TG Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. TG Therapeutics is a commercial-stage biopharmaceutical company developing treatments for B-cell malignancies and autoimmune diseases. UKONIQ (umbralisib) began U.S. sales after receiving FDA accelerated approval in February 2021.
Financial performance and position
| Metric | Q2 2021 | Six months 2021 | Comparable 2020 period |
|---|---|---|---|
| Total revenue | $1.545 million | $2.338 million | $0.038 million and $0.076 million, respectively |
| Net product revenue | $1.507 million | $2.262 million | None |
| Operating loss | $77.492 million | $166.694 million | $50.845 million and $101.090 million, respectively |
| Net loss | $78.497 million | $169.125 million | $52.884 million and $104.000 million, respectively |
| Basic and diluted loss per share | $0.59 | $1.28 | $0.47 and $0.95, respectively |
| Operating cash used | Not separately presented in the supplied cash-flow statement | $141.524 million | $105.949 million |
Q2 cost of product revenue was $0.148 million, implying reported product gross profit of about $1.359 million; this is not a normalized margin because manufacturing costs for inventory sold had been expensed as R&D before approval. The company expects product costs to rise as that pre-approval inventory is depleted, which it expected to continue using through Q2 2022.
At June 30, cash and cash equivalents were $401.707 million and investment securities were $54.509 million, or $456.216 million combined. Current assets were $455.068 million versus current liabilities of $87.551 million. Accumulated deficit was $1.150 billion. Management said cash and investments were expected to fund operations for more than 12 months from the filing date, while also stating that significant future financing would be needed to execute ongoing and planned operations.
The balance sheet reported loan payable of $23.158 million, all current, net of debt issuance costs and principal payments; the loan’s stated principal was $30 million before $7.2 million of repayments. Monthly principal payments of approximately $2.4–$2.7 million were scheduled through March 1, 2022. Lease liabilities totaled $11.686 million. The loan is secured by substantially all assets other than intellectual property; the company reported covenant compliance through the filing date.
Changes versus prior periods
- Product revenue began in 2021 following UKONIQ approval; net sales were $1.507 million in Q2 and $2.262 million for the first half.
- Q2 R&D expense rose to $44.871 million from $36.449 million; first-half R&D rose to $107.965 million from $72.471 million. The company cited license milestones and, for the first half, UKONIQ manufacturing costs.
- Q2 SG&A increased to $34.017 million from $14.434 million; first-half SG&A increased to $60.779 million from $28.695 million. The company attributed the increase mainly to UKONIQ launch activities and preparation for possible future launches.
- First-half operating cash use increased to $141.524 million from $105.949 million. Financing provided $241.173 million in the first half of 2020, largely from stock offerings, compared with $7.217 million used in the first half of 2021.
- Stock-based compensation increased to $16.304 million in Q2 from $7.370 million; first-half expense was $32.922 million versus $18.438 million.
Outlook, commentary and material risks
- The FDA accepted the BLA and supplemental NDA for ublituximab plus UKONIQ (U2) in CLL/SLL and set a March 25, 2022 PDUFA goal date. Approval is not assured. Management anticipated higher SG&A for the rest of 2021 while preparing for potential 2022 launches.
- ULTIMATE I and II trials of ublituximab in relapsing multiple sclerosis met their primary endpoint, with statistically significant reductions in annualized relapse rate; key secondary MRI endpoints were also reported as met.
- UKONIQ’s MZL and follicular lymphoma approvals are accelerated approvals contingent on confirmatory evidence of clinical benefit. The company disclosed post-marketing studies and requirements; failure to verify benefit could put continued approval at risk.
- UKONIQ’s launch was affected by COVID-19 constraints on in-person commercial interactions, although live engagements increased late in Q2. The filing also identifies potential pandemic-related risks to trials, manufacturing, regulatory reviews and commercialization.
- Management said the company has incurred significant losses since inception and expects continued losses. It may require additional capital; future equity financing could dilute shareholders, while unavailable or unfavorable financing could force reduced or delayed development and commercialization.
- Other key exposures include competition and payer/pricing pressure, dependence on third-party and single-source manufacturers, clinical and regulatory uncertainty, product safety, intellectual-property and licensing risks, and debt repayment obligations. No material pending legal proceedings were reported.
Important facts for investors to verify
- UKONIQ sales trajectory, net pricing, reimbursement, access, and the impact of gross-to-net adjustments as launch matures.
- Confirmatory-trial and other post-marketing obligations for UKONIQ, and any changes to its safety profile or regulatory status.
- FDA review progress and outcome for U2 in CLL/SLL by the stated March 25, 2022 goal date, including manufacturing and safety considerations.
- Cash burn, remaining liquidity, financing needs, and ability to meet scheduled loan repayments through March 2022.
- Clinical-trial progress and final data for ublituximab in RMS, alongside manufacturing capacity and supply-chain reliability.