TG Therapeutics, Inc. — FY2019 Form 10-K
Reporting period: Year ended December 31, 2019; filed March 2, 2020. This is an annual filing, not a standalone fourth-quarter report. TG Therapeutics is a clinical-stage biopharmaceutical company developing therapies for B-cell-mediated diseases. It had no approved products and generated no product sales.
Business and pipeline
The lead programs were ublituximab and umbralisib, also studied together as U2. Other clinical-stage candidates were cosibelimab, TG-1701 and TG-1801. The company’s strategy centered on completing pivotal trials, pursuing regulatory approvals and preparing commercial capabilities.
- In UNITY-NHL, the MZL cohort met its primary response-rate endpoint; interim IRC-assessed ORR was 52% in the 42-patient interim efficacy population, including a 19% complete response rate. The FL cohort also met its primary endpoint, but the filing does not provide a clear numerical ORR for that cohort.
- In January 2020, TG began a rolling FDA NDA submission for umbralisib for MZL and FL, with completion anticipated in the first half of 2020.
- UNITY-CLL passed a March 2019 futility review and continued without modification. The company remained blinded to efficacy results; the trial’s primary endpoint is progression-free survival (PFS).
- ULTIMATE I and II were fully enrolled; topline results were expected in the second half of 2020.
- In October 2019, TG reported that final long-term GENUINE results showed improved PFS for ublituximab plus ibrutinib versus ibrutinib alone. The company planned to present the data and discuss them with FDA.
Financial results and liquidity
| Metric | FY2019 | FY2018 |
|---|---|---|
| License revenue | $0.152 million | $0.152 million |
| Research and development expense | $154.2 million | $159.4 million |
| General and administrative expense | $15.0 million | $15.2 million |
| Operating loss | $169.1 million | $174.4 million |
| Net loss | $172.9 million | $173.5 million |
| Net loss per share | $1.96 | $2.30 |
| Cash used in operating activities | $132.8 million | $128.9 million |
| Cash, cash equivalents and short-term investments at year-end | $140.4 million | $68.9 million |
Revenue was the amortization of an earlier Ildong license payment, not product sales; operating margins are not meaningful given minimal revenue and substantial development costs. Annual net loss narrowed slightly, while operating cash use increased. R&D spending excluding noncash compensation and licensing stock expense declined modestly, primarily as late-stage programs wound down; G&A costs excluding noncash compensation rose with personnel and other corporate costs. Interest expense increased to $5.3 million, mainly due to Hercules financing.
Financing activities provided $204.2 million in net cash, including $175.0 million from equity issuance and $30.0 million of Hercules loan proceeds. The company reported $30.0 million principal outstanding under the Hercules facility, with $28.97 million carrying value net of issuance costs. The 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. Interest-only payments were extended through April 1, 2021.
At December 31, 2019, $47.2 million owed to a contract manufacturer was classified as a current liability; $19.6 million was due in the first quarter of 2020. Total disclosed contractual obligations were $97.6 million, including leases and debt. Management expected year-end cash and investments to fund operations for more than 12 months from the filing date, but also said significant future financing would be needed to execute its plans. Accumulated deficit was $701.2 million.
Material changes, outlook and principal risks
- Net loss per share improved despite the near-flat annual net loss, reflecting a larger weighted-average share count. Shares outstanding increased from 83.9 million at year-end 2018 to 109.4 million at year-end 2019; equity sales were a major funding source and further financing could dilute shareholders.
- Management expected modestly lower other R&D costs and interest expense in 2020, but higher G&A spending as it prepared for a potential launch. These are expectations, not assurances.
- The company had no product revenue, remained loss-making, and stated that profitability depends on clinical success, regulatory approval, manufacturing, market acceptance and reimbursement. It may need additional capital; unavailable or unfavorable financing could delay or reduce development and commercialization.
- Clinical outcomes and regulatory timing remain uncertain. Positive early or interim findings may not hold with longer follow-up, and SPAs, breakthrough designation and passing a futility review do not guarantee approval. UNITY-CLL is event-driven, so timing of its efficacy analysis is uncertain.
- Manufacturing scale-up, product comparability and reliance on single-source or contract suppliers pose execution risks. The filing noted potential COVID-19-related supply disruption; at filing, TG reported no material adverse impact to date and sufficient inventory or raw materials for current clinical needs and anticipated initial umbralisib demand.
- Competition, drug pricing and reimbursement pressure, patent challenges, adverse events, and the need to build commercial infrastructure could limit the value of any approvals. No material pending legal proceedings were reported.
Most important facts for investors to verify
- Subsequent UNITY-CLL PFS results and timing, and whether results support regulatory submission.
- FDA progress and decision on the umbralisib NDA for MZL/FL, including final efficacy and safety data.
- ULTIMATE I and II topline results and the eventual regulatory path for ublituximab in MS.
- Cash burn, the timing and amount of future financing, dilution, and ability to meet the $47.2 million manufacturer liability and other obligations.
- Manufacturing readiness, supply continuity, and the effect of any process changes or COVID-19-related disruption.