TG Therapeutics(TGTX) - 2020 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, detailing significant asset growth, increased net losses, and improved equity from financing activities Condensed Consolidated Balance Sheets The balance sheet shows substantial asset growth to $294.6 million, driven by increased cash, alongside decreased liabilities and significantly improved stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $260,512 | $112,637 | | Total current assets | $280,938 | $149,151 | | Total assets | $294,621 | $163,014 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $67,537 | $84,449 | | Total liabilities | $100,394 | $124,399 | | Total stockholders' equity | $194,227 | $38,615 | | Total liabilities and stockholders' equity | $294,621 | $163,014 | Condensed Consolidated Statements of Operations The company reported increased net losses for Q2 and H1 2020, primarily driven by higher research and development and general and administrative expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | :--- | | License Revenue | $38 | $38 | $76 | $76 | | Total R&D Expense | $36,449 | $32,866 | $72,471 | $65,251 | | Total G&A Expense | $14,434 | $2,716 | $28,695 | $5,057 | | Operating Loss | $(50,845) | $(35,544) | $(101,090) | $(70,232) | | Net Loss | $(52,884) | $(36,213) | $(104,000) | $(71,368) | | Net Loss per Share | $(0.47) | $(0.42) | $(0.95) | $(0.85) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity significantly increased to $194.2 million by June 30, 2020, primarily due to substantial capital raises from public and at-the-market offerings - The company significantly strengthened its equity position through capital raises, including a public offering that netted approximately $165.0 million and at-the-market offerings that netted $76.0 million during the first six months of 2020[21] Condensed Consolidated Statements of Cash Flows Operating cash usage increased, but substantial financing activities led to a net cash increase of $147.9 million, boosting total cash to $261.8 million Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(105,949) | $(69,211) | | Net cash provided by (used in) investing activities | $12,655 | $(678) | | Net cash provided by financing activities | $241,173 | $85,164 | | Net increase in cash | $147,879 | $15,275 | Notes to Condensed Consolidated Financial Statements These notes detail the company's biopharmaceutical focus, significant accumulated deficit, reliance on financing, and belief in sufficient liquidity for over twelve months - The company is a biopharmaceutical firm focused on B-cell mediated diseases, with lead drug candidates ublituximab and umbralisib in pivotal trials for CLL, NHL, and MS[26] - As of June 30, 2020, the company had an accumulated deficit of approximately $805.2 million and expects to incur operating losses for the foreseeable future[30] - The company believes its cash, cash equivalents, and investment securities of $275.6 million as of June 30, 2020, are sufficient to fund operations for more than twelve months[32] - In February 2019, the company entered into a term loan facility of up to $60.0 million with Hercules Capital, drawing an initial $30.0 million, secured by substantially all company assets excluding intellectual property[95][98] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses clinical trial progress, increased R&D and G&A expenses, and strengthened liquidity from recent equity financings, providing over a year of capital - The UNITY-CLL Phase 3 trial met its primary endpoint of Progression-Free Survival (PFS) at a prespecified interim analysis and was stopped early for superior efficacy[138] - In June 2020, the company completed the rolling submission of a New Drug Application (NDA) to the FDA for umbralisib for the treatment of both marginal zone lymphoma (MZL) and follicular lymphoma (FL)[133] Comparison of Operating Expenses (in millions) | Expense Category | H1 2020 | H1 2019 | Change | | :--- | :--- | :--- | :--- | | Other Research and Development | $68.9 | $62.3 | +$6.6 | | Other General and Administrative | $13.8 | $4.3 | +$9.5 | - As of June 30, 2020, the company had $275.6 million in cash, cash equivalents, and investment securities, which is expected to provide sufficient liquidity for more than twelve months[160] - Net cash provided by financing activities was $241.2 million for the first six months of 2020, primarily from an underwritten public offering and at-the-market (ATM) program sales[163] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuation, impacting the fair value of investments, with an objective to preserve principal and minimize risk - The company's main market risk is interest rate fluctuation, which can impact the fair value of its portfolio of cash equivalents and investments[181] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2020, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[182] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, such controls[183] PART II OTHER INFORMATION Item 1. Legal Proceedings The company and its subsidiaries are not currently involved in any material pending legal proceedings - The company and its subsidiaries are not a party to any material pending legal proceedings[185] Item 1A. Risk Factors This section outlines significant risks including the COVID-19 pandemic's impact, financial position, drug development uncertainty, competition, third-party reliance, and intellectual property concerns Risks Related to the COVID-19 Pandemic The COVID-19 pandemic poses significant risks to clinical trials, global supply chains, and potential commercialization efforts - The COVID-19 pandemic could delay or compromise clinical trials, disrupt supply chains, and adversely impact regulatory review and commercialization efforts[189] - The company's supply chain is at risk as umbralisib is manufactured in India, ublituximab in South Korea, and TG-1701 in China, all regions impacted by the pandemic[204] Risks Related to Our Financial Position and Need for Additional Capital The company faces risks from its limited operating history, accumulated deficit of $805.2 million, and ongoing need for substantial additional capital - The company has incurred significant operating losses since inception, with an accumulated deficit of $805.2 million as of June 30, 2020[214] - Substantial additional funding is required to continue operations; if unable to raise capital, the company may be forced to delay, reduce, or eliminate drug development or commercialization efforts[217] Risks Related to Drug Development and Regulatory Approval Drug development faces high risks including unreplicable early trial results, significant delays, trial failures, and uncertain regulatory approval even with SPA - The outcome of early clinical trials is not predictive of later-stage trial results, and drug candidates may fail to demonstrate sufficient safety or efficacy in pivotal studies[234] - Drug candidates may cause undesirable side effects that could delay or prevent regulatory approval, or result in a restrictive label[255] - Even with a Special Protocol Assessment (SPA) from the FDA for the UNITY-CLL and ULTIMATE trials, there is no guarantee of regulatory approval[246] Risks Related to Commercialization Commercialization risks include intense competition, market size uncertainty, unfavorable pricing, and the costly, potentially premature, build-out of sales infrastructure - The company faces substantial competition from numerous sources, including large pharmaceutical companies with greater financial and marketing resources[282] - The company is building its own sales and marketing infrastructure, which is expensive and time-consuming and could be a lost investment if product approval is delayed or denied[310][311] - Future business operations will be subject to complex healthcare laws (e.g., Anti-Kickback Statute, False Claims Act), with non-compliance leading to significant penalties[313] Risks Related to Our Dependence on Third Parties Heavy reliance on third-party CROs and CMOs for clinical trials and manufacturing poses risks to performance, compliance, and supply, alongside potential licensor disputes - The company relies on CROs to conduct clinical trials, and if these third parties do not perform as required, trials could be delayed, extended, or terminated[324] - The company does not own manufacturing facilities and depends on third-party CMOs, increasing the risk of insufficient supply, quality issues, or regulatory compliance failures[329] - As product candidates are in-licensed, any dispute with or non-performance by licensors regarding intellectual property or other obligations could adversely affect development and commercialization[339] Risks Relating to Our Intellectual Property Success depends on obtaining and defending intellectual property, facing risks of patent invalidation, insufficient breadth, and costly infringement litigation - Commercial success depends on obtaining and maintaining patent and trade secret protection for its product candidates, which is an uncertain process[350] - The company may be sued for infringing the intellectual property rights of third parties, which could be costly and time-consuming and could halt the commercialization of its products[370][373] - The company relies on trade secrets and confidentiality agreements, which may be breached or may not provide adequate protection, potentially harming its competitive position[383] Item 6. Exhibits This section lists exhibits filed with the quarterly report, including an incentive plan amendment and Sarbanes-Oxley Act certifications - The exhibits filed with this report include certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002[416]