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TG THERAPEUTICS, INC.

(TGTX)
  Report
Delayed Nasdaq  -  04:00 2022-09-23 pm EDT
5.740 USD   -5.75%
09/12TG Therapeutics to Participate in the H.C. Wainwright 24th Annual Global Investment Conference
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09/09TG Therapeutics to Participate in the H.C. Wainwright 24th Annual Global Investment Conference
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08/25TG Therapeutics Announces Results from the ULTIMATE I & II Phase 3 Trials of Investigational Ublituximab in RMS Published in The New England Journal of Medicine
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TG THERAPEUTICS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

08/09/2022 | 04:04pm EDT

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 diseases. In addition to a research pipeline including several investigational medicines, TG has completed a Phase 3 program for ublituximab, an investigational glycoengineered monoclonal antibody, to treat patients with relapsing forms of multiple sclerosis (RMS). We also actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities.

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, and based on those results, a Biologics License Application (BLA) and supplemental New Drug Application (sNDA) were submitted to the U.S. Food and Drug Administration (FDA) for U2 to treat patients with CLL/small lymphocytic lymphoma (SLL).

As previously disclosed, on April 15, 2022, we announced that pursuant to an information request made by the FDA, updated overall survival 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, we decided to withdraw the pending BLA/sNDA for U2 to treat CLL/SLL. We also announced the voluntary withdrawal of UKONIQ from sale for its approved indications. Our decision to withdraw UKONIQ from sale was primarily based on the withdrawal of the BLA and sNDA for U2 in CLL.

For more information, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.


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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 April 2022 withdrawal of the Biologics License Application (BLA) and supplemental New Drug Application (sNDA) for U2 (a combination therapy of ublituximab and umbralisib) to treat patients with chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL) and the withdrawal of UKONIQ (umbralisib) from sale in its approved indications of relapsed/refractory marginal zone lymphoma (MZL) and follicular lymphoma (FL), we are re-evaluating all our current oncology studies and products under development for oncology indications, including umbralisib +/- ublituximab and have paused or closed a number of trials and programs related to these indications. The following table summarizes our current 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 special protocol assessment (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 and notified the Company that it is not

currently planning to hold an advisory committee meeting to discuss this

application.

On May 31, 2022, we announced that the FDA extended the Prescription Drug User

Fee Act (PDUFA) goal date to December 28, 2022 for the BLA for ublituximab as a

? treatment for patients with RMS, to allow time to review a submission provided

by the Company in response to an FDA information request and which the FDA

deemed a major amendment.


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RESULTS OF OPERATIONS

The following table summarizes the results of operations for the three months ended June 30, 2022 and 2021:

                                            Three Months Ended
                                                 June 30,
(in thousands)                               2022        2021
Product revenue, net                      $      556  $    1,507
License Revenue                                   38          38
Total Revenue                             $      594  $    1,545

Costs and expenses:
Cost of product revenue                           23         148
Research and development:
Noncash compensation                           2,328       7,016
Other research and development                24,546      37,855
Total research and development                26,874      44,871

General and administrative:
Noncash compensation                         (3,304)       9,288

Other selling, general and administrative 15,942 24,729 Total general and administrative

              12,638      34,017

Total costs and expenses                      39,535      79,036

Interest expense                               3,017       1,623
Other income                                 (1,448)       (618)
Total other expense, net                       1,569       1,005

Net Loss                                  $ (40,510)  $ (78,497)

Product revenue, net. Product revenue, net for the three months ended June 30, 2022 was $0.6 million compared to $1.5 million for the three months ended June 30, 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. Effective May 31, 2022, UKONIQ was officially withdrawn from the market, therefore, subsequent to May 31, 2022, there will be no product revenue, net related to UKONIQ. There may be immaterial amounts of product revenue, net recorded in subsequent quarters due to gross-to-net sales adjustments as the currently outstanding related accrued liabilities are settled.

License revenue. License revenue was less than $0.1 million for both the three months ended June 30, 2022 and June 30, 2021. License revenue for both the three months ended June 30, 2022 and June 30, 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 June 30, 2022 was approximately $23,000 compared to approximately $0.2 million for the three months ended June 30, 2021. Due to the stoppage of product sales resulting from the market withdrawal of UKONIQ, subsequent to the quarter ended June 30, 2022, we expect the cost of product revenue to be immaterial.

Noncash Compensation Expense (Research and Development). Noncash compensation expense (research and development) related to equity incentive grants totaled $2.3 million for the three months ended June 30, 2022, as compared to $7.0 million during the comparable period ended June 30, 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 June 30, 2022.


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Other Research and Development Expense. Other research and development expense decreased for the three months ended June 30, 2022 by approximately $13.3 million to $24.5 million as compared to the comparable period ended June 30, 2021. The decrease in research and development expense is primarily attributable to a decrease in license milestones of $4.0 million, a $4.3 million decrease in clinical trial expense, and an approximately $3.8 million decrease in personnel costs as a result of a decrease in headcount during the three months ended June 30, 2022.

Noncash Compensation Expense (Selling, General and Administrative). Noncash compensation expense (selling, general and administrative) related to equity incentive grants totaled $(3.3) million for the three months ended June 30, 2022, as compared to $9.3 million during the comparable period ended June 30, 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 June 30, 2022.

Other Selling, General and Administrative. Other selling, general and administrative expenses decreased for the three months ended June 30, 2022 by approximately $8.8 million to $15.9 million as compared to the comparable period ended June 30, 2021. The decrease was due primarily to decreased other selling, general and administrative costs associated with the marketing of UKONIQ during the period ended June 30, 2022, as well as decreased headcount over that period.

Interest Expense. Interest expense increased by $1.4 million to $3.0 million for the three months ended June 30, 2022, as compared to $1.6 million for the three months ended June 30, 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 $0.8 million to $1.4 million for the three months ended June 30, 2022. The increase is mainly due to a research & development tax credit refund received by our Australian subsidiary during the three months ended June 30, 2022.


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The following table summarizes the results of operations for the six months ended June 30, 2022 and 2021:

                                              Six Months Ended
                                                  June 30,
(in thousands)                               2022         2021
Product revenue, net                      $     2,534  $     2,262
License Revenue                                    76           76
Total Revenue                             $     2,610  $     2,338

Costs and expenses:
Cost of product revenue                           260          288
Research and development:
Noncash compensation                            4,223       14,527
Other research and development                 70,693       93,438
Total research and development                 74,916      107,965

Selling, General and administrative:
Noncash compensation                          (3,077)       18,395

Other selling, general and administrative 36,324 42,384 Total selling, general and administrative 33,247 60,779

Total costs and expenses                      108,423      169,032

Interest expense                                5,681        3,521
Other income                                  (1,971)      (1,090)
Total other expense, net                        3,710        2,431

Net Loss                                  $ (109,523)  $ (169,125)

Product revenue, net. Product revenue, net for the six months ended June 30, 2022 was $2.5 million compared to $2.3 million for the six months ended June 30, 2021. Subsequent to May 31, 2022 there will be no product revenue, net recorded related to new product sales of UKONIQ. There may be immaterial amounts of product revenue, net recorded in subsequent quarters due to gross-to-net sales adjustments as the currently outstanding related accrued liabilities are settled.

License revenue. License revenue was less than $0.1 million for both the six months ended June 30, 2022 and June 30, 2021. License revenue for both the six months ended June 30, 2022 and June 30, 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 both the six month periods ended June 30, 2022 and June 30, 2021 was $0.3 million. Cost of product revenue consists primarily of freight and royalties on net sales of UKONIQ owed to our licensing partner. Subsequent to the quarter ended June 30, 2022, we expect the cost of product revenue to be immaterial due to the stoppage of product sales resulting from the market withdrawal of UKONIQ.

Noncash Compensation Expense (Research and Development). Noncash compensation expense (research and development) related to equity incentive grants totaled $4.2 million for the six months ended June 30, 2022, as compared to $14.5 million during the comparable period ended June 30, 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 six months ended June 30, 2022.


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Other Research and Development Expense. Other research and development expense decreased for the six months ended June 30, 2022 by approximately $22.7 million to $70.7 million as compared to the comparable period ended June 30, 2021. The decrease in research and development expense is primarily attributable to a decrease in license milestones of $18.0 million, and a $12.9 million decrease in clinical trial expense, partially offset by an increase in manufacturing expense of $15.3 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 $(3.1) million for the six months ended June 30, 2022, as compared to $18.4 million during the comparable period ended June 30, 2021. The decrease in noncash compensation expense was primarily related to forfeitures of stock as a result of a decrease in headcount during the six months ended June 30, 2022.

Other Selling, General and Administrative. Other selling, general and administrative expenses decreased for the six months ended June 30, 2022 by approximately $6.1 million to $36.3 million as compared to the comparable period ended June 30, 2021. The decrease was due primarily to decreased other selling, general and administrative costs associated with the marketing of UKONIQ during the period ended June 30, 2022, as well as decreased headcount over that same period.

Interest Expense. Interest expense increased by $2.2 million to $5.7 million for the six months ended June 30, 2022, as compared to $3.5 million for the six months ended June 30, 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 $0.9 million to $2.0 million for the six months ended June 30, 2022. The increase is mainly due to a research & development tax credit refund received by our Australian subsidiary during the six months ended June 30, 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 (umbralisib) from sale, we have no marketed products currently. We expect to continue to incur significant research and development expenses and we expect to continue to incur significant commercialization and outsourced-manufacturing expenses as we plan for the possible commercialization of ublituximab in RMS.

We evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year beyond the filing of this Quarterly Report on Form 10-Q.

As of June 30, 2022, we had $231.8 million in cash and cash equivalents and investment securities. Based on our available cash resources and cash flow projections as of the date the consolidated financial statements were available for issuance, we believe that our cash and cash equivalents, and investment securities as of June 30, 2022 will provide sufficient liquidity for more than a twelve-month period from the date of filing of this Quarterly Report on Form 10-Q.


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

Discussion of Cash Flows


The following table summarizes our cash flows for the six months ended June 30,
2022 and 2021:

                                          Six Months Ended
                                              June 30,
(in thousands)                           2022         2021

Net cash used in operating activities $ (117,805) $ (141,524) Net cash used in investing activities $ (33,292) $ (2,989) Net cash used in financing activities $ (715) $ (7,217)

Cash used in operating activities for the six months ended June 30, 2022 was $117.8 million as compared to $141.5 million for the six months ended June 30, 2021. The decrease in net cash used in operating activities was due primarily to greater expenditures associated with our license milestone payments and clinical trial expense during the six months ended June 30, 2021.

Net cash used in investing activities for the six months ended June 30, 2022, was $33.3 million as compared to cash used in investing activities of $3.0 million for the six months ended June 30, 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 six months ended June 30, 2022.

Net cash used in financing activities for the six months ended June 30, 2022, was $0.7 million as compared to net cash used in financing activities of $7.2 million for the six months ended June 30, 2021. The decrease in net cash used in financing activities was primarily due to the principal payments on our loan payable made during the six months ended June 30, 2021. Under the Amended Loan Agreement, the only amount paid during the six months ended June 30, 2022 was a $1.0 million end of term fee.


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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.


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Financials (USD)
Sales 2022 12,3 M - -
Net income 2022 -199 M - -
Net cash 2022 4,32 M - -
P/E ratio 2022 -3,88x
Yield 2022 -
Capitalization 776 M 776 M -
EV / Sales 2022 62,6x
EV / Sales 2023 8,72x
Nbr of Employees 173
Free-Float 91,7%
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Michael Sean Weiss Chairman, President & Chief Executive Officer
Sean A. Power Chief Financial Officer, Secretary & Treasurer
Owen A. O'Connor Chief Scientific Officer
Laurence N. Charney Lead Independent Director
Yann Echelard Independent Director
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