10-Q 1 tgtx20240331_10q.htm FORM 10-Q tgtx20240331_10q.htm
0001001316 TG THERAPEUTICS, INC. false --12-31 Q1 2024 0.001 0.001 175,000,000 175,000,000 154,607,052 151,465,598 154,565,743 151,424,289 41,309 41,309 29 0 April 1, 2024 September 30, 2024 January 1, 2024 June 30, 2024 0 5 0 http://fasb.org/us-gaap/2024#PrimeRateMember 10.0 http://fasb.org/us-gaap/2024#PrimeRateMember 7 5 5 2 38,000 2 10 false false false false 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. 00010013162024-01-012024-03-31 xbrli:shares 00010013162024-05-02 iso4217:USD 00010013162024-03-31 00010013162023-12-31 iso4217:USDxbrli:shares 0001001316us-gaap:ProductMember2024-01-012024-03-31 0001001316us-gaap:ProductMember2023-01-012023-03-31 0001001316us-gaap:LicenseMember2024-01-012024-03-31 0001001316us-gaap:LicenseMember2023-01-012023-03-31 00010013162023-01-012023-03-31 0001001316us-gaap:CommonStockMember2022-12-31 0001001316us-gaap:AdditionalPaidInCapitalMember2022-12-31 0001001316us-gaap:TreasuryStockCommonMember2022-12-31 0001001316us-gaap:RetainedEarningsMember2022-12-31 00010013162022-12-31 0001001316us-gaap:CommonStockMember2023-01-012023-03-31 0001001316us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-31 0001001316us-gaap:TreasuryStockCommonMember2023-01-012023-03-31 0001001316us-gaap:RetainedEarningsMember2023-01-012023-03-31 0001001316us-gaap:CommonStockMember2023-03-31 0001001316us-gaap:AdditionalPaidInCapitalMember2023-03-31 0001001316us-gaap:TreasuryStockCommonMember2023-03-31 0001001316us-gaap:RetainedEarningsMember2023-03-31 00010013162023-03-31 0001001316us-gaap:CommonStockMember2023-12-31 0001001316us-gaap:AdditionalPaidInCapitalMember2023-12-31 0001001316us-gaap:TreasuryStockCommonMember2023-12-31 0001001316us-gaap:RetainedEarningsMember2023-12-31 0001001316us-gaap:CommonStockMember2024-01-012024-03-31 0001001316us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-31 0001001316us-gaap:TreasuryStockCommonMember2024-01-012024-03-31 0001001316us-gaap:RetainedEarningsMember2024-01-012024-03-31 0001001316us-gaap:CommonStockMember2024-03-31 0001001316us-gaap:AdditionalPaidInCapitalMember2024-03-31 0001001316us-gaap:TreasuryStockCommonMember2024-03-31 0001001316us-gaap:RetainedEarningsMember2024-03-31 0001001316tgtx:CommercializationAgreementWithNeuraxpharmMember2023-01-012023-12-31 0001001316tgtx:BriumviUblituximabMember2024-01-012024-03-31 0001001316tgtx:UnvestedRestrictedStockMember2024-01-012024-03-31 0001001316tgtx:UnvestedRestrictedStockMember2023-01-012023-03-31 0001001316us-gaap:EmployeeStockOptionMember2024-01-012024-03-31 0001001316us-gaap:EmployeeStockOptionMember2023-01-012023-03-31 0001001316us-gaap:WarrantMember2024-01-012024-03-31 0001001316us-gaap:WarrantMember2023-01-012023-03-31 0001001316us-gaap:ConvertibleDebtSecuritiesMember2024-01-012024-03-31 0001001316us-gaap:ConvertibleDebtSecuritiesMember2023-01-012023-03-31 0001001316tgtx:LicenseRevenueMember2024-01-012024-03-31 0001001316tgtx:LicenseRevenueMember2023-01-012023-03-31 0001001316tgtx:MilestoneMember2024-01-012024-03-31 0001001316tgtx:MilestoneMember2023-01-012023-03-31 0001001316us-gaap:RoyaltyMember2024-01-012024-03-31 0001001316us-gaap:RoyaltyMember2023-01-012023-03-31 0001001316tgtx:OtherRevenueMember2024-01-012024-03-31 0001001316tgtx:OtherRevenueMember2023-01-012023-03-31 0001001316us-gaap:ProductMembertgtx:BriumviUblituximabMember2024-03-31 0001001316tgtx:CommercializationAgreementWithNeuraxpharmMember2023-07-282023-07-28 0001001316srt:MaximumMembertgtx:CommercializationAgreementWithNeuraxpharmMember2023-07-282023-07-28 0001001316tgtx:CommercializationAgreementWithNeuraxpharmMember2023-07-012023-09-30 0001001316tgtx:CommercializationAgreementWithNeuraxpharmMember2024-01-012024-03-31 0001001316tgtx:CommercializationAgreementWithNeuraxpharmMember2024-03-31 0001001316us-gaap:RoyaltyMembersrt:MaximumMember2024-01-012024-03-31 thunderdome:item 0001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMembersrt:MinimumMember2024-01-012024-03-31 0001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMembersrt:MaximumMember2024-01-012024-03-31 0001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-03-31 0001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMembersrt:MinimumMember2023-01-012023-12-31 0001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMembersrt:MaximumMember2023-01-012023-12-31 0001001316us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-31 0001001316tgtx:PrecisionBiosciencesIncMember2024-03-31 0001001316tgtx:PrecisionBiosciencesIncMember2024-01-012024-03-31 0001001316tgtx:BriumviUblituximabMember2022-12-292024-03-31 0001001316tgtx:PrecisionLicenseAgreementMember2024-01-072024-01-07 0001001316tgtx:PrecisionLicenseAgreementMember2024-01-07 0001001316tgtx:PrecisionBiosciencesIncMember2024-01-072024-01-07 0001001316tgtx:PrecisionBiosciencesIncMember2024-01-07 xbrli:pure 0001001316tgtx:PrecisionBiosciencesIncMembertgtx:ReverseStockSplitMember2024-01-072024-01-07 utr:D 0001001316tgtx:ManhattanAndAristonPharmaceuticalsMergerMember2010-03-012010-03-31 utr:Y 0001001316tgtx:ManhattanAndAristonPharmaceuticalsMergerMember2010-03-31 0001001316us-gaap:FairValueInputsLevel1Member2024-03-31 0001001316us-gaap:FairValueInputsLevel2Member2024-03-31 0001001316us-gaap:FairValueInputsLevel3Member2024-03-31 0001001316us-gaap:FairValueInputsLevel1Member2023-12-31 0001001316us-gaap:FairValueInputsLevel2Member2023-12-31 0001001316us-gaap:FairValueInputsLevel3Member2023-12-31 0001001316tgtx:The2022AtmMember2022-09-02 0001001316tgtx:The2022AtmMember2024-01-012024-03-31 0001001316tgtx:The2022AtmMember2023-01-012023-03-31 0001001316tgtx:The2022IncentivePlanMember2022-06-30 0001001316tgtx:FullValueAwardsMembertgtx:The2022IncentivePlanMembersrt:MaximumMember2022-06-30 0001001316tgtx:The2022IncentivePlanMember2024-03-31 0001001316tgtx:The2012IncentivePlanMember2024-03-31 0001001316tgtx:StockbasedCompensationExpenseCapitalizedIntoInventoryMember2024-01-012024-03-31 0001001316tgtx:StockbasedCompensationExpenseCapitalizedIntoInventoryMember2023-01-012023-03-31 0001001316us-gaap:RestrictedStockMember2023-12-31 0001001316us-gaap:RestrictedStockMember2024-01-012024-03-31 0001001316us-gaap:RestrictedStockMember2024-03-31 0001001316us-gaap:EmployeeStockOptionMember2024-03-31 0001001316us-gaap:EmployeeStockOptionMember2024-01-012024-03-31 0001001316tgtx:WarrantsToPurchaseCommonStockLoanAgreementMember2024-03-31 0001001316tgtx:WarrantsToPurchaseCommonStockAmendedLoanAgreementMember2024-03-31 0001001316tgtx:WarrantsToPurchaseCommonStockFirstAmendmentLoanAgreementMember2024-03-31 0001001316tgtx:WarrantsToPurchaseCommonStockFirstAmendmentMember2024-03-31 0001001316tgtx:TermLoanMember2019-02-28 0001001316tgtx:TermLoanMembertgtx:FirstAdvanceMember2019-02-282019-02-28 0001001316tgtx:AmendedTermLoanMember2021-12-30 0001001316tgtx:AmendedTermLoanMembertgtx:FirstAdvanceMember2021-12-302021-12-30 0001001316tgtx:AmendedTermLoanMember2021-12-30 00010013162021-12-302021-12-30 0001001316tgtx:AmendedTermLoanMember2021-12-302021-12-30 0001001316tgtx:TheFirstAmendmentTermLoanMembertgtx:Tranche3AAdvanceMember2023-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMembertgtx:Tranche3bAdvanceAndTranche3cAdvanceMember2023-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMembertgtx:Tranche3bAdvanceMember2023-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMembertgtx:Tranche3cAdvanceMember2023-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMembertgtx:Tranche4AdvanceMember2021-12-30 0001001316tgtx:TheFirstAmendmentTermLoanMembertgtx:Tranche4AdvanceMember2023-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMembertgtx:Tranche5AdvanceMember2023-03-31 00010013162023-03-312023-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMember2023-03-312023-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMember2023-03-31 0001001316tgtx:TheFirstAmendmentWarrantMember2023-03-312023-03-31 0001001316tgtx:TheFirstAmendmentWarrantMember2023-03-31 0001001316tgtx:TermLoanAdvancesMember2023-03-31 0001001316tgtx:AmendedTermLoanMember2023-03-312023-03-31 0001001316tgtx:TheFirstAmendmentWarrantMemberus-gaap:MeasurementInputExercisePriceMember2024-03-31 0001001316tgtx:TheFirstAmendmentWarrantMemberus-gaap:MeasurementInputSharePriceMember2024-03-31 0001001316tgtx:TheFirstAmendmentWarrantMemberus-gaap:MeasurementInputPriceVolatilityMember2024-03-31 0001001316tgtx:TheFirstAmendmentWarrantMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2024-03-31 0001001316tgtx:TheFirstAmendmentWarrantMemberus-gaap:MeasurementInputExpectedDividendRateMember2024-03-31 0001001316tgtx:TheFirstAmendmentWarrantMemberus-gaap:MeasurementInputExpectedTermMember2024-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMember2024-01-012024-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMember2023-01-012023-03-31 0001001316tgtx:TheFirstAmendmentTermLoanMember2024-03-31 00010013162023-01-012023-12-31 0001001316tgtx:OfficeAgreementWithFortressBiotechMember2014-10-012014-10-31 utr:sqft 0001001316tgtx:OfficeAgreementWithFortressBiotechMember2014-10-31 0001001316tgtx:OfficeAgreementWithFortressBiotechMembertgtx:DepositForOfficeAgreementMember2014-10-31 0001001316tgtx:OfficeAgreementMember2023-12-31 0001001316tgtx:TheNewJerseyLeaseMember2019-10-012019-10-31 0001001316tgtx:TheNewJerseyLeaseMember2024-01-012024-03-31 0001001316tgtx:TheNorthCarolinaLeaseMember2021-10-31 0001001316tgtx:TheNorthCarolinaLeaseMember2021-10-012021-10-31 0001001316tgtx:TheNorthCarolinaLeaseMember2024-01-012024-03-31 0001001316tgtx:LeasedOfficeSpaceMember2019-01-01 0001001316tgtx:LeasedOfficeSpaceMember2024-03-31 utr:M 0001001316srt:MinimumMember2024-03-31 0001001316srt:MaximumMember2024-03-31 00010013162019-02-28 0001001316tgtx:TheNorthCarolinaLeaseMember2022-12-31 0001001316tgtx:LFBLicenseAgreementMember2024-01-012024-03-31 0001001316us-gaap:LicenseAgreementTermsMembertgtx:LFBLicenseAgreementMember2012-01-31 0001001316tgtx:LFBLicenseAgreementMember2023-01-012023-03-31 0001001316tgtx:LFBLicenseAgreementMember2024-03-31 0001001316tgtx:SublicenseAgreementWithIldongPharmaceuticalCoMember2012-12-012012-12-31 0001001316us-gaap:LicenseAgreementTermsMembertgtx:SublicenseAgreementWithIldongPharmaceuticalCoMember2012-12-31 0001001316tgtx:SublicenseAgreementWithIldongPharmaceuticalCoMember2024-01-012024-03-31 0001001316tgtx:SublicenseAgreementWithIldongPharmaceuticalCoMember2023-01-012023-03-31 0001001316tgtx:SublicenseAgreementWithIldongPharmaceuticalCoMember2024-03-31 0001001316tgtx:SublicenseAgreementWithIldongPharmaceuticalCoMember2023-12-31 0001001316tgtx:SublicenseAgreementWithIldongPharmaceuticalCoMember2012-12-31 0001001316tgtx:CommercializationAgreementWithNeuraxpharmMember2023-07-28 0001001316us-gaap:RoyaltyMembersrt:MaximumMembertgtx:CommercializationAgreementWithNeuraxpharmMember2024-01-012024-03-31 0001001316us-gaap:WarrantMember2024-01-012024-03-31
 

 

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 March 31, 2024

 

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 154,542,945 shares of the registrant’s common stock, $0.001 par value, outstanding as of May 2, 2024.

 ​

 

 

TG THERAPEUTICS, INC.

FORM 10-Q

FOR THE QUARTER ENDED March 31, 2024

 

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

28

     

Item 3

Quantitative and Qualitative Disclosures About Market Risk

35

   

Item 4

Controls and Procedures

35

     

PART II

OTHER INFORMATION

35

     

Item 1

Legal Proceedings

35

   

Item 1A

Risk Factors

36

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

81

Item 3

Defaults of Senior Securities

81

     

Item 4

Mine Safety Disclosures

81

Item 5

Other Information

81

Item 6

Exhibits

82

 

 ​

 

 

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain matters discussed in this report, including matters discussed under the captions “Risk Factors” 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 (the Securities Act), and the Securities Exchange Act of 1934, as amended (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, TG-1801, and azercabtagene zapreleucel (azer-cel), as well as any other product candidates, and our ability to maintain regulatory approval of BRIUMVI® (ublituximab) for the treatment of relapsing forms of multiple sclerosis (RMS) in the United States (U.S.), the European Union (EU) and the United Kingdom (UK);

 

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;

 

developments relating to our competitors and our industry;

 

the effects on our company of future regulatory developments or legislative actions, including changes in healthcare, environmental and other laws and regulations to which we are subject;

 

prevailing economic, market and business conditions;

 

our ability to retain, attract and hire key personnel; and

 

fluctuations in the trading price of our common stock.

 

 

 

 

 

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 1A, 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 or azer-cel in non-oncology indications.

We have limited experience operating as a commercial company, and, as a result, the marketing and sale of BRIUMVI for the treatment of 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 or azer-cel in non-oncology indications, 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 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 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 do not 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, including 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 1A 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)

 

 

March 31,

  

December 31,

 

 

2024

  

2023

 

 

(Unaudited)

  

(Note 1)

 

Assets

 

     

Current assets:

 

  

 

Cash and cash equivalents

 $75,477  $92,933 

Short-term investment securities

  134,308   124,575 

Accounts receivable, net

  64,982   51,093 

Inventories

  77,719   39,823 

Prepaid research and development and other current assets

  8,095   9,519 

Total current assets

  360,581   317,943 

Restricted cash

  1,289   1,285 

Long-term investment securities

  1,320    

Right of use assets

  7,906   8,050 

Leasehold interest, net

  1,362   1,415 

Equipment, net

  66   95 

Goodwill

  799   799 

Total assets

 $373,323  $329,587 

        

Liabilities and stockholders’ equity

        

Current liabilities:

        

Accounts payable and accrued expenses

 $87,266  $38,471 

Other current liabilities

  4,064   1,479 

Lease liability – current portion

  1,383   1,446 

Deferred revenue - current portion

  3,373   152 

Accrued compensation

  3,598   12,172 

Total current liabilities

  99,684   53,720 

Deferred revenue, non-current portion

  3,244   6,016 

Loan payable – non-current

  101,326   100,118 

Lease liability – non-current

  8,960   9,231 

Total liabilities

  213,214   169,085 

Commitments and contingencies

          

Stockholders’ equity:

        

Common stock, $0.001 par value per share (175,000,000 shares authorized, 154,607,052 and 151,465,598 shares issued, 154,565,743 and 151,424,289 shares outstanding at March 31, 2024 and December 31, 2023, respectively)

  155   151 

Additional paid-in capital

  1,685,256   1,674,946 

Treasury stock, at cost, 41,309 shares at March 31, 2024 and December 31, 2023

  (234)  (234)

Accumulated deficit

  (1,525,068)  (1,514,361)

Total stockholders’ equity

  160,109   160,502 

Total liabilities and stockholders’ equity

 $373,323  $329,587 

 

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

 

 

March 31,

 

 

2024

   

2023

 

Revenue:

               

Product revenue, net

  $ 50,488     $ 7,765  

License, milestone, royalty and other revenue

    12,986       38  

Total revenue

  $ 63,474     $ 7,803  

               

Costs and expenses:

               

Cost of revenue

    5,441       857  

Research and development:

 

         

Noncash compensation

    2,452       1,584  

Other research and development

    30,270       14,286  

Total research and development

    32,722       15,870  

 

         

Selling, general and administrative:

 

         

Noncash compensation

    6,887       5,240  

Other selling, general and administrative

    27,694       22,828  

Total selling, general and administrative

    34,581       28,068  

 

         

Total costs and expenses

    72,744       44,795  

               

Operating loss

    (9,270 )     (36,992 )

               

Other expense (income):

               

Interest expense

    2,288       2,844  

Other income

    (880 )     (604 )

Total other expense (income), net

    1,408       2,240  

 

         

Net loss before taxes

  $ (10,678 )   $ (39,232 )

Income taxes

  $ 29        

Net loss

  $ (10,707 )   $ (39,232 )

               

Basic and diluted net loss per common share

  $ (0.07 )   $ (0.28 )
                 

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

    146,209,213       140,312,269  

 

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, 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  

 

 ​

                   

Additional

                                 
   

Common Stock

   

paid-in

   

Treasury Stock

   

Accumulated

         

 

Shares

   

Amount

   

capital

   

Shares

   

Amount

   

Deficit

   

Total

 

Balance at January 1, 2024

    151,465,598     $ 151     $ 1,674,946       41,309     $ (234 )   $ (1,514,361 )   $ 160,502  

Issuance of common stock in connection with exercise of options

    2,500     0       10                     10  

Issuance of restricted stock

    3,304,468     4       (4 )                    

Forfeiture of restricted stock

    (165,514 )   0                            

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

                10,304                       10,304  

Net loss

                                  (10,707 )   (10,707 )

Balance at March 31, 2024

    154,607,052    

155

      1,685,256    

41,309

      (234 )     (1,525,068 )  

160,109

 

 ​

*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)

 

 

Three months ended

 

 

March 31,

 

 

2024

   

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

   

 

 

   

 

Net loss

  $ (10,707 )   $ (39,232 )

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

               

Noncash stock compensation expense

    9,339       6,823  

Depreciation and amortization

    29       68  

Amortization of premium (discount) on investment securities

    (1,670 )     (301 )

Amortization of debt issuance costs

    639       461  

Amortization of leasehold interest

    53       53  

Noncash change in lease liability and right of use asset

    407       491  

Change in fair value of equity investments

    (195 )      

Change in fair value of notes payable

    (35 )     59  

Changes in assets and liabilities:

               

Increase in inventory

    (36,931 )     (26,924 )

Decrease (increase) in other current assets

    1,490       (2,623 )

Increase in accounts receivable

    (13,889 )     (8,623 )

Increase in accounts payable and accrued expenses

    40,222       9,858  

Decrease in lease liabilities

    (596 )     (593 )

Increase in other current liabilities

    3,035       619  

Increase (decrease) in deferred revenue

    602       (38 )

Net cash used in operating activities

    (8,207 )     (59,902 )

               

CASH FLOWS FROM INVESTING ACTIVITIES

               

Proceeds from maturity of short-term securities

    73,401       16,000  

Investment in held-to-maturity securities

    (81,531 )     (22,168 )

Investment in long-term securities

    (1,125 )      

Net cash used in investing activities

    (9,255 )     (6,168 )

               

CASH FLOWS FROM FINANCING ACTIVITIES

               

Proceeds from exercise of options

    10       363  

Proceeds from debt financings

          25,000  

Financing costs paid

          (125 )

Net cash provided by financing activities

    10       25,238  

               

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

    (17,452 )     (40,832 )

         

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

    94,218       103,577  

               

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

  $ 76,766     $ 62,745  

               

               

Reconciliation to amounts on condensed consolidated balance sheets:

               

Cash and cash equivalents

  $ 75,477     $ 61,469  

Restricted cash

    1,289       1,276  

Total cash, cash equivalents and restricted cash

  $ 76,766     $ 62,745  

               

Cash paid for:

               

Interest

  $ 2,448     $ 1,749  
                 

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 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, 2023. The accompanying condensed December 31, 2023 balance sheet has been derived from these statements. The results of operations for the three months ended March 31, 2024 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 twelve months ended December 31, 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 March 31, 2024, we have an accumulated deficit of $1.5 billion.

 

Our major sources of cash have been proceeds from private placements and public offerings 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. During the three months ended  March 31, 2024, we generated $50.5 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 March 31, 2024, we had $209.8 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 2023 Annual Report on Form 10-K, except as updated herein or as it relates to revenue recognition, accounts receivable, inventory, cost of revenue, equity securities, and the adoption of new accounting standards during the three months ended March 31, 2024. 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.

 

Commercial Payer Rebates: The Company contracts with various private payer organizations, primarily insurance companies and pharmacy benefit managers, for the payment of rebates with respect to utilization of our product and contracted formulary status. The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability.

 

Trade Discounts and Allowances: The Company provides its customers with discounts that are explicitly stated in the applicable 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 March 31, 2024, 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.

 

12

 

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).

 

Optional Purchases: The Company’s arrangements may provide the licensee the right to make optional purchases of the licensed product. These optional purchases are accounted for as separate contracts when the licensee determines that it will make such a purchase, unless the option conveys a material right.

 

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 March 31, 2024, 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.

 

13

 

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). The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and it writes down any excess and obsolete inventories to their estimated net realizable value in the period in which the impairment is first identified. Such impairment charges, if they occur, are recorded within cost of revenue.

 

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.

 

Equity Securities

 

Our equity securities consist of common stock of Precision BioSciences, Inc. (Precision). Equity securities are recognized at their fair value in accordance with ASC 321, Investments – Equity Securities. Forward contracts to purchase equity securities that do not qualify as derivatives under ASC 815 are accounted for in accordance with ASC 321. These forward contracts are recorded at fair value at the balance sheet date. See Note 5 for further details.

 

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 shares 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.

 

The following table summarizes our potentially dilutive securities at March 31, 2024 and 2023:

 

 

As of

 

 

March 31,

 

 

2024

  

2023

 

Unvested restricted stock

  9,898,448   9,000,857 

Options

  4,694,529   4,876,484 

Warrants

  312,272   312,272 

Shares issuable upon note conversion

  21,167   20,136 

Total

  14,926,416   14,209,749 

 

 

14

 
 

NOTE 2 REVENUE

 

As discussed in Note 1, revenues are recognized under guidance within ASC 606. The following table presents our disaggregated revenue for the periods presented (in thousands):

 

(in thousands)

 

Three months ended March 31,

 

 

2024

  

2023

 

Total product revenue, net

 $50,488  $7,765 

License Revenue

  38   38 

Milestone Revenue

  12,500   - 

Royalty Revenue

  33   - 

Other Revenue

  415   - 

Total Revenue

 $63,474  $7,803 

 

Product revenue, net

 

For the three months ended March 31, 2024 and March 31, 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.

 ​

As of March 31, 2024, approximately $15.0 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 of which the Company previously partnered (the Territory). 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. As part of the overall arrangement, the Company has agreed to supply BRIUMVI to Neuraxpharm throughout the term of the Commercialization Agreement.

 

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 $492.5 million.

 

15

 

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) the exclusive right to develop, sell, offer to sell and import the Product in the Territory (the License); (ii) certain development and regulatory activities (Development and Regulatory Activities).

 

The License to the Company’s intellectual property represents a distinct performance obligation, therefore, the $140.0 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 months ended  March 31, 2024, the Company recognized Other Revenue of $0.4 million related to the Development and Regulatory Activities.

 

The arrangement also provides Neuraxpharm with the right to make optional purchases of BRIUMVI (the Supply of Licensed Product). These optional purchases are accounted for as a separate contract when the right to purchase BRIUMVI is exercised. The consideration for optional purchases of BRIUMVI by Neuraxpharm approximates the price that a customer in the Territory would be willing to pay for these goods.

 

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 March 31, 2024, the Company has an unconditional right to receive $0.4 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, and therefore, as of March 31, 2024, $6.5 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. During the three months ended March 31, 2024 the Company received a $12.5 million milestone payment for the first key market commercial launch of BRIUMVI in the EU. Any consideration related to sales-based royalties will be recognized when the related sales occur. Royalty revenue of less than $0.1 million was recognized during the three months ended March 31, 2024.

 ​ 

16

 
 

NOTE 3 INVESTMENT SECURITIES

 

Our short-term investments as of March 31, 2024 and December 31, 2023 are classified as held-to-maturity. Held-to-maturity investments are recorded at amortized cost.

 

The following tables summarize our short-term investment securities at March 31, 2024 and December 31, 2023:

 

 

March 31, 2024

 

 

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 April 2024 and September 2024) (held-to-maturity)

 $134,308  $  $28  $134,280 

Total short-term investments

 $134,308  $  $28  $134,280 

 

 

December 31, 2023

 

 

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 2024 and June 2024) (held-to-maturity)

 $124,575  $30  $53  $124,552 

Total short-term investments

 $124,575  $30  $53  $124,552 

 

Our long-term investments as of March 31, 2024 include shares of common stock of Precision. The fair market value of these equity securities as of March 31, 2024 was $1.3 million. For the three months ended March 31, 2024, we recorded an unrealized gain of $0.2 million based on the change in fair value of Precision’s common stock during the period. See Note 5 for further details.

 

17

 
 

NOTE 4 INVENTORY

 

The following table presents our inventory as of March 31, 2024 (in thousands):

 

 

March 31, 2024

 

Raw Materials

 $1,712 

Work in Process

  74,104 

Finished Goods

  1,903 

Total Inventory

 $77,719 

 

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. Inventory that is used for clinical development purposes is expensed to research and development expense when consumed.

 

At March 31, 2024, all our inventory was solely related to BRIUMVI, which was approved by the FDA on December 28, 2022, at which time we began to capitalize costs to manufacture BRIUMVI. 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. Inventory that is used for clinical development purposes is expensed to research and development expense when consumed.

 

The work in process materials consist primarily of bulk drug substance, which has a multi-year shelf life.  When the bulk drug substance is manufactured into BRIUMVI finished goods, those finished goods have a shelf life of three years from the date of manufacture.  Our expectation is to sell finished goods at least twelve months prior to expiration. Due to our long manufacturing lead time, it was necessary to buildup inventory in support of BRIUMVI forecasted sales, to ensure appropriate safety stock levels, and meet our commitment to supply BRIUMVI to Neuraxpharm related to the Commercialization Agreement. As a result of being in the early stages of the BRIUMVI product launch, the Company is continuing to evaluate the length of its operating cycle.

 

On a quarterly basis, the Company analyzes our inventory levels for excess quantities and obsolescence (expiration), taking into account factors such as historical and anticipated future sales compared to quantities on hand and the remaining shelf-life. At March 31, 2024, we determined that a reserve related to BRIUMVI inventory for excess quantities and obsolescence is not required. In addition, since FDA approval of BRIUMVI, the Company has not recorded any inventory write downs.

 

 

 

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.

 

Equity Investments and Forward Contract Liabilities

 

On January 7, 2024, (the Precision Effective Date) the Company and its wholly-owned subsidiary, TG Cell Therapy, Inc., (TG Cell) entered into a License Agreement (the Precision License Agreement) with Precision, pursuant to which Precision granted the Company certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize Precision’s allogeneic CAR T therapy azercabtagene zapreleucel (azer-cel) for the treatment of autoimmune and other non-oncology diseases and conditions.

 

Pursuant to the Precision License Agreement, the Company made an upfront payment to Precision of $7.5 million, consisting of (i) $5.25 million in cash and (ii) $2.25 million (the Upfront Precision Stock Payment), as an equity investment, for the purchase of 2,920,816 shares of Precision’s common stock at a price of $0.77 per share. The Company paid a premium for the shares which was recorded in research and development expense as part of the cost of the Precision License Agreement. Precision subsequently had a 30-to-1 reverse stock split in February 2024. The shares purchased with the Upfront Precision Stock Payment are classified as an equity investment and are recognized at fair market value as of March 31, 2024.

 

Within 12 months following the Precision Effective Date, the Company will make a one-time payment to Precision equal to $2.5 million (the Deferred Precision Stock Payment). Upon receipt of such payment, Precision shall issue to the Company the number of shares of Precision common stock (the Precision Shares) (rounded down to the nearest whole share) obtained by dividing the Deferred Precision Stock Payment by 200% of the weighted average share price of the Precision common stock (the Precision Share Price) for the thirty (30) trading days preceding the date on which Precision receives the payment. The Deferred Precision Stock Payment was recorded to research and development License Fees as part of the cost of the Precision License Agreement in the three months ended March 31, 2024, and is classified as a forward contract liability recognized at fair market value in Other Current Liabilities as of March 31, 2024, in accordance with ASC 321.

 

Upon the achievement of a clinical and regulatory milestone event (Milestone Event 1), the Company will make a one-time payment to Precision equal to $2.3 million (the Milestone 1 Precision Stock Payment). Upon receipt of such payment, Precision shall issue to the Company the Precision Shares (rounded down to the nearest whole share) obtained by dividing the Milestone 1 Precision Stock Payment by 200% of the weighted average share price of the Precision common stock (the Precision Share Price) for the thirty (30) trading days preceding the achievement of Milestone Event 1. The Milestone 1 Precision Stock Payment was recorded to research and development License Fees as part of the cost of the Precision License Agreement in the three months ended March 31, 2024, and is classified as a forward contract liability recognized at fair market value in Other Current Liabilities as of March 31, 2024, in accordance with ASC 321.

 

19

 

5% Notes

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 March 31, 2024 and December 31, 2023, 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.

 

The following tables provide the fair value measurements of applicable financial assets and liabilities as of March 31, 2024 and December 31, 2023:

 

  

Financial assets and liabilities at fair value as of March 31, 2024

 

(in thousands)

 

Level 1

  

Level 2

  

Level 3

  

Total

 
                 

Equity Investments

 $1,320  $  $  $1,320 

Total Assets

 $1,320  $  $  $1,320 
                 

Forward Contract Liabilities

 $  $2,471  $  $2,471 

5% Notes

 $  $  $322  $322 

Total Liabilities

 $  $2,471  $322  $2,793 
                 
                 
  

Financial assets and liabilities at fair value as of December 31, 2023

 
  

Level 1

  

Level 2

  

Level 3

  

Total

 
                 

5% Notes

 $  $  $357  $357 

Total Liabilities

 $  $  $357  $357 

 

Our equity investments classified as Level 1 were valued using their respective closing stock price on the Nasdaq Stock Market. We did not experience any transfers of financial instruments between the fair value hierarchy levels during the three months ended March 31, 2024. Our forward contract liabilities classified as Level 2 were valued using Precision's closing stock price on the Nasdaq Stock Market. Our Level 3 instrument amounts represent the fair value of the 5% Notes and related accrued interest.

 

The change in the fair value of the Level 1 assets and Level 2 and 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.

 

We had no activity on the 2022 ATM during the three months ended March 31, 2024 and 2023.

 

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 March 31, 2024, 7,181,941 shares of restricted stock and 2,272,500 options were outstanding and up to an additional 5,582,801 shares were available to be issued under the 2022 Incentive Plan.

 

21

 

The TG Therapeutics, Inc. Amended and Restated 2012 Incentive Plan (the 2012 Incentive Plan) was approved by stockholders in June 2020. As of March 31, 2024, 4,216,538 shares of restricted stock and 2,422,029 options were outstanding, and no additional shares were available to be issued under the 2012 Incentive Plan as the 2022 Incentive Plan is currently the Company's only active incentive plan.

 

Stock-based compensation expense included in the condensed consolidated statements of operations was $9.3 million and $6.8 million for the three months ended March 31, 2024 and 2023, respectively. The $9.3 million and the $6.8 million for the three months ended March 31, 2024 and 2023, respectively, is net of $1.0 million and $0.3 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 three months ended March 31, 2024:

 

 

Stock Options

  

Restricted Stock

 

Equity awards outstanding, beginning of year

  4,697,029   9,639,068 

Changes during the year:

      

Granted

     3,304,468 

Exercised or vested

  (2,500)  (1,379,543)

Expired or Forfeited

     (165,514)

Equity awards outstanding, end of period

  4,694,529   11,398,479 

 

As of March 31, 2024, 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

 $3,309  $55,066 

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

 2.3  3.2 

 

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.

 

22

 

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 (the Tranche 3B Advance and the 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 March 31, 2024, 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 three months ended March 31, 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 

 

23

 

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 March 31, 2024, and 2023, respectively. At March 31, 2024, the remaining unamortized balance of debt issuance costs was $4.5 million. 

 ​

The loan payable as of March 31, 2024 and December 31, 2023, is as follows:

 

 

March 31,

  

December 31,

 

(in thousands)

 

2024

  

2023

 

Loan payable

 $95,000  $95,000 

Add: Accreted Liability of final payment fee

  10,799   10,230 

  105,799   105,230 

Less: unamortized debt issuance costs

  (4,473)  (5,112)

  101,326   100,118 

Less: principal payments

      

Total loan payable

  101,326   100,118 

Less: current portion

      

Loan payable non-current

 $101,326  $100,118 

 

 

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 $0.1 million for the three months ended March 31, 2024.

 

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 three months ended March 31, 2024.

 

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 $10.3 million and $7.9 million, respectively, as of March 31, 2024. Our leases have remaining lease terms of 9 months to 7 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 months ended March 31, 2024 and 2023:

 

 

Three months ended

 

 

March 31,

  

March 31,

 

(in thousands)

 

2024

  

2023

 

Operating lease cost

 $600  $544 

Net lease cost

 $600  $544 

 

24

 

As of March 31, 2024, the weighted-average remaining operating lease term was 5.8 years and the weighted-average discount rate for operating leases was 10.01%. Cash paid for amounts included in the measurement of operating lease liabilities during the three months ended March 31, 2024 was $0.6 million. The balance sheet classification of lease liabilities was as follows:

 

 

March 31,

  

December 31,

 

(in thousands)

 

2024

  

2023

 

Liabilities

 

  

 

Lease liability current portion

 $1,383  $1,446 

Lease liability non-current

  8,960   9,231 

Total lease liability

 $10,343  $10,677 

 

As of March 31, 2024, the maturities of lease liabilities were as follows:

 

 

Operating

 

(in thousands)

 

leases

 

Remainder of 2024

 $1,792 

2025

  2,100 

2026

  2,080 

2027

  1,913 

2028

  1,827 

After 2029

  4,715 

Total lease payments

  14,427 

Less: interest

  (4,084)

Present value of lease liabilities(*)

 $10,343 

 


 

(*)

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 March 31, 2024, 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 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 months ended March 31, 2024, the Company recorded $4.9 million related to the worldwide royalty due under the LFB License Agreement in cost of revenue based on sales of BRIUMVI in the U.S. and the EU, compared to $0.8 million during the three months ended March 31, 2023 related to the worldwide royalty due under the LFB License Agreement in cost of revenue based on U.S. sales of BRIUMVI. As of March 31, 2024, $4.9 million in royalties were payable under the LFB License Agreement.

 ​

25

 

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 March 31, 2024 and 2023. At March 31, 2024 and December 31, 2023, 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 March 31, 2024 and December 31, 2023).

 

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). In March 2024, the Company received a $12.5 million milestone payment upon the first key market commercial launch in the EU. The Company is eligible to receive 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%. Royalty revenue of less than $0.1 million was recognized during the three months ended March 31, 2024. 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.

 

26

 

Azer-cel

 

On January 7, 2024, the Company and its wholly-owned subsidiary, TG Cell Therapy, Inc., entered into the Precision License Agreement with Precision, pursuant to which Precision granted the Company certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize Precision’s allogeneic CAR T therapy azercabtagene zapreleucel (azer-cel) for the treatment of autoimmune and other non-oncology diseases and conditions.

 

Pursuant to the Precision License Agreement, the Company made an upfront payment to Precision of $7.5 million, consisting of (i) $5.25 million in cash and (ii) $2.25 million, as an equity investment, for the purchase of 2,920,816 shares of Precision’s common stock at a price of $0.77 per share. Within 12 months of the Precision License Agreement, the Company will make a deferred payment of $2.5 million to Precision, consisting of an equity investment in Precision’s common stock at a 100% premium to the 30-day volume-weighted average price (the 30-day VWAP) prior to purchase. Upon achievement of certain near-term clinical or time-based milestones, the Company will make a $7.5 million payment to Precision, a portion of which will also be an equity investment in Precision’s common stock at a 100% premium to the 30-day VWAP prior to purchase. Precision will be eligible to receive up to $293 million in additional milestone payments based on the achievement of certain clinical, regulatory, and commercial milestones. In addition, the Company is obligated to pay Precision high-single-digit to low-double-digit royalties on net sales of the licensed product on a country-by-country basis until the latest to occur of patent expiration, loss of regulatory exclusivity, and a period of ten years following the first commercial sale of the licensed product in such country. The Company has also agreed to make certain payments to Precision’s licensors during the term of the Precision License Agreement.

 

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 $0.6 million and $0.2 million for the three months ended March 31, 2024 and 2023, 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 contains 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, 2023. 

 

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 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

 

Pipeline Expansion

 

On January 9, 2024, we entered into an agreement with Precision BioSciences, Inc. (Precision) to acquire a worldwide license to Precision’s azercabtagene zapreleucel (azer-cel), an allogeneic CD19 CAR T cell therapy program for autoimmune diseases and all other non-oncology indications. Azer-cel is an allogeneic (off the shelf) CAR T program, and the Company has near term plans to evaluate the program in multiple autoimmune indications.

 

BRIUMVI Ex-US Launch

 

On February 26, 2024, we announced the commercial launch of BRIUMVI in the EU by Neuraxpharm, with BRIUMVI made available for commercial sale in Germany, with additional EU markets expected to follow.

 

BRIUMVI Patents

 

On February 27, 2024, we announced the issuance of three additional patents by the United States Patent and Trademark Office (USPTO) for BRIUMVI, which extended patent protection through 2042.

 

 

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 April 2024. 

 

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.

 

Additional exploratory data sets from the ULTIMATE I & II Phase 3 trials continue to be presented at major medical meetings. BRIUMVI is also being studied in the ENHANCE Phase 3b trial evaluating RMS patients who switch from a IV anti-CD20 therapy to BRIUMVI and data from the ENHANCE trial was most recently presented at the 2024 Americas Committee for Treatment and Research in Multiple Sclerosis Annual Meeting held in February 2024.

 

On February 27, 2024, we announced the issuance of three additional patents by the United States Patent and Trademark Office (USPTO) for BRIUMVI, which extended patent protection through 2042.

 

 

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.

 

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-U.S. commercialization of BRIUMVI (Commercialization Agreement). 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 U.S., Canada and Mexico, which are retained by TG, and excluding certain Asian countries of which the Company 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.

 

On February 26, 2024, we announced the commercial launch of BRIUMVI in the EU by Neuraxpharm, with BRIUMVI made available for commercial sale in Germany, with additional EU markets expected to follow.

 

For more information, please refer to our Annual Report on Form 10-K for the quarter and year ended December 31, 2023.

 

 

RESULTS OF OPERATIONS

 

The following table summarizes the results of operations for the three months ended March 31, 2024 and 2023:

 

   

Three months ended

 
   

March 31,

 

(in thousands)

 

2024

   

2023

 

Product revenue, net

  $ 50,488     $ 7,765  

License, milestone, royalty and other revenue

    12,986       38  

Total Revenue

  $ 63,474     $ 7,803  
                 

Costs and expenses:

               

Cost of revenue

    5,441       857  

Research and development:

               

Noncash compensation

    2,452       1,584  

Other research and development

    30,270       14,286  

Total research and development

    32,722       15,870  
                 

General and administrative:

               

Noncash compensation

    6,887       5,240  

Other selling, general and administrative

    27,694       22,828  

Total general and administrative

    34,581       28,068  
                 

Total costs and expenses

    72,744       44,795  
                 

Interest expense

    2,288       2,844  

Other income

    (880 )     (604 )

Total other expense, net

    1,408       2,240  
                 

Net loss before taxes

    (10,678 )     (39,232 )

Income taxes

    29        

Net loss

  $ (10,707 )   $ (39,232 )

 

Product Revenue, net. Product revenue, net was approximately $50.5 million for the three months ended March 31, 2024, compared to $7.8 million for the three months ended March 31, 2023. Product revenue, net for the both the three months ended March 31, 2024 and March 31, 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. The increase in product revenue, net is driven by an increase in product shipments for BRIUMVI as a result of greater market penetration.

 

License Revenue. License revenue was $12.5 million and less than $0.1 million for the three months ended March 31, 2024 and March 31, 2023, respectively. License revenue for the three months ended March 31, 2024 is predominantly comprised of a milestone payment under the Neuraxpharm Commercialization Agreement for the first key market commercial launch of BRIUMVI in the EU. License revenue for the three months ended March 31, 2023 is comprised of recognition of a portion of the upfront payment from the Ublituximab sublicense agreement with Ildong.

 

Other Revenue. Other revenue was approximately $0.5 million and zero for the three months ended March 31, 2024 and March 31, 2023, respectively.  Other revenue for the three months ended March 31, 2024 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 March 31, 2024 was $5.4 million compared to approximately $0.9 million for the three months ended March 31, 2023.  Cost of revenue for both the three months ended March 31, 2024 and March 31, 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. As a result, our initial product gross margin is higher as our pre-launch inventory costs are not included in cost of revenue. We expect the cost of revenue for BRIUMVI to increase in relation to product revenues as we deplete these inventories. We expect to use the remaining pre-commercialization inventory for product sales through the first quarter of 2025, after which our product gross margin is anticipated to decrease modestly. A portion of the cost of revenue for the three months ended March 31, 2023 includes costs related to delivering regulatory support & development services to Neuraxpharm in accordance with the Commercialization Agreement.

 

 

Noncash Compensation Expense (Research and Development). Noncash compensation expense (research and development) related to equity incentive grants totaled $2.5 million for the three months ended March 31, 2024, as compared to $1.6 million during the comparable period ended March 31, 2023. The increase in noncash compensation expense was primarily due to greater vesting of equity grants during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

 

Other Research and Development Expense. Other research and development expense increased for the three months ended March 31, 2024, by approximately $16.0 million to $30.3 million as compared to the comparable period ended March 31, 2023. The increase in research and development expense during the three months ended March 31, 2024 was primarily attributable to the Precision License Agreement, as well as manufacturing related expenses during the period.

 

Noncash Compensation Expense (Selling, General and Administrative). Noncash compensation expense (selling, general and administrative) related to equity incentive grants totaled $6.9 million for the three months ended March 31, 2024, as compared to $5.2 million during the comparable period ended March 31, 2023. The increase in noncash compensation expense was primarily due to greater vesting of equity grants during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

 

Other Selling, General and Administrative. Other selling, general and administrative expenses totaled $27.7 million for the three months ended March 31, 2024, as compared to $22.8 million during the comparable period ended March 31, 2023. The increase was primarily due to other selling, general and administrative costs, including personnel and consultants, associated with the commercialization of BRIUMVI, during the three months ended March 31, 2024.

 

Interest Expense. Interest expense decreased by $0.5 million to $2.3 million for the three months ended March 31, 2024, as compared to $2.8 million for the three months ended March 31, 2023.

 

Other Income. Other income increased by $0.3 million to $0.9 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase is mainly due to higher interest income received from our money market investments.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Historically, we have incurred operating losses since our inception; however, the Company experienced a net profit during the twelve months ended December 31, 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 Commercialization Agreement with 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 March 31, 2024, we have an accumulated deficit of $1.5 billion.

 

Our major sources of cash have been proceeds from private placements and public offerings of equity securities, our loan and security agreements executed with 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. During the three months ended March 31, 2024, we generated $50.5 million in product revenue from 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. 

 

 

As of March 31, 2024, we had $209.8 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 three months ended March 31, 2024 and 2023:

 

 

Three months ended

 
   

March 31,

 

(in thousands)

 

2024

   

2023

 

Net cash used in operating activities

  $ (8,207 )   $ (59,902 )

Net cash used in investing activities

  $ (9,255 )   $ (6,168 )

Net cash provided by (used in) financing activities

  $ 10     $ 25,238  

 

Cash used in operating activities for the three months ended March 31, 2024 was $8.2 million as compared to cash used in operating activities of $59.9 million for the three months ended March 31, 2023. The decrease in net cash used in operating activities was due to a lower net loss during the three months ended March 31, 2024, offset by an increase in inventory  of $50.5 million during the same period. This inventory balance increase was due to the buildup of inventory in support of BRIUMVI forecasted sales, to ensure appropriate safety stock levels, and meet our commitment to supply BRIUMVI to Neuraxpharm in relation to the Commercialization Agreement.

 

Net cash used in investing activities for the three months ended March 31, 2024, was $9.3 million as compared to $6.2 million for the three months ended March 31, 2023. The increase in net cash used in investing activities was primarily due to increased investment in short-term and long-term securities during the three months ended March 31, 2024.

 

Net cash provided by financing activities for the three months ended March 31, 2024, was approximately zero as compared to net cash provided by financing activities of $25.2 million for the three months ended March 31, 2023. The increase in net cash provided by financing activities during the three months ended March 31, 2023 included an advance of $25.0 million drawn as part of the First Amendment entered into with Hercules.

 

 

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 operation and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a description of our significant accounting policies, refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 1 – Organization and Summary of Significant Accounting Policies” in our 2023 Annual Report on Form 10-K for the year ended December 31, 2023 and refer to Note 1 in this Quarterly Report on Form 10-Q for significant accounting policies due to commercialization for revenue recognition, gross-to-net sales adjustments, accounts receivable, inventory, and cost of revenue. Of these policies, the following are considered critical to an understanding of our Unaudited Condensed Consolidated Financial Statements as they require the application of the most difficult, subjective and complex judgments: stock-based compensation expenses, and fair value measurement of financial liabilities. Refer to “Note 2 –Revenue”, “Note 5 - Fair Value Measurements” and “Note 6 – Stockholders’ Equity” respectively, for more information.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Our exposure to market risk has not changed materially since our disclosure in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2023.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

As of March 31, 2024, management carried out, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2024, our disclosure controls and procedures were effective.

 

Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We, and our subsidiaries, are not a party to, and our property is not the subject of, any material pending legal proceedings.

 

 

ITEM 1A. RISK FACTORS.

 ​

You should carefully consider the following risk factors and the other information contained elsewhere in this Quarterly Report before making an investment in our securities. If any of the following risks occur, our business, financial condition or operating results could be materially harmed. An investment in our securities is speculative in nature, involves a high degree of risk, and should not be made by an investor who cannot bear the economic risk of its investment for an indefinite period of time and who cannot afford the loss of its entire investment. The risks described below are not the only ones that our business faces. Additional risks not currently known to us or that we currently deem to be immaterial may adversely impact our business in the future.

 ​

Risks Related to Commercialization

 

If we obtain U.S. Food and Drug Administration (FDA) or European Medicines Agency (EMA) approval for a product candidate and do not achieve broad market acceptance among physicians, patients, healthcare payors, and the medical community, the revenues that we generate from product sales will be limited.

 

We currently have one marketed product, BRIUMVI, which received approval from the FDA on December 28, 2022, for the treatment of relapsing forms of multiple sclerosis (RMS), to include clinically isolated syndrome, relapsing-remitting disease, and active secondary progressive disease, in adults. Additionally, BRIUMVI received approval from the European Commission (EC) on June 1, 2023, and later in 2023, from the Medicines and Healthcare products Regulatory Agency (MHRA) for the treatment of adult patients with RMS who have active disease defined by clinical or imaging features in the EU and UK, respectively.

 

We have limited experience as a commercial company, and our ability to successfully overcome the risks associated with commercializing drugs in the biopharmaceutical industry, including the risk that our products do not achieve an adequate level of acceptance, remains uncertain. BRIUMVI, as well as other drugs that we may bring to the market in the future, may not gain market acceptance by physicians, patients, third-party payors and others in the healthcare community. As a result, we may not generate significant revenues or meet our revenue projections or guidance and may not become profitable. The degree of market acceptance of BRIUMVI, as well as any future product candidates for which we may receive marketing approval, will depend on a number of factors, including: 

 

 

the timing of our receipt of marketing approvals, the terms of such approvals, and the countries in which such approvals are obtained;

 

the efficacy, safety and tolerability as demonstrated in clinical trials and as compared to alternative treatments;

 

the timing of market introduction of BRIUMVI and any of our product candidates, as well as competitive products;

 

the indications for which our products are approved, and other aspects of the approved labeling for such products;

 

acceptance by physicians, advanced practitioners, major operators of neurology clinics, and patients of our products as safe, tolerable and effective treatments;

 

the potential and perceived advantages or disadvantages of our products compared to alternative treatments;

 

our ability to offer our products for sale at competitive prices;

 

the availability of adequate reimbursement by third-party payors and government authorities;

 

the extent of patient cost-sharing obligations, including copays and deductibles;

 

changes in regulatory requirements by government authorities for our products;

 

relative convenience and ease of administration;

 

the prevalence and severity of side effects and adverse events;

 

the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

 

the effectiveness of our sales and marketing efforts, as well as those of any current or future partners;

 

protecting our rights in our intellectual property portfolio;

 

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

 

favorable or unfavorable publicity relating to our products or relating to the Company.

 

 

In addition, global health concerns such as the COVID-19 pandemic could impact commercialization of BRIUMVI. 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 viruses such as COVID-19 or lead to more severe complications or outcomes upon infection, including death. These or other similar concerns may impact the commercial potential for BRIUMVI and other immunosuppressive products that we have in development.

 

If BRIUMVI, or any future product candidates for which we receive regulatory approval, do not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors and patients, we may not generate sufficient revenue from these products and we may not become or remain profitable, which would have a material adverse effect on our business.

 

We may be subject to limitations on the indicated uses or requirements to fulfill certain post-marketing requirements to the satisfaction of regulatory authorities or may be unable to maintain marketing approval for BRIUMVI or future products that we may bring to market.

 

Regulatory approvals for our product or any of our product candidates may be subject to conditions and limitations on the approved indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the approved product candidate. For example, with respect to the FDA’s approval of BRIUMVI for RMS, the approval is subject to certain post-marketing requirements and commitments, including long-term safety studies, as well as studies to evaluate the effects of BRIUMVI in pregnant women and pediatric populations, among others. Similar post-approval studies are required by other regulatory authorities outside of the U.S., including but not limited to, the EMA in the EU and the MHRA in the UK. These studies are highly specialized in their design and conduct and are associated with considerable expenses, and based on the outcome, could result in further labeling restrictions that could impair or restrict the way in which we are able to market BRIUMVI, or negatively impact its overall clinical profile.

 

In addition, with respect to BRIUMVI and any product candidate that the FDA or a comparable foreign regulatory authority approves, the manufacturing processes, testing, labeling, packaging, distribution, import, export, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current Good Manufacturing Practices (cGMPs), with Good Clinical Practices (GCPs), for any clinical trials that we conduct post-approval, and with Good Laboratory Practices (GLPs), for any nonclinical studies. Later discovery of previously unknown problems with a product or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things, restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, mandatory safety labeling changes or product recalls, suspension or revocation of product approvals, product seizure or detention, refusal to permit the import or export of products, and injunctions or the imposition of civil or criminal penalties, all of which would adversely affect our business, prospects and ability to achieve or sustain profitability.

 

 

BRIUMVI, and any of our product candidates for which we in the future obtain approval, may, after approval, be found to cause undesirable side effects that could result in significant negative consequences following commercialization.

 

As BRIUMVI or any future approved products are used more widely or for a longer duration after being brought to market, data may emerge from clinical studies, including confirmatory or other post-marketing studies, or from adverse event reporting, that may affect the commercial potential of our products. For example, as additional patients are exposed for longer durations to a product in the commercial and clinical settings, it is unknown whether greater frequency and/or severity of adverse events are likely to occur or whether an acceptable safety and tolerability profile will continue to be demonstrated. If we or others identify unexpected side effects caused by BRIUMVI or other products or product candidates within the RMS space following introduction into the market, a number of potentially significant negative consequences could result, including:

 

 

regulatory authorities may withdraw approval or limit the approved indications for use of such products;

 

regulatory authorities may require the addition of new or different labeling statements, including warnings or boxed warnings, precautions, or contraindications that could diminish the usage of the product or otherwise limit the commercial success of the affected product;

 

we may be required to change the way such drug candidates are distributed or administered, or to conduct additional clinical trials;

 

regulatory authorities may require a Risk Evaluation and Mitigation Strategy (REMS), a plan to mitigate risks, which could include a Medication Guide, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools;

 

we may be subject to regulatory investigations and government enforcement actions;

 

we may decide to remove such drug candidates from the marketplace;

 

we may not be able to enter into collaboration agreements on acceptable terms and execute on our business model;

 

we could be sued and held liable for injury caused to individuals exposed to or taking our products; and

 

our reputation may suffer.

 

Any one or a combination of these events could prevent us from maintaining regulatory approval and achieving or maintaining market acceptance of the affected product or could substantially increase the costs and expenses of commercializing the affected product, which in turn could significantly impact our ability to successfully commercialize our drug candidates and generate revenues.

 

The incidence and prevalence for target patient populations of BRIUMVI and our product candidates, including TG-1701 and TG-1801 in B-cell disorders and azer-cel in non-oncology indications, have not been established with precision. If the market opportunities for BRIUMVI and our product candidates are smaller than we estimate or if any approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected.

 

The precise incidence and/or prevalence of RMS are unknown. Our projections for BRIUMVI in RMS are based on estimates and our current knowledge and understanding of the disease. These estimates are typically based on one-on-one and group interactions with target physicians and other sources available at the time we make the estimates, including the scientific literature, healthcare utilization databases and market research. Although we believe our estimates are reasonable, many factors may limit their accuracy. For example, the sources we use to make the estimates may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases and the number of patients may turn out to be lower than expected.

 

The total addressable market opportunity for BRIUMVI and our product candidates, if approved, ultimately depends upon, among other things, the approved prescribing information, acceptance by the medical community, patient access, and drug pricing and reimbursement. The number of patients in major markets, including the number of addressable patients in those markets, may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our drugs, new patients may become increasingly difficult to identify or gain access to, patients and physicians may choose to utilize competitive products or reimbursement may be unfavorable, all of which would adversely affect our results of operations and our business.

 

 

We face substantial competition, which may result in others commercializing drugs before or more successfully than we do resulting in the reduction or elimination of our commercial opportunity.

 

We operate in a highly competitive segment of the biotechnology and biopharmaceutical market. We face competition from numerous sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies, and private and public research institutions. Many of our competitors have significantly greater financial, product development, manufacturing and commercialization resources. Large pharmaceutical companies have extensive experience commercializing products and may have significant existing relationships with customers and more resources available to them to promote their products. Many are active in the same diseases that we are, including within the neurological and immunological fields, some in direct competition with us. We may also compete with these organizations to recruit commercial and other key personnel. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

 

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize drugs that are more effective, have fewer or less severe side effects, are more convenient or are priced or contracted differently than any drugs that we or our collaborators may develop. Our competitors also may obtain FDA or other regulatory approval for their drugs more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we or our collaborators are able to enter the market. In a competitive environment, a company’s communications may also be subject to heightened scrutiny from regulators and competitors under laws, regulations, and guidance about promotional communications (advertising and promotional labeling) and non-promotional communications (e.g., certain educational and scientific exchange), and with regard to potential competitor actions under federal law (the Lanham Act) and congruous state law, which protect businesses against the unfair competition of misleading advertising or labeling.

 

The key competitive factors affecting the success of all of our drug candidates, if approved, are likely to be their efficacy, safety, convenience, price, the level of generic or biosimilar competition and the availability of reimbursement from government and other third-party payors.

 

New developments, including the development of other pharmaceutical technologies and methods of treating disease, occur in the pharmaceutical and life sciences industries at a rapid pace. These developments may render our product or product candidates obsolete or noncompetitive. Compared to us, many of our potential competitors have substantially greater:

 

 

research and development resources, including personnel and technology;

 

regulatory experience;

 

pharmaceutical development, clinical trial and pharmaceutical commercialization experience;

 

experience and expertise in exploitation of intellectual property rights; and

 

capital resources.

 

We will also face competition from these third parties in recruiting and retaining qualified personnel, establishing clinical trial sites, patient registration for clinical trials, and in identifying and in-licensing new products and product candidates.

 

BRIUMVI, as well as any products that we are able to commercialize in the future, may become subject to unfavorable pricing regulations or third-party payor coverage and reimbursement policies, which would harm our business.

 

The regulations that govern regulatory approvals, pricing and reimbursement for new drugs vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing approval is granted. In some markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the drug candidate, possibly for lengthy time periods, and negatively impact the revenues we are able to generate from the sale of the drug candidate in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more products, even if more of our product candidates obtain marketing approval. Eligibility for reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also be insufficient to cover our costs and may not be made permanent. On April 27, 2023, we received a product-specific J-Code for BRIUMVI (J2329), which became effective July 1, 2023 and is expected to help reduce reluctance by physicians to prescribe BRIUMVI based on reimbursement concerns. However, some third-party payors may nevertheless still require documented proof that patients meet certain eligibility criteria in order to be reimbursed for BRIUMVI.

 

 

Our ability to commercialize any product successfully also will depend in part on the extent to which coverage and reimbursement for our products and related treatments will be available from government authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement and co-payment levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by restricting coverage and limiting the amount of reimbursement for particular drugs. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for drugs, examining the cost effectiveness of drugs in addition to their safety and efficacy. Third-party commercial payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Payors may restrict coverage of some products by using formularies under which only selected drugs are covered, variable co-payments that make drugs that are not preferred by the payor more expensive for patients, and utilization management controls, such as requirements for prior authorization or failure first on another type of treatment. Payors may target higher-priced drugs for imposition of these obstacles to coverage, and consequently our products may be subject to payor-driven restrictions. Additionally, in countries where patients have access to insurance, as in the U.S., insurance co-payment amounts or other benefit limits may represent a barrier to obtaining or continuing use of our products that receive regulatory approval. If we are unable to obtain or maintain coverage, or coverage is reduced in one or more countries, our product sales may be lower than anticipated and our financial condition could be harmed.

 

Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices. In the United States, for example, we must offer discounted pricing or rebates on purchases of pharmaceutical products under various federal and state healthcare programs, such as the Medicaid Drug Rebate Program, the 340B drug pricing program and the Medicare Part D Program. We must also report specific prices to government agencies under healthcare programs, such as the Medicaid Drug Rebate Program and Medicare Part B. The calculations necessary to determine the prices reported are complex and the failure to report prices accurately may expose us to penalties. 

 

If we are unable to expand our commercialization operations, we may not be successful in commercializing BRIUMVI or any product candidate, if and when such product candidates are approved, and we may not be able to generate revenue.

 

Commercialization of pharmaceutical products is an extremely complex and highly capital and resource-intensive process. Even for established companies with existing infrastructure and significantly greater resources than we have, challenges have occurred.

 

We have made and continue to make significant investments in our commercial organization and infrastructure. We built processes and systems to support the commercialization of BRIUMVI following its commercial launch on January 26, 2023. There are risks involved with establishing our own commercialization capabilities. For example, if we are unable to recruit and retain adequate numbers of effective personnel to support the ongoing commercialization of BRIUMVI, we may not be successful in marketing and selling the product.

 

Additional factors that may inhibit our efforts to commercialize BRIUMVI and our other product candidates on our own, or through partnership, and generate product revenues include:

 

 

the costs and time associated with the initial and ongoing training of commercialization personnel on the applicable disease states, products, competitors, and legal and regulatory compliance matters;

 

the inability of commercialization personnel to obtain access to physicians or to effectively promote or provide education about BRIUMVI and any future approved products;

 

the lack of complementary drugs to be offered by the Company, which may put us at a competitive disadvantage relative to companies with more extensive product lines;

 

decisions by third-party payors to deny reimbursement of or delay coverage decisions regarding BRIUMVI or following approval of any product candidates;

 

our inability to maintain a healthcare compliance program including effective mechanisms for compliance monitoring;

 

our inability to establish and maintain commercial partnerships outside the U.S.;

 

our inability, or the inability of a third party with whom we have partnered, to maintain the necessary regulatory approvals required to operate in markets outside of the U.S.; 

 

the timing of product availability for commercial sale following approval and continued product supply; and

 

unforeseen costs and expenses associated with creating a commercialization organization.

 

 

In addition, we have entered into a commercialization agreement, and may enter into additional agreements in the future, that facilitate commercialization of BRIUMVI and/or future products that receive approval in markets outside the U.S. through partnerships. On February 26, 2024, our partner commercially launched BRIUMVI in Germany, the first European market in which BRIUMVI has launched. However, there are also risks with entering into these types of arrangements with third parties to perform sales, marketing and distribution services. For example, we may not be able to enter into such arrangements on terms that are favorable to us. Our drug revenues or the profitability of these drug revenues to us are likely to be lower than if we were to market and sell any products or product candidates that we develop ourselves. In addition, we likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our product or product candidates effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our drug candidates. Further, our business, results of operations, financial condition and prospects will be materially adversely affected.

 

We believe there is potential market opportunity for BRIUMVI outside of the U.S., including in the EU. We have entered into a commercialization agreement for the sale of BRIUMVI in certain territories outside the U.S., Canada and Mexico, the commercialization rights for which had been previously retained by TG, thus excluding certain Asian countries subject to previously existing partnerships, and we also may enter into certain collaboration and/or commercialization agreements with third parties in the future to facilitate market expansion. To the extent we do expand into other markets outside of the U.S. in which we are responsible for building and maintaining a commercial infrastructure, we expect to incur significant expenses in establishing an infrastructure to commercialize our drug products. Depending on the expenses incurred, it could have a negative impact on our cash resources.

 

Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any drug candidates that we may develop.

 

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials, and an even greater risk in connection with the commercialization of BRIUMVI and any other products for which we may receive marketing authorization in the future. If we cannot successfully defend ourselves against claims that BRIUMVI or any of our product candidates caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

 

 

decreased demand for any products that we may commercialize;

 

injury to our reputation and significant negative media attention;

 

withdrawal of clinical trial participants;

 

significant costs to defend the related litigation, including the risk that any individuals who may face such related litigation may in turn seek to recover from us;

 

substantial monetary awards to trial participants or patients;

 

loss of revenue; and

 

the inability to commercialize any products or product candidates that we may develop.

 

Although we maintain product liability insurance coverage, it may not be adequate to cover all liabilities that we may incur. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

 

Any contracts that we enter into with government entities may involve future funding and compliance risks.

 

Any contracts that we enter into with government entities may involve future funding and compliance risks.  Such contracts with government entities are generally subject to risks such as lack of funding and compliance with unique requirements. For example, government contract purchase obligations are typically subject to the availability of funding, which may be eliminated or reduced. In addition, the future volume of products or services purchased by a government customer is often uncertain. Any of our government contracts might not be renewed or might be terminated for convenience with little prior notice. Contracts with government entities typically are subject to procurement laws that include socio-economic, employment practices, environmental protection, recordkeeping and accounting, and other requirements. These contractual and legal requirements could complicate our business and increase our compliance burden. The occurrence of any of these risks could harm our reputation and might have a materially adverse impact on our business operations and our financial position or results of operations.

 

 

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.

 

Biopharmaceutical drug development is a highly speculative undertaking and involves a substantial degree of risk. We commenced operations in January 2012. To date, our operations have been limited primarily to organizing and staffing our company, business planning, raising capital, developing our technology, identifying potential drug candidates, undertaking pre-clinical studies and clinical trials, commercializing UKONIQ (withdrawn from sale) and launching and commercializing BRIUMVI. We are transitioning from a company with a research and development focus and commercialization capabilities in oncology to a company capable of supporting commercial activities in neurology and immunology in the U.S. and outside the U.S. This transition involves a wide variety of risks, and we may not be successful in such transition.

 

Since inception, we have focused our efforts and financial resources on clinical trials, manufacturing of our product and product candidates and preparing to support a commercial product. To date, we have financed our operations primarily through public offerings of our common stock and debt financing. 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. Our prior losses, combined with expected future losses, have had, and will continue to have an adverse effect on our stockholders’ deficit and working capital. BRIUMVI is currently our only marketed product. We expect to continue to incur significant research and development expenses, as well as significant commercialization and outsourced-manufacturing expenses as we commercialize BRIUMVI. Because of the numerous risks and uncertainties associated with developing pharmaceuticals, we are unable to predict the extent of any future losses or 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.

 

To become and remain profitable, we must succeed in developing (or in-licensing) and commercializing our products or product candidates that generate significant revenue. It is uncertain when and if we will generate any significant revenue from the sale of our product or any product candidates, if approved, in the future. Furthermore, no assurance can be given that we will meet revenue projections or guidance with respect to BRIUMVI or our product candidates, if approved. To obtain significant and sustained revenues and meet our revenue projections or guidance, we must succeed, either alone or with others, in (i) obtaining and maintaining regulatory approval for our product and product candidates; and (ii) manufacturing and marketing our product and product candidates. Our ability to generate sustained revenue depends on a number of factors, including, but not limited to, our ability to:

 

 

successfully complete clinical trials that meet their clinical endpoints;

 

initiate and successfully complete all safety, pharmacokinetic, biodistribution, and non-clinical studies required to obtain U.S. and foreign marketing approval for our product and product candidates;

 

obtain approval from the FDA and foreign equivalents to market and sell our product and product candidates, and maintain FDA, MHRA and EMA approvals of BRIUMVI for RMS;

 

establish and maintain commercial manufacturing capabilities with third parties that are satisfactory to the regulatory authorities, cost effective, and that are capable of providing commercial supply of our product and product candidates;

 

expand on our commercialization infrastructure to commercialize BRIUMVI, and/or entering into collaborations with third parties; and

 

achieve market acceptance of BRIUMVI and any other products for which we may receive regulatory approval in the medical community and with third-party payors.

 

If we are unable to generate significant and sustained revenues, we will not become or remain profitable and we will be unable to continue our operations without continued funding.

 

 

While we do not 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.

 

The development of pharmaceuticals is capital-intensive. We are also continuing to generate additional clinical data for BRIUMVI to support and potentially expand commercial adoption, including assessing long-term tolerability in an Open-Label Extension of the Phase 3 ULTIMATE I and II trials and Phase 4 clinical studies necessary to satisfy post-approval commitments for regulatory authorities or those undertaken voluntarily by the Company to evaluate the use of BRIUMVI in alternate settings or with alternate methods of administration. Moreover, now that we have launched BRIUMVI, we will need to expend substantial resources on maintaining approvals and continuing commercialization, manufacturing and distribution over the foreseeable future. Additionally, we expect to commence a trial evaluating azer-cel in autoimmune disease in 2024. We are also currently advancing our early-stage drug candidates, TG-1701 and TG-1801 in ongoing Phase 1 studies to identify tolerable and efficacious doses.

 

The amount and timing of our future funding requirements will depend on many factors, including, but not limited to, the following:

 

 

the success of the commercialization of BRIUMVI and any other products for which we receive regulatory approval;

 

the costs and timing of clinical and commercial manufacturing supply arrangements for each product and product candidate;

 

the costs of expanding our sales, distribution, and other commercialization capabilities;

 

the costs and timing of regulatory approvals;

 

the progress of our clinical trials, including expenses to support the trials and milestone payments that may become payable under our license agreements;

 

our ability to establish and maintain strategic collaborations, including licensing and other arrangements;

 

the costs involved in enforcing or defending patent claims or other intellectual property rights; and

 

the extent to which we in-license or invest in other indications or product candidates.

 

As a result, significant additional funding may be required. Additional sources of financing to continue our operations in the future might not be available on favorable terms, if at all. If we do not succeed in raising additional funds on acceptable terms, we could be forced to discontinue product development, reduce or forego commercialization efforts that are required for successful commercialization of BRIUMVI or any of our product candidates and otherwise forego attractive business opportunities. Any additional sources of financing may involve the issuance of our equity securities, which would have a dilutive effect to stockholders. Currently, other than BRIUMVI, our products are investigational and have not been approved by the FDA or any foreign regulatory authority for sale. For the foreseeable future, we will have to fund all our operations and capital expenditures from sales of BRIUMVI, cash on hand and amounts raised in future offerings or financings. Accordingly, our prospects must be considered in light of the uncertainties, risks, expenses and difficulties frequently encountered by companies in the early stages of commercial operations and the competitive environment in which we operate.​

 

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or drug candidates and occupy valuable management time and resources.

 

Until such time, if ever, as we can generate substantial revenues, we expect to finance our cash needs through a combination of public and private equity offerings, debt financings, collaborations, strategic alliances, licensing agreements or other arrangements. We do not have any committed external source of funds, other than funds already borrowed under the loan and security agreement that we entered into with Hercules in February 2019, amended and restated in December 2021 and amended on March 31, 2023 (see Note 7 to our condensed consolidated financial statements for more information). To the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that materially adversely affect the rights of our common stockholders. We may also seek funds through collaborations, strategic alliances or licensing arrangements with third parties at a time that is not desirable to us and we may be required to relinquish valuable rights to some intellectual property, future revenue streams, research programs or products and product candidates or to grant licenses on terms that may not be favorable to us, any of which may have a material adverse effect on our business, operating results and prospects. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all, which could limit our ability to expand our business operations and could harm our overall business prospects.

 

 

Additionally, fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our drug candidates. Dislocations in the financial markets have generally made equity and debt financing more difficult to obtain and may have a material adverse effect on our ability to meet our fundraising needs. Moreover, the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline.

 

Due to limited resources, we may fail to capitalize on programs or product candidates that may present a greater commercial opportunity or for which there is a greater likelihood of success.

 

Because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or product candidates or for indications that later prove to have greater commercial potential. Our estimates regarding the potential market for a product candidate could be inaccurate, and our spending on current and future research and development programs may not yield any commercially viable products. If we do not accurately evaluate the commercial potential for a particular product candidate, we may relinquish valuable rights to that product candidate through strategic collaboration, licensing, sale or other arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. We may focus our efforts and resources on potential product candidates or other potential programs that ultimately prove to be unsuccessful. Alternatively, we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.

 

There can be no assurance that we will ever be able to identify additional therapeutic opportunities for our product candidates or to develop suitable potential product candidates through internal research programs, which could materially adversely affect our future growth and prospects. If any of the aforementioned events occur, we may be forced to abandon or delay our development efforts with respect to a particular product candidate or fail to develop a potentially successful product candidate, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

 

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.

 

In February 2019, we entered into a Loan and Security Agreement, with Hercules Capital, Inc., a Maryland corporation (Hercules), and on December 30, 2021 (the Amendment Closing Date), the Company entered into an Amended and Restated Loan and Security Agreement (the Amended Loan Agreement) with Hercules. Under the Amended Loan Agreement, Hercules increased the aggregate principal amount of the loan, available at the Company’s option, from $60.0 million to $200.0 million. On March 31, 2023 (the First Amendment Effective Date), the Company entered into a First Amendment to the Amended Loan Agreement (the First Amendment) with Hercules. An advance of $25.0 million was drawn at the First Amendment Effective Date (see Note 7 to our condensed consolidated financial statements for more information). We have the option to request additional loan advances in an aggregate principal amount of up to $60.0 million under the First Amendment.

 

All obligations under the Amended Loan Agreement, as amended, are secured by substantially all our existing property and assets, excluding intellectual property. This indebtedness may create additional financing risk for us, particularly if our business or prevailing financial market conditions are not conducive to paying off or refinancing its outstanding debt obligations at maturity. This indebtedness could also have important negative consequences, including:

 

 

we will need to repay the indebtedness by making payments of interest and principal, which will reduce the amount of money available to finance our operations, our research and development efforts and other general corporate activities; and

 

our failure to comply with the restrictive covenants in the Amended Loan Agreement, as amended, could result in an event of default that, if not cured or waived, would accelerate our obligation to repay this indebtedness, and Hercules could seek to enforce its security interest in the assets securing such indebtedness.

 

To the extent additional debt is added to our current debt levels, the risks described above could increase.

 

 

We may not have cash available in an amount sufficient to enable us to make interest or principal payments on our indebtedness when due.

 

Failure to satisfy our current and future debt obligations under the Amended Loan Agreement, as amended, or the breach of any of its covenants, subject to specified cure periods with respect to certain breaches, could result in an event of default and, as a result, Hercules could accelerate all the amounts due. In the event of an acceleration of amounts due under the Amended Loan Agreement, as amended, as a result of an event of default, we may not have enough available cash or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time of such acceleration. In that case, we may be required to delay, limit, reduce or terminate our product candidate development or commercialization efforts or grant to others rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Hercules could also exercise its rights as collateral agent to take possession and dispose of the collateral securing the term loan for its benefit, which collateral includes substantially all our property other than intellectual property. Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.

 

The Amended Loan Agreement, as amended, imposes operating and other restrictions on the Company. Such restrictions will affect, and in many respects limit or prohibit, our ability and the ability of any future subsidiary to, among other things: 

 

 

dispose of certain assets;

 

change its lines of business;

 

engage in mergers, acquisitions or consolidations;

 

incur additional indebtedness;

 

create liens on assets;

 

pay dividends and make contributions or repurchase our capital stock; and

 

engage in certain transactions with affiliates.

 

The breach of any of these restrictive covenants could have a material adverse effect on our business and prospects.

 

Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.

 

On March 10, 2023, the Federal Deposit Insurance Corporation (FDIC) announced that Silicon Valley Bank had been closed by the California Department of Financial Protection and Innovation, and on March 12, 2023, Signature Bank was closed by the New York State Department of Financial Services, and the FDIC was named receiver. Although we did not maintain any bank accounts with Silicon Valley Bank or Signature Bank, we regularly maintain cash balances at third-party financial institutions in excess of the FDIC insurance limit. Any failure of a depository institution to return any of our deposits, or any other adverse conditions in the financial or credit markets affecting depository institutions, could impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance.

 

 

Risks Related to Drug Development and Regulatory Approval

 

If we are unable to obtain and maintain regulatory approval for our product and product candidates and ultimately cannot successfully commercialize our product or product candidates, or experience significant delays in doing so, our business will be materially harmed.

 

Our ability to generate revenues from product sales will depend largely on the successful commercialization of BRIUMVI. Each of our product candidates will require additional non-clinical or clinical development, regulatory approval, and sufficient clinical and commercial supply. The success of our development programs and achievement of regulatory approval of our product candidates will depend on several factors, including, among others, the following:

 

 

successful completion of our clinical programs with positive results that support a finding of effectiveness and an acceptable safety profile of our product candidates in the intended populations within the timeframes we have projected;

 

Investigational New Drugs (INDs) and clinical trial applications (CTAs), being cleared/approved such that our product candidates can commence clinical trials;

 

successful initiation and completion of preclinical studies and successful initiation of, enrollment in, and completion of clinical trials;

 

sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;

 

receipt of regulatory approvals from applicable regulatory authorities for our product candidates;

 

establishing commercially viable arrangements with third-party manufacturers for clinical supply and commercial manufacturing; and

 

obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates.

 

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays in our clinical programs and regulatory submission timelines and may not be able to obtain regulatory approval for our product candidates.

 

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 or receive regulatory approval. 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 negatively impacted, as more patient data or additional endpoints (including efficacy and safety) are analyzed.

 

Pharmaceutical development has inherent risks. The outcome of preclinical development testing and early clinical trials may not be predictive of the outcome of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval. Once a product candidate has displayed sufficient preclinical data to warrant clinical investigation, we will be required to demonstrate, through adequate and well-controlled clinical trials, that our product candidates are effective with a favorable benefit-risk profile for use in populations for their target indications before we can seek regulatory approvals for their commercial sale. Many drug candidates fail in the early stages of clinical development for safety and tolerability issues or for insufficient clinical activity, despite promising pre-clinical results. Accordingly, no assurance can be made that a safe and efficacious dose can be found for these compounds or that they will ever enter into advanced clinical trials alone or in combination with other product candidates. Moreover, success in early clinical trials does not mean that later clinical trials will be successful because product candidates in later-stage clinical trials may fail to demonstrate sufficient safety or efficacy despite having progressed through initial clinical testing. Companies frequently experience significant setbacks in advanced clinical trials, even after earlier clinical trials have shown promising results. There is an extremely high rate of failure of pharmaceutical candidates proceeding through clinical trials. 

 

Individually reported outcomes of patients treated in clinical trials may not be representative of the entire population of treated patients in such studies. In addition, larger scale Phase 3 studies, which are often conducted internationally, are inherently subject to increased operational risks compared to earlier stage studies, including the risk that the results could vary on a region to region or country to country basis, which could materially adversely affect the outcome of the study or the opinion of the validity of the study results by applicable regulatory agencies. ​

 

 

From time to time, we may publicly disclose top-line or preliminary data from our clinical trials, which is based on a preliminary analysis of available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of such data, and we may not have received or had the opportunity to fully and carefully evaluate all data from the particular study or trial, including all endpoints and safety data. As a result, top-line or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results once additional data have been received and fully evaluated. Top-line or preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the topline, interim, or preliminary data we previously published. When providing top-line results, we may disclose the primary endpoint of a study before all secondary endpoints have been fully analyzed. A positive primary endpoint does not translate to all, or any, secondary endpoints being met. As a result, top-line and preliminary data should be viewed with caution until the final data are available, including data from the full safety analysis and the final analysis of all endpoints.

 

Further, from time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. For example, time-to-event based endpoints such as duration of response (DOR) and progression-free survival (PFS), and continuously observed data such as annualized relapse rate (ARR) have the potential to change with longer follow-up. In addition, as patients continue on therapy, there can be no assurance given that the final safety data from studies, once fully analyzed, will be consistent with prior safety data presented, will be differentiated from other similar agents in the same class, will support continued development, or will be favorable enough to support regulatory approvals for the indications studied. Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. The information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and regulators or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure. If the interim, top-line or preliminary data that we report differ from final results, or if others, including regulatory authorities, disagree with the conclusions we have reached, our ability to obtain approval for, or successfully commercialize, our product or product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

 

Many of the results reported in our early clinical trials rely on local investigator-assessed efficacy outcomes which may be subject to greater variability or subjectivity than results assessed in a blinded, independent, centrally reviewed manner, often required of later phase, adequate and well-controlled registration-directe