TG Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Financial amounts below are in U.S. dollars; figures are rounded to millions unless noted.
Business context
TG Therapeutics is a commercial-stage biopharmaceutical company focused on B-cell diseases. Its marketed product is BRIUMVI (ublituximab), approved in the U.S. and EU for relapsing forms of multiple sclerosis (RMS). U.S. commercial sales began in January 2023. TG also reported Phase 1 programs TG-1701 and TG-1801 for B-cell disorders. The company announced UK approval for BRIUMVI on November 1, 2023, after the quarter-end.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Product revenue | $25.1m | $0.1m | $48.9m | $2.6m |
| License, milestone and other revenue | $140.7m | $0.04m | $140.8m | $0.1m |
| Total revenue | $165.8m | $0.1m | $189.7m | $2.7m |
| Research and development expense | $14.8m | $20.8m | $58.7m | $95.7m |
| Selling, general and administrative expense | $32.8m | $14.3m | $91.6m | $47.5m |
| Operating income (loss) | $114.8m | $(35.0)m | $33.1m | $(140.8)m |
| Net income (loss) | $113.9m | $(35.8)m | $27.1m | $(145.3)m |
| Operating cash flow | Not stated for quarter | Not stated for quarter | $(18.2)m | $(152.3)m |
Q3 diluted earnings per share were $0.73; nine-month diluted earnings per share were $0.19. The reported profit was substantially driven by recognition of a $140.0m non-refundable Neuraxpharm upfront license payment, rather than product sales alone. Reported operating margins therefore do not represent a typical recurring product-sales margin. Cost of revenue was $3.5m in Q3 and $6.3m year to date; the filing notes that some BRIUMVI inventory costs were expensed as R&D before approval, so current cost of revenue does not capture all manufacturing costs.
At September 30, cash and cash equivalents were $150.9m and short-term investments were $78.3m, totaling approximately $229.2m; restricted cash was an additional $1.3m. Accounts receivable were $39.3m and inventory was $33.6m. Current assets were $319.1m versus current liabilities of $57.7m. Total liabilities were $166.3m and stockholders’ equity was $164.8m.
Loan payable had $95.0m of principal outstanding and a $98.9m carrying value after the accrued final payment fee and unamortized financing costs. The loan matures January 2026; interest-only payments run through August 2025, subject to extension conditions. The amended facility accrues cash interest at the greater of prime plus 1.20% or 8.95%, plus 2.25% paid-in-kind interest. TG reported compliance with financial covenants at quarter-end.
Changes versus prior comparable periods
- Revenue rose sharply as BRIUMVI launched in the U.S. and TG recognized Neuraxpharm’s upfront payment. The prior-year product revenue was primarily from UKONIQ, withdrawn from the U.S. market in May 2022.
- Q3 and year-to-date net income replaced prior-year losses, chiefly due to the one-time $140.0m license revenue. TG stated it expects to continue incurring operating losses in the near term and may never become profitable.
- R&D expense declined year over year, mainly reflecting lower manufacturing and clinical-trial costs after BRIUMVI approval. SG&A increased with BRIUMVI commercialization, personnel and consulting costs, and Neuraxpharm-related advisory fees.
- Operating cash use fell to $18.2m from $152.3m for the first nine months, primarily reflecting the Neuraxpharm upfront payment. Cash provided by financing was $72.7m, including a $25.0m Hercules loan advance and $46.3m net proceeds from ATM stock sales.
Outlook, commentary and risks
- Management said cash, cash equivalents and investments, together with projected U.S. and ex-U.S. BRIUMVI revenues, should fund anticipated operating cash requirements for at least 12 months following the filing date. This depends on commercialization, development and other spending assumptions; the company also noted it may need significant future financing.
- The Neuraxpharm agreement grants exclusive commercialization rights in specified territories outside the U.S., Canada and Mexico, excluding certain previously partnered Asian countries. TG received $140.0m upfront and is eligible for up to $505.0m in sales-based or other milestones, plus tiered royalties up to 30%. No royalty revenue had been recognized by September 30, 2023. Future milestones and royalties depend on launch, sales and other conditions.
- TG expects BRIUMVI cost of revenue to increase relative to product revenue as pre-commercialization inventory is depleted; it expected to use that remaining inventory through the end of 2024.
- Key risks include BRIUMVI market uptake, reimbursement and pricing pressure, competition, maintaining regulatory approvals and fulfilling post-marketing requirements, product safety, and dependence on third-party manufacturers and suppliers. The company relies on Samsung Biologics for BRIUMVI supply. Debt service and covenant obligations, potential dilution from future financing, and the possibility of continued losses are additional risks.
- No numerical product-revenue guidance is stated in the supplied filing text. Management identified disclosure controls as effective and reported no material change in internal control over financial reporting during the quarter. TG reported no material pending legal proceedings.
Important facts for investors to verify
- How much BRIUMVI sales grow after launch, including payer coverage, reimbursement, demand and market share.
- Whether and when Neuraxpharm achieves European launches, triggering milestones and royalties, and how its performance affects TG’s ex-U.S. economics.
- Cash burn and runway excluding the one-time upfront payment, and the assumptions behind management’s 12-month liquidity statement.
- BRIUMVI supply capacity, inventory utilization and the expected increase in cost of revenue as pre-approval inventory runs down.
- Debt interest, covenant compliance, repayment obligations and any additional borrowing or equity issuance; TG sold 1.39m shares through its ATM in the first nine months of 2023.
- Progress and outcomes for TG-1701, TG-1801 and BRIUMVI post-approval studies, along with any changes to regulatory status or safety information.