The following discussion and analysis contain 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. Additionally, many of these risks and uncertainties are currently elevated by and may or will continue to be elevated by the COVID-19 pandemic. 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, 2021.





OVERVIEW

TG Therapeutics is a biopharmaceutical company focused on the acquisition, development and commercialization of novel treatments for B-cell malignancies and autoimmune diseases. In addition to a research pipeline including several investigational medicines, TG has completed a Phase 3 program for ublituximab, an investigational glycoengineered monoclonal antibody that targets a unique epitope on CD20-expressing B-cells, to treat patients with relapsing forms of multiple sclerosis (RMS). We also actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities.

RECENT UPDATES

UNITY-CLL Phase 3 Trial & Withdrawal of the BLA/sNDA Submission for U2 to Treat Patients with CLL/SLL and Withdrawal of UKONIQ from Sale

UNITY-CLL, a global, Phase 3, randomized, controlled clinical trial, compared the combination of ublituximab and UKONIQ® (umbralisib) (combination referred to as U2), to an active control arm of obinutuzumab plus chlorambucil in patients with both treatment-naïve and relapsed or refractory chronic lymphocytic leukemia (CLL). The trial met its primary endpoint, with U2 significantly prolonging independent review committee (IRC) assessed progression-free survival (PFS) versus. the control arm. The UNITY-CLL Phase 3 trial was conducted under a Special Protocol Assessment (SPA) agreement with the U.S. Food and Drug Administration (FDA). Based on the results of the UNITY-CLL trial, a Biologics License Application (BLA) and supplemental New Drug Application (sNDA) were submitted to the FDA for U2 to treat patients with CLL/small lymphocytic lymphoma (SLL).

In November 2021, the FDA notified the Company that it planned to host an Oncologic Drug Advisory Committee (ODAC) meeting in connection with its review of the pending BLA/sNDA and to discuss the benefit risk of UKONIQ in its approved indications. While the FDA identified a number of concerns, the FDA's desire to host an ODAC appeared to stem from an early ad hoc analysis of overall survival (OS) from the UNITY-CLL trial.

In this first analysis of OS using a cut-off date of September 2021, there was an imbalance in favor of the control arm (HR: 1.23). However, based on the ad hoc nature of the analysis, approximately 15% of patients had missing or outdated survival data. Further, when excluding deaths related to COVID-19, the two arms were approximately balanced (HR: 1.04). In February 2022, the Company submitted updated OS data with the same September 2021 cut-off date, but with reduced missing data and additional OS events, which showed an improvement from the previously reported OS data. Neither the original preliminary OS results nor the updated preliminary OS results were statistically significant.



                                       20

Table of Contents

On April 15, 2022, we announced that pursuant to a recent information request made by the FDA, updated OS data were collected that showed an increasing imbalance in favor of the control arm, differing from the improved results provided to the FDA in February 2022. Based on these new data, the Company decided to withdraw the pending BLA/sNDA for U2 to treat CLL/SLL and accordingly the April 22, 2022 ODAC meeting was canceled.

We also announced the voluntary withdrawal of UKONIQ from sale for the approved indications of adult patients with relapsed or refractory marginal zone lymphoma (MZL) who have received at least one prior anti-CD20 based regimen and for the treatment of adult patients with relapsed or refractory follicular lymphoma (FL) who have received at least three prior lines of systemic therapy. UKONIQ was granted accelerated approval in these indications in February 2021. Our decision to withdraw UKONIQ from sale was primarily based on the withdrawal of the BLA and sNDA for U2 in CLL.

OUR PRODUCTS UNDER DEVELOPMENT

We have leveraged our B-cell platform to develop a drug pipeline of small molecule kinase inhibitors and intravenously delivered immunotherapies that leverage the patients' own immune system. In connection with the withdrawal of the BLA/sNDA for U2 to treat patients with CLL/SLL and the withdrawal of UKONIQ from sale in its approved indications of relapsed/refractory MZL and FL, we are re-evaluating the clinical development of umbralisib +/- ublituximab and combinations including those medicines in oncology indications and have paused or closed a number of trials related to these indications. The following table summarizes our current focus for the Company's clinical stage pipeline:

Clinical Drug Candidate: Initial Target Disease Stage of Development (molecular target)

                                      (trial name)

Ublituximab (anti-CD20 mAb) Relapsing Forms of Phase 3 trials (ULTIMATE


                             Multiple Sclerosis (RMS)   I and II)
Cosibelimab/TG-1501          B-cell cancers             Phase 1 trial
(anti-PDL1 mAb)
TG-1701 (BTK inhibitor)      B-cell cancers             Phase 1 trial
TG-1801 (anti-CD47/CD19      B-cell cancers             Phase 1 trial
bispecific mAb)

Current Phase 3 ULTIMATE Program in Relapsing Forms of Multiple Sclerosis:

ULTIMATE I and ULTIMATE II are two independent Phase 3 trials. Each trial is a 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 SPA with the FDA. The ULTIMATE I and II trials were led by Lawrence Steinman, MD, Zimmermann Professor of Neurology & Neurological Sciences, and Pediatrics at Stanford University. Full enrollment was completed in October 2018, with approximately 1,100 subjects enrolled in both studies combined.

In April 2021, data from the ULTIMATE I and II trials were presented at the

American Academy of Neurology Annual meeting. Both studies met their primary

? endpoint with ublituximab treatment demonstrating a statistically significant

reduction in annualized relapse rate (ARR) over a 96-week period (p<0.005 in

each trial). Key secondary MRI endpoints were also met. Additional data from

these trials have been presented at various other medical meetings.

On December 14, 2021, we announced that the FDA accepted a BLA for ublituximab

as a treatment for patients with RMS. The FDA set a Prescription Drug User Fee

? Act (PDUFA) goal date of September 28, 2022 and notified the Company that it is

not currently planning to hold an advisory committee meeting to discuss this


   application.


                                       21

  Table of Contents

RESULTS OF OPERATIONS

Comparison of the Quarters Ended March 31, 2022 and 2021



The following table summarizes the results of operations for the quarters ended
March 31, 2022 and 2021:

                                            Three Months Ended
                                                March 31,
(in thousands)                               2022        2021
Product revenue, net                      $    1,978  $      755
License Revenue                                   38          38
Total Revenue                             $    2,016  $      793

Costs and expenses:
Cost of product revenue                          237         139
Research and development:
Noncash compensation                           1,895       7,511
Other research and development                46,147      55,583
Total research and development                48,042      63,094

Selling, General and administrative:
Noncash compensation                             226       9,107

Other selling, general and administrative 20,383 17,655 Total selling, general and administrative 20,609 26,762



Total costs and expenses                      68,888      89,995

Interest expense                               2,664       1,898
Other income                                   (523)       (472)
Total other expense, net                       2,141       1,426

Net Loss                                  $ (69,013)  $ (90,628)

Product revenue, net. Product revenue, net for the three months ended March 31, 2022 was $2.0 million compared to $0.8 million for the three months ended March 31, 2021. Product revenue, net consisted of net product sales of UKONIQ in the United States. In February 2021, we began commercial sales of UKONIQ within the U.S. following FDA approval. The $1.2 million increase was primarily driven by an increase in product shipments for UKONIQ as a result of greater market penetration. The increase in product shipments is partially offset by the recording of an additional allowance for sales returns in the first quarter of 2022 due to the anticipated increase in returns resulting from the voluntary withdrawal of UKONIQ from the U.S. market announced on April 15, 2022. Any product sales subsequent to the voluntary withdrawal are limited to existing patients that elect to remain on treatment and no shipments for new prescriptions are allowed. Therefore, it is expected product revenue, net will decline significantly throughout 2022 as a result of the voluntary market withdrawal of UKONIQ.

License revenue. License revenue was less than $0.1 million for both the three months ended March 31, 2022 and March 31, 2021. License revenue for both the three months ended March 31, 2022 and March 31, 2021 is comprised of recognition of a portion of the upfront payment from the ublituximab sublicense agreement with Ildong.

Cost of Product Revenue. Cost of product revenue for the three months ended March 31, 2022 was $0.2 million compared to $0.1 million for the three months ended March 31, 2021. The $0.1 million increase was primarily driven by an increase in the volume of UKONIQ sold, corresponding increases in royalties and other costs during the three month period ended March 31, 2022 as compared to the three month period ended March 31, 2021. Cost of product revenue consists primarily of freight and royalties on net sales of UKONIQ owed to our licensing partner. Based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, the manufacturing costs of



                                       22

Table of Contents

UKONIQ units recognized as revenue during the three months ended March 31, 2022

and March 31, 2021 were expensed as research and development expenses prior to receipt of FDA approval on February 5, 2021, and therefore are not included in costs of product revenue during this period. We expect the cost of product revenue to remain low, as we sell through certain inventory that was expensed prior to FDA approval of UKONIQ in February 2021 and the anticipated decline in product sales resulting from the voluntary market withdrawal of UKONIQ.

Noncash Compensation Expense (Research and Development). Noncash compensation expense (research and development) related to equity incentive grants totaled $1.9 million for the three months ended March 31, 2022, as compared to $7.5 million during the comparable period ended March 31, 2021. The decrease in noncash compensation expense was primarily due to forfeitures of restricted stock as a result of a decrease in headcount during the three months ended March 31, 2022.

Other Research and Development Expense. Other research and development expense decreased for the three months ended March 31, 2022 by approximately $9.4 million to $46.1 million as compared to the comparable period ended March 31, 2021. The decrease in research and development expense is primarily attributable to a decrease in license milestones of $14.0 million, and an $8.6 million decrease in clinical trial expense, partially offset by an increase in manufacturing expense of $16.4 million. The increase in manufacturing expense was primarily due to a one time charge to expense advanced payments related to clinical and commercial batches of UKONIQ as a result of the voluntary withdrawal from the market.

Noncash Compensation Expense (Selling, General and Administrative). Noncash compensation expense (selling, general and administrative) related to equity incentive grants totaled $0.2 million for the three months ended March 31, 2022, as compared to $9.1 million during the comparable period ended March 31, 2021. The decrease in noncash compensation expense was primarily related to forfeitures of stock as a result of a decrease in headcount during the three months ended March 31, 2022.

Other Selling, General and Administrative. Other selling, general and administrative expenses increased for the three months ended March 31, 2022 by approximately $2.7 million to $20.4 million as compared to the comparable period ended March 31, 2021. The increase was due primarily to increased other selling, general and administrative costs associated with the marketing of UKONIQ and planning for the potential launch of ublituximab in RMS.

Interest Expense. Interest expense increased by $0.8 million to $2.7 million for the three months ended March 31, 2022, as compared to $1.9 million for the three months ended March 31, 2021. The increase is mainly due to greater interest expense related to the Amended Loan Agreement entered into in December 2021.

Other Income. Other income increased by less than $0.1 million to $0.5 million for the three months ended March 31, 2022. The increase is mainly due to a decrease in the fair value of notes payable during the three months ended March 31, 2022.

LIQUIDITY AND CAPITAL RESOURCES

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



                                       23

  Table of Contents

As of March 31, 2022, we had $280.7 million in cash and cash equivalents, and investment securities. We anticipate that our cash and cash equivalents, and investment securities as of March 31, 2022 will provide sufficient liquidity for more than a twelve-month period from the date of filing this Quarterly Report on Form 10-Q. The actual amount of cash that we will need to operate is subject to many factors, including, but not limited to, the costs and timing of clinical and commercial manufacturing supply arrangements for each product and product candidate, and the costs of expanding our sales, distribution and other commercialization capabilities. We are dependent upon significant future financing to provide the cash necessary to execute our long-term operations.

Discussion of Cash Flows



The following table summarizes our cash flows for the three months ended March
31, 2022 and 2021:

                                        Three Months Ended
                                            March 31,
(in thousands)                           2022        2021

Net cash used in operating activities $ (68,689) $ (81,355) Net cash used in investing activities $ (43,671) $ (514) Net cash used in financing activities $ (850) $ (55)

Cash used in operating activities for the three months ended March 31, 2022 was $68.7 million as compared to $81.4 million for the three months ended March 31, 2021. The decrease in net cash used in operating activities was due primarily to greater expenditures associated with our license milestone agreements and clinical trial expense during the three months ended March 31, 2021.

Net cash used in investing activities for the three months ended March 31, 2022, was $43.7 million as compared to cash used in investing activities of $0.5 million for the three months ended March 31, 2021. The increase in net cash used in investing activities was primarily due to greater investment in short-term and long-term securities during the three months ended March 31, 2022.

Net cash used in financing activities for the three months ended March 31, 2022, was $0.9 million as compared to net cash used in financing activities of $0.1 million for the three months ended March 31, 2021. The increase in net cash used in financing activities was primarily due to the one time payment of the End of Term Charge (as defined in the Loan Agreement) related to our Term Loan during the three months ended March 31, 2022.

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 2021 Annual Report on Form 10-K. 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 Recognition", "Note 4 - Fair Value Measurements" and "Note 5 - Stockholders' Equity" respectively, for more information.



                                       24

Table of Contents

© Edgar Online, source Glimpses