TG Therapeutics, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual filing; standalone fourth-quarter results are not clearly provided. The filing was signed March 1, 2021. TG Therapeutics is a commercial-stage biopharmaceutical company developing treatments for B-cell malignancies and autoimmune diseases.
Business context and developments
- UKONIQ (umbralisib) received FDA accelerated approval on February 5, 2021, after year-end, for certain adults with relapsed or refractory marginal zone lymphoma and follicular lymphoma. The filing reports no UKONIQ product-sales revenue in 2020; U.S. commercialization began in February 2021.
- The company’s main late-stage programs are U2 (ublituximab plus umbralisib) for chronic lymphocytic leukemia (CLL) and ublituximab for relapsing multiple sclerosis (RMS). The pipeline also includes cosibelimab, TG-1701 and TG-1801.
Financial performance and liquidity
| Metric | FY2020 / Dec. 31, 2020 | Comparison |
|---|---|---|
| Revenue | $0.152 million, entirely license revenue | $0.152 million in 2019; no meaningful product-sales revenue in either year |
| Research and development expense | $165.9 million | $154.2 million in 2019 |
| General and administrative expense | $107.9 million | $15.0 million in 2019 |
| Operating loss | $273.6 million | $169.1 million in 2019 |
| Net loss | $279.4 million; $2.42 per diluted share | $172.9 million; $1.96 per diluted share in 2019 |
| Operating cash used | $214.5 million | $132.8 million in 2019 |
| Cash, equivalents and short-term investments | $605.4 million | $140.4 million at year-end 2019 |
| Total assets / liabilities / equity | $625.6 million / $106.3 million / $519.4 million | Equity was $38.6 million at year-end 2019 |
| Debt | $30.0 million principal under Hercules loan; $29.9 million carrying value before current/noncurrent presentation | $30.0 million principal at year-end 2019 |
Current assets were $611.7 million and current liabilities $87.6 million, implying working capital of approximately $524.2 million. The company reported no product gross margin; margins are not meaningful given minimal license revenue and operating losses.
- Net cash provided by financing activities was $679.8 million in 2020, primarily from common-stock sales, including public offerings and at-the-market programs. Shares issued and outstanding rose to 140.6 million from 109.4 million at year-end 2019.
- Research and development expense excluding noncash compensation was $151.9 million versus $148.4 million in 2019. Ublituximab program expense declined to $72.4 million from $93.3 million, while umbralisib expense increased to $66.5 million from $46.1 million.
- Noncash compensation rose to $80.3 million from $11.3 million, largely reflecting milestone-based restricted-stock vesting for executives and higher stock-based compensation. Other G&A increased primarily due to UKONIQ launch preparation.
- At year-end, $15.7 million was owed to a contract manufacturer, including $4.2 million due in the first quarter of 2021. The company also disclosed $19.5 million of future operating lease payments and $30 million of loan principal obligations.
Material changes, outlook and risks
- In December 2020, the company reported that UNITY-CLL met its primary progression-free-survival endpoint: U2 versus obinutuzumab plus chlorambucil had a hazard ratio of 0.54 (p<0.0001). A rolling BLA submission began in December, with completion targeted for the first half of 2021.
- In December 2020, both ULTIMATE RMS Phase 3 trials met their primary annualized relapse-rate endpoint (p<0.005 each); relative reductions versus teriflunomide were approximately 60% and 50%. Detailed results and a BLA submission were targeted for 2021, with filing targeted around mid-year.
- Management said year-end cash and investments were expected to fund operations for more than 12 months from the filing date. It expected other R&D costs to remain at similar levels in 2021 and other G&A to increase modestly. The company also stated that continued operations and its plans depend on future financing, despite this stated liquidity runway.
- UKONIQ’s accelerated approval is contingent on confirmatory evidence of clinical benefit; failure to verify benefit could jeopardize continued approval. The filing also identifies post-marketing studies and safety obligations.
- Key risks include commercial-launch execution and market access, competition, drug pricing and reimbursement, ongoing losses and cash burn, dilution from further equity financing, clinical and regulatory uncertainty, reliance on third-party and single-source manufacturers, manufacturing scale-up/comparability, debt covenants and repayment, and COVID-19-related operating or supply disruption. COVID-19 had not materially affected the business to date, but future impact was uncertain.
- The Hercules loan matures March 1, 2022, bears interest at the greater of prime plus 4.75% or 10.25%, and is secured by substantially all assets other than intellectual property. The company reported covenant compliance at year-end.
- The company reported no material pending legal proceedings. Management and the auditor reported effective internal control over financial reporting; the financial-statement audit opinion was unqualified.
Important facts for investors to verify
- UKONIQ launch uptake, net pricing, reimbursement coverage, safety experience and confirmatory-trial requirements.
- Completion and FDA review of the U2 CLL BLA and ublituximab RMS BLA, including full efficacy and safety data beyond topline results.
- Cash burn relative to the stated liquidity runway, the timing and terms of any additional financing, and the impact of further share issuance.
- Contract-manufacturing balances, supply capacity, product comparability, and the loan’s amortization, covenants and 2022 maturity obligations.
- The extent and timing of milestone-based stock compensation and its effect on reported losses and per-share results.