TG Therapeutics, Inc. — FY2022 Form 10-K
Business context and reporting period
Annual report for the fiscal year ended December 31, 2022; the filing provides full-year results, not a separate Q4 income statement. TG Therapeutics is a biopharmaceutical company focused on B-cell diseases. FDA approved BRIUMVI (ublituximab-xiiy) for relapsing forms of multiple sclerosis on December 28, 2022; the U.S. commercial launch followed on January 26, 2023. UKONIQ (umbralisib), the company’s only marketed product during 2022, was withdrawn from sale in April and its FDA approval was withdrawn in June.
Financial results and liquidity
- Revenue: $2.8 million in 2022, down from $6.7 million in 2021. Product revenue was $2.6 million, versus $6.5 million; license revenue was $0.2 million in both years. 2022 product revenue came from UKONIQ; the company had no BRIUMVI sales in 2022.
- Expenses and loss: Total costs and expenses were $195.6 million, down from $351.5 million. Research and development expense was $125.4 million versus $222.6 million; selling, general and administrative expense was $70.0 million versus $128.1 million. Net loss narrowed to $198.3 million from $348.1 million; basic and diluted loss per share was $1.46 versus $2.63.
- Cash flow: Cash used in operating activities was $176.2 million, compared with $295.6 million in 2021. Investing activities used $20.0 million, mainly reflecting purchases of short-term securities; financing activities used $0.4 million, versus $41.4 million provided in 2021.
- Cash and liquidity: At year-end, cash and cash equivalents were $102.3 million and investment securities were $71.8 million, totaling $174.1 million. Current assets were $168.3 million and current liabilities $53.2 million. Management expected cash, investments, available loan capital and forecast revenue to fund operations for more than 12 months after filing; the auditor identified forecast revenue assumptions in this liquidity assessment as a critical audit matter.
- Debt and commitments: The Hercules loan had $70.0 million principal outstanding and a $71.1 million carrying value at year-end. It matures January 2026; the stated cash rate is the greater of prime plus 2.15% or 5.40%. Additional advances are subject to conditions, and financial covenants apply. Operating lease commitments totaled $17.4 million; reported contractual obligations, including debt and leases, totaled $91.6 million.
- Margins: The filing does not present a company-wide gross margin. Product revenue and cost of product revenue are not representative of ongoing BRIUMVI economics, which had not yet generated sales.
Material changes versus the prior year
- Revenue declined following UKONIQ’s withdrawal. The company also reported $0.6 million of UKONIQ returns related to the market withdrawal.
- Research and development and SG&A expenses fell substantially, principally reflecting reduced clinical activity, lower headcount and other costs after the oncology program changes and UKONIQ withdrawal. Noncash compensation also declined.
- Interest expense rose to $10.2 million from $5.6 million, primarily due to the amended Hercules loan. Other income increased to $4.7 million, including higher interest income and an Australian R&D tax-credit refund.
- Year-end cash and investments fell from $350.3 million in 2021 to $174.1 million in 2022, while the company continued to report substantial operating losses.
Outlook, risks and unusual items
- Management’s priorities are launching BRIUMVI in the U.S., considering additional uses and geographies, and advancing TG-1701 and TG-1801, both in Phase 1 studies. The company submitted a European marketing application for ublituximab and expected a decision in the second half of 2023. The filing gives no quantified revenue guidance.
- In April 2022, TG Therapeutics withdrew the pending BLA/sNDA for the ublituximab-plus-umbralisib combination (U2) in CLL/SLL after updated UNITY-CLL overall-survival data showed a negative survival benefit. UKONIQ was also withdrawn, and related oncology studies were closed or being closed.
- Key risks include uncertain BRIUMVI uptake, reimbursement and pricing; competition from established MS treatments; dependence on contract manufacturers and other third parties; clinical and regulatory uncertainty; and the need for additional financing. The company relies on Samsung Biologics for BRIUMVI supply and has no in-house manufacturing.
- The company reported an accumulated deficit of $1.5 billion and said it expects continued losses. It stated that significant future financing is needed; equity issuance could dilute shareholders, while debt carries repayment, covenant and collateral risks.
- A putative securities class action filed in 2022 was dismissed in full, with prejudice, in January 2023. The filing reports effective disclosure controls and internal control over financial reporting; KPMG issued unqualified opinions on the financial statements and internal controls.
Important facts for investors to verify
- BRIUMVI launch progress, net sales, patient access, payer coverage and any updated commercial outlook.
- Cash burn, cash and investment balances, and the assumptions supporting management’s greater-than-12-month liquidity assessment.
- Hercules loan availability, draw conditions, covenants, interest costs and repayment schedule.
- Supply capacity and continuity under the single-source contract manufacturing arrangement.
- Latest clinical and regulatory updates for TG-1701, TG-1801 and the European BRIUMVI application, including required post-approval studies.