TG Therapeutics(TGTX) - 2022 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1 Financial Statements TG Therapeutics reported H1 2022 revenue of $2.6 million and a net loss of $109.5 million, reflecting a substantial accumulated deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $147,073 | $298,887 | | Total current assets | $202,560 | $330,965 | | Total assets | $251,666 | $379,629 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $43,326 | $65,384 | | Total liabilities | $122,631 | $142,476 | | Accumulated deficit | $(1,438,221) | $(1,328,698) | | Total stockholders' equity | $129,035 | $237,153 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Total revenue | $594 | $2,610 | | Total costs and expenses | $39,535 | $108,423 | | Operating loss | $(38,941) | $(105,813) | | Net loss | $(40,510) | $(109,523) | | Basic and diluted net loss per common share | $(0.30) | $(0.81) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(117,805) | $(141,524) | | Net cash used in investing activities | $(33,292) | $(2,989) | | Net cash used in financing activities | $(715) | $(7,217) | | Net decrease in cash, cash equivalents and restricted cash | $(151,812) | $(151,730) | - The company is a biopharmaceutical firm focused on novel treatments for B-cell diseases, with its primary late-stage asset being ublituximab for relapsing forms of multiple sclerosis (RMS)[31] - On April 15, 2022, the company announced the voluntary withdrawal of its drug UKONIQ from sale, following the withdrawal of its BLA/sNDA submission for the U2 combination therapy in CLL/SLL[43][90] Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Management shifted focus to ublituximab for RMS after UKONIQ withdrawal, reporting a $109.5 million net loss for H1 2022 - Following updated overall survival data for the UNITY-CLL trial, the company withdrew its BLA/sNDA for the U2 combination (ublituximab and UKONIQ) in CLL/SLL and voluntarily withdrew UKONIQ from sale for its approved indications[90] - The company is re-evaluating its oncology studies and has paused or closed several trials. The primary clinical-stage focus is now on ublituximab for RMS[92] - The FDA accepted the Biologics License Application (BLA) for ublituximab in RMS and extended the PDUFA goal date to December 28, 2022, to review a major amendment submitted by the company[94] Comparison of Results for the Six Months Ended June 30 (in thousands) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,610 | $2,338 | $272 | | R&D Expense | $74,916 | $107,965 | $(33,049) | | SG&A Expense | $33,247 | $60,779 | $(27,532) | | Net Loss | $(109,523) | $(169,125) | $59,602 | - The decrease in R&D expense for the six months ended June 30, 2022 was primarily due to an $18.0 million decrease in license milestones and a $12.9 million decrease in clinical trial expense, partially offset by a $15.3 million increase in manufacturing expense related to a one-time charge for UKONIQ batches[110] - As of June 30, 2022, the company had $231.8 million in cash, cash equivalents, and investment securities, which is believed to be sufficient to provide liquidity for more than a twelve-month period[116] Item 3 Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure has not materially changed since December 31, 2021 - There have been no material changes in the company's market risk exposure since the end of 2021[125] Item 4 Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control - As of June 30, 2022, management concluded that the company's disclosure controls and procedures were effective[126] - No changes occurred during the quarter ended June 30, 2022, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[127] PART II OTHER INFORMATION Item 1 Legal Proceedings A securities class action lawsuit was filed in July 2022 alleging false statements about Ublituximab and Umbralisib - A securities class action lawsuit was filed in July 2022 against the company and two officers, alleging violations of federal securities laws related to statements about Ublituximab and Umbralisib[128] Item 1A Risk Factors The company faces substantial risks including ublituximab regulatory approval, commercialization, capital needs, and extensive regulation Risks Related to Drug Development and Regulatory Approval Future success depends on ublituximab RMS approval, a lengthy and uncertain process with risks of delays and side effects - The business will be materially harmed if the company cannot obtain regulatory approval for and commercialize its product candidates, particularly ublituximab in RMS, following the withdrawal of UKONIQ and the U2 application for CLL/SLL[131] - Clinical drug development is a lengthy, expensive process with an uncertain outcome. The company may experience delays or be unable to complete the development and commercialization of its product candidates[135] - Product candidates may cause undesirable side effects that could delay or prevent regulatory approval or limit their commercial potential if approved[148] - The FDA extended the PDUFA goal date for the ublituximab BLA in RMS to December 28, 2022, and there is no guarantee of approval or that further delays will not occur[153] Risks Related to Commercialization Commercialization of ublituximab faces hurdles including market acceptance, competition, pricing, and expanding operations - Even if approved, products like ublituximab in RMS may not gain market acceptance from physicians, patients, and payors, which would limit revenue[177] - The company faces substantial competition from numerous sources, including large pharmaceutical companies with significantly greater financial and commercialization resources[194] - The ability to commercialize any product successfully depends on obtaining adequate coverage and reimbursement from government and private payors, who are increasingly focused on cost containment[199] - The company must expand its commercialization operations to support a potential launch of ublituximab in RMS, which is expensive and risky, especially given the recent dismantling of its oncology commercial team[179][180] Risks Related to Our Financial Position and Need for Additional Capital The company has a history of losses, requires substantial capital, and faces risks from debt covenants and dilution - The company has incurred significant operating losses since inception and anticipates continued losses. Its ability to become profitable depends on generating substantial revenue from product candidates like ublituximab[206][209] - Substantial additional funding is required for commercialization and development efforts. Failure to raise capital when needed could force the company to delay, reduce, or eliminate programs[213] - The company's indebtedness under its loan agreement with Hercules could adversely affect its financial condition, as it includes restrictive covenants and is secured by substantially all of the company's assets (excluding IP)[222][223] Risks Related to Governmental Regulation of Pharmaceutical Industry and Legal Compliance Matters The company faces risks from extensive government regulation, drug pricing, fraud and abuse laws, and data privacy compliance - The company is subject to legislative and regulatory proposals aimed at lowering prescription drug prices, which could adversely affect its ability to market products profitably[227][232] - Relationships with customers and payors are subject to fraud and abuse laws, which could expose the company to criminal sanctions, civil penalties, and exclusion from government healthcare programs[242][243] - Failure to comply with data privacy and security laws (such as HIPAA, CCPA, and GDPR) could result in significant penalties and operational disruptions[248][251] Risks Related to Our Dependence on Third Parties Heavy reliance on third parties for clinical trials, manufacturing, and IP creates significant development and commercialization risks - The company relies on third-party CROs to conduct clinical trials. If these parties do not perform as required, regulatory approval and commercialization could be delayed or prevented[260][262] - The company relies on third parties for manufacturing, including a single-source supplier (Samsung Biologics) for ublituximab. This increases the risk of supply shortages, quality issues, or cost fluctuations[268][269] - As product candidates are in-licensed, any dispute or non-performance by licensors regarding intellectual property rights could adversely affect the ability to develop and commercialize the products[282] Risks Relating to Our Intellectual Property Success depends on obtaining and defending IP, facing risks of patent challenges, infringement litigation, and trade secret loss - Commercial success depends on obtaining and maintaining patent and trade secret protection. If the scope of patent protection is not broad enough, competitors could develop similar drugs, impairing commercialization[290][291] - The company may be involved in expensive and time-consuming lawsuits to protect its patents or defend against claims of infringing third-party patents, with potentially unfavorable outcomes[312][318] - Failure to protect the confidentiality of trade secrets could harm the company's business and competitive position, as competitors could independently discover or unlawfully obtain this information[327] Risks Related to Our Business Organization and Governance, Strategy, Employees and Growth Management The company relies on key personnel, faces neurology transition challenges, stock price volatility, and IT security risks - The company is highly dependent on key management and personnel and may be unable to attract and retain them, which could impede development and commercialization objectives[330] - The company must manage its development and expansion, particularly the shift in focus to neurology and immunology, which could disrupt operations if not handled effectively[332][333] - Internal IT systems are vulnerable to security breaches and cyber-attacks, which could result in a material disruption of drug development programs[340] Risks Related to the COVID-19 Pandemic The COVID-19 pandemic poses risks to supply chain, clinical trials, and commercialization, impacting ublituximab's market acceptance - The COVID-19 pandemic could materially adversely affect business operations, including disrupting the supply chain and delaying clinical trials, if new variants circulate and restrictions are reinstated[351] - Concerns that B-cell targeted agents may increase the risk or severity of COVID-19 could negatively impact the clinical results, regulatory approval, labeling, and market acceptance of ublituximab[352] General Risks The company's stock price is highly volatile, exposing it to litigation, with no dividends anticipated for stockholders - The company's stock price is highly volatile and subject to wide fluctuations, which could limit investors' ability to sell at a profit and exposes the company to securities litigation[359][366] - The company has never paid cash dividends and does not anticipate doing so in the foreseeable future, meaning capital appreciation will be the sole source of gain for stockholders[361] - The military conflict between Russia and Ukraine may result in market volatility that could adversely affect the company's stock price[368] Item 2 Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable[370] Item 3 Defaults of Senior Securities No defaults of senior securities were reported during the period - None[371] Item 4 Mine Safety Disclosures This item is not applicable to the company - Not applicable[372] Item 5 Other Information No other information was reported for the period - None[373] Item 6 Exhibits Exhibits include CEO and CFO certifications and iXBRL financial data filed with the quarterly report - The exhibits filed with the report include certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 and iXBRL financial data[376]