TG Therapeutics(TGTX) - 2025 Q1 - Quarterly Report

Special Cautionary Notice Regarding Forward-Looking Statements This section cautions that the report contains forward-looking statements subject to safe harbor provisions, where actual results may differ materially due to various risks Special Cautionary Notice Regarding Forward-Looking Statements This section details the report's forward-looking statements, which are subject to safe harbor provisions and involve known and unknown risks that could cause actual results to differ materially - The report's forward-looking statements are protected under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[9] - Key areas covered by forward-looking statements include regulatory approvals for products like BRIUMVI and azer-cel, commercialization success, manufacturing reliability, financial projections, capital requirements, and competitive developments[10] Summary Risk Factors This section provides a high-level overview of principal risks associated with investing in the company, categorized by commercialization, financial, and operational areas Summary Risk Factors This section summarizes the principal risks of investing in the company, covering commercialization, financial position, drug development, regulatory, third-party dependence, and intellectual property challenges - Commercialization risks include achieving market acceptance for BRIUMVI, facing substantial competition, and potential product liability lawsuits[12][15] - Financial risks highlighted are a history of significant operating losses, potential future need for additional capital, and the adverse effects of indebtedness[13][15] - Drug development and regulatory risks involve the uncertainty of obtaining and maintaining approvals, the potential for undesirable side effects, and navigating extensive and costly regulations[13][15] - The company is heavily reliant on third parties for manufacturing, clinical trials, and in-licensed products, which poses significant operational risks[16][20] - Intellectual property risks center on the ability to obtain, protect, and enforce patents and trade secrets, which is critical for commercial success[17][20] PART I: Financial Information This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2025 Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2025, showing a net income of $5.1 million driven by strong product revenue growth Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased to $656.7 million, driven by higher accounts receivable and inventories, while total liabilities also rose to $419.4 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $132,139 | $179,894 | | Accounts receivable, net | $190,121 | $129,185 | | Inventories | $157,759 | $110,458 | | Total Assets | $656,689 | $577,690 | | Liabilities & Equity | | | | Accounts payable and accrued expenses | $133,932 | $58,296 | | Loan payable – non-current | $244,733 | $244,429 | | Total Liabilities | $419,400 | $355,326 | | Total Stockholders' Equity | $237,289 | $222,364 | Condensed Consolidated Statements of Operations For Q1 2025, the company achieved profitability with a net income of $5.1 million, a significant improvement from a $10.7 million net loss in Q1 2024, driven by a 137% increase in net product revenue Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Product revenue, net | $119,655 | $50,488 | | Total revenue | $120,856 | $63,474 | | Total costs and expenses | $112,234 | $72,744 | | Operating income (loss) | $8,622 | ($9,270) | | Net income (loss) | $5,060 | ($10,707) | | Diluted net income (loss) per share | $0.03 | ($0.07) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities for Q1 2025 increased to $28.7 million, primarily due to higher accounts receivable and inventory, resulting in a $47.8 million net decrease in cash Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($28,715) | ($8,207) | | Net cash used in investing activities | ($12,934) | ($9,255) | | Net cash (used in) provided by financing activities | ($6,102) | $10 | | Net Decrease in Cash | ($47,751) | ($17,452) | Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and financial statement line items, including revenue recognition, inventory valuation, debt facilities, and significant license agreements - The company is a commercial-stage biopharmaceutical firm focused on B-cell diseases, with BRIUMVI approved in the US, EU, and UK for relapsing forms of multiple sclerosis (RMS)[32] - As of March 31, 2025, the company had $276.2 million in cash, cash equivalents, and short-term investments, which is anticipated to be sufficient for more than twelve months of operations[35] - In August 2024, the company entered into a new $250 million term loan facility with Blue Owl Capital, refinancing its previous debt[100] - The company has a commercialization agreement with Neuraxpharm for BRIUMVI outside the US, receiving $140 million upfront and a $12.5 million milestone payment, with potential for up to $492.5 million in additional milestones[114] - In January 2024, the company licensed azer-cel, an allogeneic CAR T therapy, from Precision BioSciences for autoimmune diseases, with an upfront payment of $7.5 million and potential for $288 million in future milestones[118][119] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) This section provides management's perspective on the company's financial condition and results of operations, highlighting BRIUMVI's strong commercial performance and liquidity position Q1 2025 vs Q1 2024 Results of Operations (in thousands) | Line Item | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Product revenue, net | $119,655 | $50,488 | +137.0% | | Total Revenue | $120,856 | $63,474 | +90.4% | | Cost of revenue | $15,541 | $5,441 | +185.6% | | Total R&D | $46,362 | $32,722 | +41.7% | | Total SG&A | $50,331 | $34,581 | +45.5% | | Net income (loss) | $5,060 | ($10,707) | N/A | - The significant increase in net product revenue was due to greater market penetration of BRIUMVI in the United States[139] - Research and development expenses increased primarily due to manufacturing costs associated with the ublituximab subcutaneous development program[143] - Selling, general and administrative expenses rose due to increased costs associated with the commercialization of BRIUMVI[145] - The company anticipates its cash, cash equivalents, and investment securities, combined with projected BRIUMVI revenues, will provide sufficient liquidity for more than 12 months[149] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in its market risk exposure since the prior annual report - There have been no material changes in the company's market risk exposure since the last annual report[155] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[156] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[157] PART II: Other Information This part covers other important information including legal proceedings, detailed risk factors, equity sales, and exhibits Item 1. Legal Proceedings The company reports no involvement in any material pending legal proceedings - The company is not currently involved in any material legal proceedings[158] Item 1A. Risk Factors This section extensively discusses risks and uncertainties that could adversely affect the company's business, financial condition, and operating results Risks Related to Commercialization This subsection details risks associated with commercializing BRIUMVI and future products, including market acceptance, competition, pricing, and product liability - Failure to achieve broad market acceptance for BRIUMVI among physicians, patients, and payors could significantly limit revenue[161] - The company faces substantial competition from large pharmaceutical companies with greater resources and established market presence in the neurological and immunological fields[173] - The business is vulnerable to unfavorable pricing regulations, cost-containment efforts by payors, and challenges in securing adequate reimbursement, which could harm profitability[177][179] Risks Related to Financial Position and Capital Needs This subsection outlines financial risks, including a history of operating losses, potential future capital needs, and the significant indebtedness from the $250 million term loan - Despite recent net income, the company has a history of significant operating losses and may incur losses in the future, as profitability depends on sustained revenue from BRIUMVI[190][191] - The company may need to raise additional capital, and an inability to do so on acceptable terms could require delaying or eliminating drug development or commercialization efforts[195] - The $250 million term loan from Blue Owl Capital imposes significant debt service obligations and restrictive covenants that could adversely affect financial condition and operational flexibility[202][206] Risks Related to Drug Development and Regulatory Approval This subsection covers inherent uncertainties of drug development, including trial success predictability, lengthy processes, potential side effects, and complex regulatory hurdles - Early-stage clinical trial results are not necessarily predictive of future success, and product candidates face a high rate of failure in later-stage trials[211] - Clinical development is a long, expensive, and uncertain process; delays in trial completion or negative results could prevent or delay commercialization[217] - Undesirable side effects from product candidates could delay or prevent regulatory approval, or if discovered post-approval, could lead to market withdrawal or a more restrictive label[226] Risks Related to Dependence on Third Parties This subsection highlights the company's significant reliance on third parties for clinical trials, manufacturing, and intellectual property, posing operational and development risks - The company relies on third-party CROs to conduct clinical trials, and any failure by them to perform adequately could delay or terminate trials and jeopardize regulatory approval[286] - The company contracts with third parties like Samsung Biologics for the sole-source manufacture of BRIUMVI, increasing the risk of supply disruptions that could impair commercialization[290] - As products are in-licensed, any dispute with or non-performance by licensors (e.g., LFB Group for BRIUMVI) could adversely affect the ability to develop and commercialize the products[300] Risks Related to Intellectual Property This subsection discusses the critical importance and risks of intellectual property, including obtaining and defending patents, potential infringement, and protecting trade secrets - Commercial success is highly dependent on obtaining and maintaining robust patent protection for products like BRIUMVI; if patent scope is insufficient, competitors could develop similar drugs[314][315] - The company may be involved in expensive and time-consuming lawsuits to enforce its patents or defend against claims that it infringes on third-party intellectual property[336][342] - Failure to protect the confidentiality of trade secrets could harm the company's competitive position, as this is a primary form of intellectual property for its proprietary compound library[349] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity, including the $100 million authorized program and $6.1 million in repurchases during Q1 2025 - The company has a share repurchase program authorized for up to $100 million of its common stock, which was approved in August 2024[390] Q1 2025 Share Repurchases | Period | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 99,835 | $30.13 | | February 2025 | 94,860 | $31.28 | | March 2025 | 5,000 | $29.28 | | Total Q1 2025 | 199,695 | $30.23 | - As of March 31, 2025, approximately $85.1 million remained available for future repurchases under the program[387] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - None Item 5. Other Information The company states that no directors or executive officers adopted or terminated Rule 10b5-1 trading plans during Q1 2025 - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the quarter[393] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and iXBRL data files - The exhibits include certifications from the CEO and CFO as required by the Sarbanes-Oxley Act of 2002[396]