TG Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The filing was submitted May 10, 2022. Financial amounts below are in U.S. dollars; millions are used unless otherwise stated.
Business context and material developments
TG Therapeutics is a biopharmaceutical company focused on B-cell malignancies and autoimmune diseases. Its lead program was ublituximab for relapsing forms of multiple sclerosis (RMS); it also had early-stage oncology candidates. UKONIQ (umbralisib) generated the company’s product revenue in Q1.
After quarter-end, on April 15, 2022, the company announced it would withdraw the pending U2 (ublituximab plus UKONIQ) applications for CLL/SLL and voluntarily withdraw UKONIQ from sale in its approved indications. The decision followed updated overall-survival data from UNITY-CLL showing an increasing imbalance favoring the control arm. The company said the data were not statistically significant; the FDA had imposed a partial clinical hold on certain UKONIQ/ublituximab oncology trials in January. The company was reassessing oncology development and had paused or closed some related trials.
The FDA had accepted the ublituximab BLA for RMS, with a PDUFA goal date of September 28, 2022. The company reported that ULTIMATE I and II met their primary endpoint, annualized relapse rate, and key secondary MRI endpoints.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 | Change / context |
|---|---|---|---|
| Total revenue | $2.016 million | $0.793 million | Up $1.223 million; product revenue was UKONIQ sales. |
| Net product revenue | $1.978 million | $0.755 million | Higher shipments and market penetration; Q1 2022 included increased expected returns related to the subsequent withdrawal. |
| Research and development | $48.042 million | $63.094 million | Down $15.052 million; lower license milestones and clinical-trial expense were partly offset by higher manufacturing expense. |
| Selling, general and administrative | $20.609 million | $26.762 million | Down $6.153 million, chiefly lower noncash compensation; other SG&A increased. |
| Operating loss | $(66.872) million | $(89.202) million | Loss narrowed. |
| Net loss | $(69.013) million | $(90.628) million | Loss narrowed; basic and diluted loss per share was $(0.51), versus $(0.69). |
| Net cash used in operating activities | $(68.689) million | $(81.355) million | Lower use was attributed mainly to reduced license-milestone and clinical-trial expenditures. |
Product costs were $0.237 million versus $0.139 million. The filing notes that manufacturing costs for UKONIQ units sold had largely been expensed as R&D before approval, so product cost in this period is not a complete measure of product economics. It does not present a standalone gross-margin measure.
At March 31, 2022, cash and cash equivalents were $185.676 million and investment securities were $94.997 million, for a combined $280.673 million. Restricted cash was an additional $1.265 million. Total assets were $303.028 million; current assets were $242.216 million and current liabilities were $54.656 million. Accumulated deficit was $1.398 billion.
Loan principal was $70.0 million; its balance-sheet carrying amount, net of unamortized issuance costs and including the end-of-term fee, was $67.249 million. Interest expense was $2.664 million, up from $1.898 million. The Hercules facility permits total advances up to $200 million, subject to contractual conditions. It matures January 1, 2026, with interest-only payments through February 1, 2025, potentially extendable to August 1, 2025 if milestones are met. The company repaid $0.975 million of loan payable in Q1.
Cash, cash equivalents and restricted cash decreased by $113.210 million to $186.941 million. Investing cash outflow was $43.671 million, primarily reflecting purchases of investment securities. Management stated that cash and investment securities at March 31 were expected to fund operations for more than twelve months from the filing date, while also noting that significant future financing would be needed for long-term operations.
Outlook, commentary and principal risks
- The company expected UKONIQ revenue to decline significantly during 2022 following withdrawal; sales after withdrawal were limited to existing patients continuing treatment. It had no marketed products after the withdrawal.
- Management expected continued operating losses and significant R&D, commercialization, and outsourced-manufacturing costs. The filing provides no numerical revenue or earnings guidance.
- Key uncertainties include the FDA’s RMS review, possible commercial launch costs and acceptance, manufacturing scale-up and supply, and the company’s ability to obtain additional financing. Future loan covenants and minimum-cash requirements may constrain liquidity.
- Clinical and commercial execution risks include the ongoing partial oncology clinical hold, the UNITY-CLL survival imbalance, the potential impact of updated FDA views on PI3K inhibitors, and uncertainty about the future of the oncology pipeline.
- The company cited potential disruption to clinical trials and supply from COVID-19 and the Russia-Ukraine conflict. It reported that the conflict had disrupted some trial-site activity and drug supply, but said its full impact remained uncertain.
- Stock-based compensation fell substantially year over year, partly due to forfeitures associated with reduced headcount. The company reported streamlining efforts across oncology R&D and commercialization functions.
- No material pending legal proceedings were reported. Management concluded disclosure controls were effective as of March 31, 2022; no material change in internal control over financial reporting was reported for the quarter.
Investor verification points
- Track the FDA’s review and decision on the ublituximab RMS BLA, including any changes to the stated September 28, 2022 goal date.
- Review subsequent UNITY-CLL survival updates, the status of the partial clinical hold, and the company’s decisions on UKONIQ and oncology-program development.
- Monitor cash burn, available cash and securities, financing needs, and compliance with Hercules facility covenants and minimum-cash requirements.
- Assess how UKONIQ withdrawal affects returns, remaining revenue, inventory and manufacturing charges, and confirm the timing and extent of any further revenue decline.
- Evaluate whether ublituximab manufacturing scale-up, supply arrangements, and commercial preparations remain on schedule and within the company’s funding capacity.