Other Revenue. Other revenue was $0.7 million and zero for the nine months ended September 30, 2023 and September 30, 2022, respectively.  Other revenue for the nine months ended September 30, 2023 is comprised of  consideration received for development and regulatory activities performed on behalf of Neuraxpharm in accordance with the Commercialization Agreement.

 ​

Cost of Revenue. Cost of revenue for the nine months ended September 30, 2023 was $6.3 million compared to approximately $0.3 million for the nine months ended September 30, 2022.  Cost of revenue for the nine months ended September 30, 2023 consists primarily of third-party manufacturing, distribution, overhead costs and royalties owed to our licensing partner for BRIUMVI sales. 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 revenue. We expect the cost of revenue for BRIUMVI to increase in relation to product revenues as we deplete these inventories and we expect to use the remaining pre-commercialization inventory for product sales through the end of 2024. A portion of the cost of revenue for the nine months ended September 30, 2023 includes costs related to delivering regulatory support & development services to Neuraxpharm in accordance with the Commercialization Agreement. Cost of revenue for the nine months ended September 30, 2022 primarily relates to freight and royalties owed to our licensing partner for UKONIQ sales.

 

 

Noncash Compensation Expense (Research and Development). Noncash compensation expense (research and development) related to equity incentive grants totaled $10.2 million for the nine months ended September 30, 2023, as compared to $7.5 million during the comparable period ended September 30, 2022. The increase in noncash compensation expense was primarily due to vesting of milestone-based grants and a decrease in forfeitures during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

 

Other Research and Development Expense. Other research and development expense decreased for the nine months ended September 30, 2023, by approximately $39.7 million to $48.6 million as compared to the comparable period ended September 30, 2022. The decrease in R&D expense during the nine months ended September 30, 2023 was primarily attributable to reduced manufacturing expense and clinical trial related expenses. Prior to the approval of BRIUMVI, manufacturing costs pertaining to BRIUMVI were expensed to research and development expense in the period incurred, and following approval are reflected in inventory. These decreased costs were offset by license milestones incurred during the nine months ended September 30, 2023.

 

Noncash Compensation Expense (Selling, General and Administrative). Noncash compensation expense (selling, general and administrative) related to equity incentive grants totaled $18.4 million for the nine months ended September 30, 2023, as compared to $0.7 million during the comparable period ended September 30, 2022. The increase in noncash compensation expense was primarily due to vesting of milestone-based grants and a decrease in forfeitures during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

 

Other Selling, General and Administrative. Other selling, general and administrative expenses totaled $73.2 million for the nine months ended September 30, 2023, as compared to $46.8 million during the comparable period ended September 30, 2022. The increase was primarily due to other selling, general and administrative costs, including personnel and consultants, associated with the approval and commercialization of BRIUMVI, as well as increase in advisory fees pertaining to the Commercialization Agreement with Neuraxpharm Pharmaceuticals, S.L. during the nine months ended September, 30, 2023.

 

Interest Expense. Interest expense increased by $2.9 million to $10.2 million for the nine months ended September 30, 2023, as compared to $7.3 million for the nine months ended September 30, 2022. The increase is mainly due to greater interest expense related to the First Amendment to the Amended Loan Agreement.

 

Other Income. Other income increased by $1.4 million to $4.2 million for the nine months ended September 30, 2023. The increase is mainly due to higher interest income received from our money market investments, as well as a research & development tax credit refund received by our Australian subsidiary during the nine months ended September 30, 2023.

 

LIQUIDITY AND CAPITAL RESOURCES

 

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 (see Note 7 for more information), and from our Commercialization Agreement executed with Neuraxpharm (see Note 2 for more information).

 

Historically, we have incurred operating losses since our inception; however, the Company experienced a net profit during the three and nine months ended September 30, 2023 due to a $140.0 million non-refundable upfront payment recognized as license revenue in the third quarter of 2023 as part of the Commercialization Agreement with Neuraxpharm. 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 September 30, 2023, we had generated $48.9 million in product revenue from drug sales of BRIUMVI. BRIUMVI first became commercially available in the United States in January of 2023. Even with the commercialization of BRIUMVI and the possible future commercialization of our other drug candidates, we may not become profitable. Our ability to achieve profitability depends on our ability to generate revenue and many other factors, including our ability to successfully commercialize our drug candidates alone or in partnership; successfully complete any post-approval regulatory obligations; and obtain regulatory approval for our drug candidates. We may continue to incur operating losses even now that we are generating revenues from BRIUMVI.

 

 

As of September 30, 2023, we had $229.2 million in cash and cash equivalents, and investment securities. The Company believes its existing cash, cash equivalents, and investment securities, combined with  projected revenues associated with the sale of BRIUMVI in the U.S. and ex-U.S., will be sufficient to fund its anticipated operating cash requirements for at least twelve months following the date of this filing.

 

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 as well as the costs associated with licensing or otherwise acquiring new product 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.

 

Discussion of Cash Flows

 ​

The following table summarizes our cash flows for the nine months ended September 30, 2023 and 2022:

 

 

Nine months ended

 
   

September 30,

 

(in thousands)

 

2023

   

2022

 

Net cash used in operating activities

  $ (18,203 )   $ (152,300 )

Net cash used in investing activities

  $ (5,896 )   $ (36,282 )

Net cash provided by (used in) financing activities

  $ 72,706     $ (440 )

 

Cash used in operating activities for the nine months ended September 30, 2023 was $18.2 million as compared to cash used in operating activities of $152.3 million for the nine months ended September 30, 2022. The decrease in net cash used in operating activities was due to the one-time upfront payment of $140.0 million from Neuraxpharm, as part of the Commercialization Agreement during the nine months ended September 30, 2023.

 

Net cash used in investing activities for the nine months ended September 30, 2023, was $5.9 million as compared to $36.3 million for the nine months ended September 30, 2022. The decrease in net cash used in investing activities was primarily due to decreased investment in short-term and long-term securities during the nine months ended September 30, 2023.

 

Net cash provided by financing activities for the nine months ended September 30, 2023, was $72.7 million as compared to net cash used in financing activities of $0.4 million for the nine months ended September 30, 2022. The increase in net cash provided by financing activities was primarily due to the advance of $25.0 million drawn as part of the First Amendment entered into with Hercules, and $46.3 million received in net proceeds under the 2022 ATM during the nine months ended September 30, 2023.

 

 

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 op