TG Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. TG Therapeutics is a commercial-stage biopharmaceutical company focused on B-cell diseases. BRIUMVI (ublituximab-xiiy) was FDA-approved for relapsing forms of multiple sclerosis in December 2022 and launched in the U.S. in January 2023.
Financial results and position
| Metric | Q1 2023 | Q1 2022 / prior period |
|---|---|---|
| Total revenue | $7.8 million | $2.0 million |
| Net product revenue | $7.8 million, from U.S. BRIUMVI sales | $2.0 million, from UKONIQ |
| Operating loss | $37.0 million | $66.9 million |
| Net loss | $39.2 million | $69.0 million |
| Net loss per share | $0.28 | $0.51 |
| Operating cash used | $59.9 million | $68.7 million |
- Revenue increased approximately 287% year over year, principally reflecting BRIUMVI’s initial commercial sales. UKONIQ was withdrawn from the U.S. market in May 2022.
- Reported cost of product revenue was $0.9 million, versus $0.2 million. A portion of BRIUMVI manufacturing costs had been expensed to R&D before approval, so current product costs and gross margin may not represent future economics. The company expects product costs to rise as pre-commercial inventory is depleted, which it expects to use through the end of 2024.
- R&D expense fell to $15.9 million from $48.0 million, mainly due to lower manufacturing and clinical-trial expenses and capitalization of approved-product manufacturing into inventory. SG&A rose to $28.1 million from $20.6 million, including commercialization costs and higher noncash compensation.
- Cash and cash equivalents were $61.5 million at March 31; investment securities were $78.2 million short-term. Together, cash and investments were approximately $139.7 million. Restricted cash was an additional $1.3 million.
- Total assets were $197.4 million, current liabilities $63.1 million, total liabilities $169.9 million, and stockholders’ equity $27.4 million. Accumulated deficit was $1.6 billion.
- Loan principal was $95.0 million; the balance-sheet carrying amount was $96.5 million after accrued final-payment fees and unamortized issuance costs. The company drew $25.0 million under a Hercules loan amendment during the quarter. Operating and investing cash use, partly offset by financing inflows, reduced cash, cash equivalents and restricted cash by $40.8 million.
Material changes and developments
- BRIUMVI’s first U.S. patient infusion occurred February 1, 2023. The company described efforts to engage neurology practices, provide infusion training and education, and secure payer coverage.
- On March 31, 2023, the European Medicines Agency’s CHMP issued a positive opinion recommending BRIUMVI approval for adult RMS patients with active disease; the company expected a European Commission decision by early June 2023.
- The Hercules amendment changed loan availability and terms, extended the interest-only period to August 1, 2025, and set cash interest at the greater of prime plus 1.20% or 8.95%, with paid-in-kind interest of 2.25%. It added warrants and financial covenants that apply from July 1, 2023. The loan matures January 1, 2026.
- Research pipeline candidates TG-1701 and TG-1801 remained in Phase 1 studies. No numerical revenue or earnings guidance was provided in the supplied filing text.
Outlook, risks and contingencies
- Management said cash, investments, capital contractually available under the loan agreement, and forecast revenue were expected to fund operations for more than twelve months from filing. It also stated that significant future financing may be needed and that profitability is uncertain.
- Key risks include BRIUMVI market uptake, reimbursement and pricing, competition, post-approval requirements and safety, reliance on contract manufacturers and a limited supply chain, clinical and regulatory outcomes, and access to additional capital. The company noted that future financing may dilute shareholders or require additional debt.
- Debt covenants, interest and repayment obligations may constrain operations; default could accelerate repayment and expose substantially all company assets other than intellectual property to the lender’s security interest.
- A putative securities class action filed in 2022 was dismissed in full, with prejudice, in January 2023. The filing reported no other material legal proceeding in the supplied text.
- Management stated disclosure controls were effective. It implemented inventory and product-cost controls during the quarter following BRIUMVI approval and launch, resulting in material changes to internal controls over financial reporting.
Important facts for investors to verify
- BRIUMVI sales, payer coverage, patient uptake and repeat demand, including how launch inventory affects reported product costs and margins.
- Actual cash burn and liquidity against management’s stated greater-than-twelve-month outlook, including availability and conditions of remaining Hercules advances.
- Debt interest, covenants, maturity, warrant-related dilution and the effect of any future financing.
- Timing and outcome of the European Commission decision, post-marketing commitments, and progress and results for TG-1701 and TG-1801.
- Supply capacity and dependence on third-party manufacturers, as well as any changes in commercial demand or inventory reserves.