TG Therapeutics, Inc. — 2017 Form 10-K
Reporting period: Fiscal year ended December 31, 2017. The filing also presents unaudited fourth-quarter results. TG Therapeutics is a clinical-stage biopharmaceutical company developing treatments for B-cell malignancies and autoimmune diseases; it had no approved products and generated no product sales.
Financial performance and position
| Metric | 2017 | 2016 |
|---|---|---|
| License revenue | $0.15 million | $0.15 million |
| Research and development expense | $102.5 million | $69.2 million |
| General and administrative expense | $16.3 million | $9.9 million |
| Total costs and expenses | $118.9 million | $79.1 million |
| Operating loss | $118.7 million | $79.0 million |
| Net loss | $118.5 million | $78.3 million |
| Net loss per share | $1.91 | $1.60 |
| Cash used in operating activities | $93.8 million | $61.6 million |
Fourth-quarter 2017 revenue was approximately $38,000, total expenses were $31.1 million, and net loss was $30.9 million, or $0.46 per share. Fourth-quarter 2016 net loss was $23.7 million, or $0.48 per share.
At year-end, cash and cash equivalents were $56.7 million and short-term investments were $28.0 million; together with interest receivable, reported liquid resources totaled $84.8 million. Total assets were $97.4 million, total liabilities $30.4 million, and stockholders’ equity $67.0 million. The balance sheet lists $127,614 of notes payable at fair value; the related cumulative face liability and accrued interest were approximately $17.5 million, with repayment tied to specified legacy product cash flows and a conversion feature. No conventional funded debt balance is otherwise identified in the provided text.
There is no meaningful operating margin comparison for a company with negligible license revenue and no product sales. Accumulated deficit was $354.9 million. The company reported $15.6 million of operating lease commitments through 2031.
Changes versus the prior comparable period
- Net loss increased by $40.2 million year over year as total expenses rose $39.7 million. R&D spending excluding noncash compensation increased $30.4 million, primarily reflecting clinical development and manufacturing for TG-1101 and TGR-1202.
- Operating cash use increased $32.2 million. Financing provided $133.7 million in 2017, chiefly from a public offering, at-the-market stock sales, and warrant exercises; year-end cash and investments rose from $45.0 million to $84.8 million.
- Shares issued and outstanding increased substantially during 2017 through equity financing and stock awards. The company reported 75.6 million common shares outstanding as of March 1, 2018.
Pipeline, outlook, and principal risks
- Clinical progress: The Phase 3 GENUINE trial of ublituximab plus ibrutinib in high-risk CLL met its primary overall response rate endpoint. In the treated population, response was 78% for the combination versus 45% for ibrutinib alone (P<0.001). The FDA indicated accelerated approval based on response rate would be a review issue and highlighted the potential relevance of other available therapies; approval was not assured. The company was preparing a possible 2018 BLA filing.
- U2 and multiple sclerosis: An interim UNITY-CLL analysis established contribution of both agents in the ublituximab/umbralisib combination; enrollment then continued in the combination and active-control arms. The company expected top-line response data in 2018. Two Phase 3 ULTIMATE trials for ublituximab in relapsing multiple sclerosis were open to enrollment under FDA protocol assessments.
- Management outlook: Management expected other R&D costs to remain relatively consistent in 2018 as UNITY-CLL wound down and the MS Phase 3 program ramped up, and expected other G&A costs to increase modestly. Estimated phase-completion costs included approximately $7 million for the specified accelerated-approval portion of UNITY-CLL, $10 million for the UNITY-NHL Phase 2b program, and $50 million for the MS Phase 3 program; timelines and costs were uncertain and dependent on financing.
- Liquidity and financing: After approximately $35.3 million of net ATM proceeds raised in the first quarter of 2018, management believed available funds would support planned operations into the second quarter of 2019. The company expects continuing losses and will need additional capital; equity financing could dilute shareholders, while financing may not be available on acceptable terms.
- Other material risks: Clinical outcomes and FDA decisions remain uncertain; competitors may advance sooner; the company relies on third parties for manufacturing, clinical work, and licensed intellectual property; and several suppliers are single-source. Drug safety, trial enrollment, regulatory requirements, commercialization capability, reimbursement, and patent disputes are additional risks.
- Legal and governance matters: A securities class action concerning statements about GENUINE was dismissed without prejudice in April 2017; the company denied the allegations. The CEO also held leadership roles at related entities, and the filing describes related-party arrangements involving office space, shared services, and licensing. The auditor gave unqualified opinions on the financial statements and internal control over financial reporting.
Key facts for investors to verify
- Whether GENUINE results support a BLA, how the FDA weighs available therapies, and whether any filing or approval occurs.
- UNITY-CLL and UNITY-NHL data, the MS Phase 3 timelines, and whether trial results and safety remain favorable.
- Cash burn, remaining ATM capacity, dilution from future financing, and whether the stated runway remains adequate.
- Manufacturing supply and scale-up readiness, as well as obligations under licenses and related-party agreements.
- The status and financial impact of the dismissed litigation, contingent notes, and long-term lease commitments.