10-Q 1 tgtx-20220630x10q.htm 10-Q
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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 June 30, 2022

 

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.)

2 Gansevoort Street, 9th Floor

New York, New York 10014

(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 145,274,048 shares of the registrant’s common stock, $0.001 par value, outstanding as of August 2, 2022.

TG THERAPEUTICS, INC.

FORM 10-Q

FOR THE QUARTER ENDED June 30, 2022

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

 

21

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

 

29

 

Item 4

Controls and Procedures

 

29

 

PART II

OTHER INFORMATION

 

29

 

Item 1

Legal Proceedings

 

29

 

Item 1A

Risk Factors

 

30

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

79

Item 3

Defaults of Senior Securities

79

 

Item 4

Mine Safety Disclosures

79

Item 5

Other Information

79

Item 6

Exhibits

 

79

2

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report, including matters discussed under the captions “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” or the negative of these words or other comparable terminology, although not all forward-looking statements contain these identifying words.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements about:

our ability to obtain regulatory approval for ublituximab in relapsing forms of multiple sclerosis (RMS) and any other product candidates;
our ability to adapt and expand our commercial infrastructure to successfully launch, market and sell ublituximab in RMS if we obtain regulatory approval in the future;
the success of the potential commercialization of ublituximab 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 establish and maintain contractual relationships, on commercially reasonable terms, with third parties for manufacturing, distribution and supply, and a range of other support functions for our clinical development and commercialization efforts;
the implementation of our business model, 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 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; and
developments relating to our competitors and our industry.

3

SUMMARY RISK FACTORS

Our business is subject to a number of risks of which you should be aware before making an investment decision. The risks described below are a summary of the principal risks associated with an investment in us and are not the only risks we face. You should carefully consider these risks, the risk factors in Item IA, and the other reports and documents that we have filed with the Securities and Exchange Commission (SEC).

Risks Related to Drug Development and Regulatory Approval

If we are unable to obtain regulatory approval for our product candidates and ultimately cannot commercialize one or more of them, or experience significant delays in doing so, our business will be materially harmed.
Our 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.
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 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 Commercialization

We cannot predict when or if we will obtain regulatory approval to commercialize our product candidates, including ublituximab in RMS.
We have limited experience operating as a commercial company, and, as a result, the marketing and sale of ublituximab in RMS, if approved, may be less successful than anticipated.
If any of our future product candidates receive approval but do not achieve broad market acceptance among physicians, patients, payors, and the medical community, the revenues that we generate from product sales will be limited.
If the market opportunities for any products for which we may receive approval, including ublituximab in RMS, are smaller than we estimate or if any approval that 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, which may result in others commercializing drugs before or more successfully than we do, resulting in the reduction or elimination of our commercial opportunity.
If we are unable to establish additional commercial capabilities and infrastructure to support a potential launch in RMS or expansion into geographies outside the U.S., we may be unable to generate sufficient revenue to sustain our business.
Product liability lawsuits could cause us to incur substantial liabilities and limit product commercialization.

Risks Related to our Financial Position and Need for Additional Capital

We have incurred significant operating losses since our inception and anticipate that we will continue to incur losses for the foreseeable future.
We will need to raise substantial additional funding. If we are unable to raise capital when needed, we will be forced to delay, 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.

Risks Related to Governmental Regulation of the Pharmaceutical Industry

We are subject to extensive regulation, including new legislative and regulatory proposals, that 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 liability.
If we fail to comply with regulatory requirements, any product for which we obtain marketing approval could be subject to restrictions or withdrawal from the market and we may be subject to penalties.

4

Risks Related to our Dependence on Third Parties

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 candidates when expected or at all.
Our reliance on third parties for commercial and clinical supply of our products and product candidates increases the risk that we will not have sufficient quantities of our products or product candidates or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.
Because we have in-licensed our products 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, and an unfavorable outcome in that litigation 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 COVID-19

Public health issues, 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 ublituximab and other immunosuppressive products that we have in development.

General Risk Factors

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.

The foregoing is only a summary of some of our risks. These and other risks are discussed more fully in the section entitled “Risk Factors” in Part II, Item IA and elsewhere in this Quarterly Report on Form 10-Q (our Risk Factors).

5

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TG Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

June 30, 

December 31, 

    

2022

    

2021

(Unaudited)

(Note 1)

Assets

Current assets:

 

  

 

  

Cash and cash equivalents

$

147,073

$

298,887

Short-term investment securities

 

48,636

 

15,876

Accounts receivable, net

88

 

1,389

Prepaid research and development

 

3,627

 

11,929

Other current assets

 

3,136

 

2,884

Total current assets

 

202,560

 

330,965

Restricted cash

 

1,266

 

1,264

Long-term investment securities

36,078

35,533

Right of use assets

8,783

8,629

Leasehold interest, net

 

1,733

 

1,839

Equipment, net

 

447

 

600

Goodwill

 

799

 

799

Total assets

$

251,666

$

379,629

 

  

 

  

Liabilities and stockholders’ equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable and accrued expenses

$

37,224

$

51,294

Other current liabilities

1,740

1,512

Loan payable – current portion

975

Lease liability – current portion

1,480

1,437

Accrued compensation

 

2,882

 

10,166

Total current liabilities

 

43,326

 

65,384

Deferred revenue, net of current portion

 

381

 

457

Loan payable – non-current

68,947

66,788

Lease liability – non-current

9,977

9,847

Total liabilities

 

122,631

 

142,476

Commitments and contingencies

 

  

 

  

Stockholders’ equity:

 

  

 

  

Common stock, $0.001 par value per share (175,000,000 shares authorized, 145,198,058 and 143,292,043 shares issued, 145,156,749 and 143,250,734 shares outstanding at June 30, 2022 and December 31, 2021, respectively)

 

145

 

143

Additional paid-in capital

 

1,567,345

 

1,565,942

Treasury stock, at cost, 41,309 shares at June 30, 2022 and December 31, 2021

 

(234)

 

(234)

Accumulated deficit

 

(1,438,221)

 

(1,328,698)

Total stockholders’ equity

 

129,035

 

237,153

Total liabilities and stockholders’ equity

$

251,666

$

379,629

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

6

TG Therapeutics, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

Three months ended

Six months ended

June 30, 

June 30, 

2022

    

2021

2022

    

2021

    

Revenue:

Product revenue, net

$

556

$

1,507

$

2,534

$

2,262

License revenue

38

38

76

76

Total revenue

$

594

$

1,545

$

2,610

$

2,338

 

  

 

  

 

  

 

  

Costs and expenses:

 

  

 

  

 

  

 

  

Cost of product revenue

23

148

260

288

Research and development:

 

 

  

 

 

  

Noncash compensation

 

2,328

 

7,016

 

4,223

 

14,527

Other research and development

 

24,546

 

37,855

 

70,693

 

93,438

Total research and development

 

26,874

 

44,871

 

74,916

 

107,965

 

 

  

 

 

  

Selling, general and administrative:

 

 

  

 

 

  

Noncash compensation

 

(3,304)

 

9,288

 

(3,077)

 

18,395

Other selling, general and administrative

 

15,942

 

24,729

 

36,324

 

42,384

Total selling, general and administrative

 

12,638

 

34,017

 

33,247

 

60,779

 

 

  

 

 

  

Total costs and expenses

 

39,535

 

79,036

 

108,423

 

169,032

 

  

 

  

 

  

 

  

Operating loss

 

(38,941)

 

(77,492)

 

(105,813)

 

(166,694)

 

  

 

  

 

  

 

  

Other expense (income):

 

  

 

  

 

  

 

  

Interest expense

 

3,017

 

1,623

 

5,681

 

3,521

Other income

 

(1,448)

 

(618)

 

(1,971)

 

(1,090)

Total other expense (income), net

 

1,569

 

1,005

 

3,710

 

2,431

 

  

 

  

 

  

 

  

Net loss

$

(40,510)

$

(78,497)

$

(109,523)

$

(169,125)

 

  

 

  

 

  

 

  

Basic and diluted net loss per common share

$

(0.30)

$

(0.59)

$

(0.81)

$

(1.28)

 

  

 

  

 

  

 

  

Weighted-average shares used in computing basic and diluted net loss per common share

 

134,779,904

 

132,072,996

 

134,591,250

 

131,986,293

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

7

TG Therapeutics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share and per share amounts)

(Unaudited)

    

    

    

Additional

    

    

    

Common Stock

paid-in

Treasury Stock  

Accumulated

Shares

Amount

 capital

Shares

Amount 

Deficit

Total

Balance at January 1, 2021

 

140,617,606

$

141

$

1,500,040

41,309

$

(234)

$

(980,597)

$

519,350

Issuance of common stock in connection with exercise of options

31,245

*

128

128

Issuance of restricted stock

 

893,488

 

1

 

(1)

 

 

 

 

Forfeiture of restricted stock

 

(21,643)

 

*

 

*

 

 

 

 

Offering costs paid

(183)

(183)

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

 

 

 

16,618

 

 

 

 

16,618

Net loss 

 

 

 

 

 

 

(90,628)

 

(90,628)

Balance at March 31, 2021

 

141,520,696

142

1,516,602

 

41,309

(234)

(1,071,225)

445,285

Issuance of common stock in connection with exercise of options

9,364

*

38

38

Issuance of restricted stock

 

1,356,151

 

1

 

(1)

 

 

 

 

Forfeiture of restricted stock

 

(12,416)

 

*

 

*

 

 

 

 

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

 

 

 

16,304

 

 

 

 

16,304

Net loss

 

 

 

 

 

 

(78,497)

 

(78,497)

Balance at June 30, 2021

 

142,873,795

143

1,532,943

 

41,309

(234)

(1,149,722)

383,130

    

    

    

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

*Amount less than one thousand dollars

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

8

TG Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Six months ended

June 30, 

    

2022

    

2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

  

 

  

 

  

 

  

Net loss

$

(109,523)

$

(169,125)

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

 

 

  

Noncash stock compensation expense

 

1,146

 

32,922

Depreciation and amortization

 

154

 

126

Amortization of premium on investment securities

 

(17)

 

282

Amortization of debt issuance costs

922

463

Amortization of leasehold interest

106

106

Noncash change in lease liability and right of use asset

1,014

949

Change in fair value of notes payable

 

(276)

 

(221)

Changes in assets and liabilities:

 

 

Decrease (increase) in other current assets

8,054

(4,421)

Decrease (increase) in accounts receivable

1,301

(931)

(Decrease) increase in accounts payable and accrued expenses

 

(21,355)

 

3,271

Decrease in lease liabilities

(995)

(1,006)

Increase (decrease) in other current liabilities

 

1,740

(3,863)

Decrease in deferred revenue

 

(76)

 

(76)

Net cash used in operating activities

 

(117,805)

 

(141,524)

 

  

 

  

CASH FLOWS FROM INVESTING ACTIVITIES

 

  

 

  

Proceeds from maturity of short-term securities

 

38,525

 

28,750

Investment in held-to-maturity securities

 

(71,810)

 

(31,497)

Purchases of PPE

 

(7)

 

(242)

Net cash used in investing activities

 

(33,292)

 

(2,989)

 

  

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

 

  

 

  

Payment of loan payable

(975)

(7,200)

Proceeds from exercise of options

260

166

Offering costs paid

 

 

(183)

Net cash used in financing activities

 

(715)

 

(7,217)

 

  

 

  

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

(151,812)

 

(151,730)

 

  

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

300,151

 

554,698

 

  

 

  

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$

148,339

$

402,968

 

  

 

  

 

  

 

  

Reconciliation to amounts on condensed consolidated balance sheets:

 

  

 

  

Cash and cash equivalents

$

147,073

$

401,707

Restricted cash

 

1,266

 

1,261

Total cash, cash equivalents and restricted cash 

$

148,339

$

402,968

 

  

 

  

Cash paid for:

 

  

 

  

Interest

$

2,622

$

2,094

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

9

TG Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Unless the context requires otherwise, references in this report to “TG,” “Company,” “we,” “us” and “our” refer to TG Therapeutics, Inc. and our subsidiaries.

NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

TG Therapeutics is a 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 completed a Phase 3 program for ublituximab, an investigational glycoengineered monoclonal antibody, to treat patients with relapsing forms of multiple sclerosis (RMS).  We also 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, 2021. The accompanying condensed December 31, 2021 balance sheet has been derived from these statements. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.

In December 2018, the Company created an Australian corporation, TG Therapeutics AUS Pty Ltd. (TG AUS), as a wholly-owned subsidiary. This corporation’s functional currency, the Australian dollar, is also its reporting currency, and its financial statements are translated to U.S. dollars, the Company’s reporting currency, prior to consolidation. The activities of TG AUS result in immaterial currency translation adjustments and, thus, are included in Other Income/Expense on the Company’s condensed consolidated statement of operations. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries, and all intercompany accounts and transactions have been eliminated in consolidation.

Liquidity and Capital Resources

We have incurred operating losses since our inception, and expect to continue to incur operating losses for the foreseeable future and may never become profitable. As of June 30, 2022, we have an accumulated deficit of $1.4 billion.

Our major sources of cash have been proceeds from private placement and public offering of equity securities, and from our loan and security agreements executed with Hercules Capital, Inc. (Hercules) (see Note 6 for more information). Since inception, we have incurred significant operating losses. Substantially all our operating losses have resulted from costs incurred in connection with our research and development programs and from selling, general and administrative costs associated with our operations, including our commercialization activities. We expect to continue to incur significant expenses and operating losses for the foreseeable future. Because we have withdrawn UKONIQ (umbralisib) from sale, we have no marketed products currently. We expect to continue to incur significant research and development expenses and we expect to continue to incur significant commercialization and outsourced-manufacturing expenses as we plan for the possible commercialization of ublituximab in RMS.

We evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year beyond the filing of this Quarterly Report on Form 10-Q.  As of June 30, 2022, we had $231.8 million in cash and cash equivalents, and investment securities. Based on our available

10

cash resources and cash flow projections as of the date the consolidated financial statements were available for issuance, we believe that our cash and cash equivalents, and investment securities as of June 30, 2022 will provide sufficient liquidity for more than a twelve-month period from the date of filing of this Quarterly Report on Form 10-Q.

The actual amount of cash that we will need to operate is subject to many factors, including, but not limited to, the costs and timing of clinical and commercial manufacturing supply arrangements for each product and product candidate, and the costs of expanding our sales, distribution and other commercialization capabilities. Because of the numerous risks and uncertainties associated with developing pharmaceuticals, we are unable to predict when we will become profitable, if at all. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis. Our ability to become profitable depends upon our ability to generate substantial revenue. We are dependent upon significant future financing to provide the cash necessary to execute our long-term operations. However, the Company cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to the Company or its existing stockholders.

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 2021 Annual Report on Form 10-K, except updated herein or as it relates to the adoption of new accounting standards during the six months ended June 30, 2022. 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.

Net Loss Per Common Share

Basic net loss per share of our common stock is calculated by dividing net loss applicable to the common stock by the weighted-average number of our common stock outstanding for the period. Diluted net loss per share of common stock is the same as basic net loss per share of common stock since potentially dilutive securities from stock options, stock warrants and convertible preferred stock would have an antidilutive effect either because we incurred a net loss during the period presented or because such potentially dilutive securities were out of the money and the Company realized net income during the period presented. The cumulative amounts of potentially dilutive securities excluded from the calculation were 13,512,092 securities and 13,255,355 securities for the six months ended June 30, 2022 and 2021, respectively.

The following table summarizes our potentially dilutive securities at June 30, 2022 and 2021:

 Six Months Ended

June 30, 

    

2022

    

2021

 Unvested restricted stock

 

10,004,825

 

10,610,193

 Options

 

3,225,515

 

2,479,622

Warrants

262,100

147,058

 Shares issuable upon note conversion

 

19,652

 

18,482

 Total

 

13,512,092

 

13,255,355

11

NOTE 2 REVENUE RECOGNITION

Gross-to-Net Sales Adjustments

To date, our only source of product revenue has been from the U.S. sales of UKONIQ, which we began shipping to our customers in February 2021. On April 15, 2022, we announced our voluntary withdrawal of UKONIQ from sale. Furthermore, on May 27, 2022, the Food and Drug Administration (FDA) issued a notice in the Federal Register officially withdrawing approval of the New Drug Application (NDA) for UKONIQ, effective May 31, 2022. This notice required stopping all distribution of UKONIQ and the return of all remaining inventory from the Company’s customers as soon as possible. We record our best estimate for sales discounts and allowances to which customers are likely to be entitled. The reconciliation of gross product sales to net product sales by each significant category of gross-to-net adjustments was as follows for the three and six months ended June 30, 2022 and 2021:

(in thousands)

Three months ended

Six months ended

June 30, 

June 30, 

June 30, 

June 30, 

2022

    

2021

    

2022

    

2021

Gross product revenue

$

700

$

1,733

$

4,119

$

2,639

Gross-to-net adjustments:

Chargebacks and administrative fees

(122)

(120)

(372)

(195)

Trade discounts and allowances

31

(59)

(189)

(94)

Government rebates and co-payment assistance

(53)

(39)

(282)

(76)

Sales returns and allowances

(8)

(742)

(12)

Total gross-to-net adjustments(1)

$

(144)

$

(226)

$

(1,585)

$

(377)

Net product revenue

$

556

$

1,507

$

2,534

$

2,262

(1) As of June 30, 2022 approximately $0.9 million of estimated 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.

12

NOTE 3 INVESTMENT SECURITIES

Our investments as of June 30, 2022 and December 31, 2021 are classified as held-to-maturity. Held-to-maturity investments are recorded at amortized cost.

The following tables summarize our investment securities at June 30, 2022 and December 31, 2021:

June 30, 2022

  Amortized

  Gross

  Gross

cost, as

unrealized

unrealized

  Estimated

(in thousands)

    

adjusted

    

holding gains

    

holding losses

    

fair value

Short-term investments:

 

  

 

  

 

  

 

  

Obligations of domestic governmental agencies (maturing between July 2022 and June 2023) (held-to-maturity)

$

48,636

$

$

364

$

48,272

Long-term investments:

 

 

  

 

  

 

  

Obligations of domestic governmental agencies (maturing between July 2023 and February 2024) (held-to-maturity)

36,078

971

35,107

Total short-term and long-term investment securities

$

84,714

$

$

1,335

$

83,379

December 31, 2021

    

Amortized

    

Gross

    

Gross

    

cost, as

unrealized

unrealized

Estimated fair

adjusted

holding gains

holding losses

value

Short-term investments:

 

  

 

  

 

  

 

  

Obligations of domestic governmental agencies (maturing between January 2022 and April 2022) (held-to-maturity)

$

15,876

$

$

4

$

15,872

Long-term investments:

Obligations of domestic governmental agencies (maturing between February 2023 and June 2023) (held-to-maturity)

35,533

160

35,373

Total short-term and long-term investment securities

$

51,409

$

$

164

$

51,245

NOTE 4 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.

As of June 30, 2022 and December 31, 2021, the fair values of cash and cash equivalents, restricted cash, accounts receivable, and loan and interest payable approximate their carrying value.

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.

13

The Company’s financial instruments include cash, cash equivalents consisting of money market funds, accounts receivable, accounts payable and loan payable. Cash, cash equivalents, restricted cash, accounts receivable, accounts payable and interest payable are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature. 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.

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 six months ended June 30, 2022:

(in thousands)

Balance at December 31, 2021

360

Interest accrued on face value of 5% Notes

 

269

Change in fair value of Level 3 liabilities

 

(545)

Balance at June 30, 2022

$

84

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 5 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 5, 2019, we filed an automatic “shelf registration” statement on Form S-3 (the 2019 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 2019 WKSI Shelf was declared effective in September 2019. In connection with the 2019 WKSI Shelf, we entered into an At-the-Market Issuance Sales Agreement (the 2020 ATM) with Jefferies LLC, Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (each a 2020 Agent and collectively, the 2020 Agents), relating to the sale of shares of our common stock. Under the 2020 ATM, we paid the 2020 Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock. In November 2020, we entered into an At-the-Market Issuance Sales Agreement (the 2021 ATM) with the same terms and agents (each a 2021 Agent and collectively, the 2021 Agents) as the 2020 ATM. The 2021 ATM has replaced the 2020 ATM as the only active ATM program.

We had no activity on the 2021 ATM during the six months ended June 30, 2022 and 2021.

The 2019 WKSI Shelf is currently our only active shelf-registration statement. We may offer any combination of the securities registered under the 2019 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.

14

Equity Incentive Plans

The TG Therapeutics, Inc. 2022 Incentive Plan (the 2022 Incentive Plan) was approved by stockholders in June 2022 with 17 million shares available to be issued, of which not more than 10 million 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 June 30, 2022, 1,003,090 shares of restricted stock and 200,000 options were outstanding and up to an additional 15,796,910 shares were available to be issued under the 2022 Incentive Plan.

The TG Therapeutics, Inc. Amended and Restated 2012 Incentive Plan (the 2012 Incentive Plan) was approved by stockholders in June 2020. As of June 30, 2022, 10,501,767 shares of restricted stock and 3,025,515 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 $(1.0) million and $16.3 million for the three months ended June 30, 2022 and 2021, respectively, and $1.1 million and $32.9 million for the six months ended June 30, 2022 and 2021, respectively.

Stock Options and Restricted Stock

The following table summarizes the activity for stock options and restricted stock for the six months ended June 30, 2022:

Stock Options

Restricted Stock

Equity awards outstanding, beginning of year

2,467,537

12,032,040

Changes during the year:

Granted

875,000

3,682,946

Exercised or vested

(63,455)

(2,369,743)

Expired or Forfeited

(53,567)

(1,840,386)

Equity awards outstanding, end of period

3,225,515

11,504,857

As of June 30, 2022, 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

$

1,059

$

35,273

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

1.5

1.6

Warrants

The Company’s only outstanding warrants are the warrants issued to Hercules as part of our the Loan Agreement and Amended Loan Agreement (as such terms are defined below) to purchase 147,058 and 115,042 shares of our common stock with exercise prices of $4.08 and $17.95, respectively. See Note 6 for further details. There will not be any ongoing stock compensation expense volatility associated with these warrants.

NOTE 6 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 proceeds of which were used for research and development programs and for general corporate purposes. 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.

15

On December 30, 2021 (the First Amendment 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 First Amendment 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 will accrue 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.The performance milestones are based on achievement of certain U.S. Food and Drug Administration approvals and impact the potential extension of the interest only period, access to future advances under the Loan Agreement and minimum cash levels required under the Amended Loan Agreement.

The Amended Loan Agreement contains financial covenants from and after October 15, 2022 that require the Company to maintain certain levels of unrestricted cash and additional financial covenants related to market capitalization and unrestricted cash commencing on July 1, 2023 at any time when the Amended Term Loan advances made under the Amended Loan Agreement are greater than $70 million.

The Amended Loan Agreement also contains warrant coverage of 2.95% of the total amount funded. A warrant was issued by the Company to Hercules to purchase 115,042 shares of common stock with an exercise price of $17.95 for the initial amount funded at closing (the Warrant). The Warrant shall be exercisable for seven years from the date of issuance. Hercules may exercise the 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).

The Company may, at its option, prepay the Amended Term Loan in full or in part, subject to a prepayment penalty equal to (i) 2.0% of the principal amount prepaid if the prepayment occurs prior to the first anniversary of the First Amendment Closing Date, (ii) 1.5% of the principal amount prepaid if the prepayment occurs on or after the first anniversary and prior to the second anniversary of the First Amendment Closing Date, and (iii) 1.0% of the principal amount prepaid if the prepayment occurs on or after the second anniversary and prior to the third anniversary of the First Amendment Closing Date.

The Company evaluated whether the Amended Term Loan entered into in December 2021 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 repayment and retirement of the Term Loan, the Term Loan was accounted for by the Company under the extinguishment accounting model. The Company recorded a loss on extinguishment of debt of approximately $0.2 million on the Company’s statement of operations for the twelve months ended December 31, 2021, representing the write-off of deferred financing costs.

16

The Company estimated the fair value of the Warrant using the Black-Scholes model based on the following key assumptions:

Amended Term Loan

Exercise price

    

$

17.95

Common share price on date of issuance

$

19.35

Volatility

184.4

%

Risk-free interest rate

1.44

%

Expected dividend yield

%

Contractual term (in years)

7.00 years

The Company incurred financing expenses of $7.4 million (including the fair value of the Warrant) related to the Amended Loan Agreement 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 $0.5 million and $0.2 million for the three months ended June 30, 2022, and 2021, respectively and $0.9 million and $0.5 million for the six months ended June 30, 2022 and 2021, respectively. At June 30, 2022, the remaining unamortized balance of debt issuance costs was $6.5 million.

The loan payable as of June 30, 2022 and December 31, 2021, is as follows:

June 30, 

    

December 31,

(in thousands)

2022

 

2021

Loan payable

$

70,000

$

70,000

Add: Accreted Liability of final payment fee

 

5,402

 

5,140

 

75,402

 

75,140

Less: unamortized debt issuance costs

 

(6,455)

 

(7,377)

 

68,947

 

67,763

Less: principal payments

Total loan payable

68,947

67,763

Less: current portion

 

 

(975)

Loan payable non-current

$

68,947

$

66,788

NOTE 7 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 $1.4 million under the Office Agreement. We began to occupy this new space in April 2016, with rental payments beginning in the third quarter of 2016. The initial commitment period of the 45% rate was for a period of three (3) years. We and FBIO currently determine actual office space utilization annually and if our utilization differs from the amount we have been billed, we will either receive credits or be assessed incremental utilization charges. As of June 30, 2022, the allocation rate is 63% and will be evaluated again in September 2022 for the following rent year. Also in connection with this lease, 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 rent expense of $0.1 million for the six months ended June 30, 2022.

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 rent expense of $0.1 million for the six months ended June 30, 2022.

17

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 $11.5 million and $8.8 million, respectively, as of June 30, 2022. Our leases have remaining lease terms of 2 years to 10 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 six months ended June 30, 2022 and 2021: