What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-09 compared with 2020-08-10 · 75 added, 53 removed, 234 unchanged (35% of the section changed)

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Umbralisib is an oral, once daily, dual inhibitor of PI3K-delta and CK1-epsilon.

When used together in combination therapy, ublituximab and umbralisib are referred to as “U2.” Additionally, in early clinical development we have an anti-PD-L1 monoclonal antibody referred to as cosibelimab (TG-1501), an oral Bruton’s Tyrosine Kinase (BTK) inhibitor referred to as TG-1701, and an anti-CD47/CD19 bispecific antibody referred to as TG-1801.

When used together in combination therapy, ublituximab and umbralisib are referred to as “U2”.

Additionally, in early clinical development we have an anti-PD-L1 monoclonal antibody cosibelimab (TG-1501), an oral Bruton’s Tyrosine Kinase (BTK) inhibitor referred to as TG-1701, and an anti-CD47/CD19 bispecific antibody referred to as TG-1801.

We also actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities.

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Stage of Development

Ublituximab/TG-1101 (anti-CD20 mAb)

Ublituximab (anti-CD20 mAb)

Chronic Lymphocytic Leukemia

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Phase 3 trials (ULTIMATE I and II)

Umbralisib/TGR-1202 (PI3K-delta inhibitor)

Umbralisib (PI3K-delta inhibitor)

Chronic Lymphocytic Leukemia

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UNITY-NHL is a global Phase 2b registration-directed clinical trial designed to evaluate the efficacy and safety of single-agent umbralisib and U2 combinations in patients with previously treated NHL.

The marginal zone lymphoma (MZL) and the follicular lymphoma (FL)/small lymphocytic lymphoma (SLL) single agent umbralisib cohorts of this trial are fully enrolled.

The marginal zone lymphoma (MZL), follicular lymphoma (FL), and small lymphocytic lymphoma (SLL) single agent umbralisib cohorts of this trial are fully enrolled.

The primary objective of these cohorts is to assess the efficacy of single agent umbralisib as measured by Overall Response Rate (ORR).

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The results met our target guidance of 40-50% ORR.

Interim safety and efficacy data from the MZL cohort were presented in an oral presentation at the American Association for Cancer Research (AACR) annual meeting on April 1, 2019.

The data presented included safety and tolerability data on all 69 treated patients (safety population) and efficacy data on 42 patients who were enrolled for at least 9 cycles (28-day cycles) prior to the data cut-off date (interim efficacy population).

The safety population had a median duration of exposure of 6.9 months, and no unexpected toxicities were observed.

Analysis of the interim efficacy population showed an ORR by IRC of 52%, including a 19% CR rate, an 88% clinical benefit rate (defined as patients obtaining Complete Response + Partial Response + Stable Disease) and a median duration of exposure of 10.1 months.

These results were also presented in oral presentations during the 2019 American Society of Clinical Oncology (ASCO) annual meeting and the 2019 International Conference on Malignant Lymphoma (ICML) both held in June of 2019.

Previously, in January 2019, the U.S.

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nodal, extranodal, and splenic MZL.

In June of 2019, we had a BTD meeting with the FDA to discuss the MZL NDA submission strategy.

The FL/SLL cohort enrolled adult patients who had two or more prior lines of therapy that included an anti-CD20 monoclonal antibody and an alkylating agent.

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The results met our target guidance of 40-50% ORR.

Importantly, single-agent umbralisib appeared to be well tolerated with a safety profile consistent with previous reports.

In January of 2020, we received guidance from the FDA allowing submission of a single New Drug Application (NDA) for MZL and FL indications, and we initiated a rolling submission of an NDA to the FDA for umbralisib in MZL and FL.

In March 2020, we announced that the FDA granted orphan drug designation to umbralisib for the treatment of FL.

Most recently, in June 2020, we announced the completion of the rolling NDA submission.

In June 2020, we announced the completion of the rolling NDA submission for MZL and FL, and in August 2020 we announced the FDA accepted the NDA.

The MZL indication, under BTD, has been accepted for Priority Review and has a Prescription Drug User Fee Act (PDUFA) goal date of February 15, 2021.

The FL indication has been accepted for standard review with a PDUFA goal date of June 15, 2021.

On November 4, 2020, accepted abstracts for the 2020 American Society of Hematology Virtual Conference were released with the final data from the UNITY-NHL, MZL and FL cohorts, which we previously announced top-line results for in February and October 2019, respectively.

Highlights from the abstract are as follows:

● A total of 208 patients with iNHL received at least 1 dose of umbralisib, including 69 marginal zone lymphoma (MZL), 117 follicular lymphoma (FL), and 22 small lymphocytic lymphoma (SLL) patients

● MZL patients were relapsed/refractory to ≥1 prior lines of treatment, including an anti-CD20.

At a median follow up of 27.8 months, the following was observed:

o 49.3% ORR with 15.9% Complete response (CR) rate

o Median PFS was not reached, with an estimated 12-month PFS rate of 64.2%;

no patients who achieved a CR have experienced disease progression to date

● FL patients were relapsed or refractory to ≥2 prior lines, including an anti-CD20 and an alkylating agent.

At a median follow up of 27.5 months the following was observed:

o 45.3% ORR with 5.1% achieving a CR

o Median PFS was 10.6 months, with an estimated 12-month PFS rate of 45.9%

● The most common AEs of > Grade 3 were neutropenia (11.5%), diarrhea (10.1%) and increased ALT/AST (7.2%).

Other AEs of interest included pneumonitis (all Grades 1.4%, > Grade 3 1.0%) and colitis (all Grades 1.4%, >Grade 3 0.5%)

● Conclusion:

Umbralisib achieved meaningful clinical activity in a heavily pretreated iNHL population.

The safety profile was manageable, with a relatively low incidence of immune-mediated toxicities and AE-related discontinuations.

● UNITY-NHL Additional Cohorts :

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Two additional arms evaluating single agent ublituximab and single agent umbralisib were also enrolled for purposes of evaluating the contribution of each in the U2 combination regimen.

The primary endpoint for this study is progression free survival (PFS) which we intend to use to support a BLA submission for approval of the U2 combination in CLL.

The primary endpoint for this study is progression free survival (PFS) which we intend to use to support a Biologics License Application (BLA) submission for approval of the U2 combination in CLL.

The study completed enrollment in October 2017 with over 600 patients across the four treatment arms, with approximately 420 patients in the U2 and the active control arms combined.

This trial is conducted under a Special Protocol Assessment (SPA) with the FDA.

In March of 2020, the DSMB reviewed safety information from all 600+ CLL patients on the trial, including over 300 treatment-naïve and previously treated patients on single-agent umbralisib or in combination with ublituximab.

Based on its review, no safety concerns were identified and the DSMB recommended that the UNITY-CLL trial continue without modification.

In March 2020, we announced during our quarterly earnings call, that we reached an agreement with the FDA to conduct an interim efficacy analysis, which would allow us to stop the study early for a greater-than-expected PFS benefit.

On May 5, 2020, we announced the UNITY-CLL trial met its primary endpoint at a prespecified interim analysis demonstrating a statistically significant improvement in PFS (p<0.0001) and will be stopped early for superior efficacy.

PFS was assessed by an IRC, and benefit was also seen across both previously untreated and relapsed/refractory patient populations.

Safety and other secondary endpoints are still being assessed and have not yet been reported.

In October 2020, we announced that the FDA granted Fast Track Designation to U2 for CLL.

On November 4, 2020, accepted abstracts for the 2020 ASH Virtual Conference were released with the final data from the UNITY-CLL study, which we previously announced top-line results for in May of 2020.

Highlights from this abstract are as follows:

● 421 patients were randomized to the U2 (n=210) or O+Chl (n=211) arms;

57% of patients were treatment-naïve and 43% had R/R CLL

● At a median follow-up of 36.2 months, U2 significantly prolonged progression-free survival (PFS) vs O+Chl (median 31.9 months vs 17.9 months;

hazard ratio 0.546 (p<0.0001))

● PFS improvement with U2 vs O+Chl was consistent across all subgroups examined including treatment naïve patients (median 38.5 months vs 26.1 months, hazard ratio 0.482) and relapsed/refractory patients (median 19.5 months vs 12.9 months, hazard ratio 0.601)

● Overall response rate (ORR) was significantly higher with U2 compared to O+Chl (83.3% vs 68.7%;

● Grade 3/4 Adverse Events (AE) of interest regardless of causality (U2 vs O+Chl) included neutropenia (30.6% vs 34.7%), thrombocytopenia (3.4% vs 13.1%), diarrhea (12.1% vs 2.5%), infusion related reaction (1.9% vs 3.5%), elevated AST/ALTs (8.3% vs 2%), colitis (3.4% vs 0%) and pneumonitis (2.9% vs 0%)

● Conclusion:

U2 exhibited a well-tolerated safety profile, and significantly improved PFS vs.

standard of care chemoimmunotherapy in patients with treatment naïve and relapsed/refractory CLL

● ULTIMATE I & II Trials Evaluating Single Agent Ublituximab in RMS:

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These trials are both being conducted under a SPA with the FDA.

Full enrollment was completed in October of 2018, with approximately 1,100 subjects enrolled in both studies combined.

Full enrollment was completed in October 2018, with approximately 1,100 subjects enrolled in both studies combined.

● ULTRA-V Phase 2 Trial Evaluating U2 Plus Venetoclax in CLL:

ULTRA-V is a Phase 2 open-label, multicenter, registration-directed clinical trial designed to investigate the efficacy and safety of ublituximab and umbralisib (U2) combined with venetoclax in subjects with treatment-naïve and relapsed or refractory CLL.

ULTRA-V is a Phase 2 open-label, multicenter, registration-directed clinical trial designed to investigate the efficacy and safety of U2 in combination with venetoclax in subjects with treatment-naïve and relapsed or refractory CLL.

The primary endpoints for this study are ORR and Complete Response (CR) rate.

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RESULTS OF OPERATIONS

Three months ended June 30, 2020 and 2019

Three months ended September 30, 2020 and 2019

License Revenue.

License revenue was approximately $38,000 for each of the three months ended June 30, 2020 and 2019.

License revenue was approximately $38,000 for each of the three months ended September 30, 2020 and 2019.

License revenue is related to the amortization of an upfront payment of $2.0 million received in 2012 associated with our license agreement with Ildong.

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Noncash Compensation Expense (Research and Development).

Noncash compensation expense (research and development) related to equity incentive grants totaled $1.6 million for the three months ended June 30, 2020, as compared to $1.4 million during the comparable period in 2019.

The increase in noncash compensation expense was primarily due to greater compensation expense related to more research and development personnel during the period ended June 30, 2020.

Noncash compensation expense (research and development) related to equity incentive grants totaled $4.6 million for the three months ended September 30, 2020, as compared to $1.5 million during the comparable period in 2019.

The increase in noncash compensation expense was primarily due to greater compensation expense related to more research and development personnel during the period ended September 30, 2020.

Other Research and Development Expenses.

Other research and development expenses increased by $3.5 million to $34.9 million for the three months ended June 30, 2020, as compared to $31.4 million for the three months ended June 30, 2019.

The increase in R&D expense is primarily attributable to ongoing late-stage clinical development programs and related manufacturing costs for ublituximab and umbralisib during the three months ended June 30, 2020.

Other research and development expenses decreased by $10.7 million to $45.8 million for the three months ended September 30, 2020, as compared to $56.5 million for the three months ended September 30, 2019.

The decrease in R&D expense is primarily attributable to a decrease in manufacturing costs for ublituximab and umbralisib, offset by an increase in milestone payments made during the three months ended September 30, 2020.

Noncash Compensation Expense (General and Administrative).

Noncash compensation expense (general and administrative) related to equity incentive grants increased by $5.4 million to $5.8 million for the three months ended June 30, 2020, as compared to $0.4 million for the three months ended June 30, 2019.

The increase in noncash compensation expense was primarily related to greater compensation expense during the three months ended June 30, 2020 related to restricted stock and stock options granted to executive personnel.

Noncash compensation expense (general and administrative) related to equity incentive grants increased by $23.1 million to $23.7 million for the three months ended September 30, 2020, as compared to $0.6 million for the three months ended September 30, 2019.

The increase in noncash compensation expense was primarily related to greater compensation expense during the three months ended September 30, 2020 related to restricted stock and stock options granted to executive personnel.

Other General and Administrative Expenses .

Other general and administrative expenses was $8.6 million for the three months ended June 30, 2020, as compared to $2.3 million for the three months ended June 30, 2019.

Other general and administrative expenses was $11.6 million for the three months ended September 30, 2020, as compared to $2.3 million for the three months ended September 30, 2019.

The increase was due primarily to increased personnel and other general and administrative costs, associated with preparations for a potential commercial launch.

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Interest Expense .

Interest expense increased by $1.1 million to $2.2 million for the three months ended June 30, 2020, as compared to $1.1 million for the three months ended June 30, 2019.

The increase is mainly due to interest expense related to administrative fees in connection with contract manufacturing costs during the three months ended June 30, 2020.

Interest expense increased by $0.1 million to $1.6 million for the three months ended September 30, 2020, as compared to $1.5 million for the three months ended September 30, 2019.

Other Income .

Other income was $0.2 million for the three months ended June 30, 2020, as compared to $0.4 million for the three months ended June 30, 2019.

Other income was $0.2 million for the three months ended September 30, 2020, as compared to $0.5 million for the three months ended September 30, 2019.

We expect our other income to remain at a comparable level for the remainder of 2020.

Six months ended June 30, 2020 and 2019

Nine months ended September 30, 2020 and 2019

License Revenue.

License revenue was approximately $76,000 for each of the six months ended June 30, 2020 and 2019.

License revenue was approximately $114,000 for each of the nine months ended September 30, 2020 and 2019.

License revenue is related to the amortization of an upfront payment of $2.0 million received in 2012 associated with our license agreement with Ildong.

Noncash Compensation Expense (Research and Development).

Noncash compensation expense (research and development) related to equity incentive grants totaled $3.5 million for the six months ended June 30, 2020, as compared to $2.8 million during the comparable period in 2019.

The increase in noncash compensation expense was primarily due to greater compensation expense related to more research and development personnel during the period ended June 30, 2020.

Noncash compensation expense (research and development) related to equity incentive grants totaled $8.1 million for the nine months ended September 30, 2020, as compared to $4.3 million during the comparable period in 2019.

The increase in noncash compensation expense was primarily due to greater compensation expense related to more research and development personnel during the period ended September 30, 2020.

Other Research and Development Expenses.

Other research and development expenses increased by $6.6 million to $68.9 million for the six months ended June 30, 2020, as compared to $62.3 million for the six months ended June 30, 2019.

Other research and development expenses decreased by $4.0 million to $114.8 million for the nine months ended September 30, 2020, as compared to $118.8 million for the nine months ended September 30, 2019.

Noncash Compensation Expense (General and Administrative).

Noncash compensation expense (general and administrative) related to equity incentive grants increased by $14.1 million to $14.9 million for the six months ended June 30, 2020, as compared to $0.8 million for the six months ended June 30, 2019.

The increase in noncash compensation expense was primarily related to greater compensation expense during the six months ended June 30, 2020 related to restricted stock and stock options granted to executive personnel.

Noncash compensation expense (general and administrative) related to equity incentive grants increased by $37.2 million to $38.6 million for the nine months ended September 30, 2020, as compared to $1.4 million for the nine months ended September 30, 2019.

The increase in noncash compensation expense was primarily related to greater compensation expense during the nine months ended September 30, 2020 related to restricted stock and stock options granted to executive personnel.

Other General and Administrative Expenses .

Other general and administrative expenses was $13.8 million for the six months ended June 30, 2020, as compared to $4.3 million for the six months ended June 30, 2019.

Other general and administrative expenses was $25.4 million for the nine months ended September 30, 2020, as compared to $6.6 million for the nine months ended September 30, 2019.

The increase was due primarily to increased personnel and other general and administrative costs, associated with preparations for a potential commercial launch.

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Interest Expense .

Interest expense increased by $1.5 million to $3.4 million for the six months ended June 30, 2020, as compared to $1.9 million for the six months ended June 30, 2019.

The increase is mainly due to interest expense related to administrative fees in connection with contract manufacturing costs during the six months ended June 30, 2020.

Interest expense increased by $1.6 million to $5.0 million for the nine months ended September 30, 2020, as compared to $3.4 million for the nine months ended September 30, 2019.

The increase is mainly due to interest expense related to administrative fees in connection with contract manufacturing costs during the nine months ended September 30, 2020.

Other Income .

Other income was $0.5 million for the six months ended June 30, 2020, as compared to $0.7 million for the six months ended June 30, 2019.

Other income was $0.7 million for the nine months ended September 30, 2020, as compared to $1.2 million for the nine months ended September 30, 2019.

We expect our other income to remain at a comparable level for the remainder of 2020.

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We may continue to incur substantial operating losses even if we begin to generate revenues from our drug candidates.

As of June 30, 2020, we had approximately $275.6 million in cash and cash equivalents, and investment securities.

We anticipate that our cash, cash equivalents, and investment securities on hand as of June 30, 2020 will provide sufficient liquidity for more than a twelve-month period from the date of filing this Quarterly Report on Form 10-Q.

As of September 30, 2020, we had approximately $254.2 million in cash and cash equivalents.

We anticipate that our cash and cash equivalents on hand as of September 30, 2020, along with the additional capital raised in the fourth quarter of 2020 (see Note 5), will provide sufficient liquidity for more than a twelve-month period from the date of filing this Quarterly Report on Form 10-Q.

The actual amount of cash that we will need to operate is subject to many factors, including, but not limited to, the timing, design and conduct of clinical trials for our drug candidates.

We are dependent upon significant financing to provide the cash necessary to execute our current operations, including the commercialization of any of our drug candidates.

Cash used in operating activities for the six months ended June 30, 2020 was $105.9 million as compared to $69.2 million for the six months ended June 30, 2019.

Cash used in operating activities for the nine months ended September 30, 2020 was $162.5 million as compared to $102.4 million for the nine months ended September 30, 2019.

The increase in cash used in operating activities was due primarily to increased expenditures associated with our scale-up for manufacturing as well as ongoing clinical development programs and paydown of accounts payable and accrued expenses.

For the six months ended June 30, 2020, net cash provided by investing activities was $12.7 million as compared to cash used in investing activities of $0.7 million for the six months ended June 30, 2019.

The increase in net cash provided by investing activities was primarily due to greater proceeds from the maturity of short-term investment in treasury securities during the six months ended June 30, 2020.

For the six months ended June 30, 2020, net cash provided by financing activities of $241.2 million related to proceeds from the issuance of common stock as part of our underwritten public offering in May 2020 and our ATM program.

For the nine months ended September 30, 2020, net cash provided by investing activities was $27.6 million as compared to cash used in investing activities of $0.7 million for the nine months ended September 30, 2019.

The increase in net cash provided by investing activities was primarily due to greater proceeds from the maturity of short-term investment in treasury securities during the nine months ended September 30, 2020.

For the nine months ended September 30, 2020, net cash provided by financing activities of $276.4 million related to proceeds from the issuance of common stock as part of our underwritten public offering in May 2020 and our ATM program.

OFF-BALANCE SHEET ARRANGEMENTS

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CONTRACTUAL OBLIGATIONS AND COMMITMENTS

As of June 30, 2020, we have known contractual obligations, commitments and contingencies of $73.1 million related to our long-term debt, contract manufacturer and operating lease obligations.

As of September 30, 2020, we have known contractual obligations, commitments and contingencies of $67.9 million related to our long-term debt, contract manufacturer and operating lease obligations.

Payment due by period (in thousands)

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Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period.

We review and accrue CRO expenses and clinical trial study expenses based on work performed and rely upon estimates of those costs applicable to the stage of completion of a study.

We review and accrue CRO expenses

and clinical trial study expenses based on work performed and rely upon estimates of those costs applicable to the stage of completion of a study.

Accrued CRO costs are subject to revisions as such trials progress to completion.

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An entity should only remeasure equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date.

Upon transition, the

entity is required to measure these nonemployee awards at fair value as of the adoption date.

The entity must not remeasure assets that are completed.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis