Q2 2023 TG Therapeutics Inc Earnings Call

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Operator: Greetings and welcome to the TG Therapeutics Second Quarter, 2023 Financial Results and Business Update Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jenna Bosco. Thank you, Ms. Bosco. You may begin.

Jenna Bosco: Thank you. Welcome everyone, and thanks for joining us this morning. I am Jenna Bosco, and with me today to discuss this morning's news about our former US commercialization partner, as well as the results for the second quarter of 2023, are Michael Weiss, our chairman and chief executive officer, Adam Walden, our chief commercialization officer, and Sean Power, our chief financial officer. Following our Safe Harbor statement, Mike will provide an overview of today's news, as well as our recent corporate developments. Adam will give an update on our commercialization efforts, and Sean will provide a brief overview of our financial results before turning the call over to the operator to begin the Q&A session.

Jenna Bosco: Before we begin, I'd like to remind everyone that we will be making forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. These forward-looking statements include statements about our anticipated future operating and financial performance, including sales performance, projected milestones, and expectations for our marketed and pipeline products. TG cautions that these forward-looking statements are subject to risks that may cause our actual results to differ materially from those indicated.

Jenna Bosco: Factors that may affect TG therapeutics operations include various risk factors that can be found in our SEC filing. In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. This conference call is being recorded for audio rebroadcast on TG's website, www.tgtherapeutics.com, where it will be available for the next 30 days. Now, I would like to turn the call over to Mike Weiss, our CEO.

Michael S. Weiss: Thanks, Jenna, and good morning, everyone, and thanks for joining us on today's call. We are excited to present to you our second quarter 2023 financial results, representing the first full quarter of Brumby sales, which, like the first quarter of 2023, exceeded our expectations. But before I do, I want to kick off today's call by highlighting this morning's news relating to our agreement for the ex-US commercialization of Breaum. As you may recall, in June.

Michael S. Weiss: Brionvi was approved in the European Union to treat adult patients with the relapsing forms of MS who have active disease defined by clinical or imaging features. Today, we are very happy to announce that we've entered into an ex-US commercialization agreement for Brionvi with Nurex, a leading European specialty pharmaceutical company focused on the treatment of central nervous system disorders or CNS disorders. We are very excited to be partnering with them to launch Bromvi in Europe.

Michael S. Weiss: The neurology-focused approach, broad European platform, and entrepreneurial organization really resonated with us as an attractive partner for Brumvi and TG. Nurex Farm has over 35 years of experience in the CNS space, a direct presence in 20 European countries, and an extensive commercial CNS team, and, in addition, they have committed to add over 100 additional field-based commercial and medical MS specialists dedicated to Myanmar.

Michael S. Weiss: Moreover, they have the backing of one of the preeminent global private equity firms, Premier. For all of these reasons, we are confident in their ability to succeed and make embryon via a leading treatment for patients with RMS worldwide. From a deal perspective, the terms provide us with many important benefits that we were seeking when evaluating potential ex-US partnership, including a meaningful up-front payment, which together with a near-term milestone total over $150 million, solidifying our balance. We're also eligible to receive up to an additional $500 million in milestone payments based on the achievement of certain launch and commercial objectives for a total deal value of up to approximately $650 million.

Michael S. Weiss: We will also receive tier double-digit royalties on net product sales up to 30%, which we think will provide significant participation in the success of Breon v. Europe and the rest of the world. And, lastly, and very importantly, as part of the deal, we retain strategic flexibility in the event of an acquisition of PG within the next two years with an option to buy back all rights under the commercialization. As we noted previously, retaining this type of strategic flexibility was core to our consideration of an ex-US transaction, and Nurex Farm and its backers appreciated that need.

Michael S. Weiss: In exchange, Narex Farm will have the exclusive right to commercialize Brionvi in territories outside the United States, Canada, and Mexico, which we have retained, and excluding certain Asian countries which we had previously partnered with. As I said earlier, we are very excited to partner with Nurex Farm and believe they are well positioned to successfully launch Burund in Europe, which we expect to commence in Germany in the next six months. With that, let me touch upon the U.S. Rionvi launch deck, which remains our primary focus.

Michael S. Weiss: As a reminder, it received U.S. FDA approval late last year and officially launched at the end of January of this year as the first and only anti-CD20 monoclonal antibody to treat patients with relapsing forms of MS that can be administered in a one-hour infusion twice per year following the starting dose.

Michael S. Weiss: I'm delighted to share that we experienced significant growth in revenues and prescriptions over the first quarter of this year, illustrating what we believe is strong early demand for Breemble. Equally noteworthy is the breadth of centers and providers willing to embrace this new treatment option, demonstrating the trust and confidence they have in Brumvi and TG. Our early performance is a testament to the dedication and passion of our entire PG team, who have relentlessly worked to bring Brionvi to patients with RMS.

Michael S. Weiss: The enthusiasm for Brionvi continues to build, and the feedback we have received continues to encourage us that the unique attributes of Brombe are supportive of its best in class potential, including its glycoengineering for efficient B-cell depletion, the lowest reported annualized relapse rates of any CD20 monoclonal antibody in MS Phase 3 trials, and a rapid and reliable one-hour infusion.

Michael S. Weiss: As we move into the third quarter, we believe we are building a solid foundation for future Brionvi growth. We continue to see adoption from both major academic centers and community centers and believe that that adoption will continue to grow, especially now that we have a permanent J-code in place and improved insurance coverage for Brionvi. All of these factors, along with the continuing growth of the CD20 market within the overall MS treatment landscape, further strengthen our confidence in the future potential of Breonbe.

Michael S. Weiss: I'll stop there as our chief commercialization officer, Adam Wallman, will join us shortly to run more detailed launch metrics. But as you can hear, I'm extremely impressed with the progress the team has made to date and look forward to an impactful second half of 2023. Before I turn the call over to Adam, I just want to touch briefly on TG's cash position. Following the Newark's Farm transaction, we have a pro forma cash balance of approximately $285 million.

Michael S. Weiss: Given our relatively stable OPEX and growing revenues, we believe we now have sufficient capital to fund our operations into the foreseeable future without the need to raise additional capital. Of course, this projection is subject to many variables, but suffice to say, as of today, we are confident with our cash position. With that, let me turn the call over to Adam Waldman, our chief commercialization officer, to share some additional color on our first full quarter of launch. Adam.

Adam Waldman: Yep, thank you, Mike, and good morning, everybody. Before I jump into the quarterly results in the U.S., let me start by saying how excited I am to be partnering NERX Farm to launch Breonby in Europe and other markets around the world. They share our entrepreneurial mindset and urgency and will undoubtedly make Brand a top priority. From a commercial perspective, I am very impressed with their capabilities, expertise, and presence in the neurology space.

Adam Waldman: And I believe they will do an excellent job accelerating the launch and quickly bringing Briambi to patients around the world. As far as the U.S. performance in the second quarter, which as Mike mentioned is our first full quarter in the market,

Adam Waldman: We are very pleased with the progress we're seeing with Breonby, and we continue to exceed our internal expectations. We have built positive momentum in the first half of the year and are encouraged by the launch trajectory to date, with second quarter net sales for Brambia of $16 million, representing over 100% growth quarter over quarter. Key highlights from the quarter include increases in patient demand growth, where we saw daily average hub enrollments nearly double quarter over quarter, with greater than 800 Brumby prescriptions coming through our hub in the second quarter, bringing our launch-to-date total to more than 1,200 new patient scripts.

Adam Waldman: As we have mentioned in the past, we believe this figure captures 80 to 90% of the total new scripts written. And while it is challenging to determine the exact number, we saw dramatic increases in new patient infusions in the second quarter.

Adam Waldman: Importantly, patient and physician feedback continues to be overwhelmingly positive. In our market research, the majority of Brombe prescribers report having a very positive experience so far, with nearly all patients completing the one-hour infusions as expected. We also continue to increase our breadth of adoption, adding more than 100 plus incremental accounts and over 170 incremental prescribers, bringing the total to over 225 accounts and over 340 prescribers launched to date. This includes both academic and community centers across all regions of the U.S. At this point, we have seen a high percentage of our initially targeted accounts prescribe Brombe, and we intend to broaden our focus in the second half of the year.

Adam Waldman: We also continue to see broad utilization across patient types, including newly diagnosed and switches that are both new to CD20 and from other CD20 platforms. Importantly, the feedback we have received from customers on the unique profile of BrioMB continues to be encouraging. We routinely hear that the predictability of the one-hour fusion, combined with the annualized relapse rate of less than 0.1, are important differentiators for BrioMB.

Adam Waldman: Through our market research, we have also found the vast majority of BramV prescribers plan to increase their use of BramD over the next six months. We've launched with a focus strategy to maximize our market opportunity with a nimble and experienced team who are producing early results. Neurologists' perceptions of TD rep performance are outstanding, and outpaces our competition on almost all trials.

Adam Waldman: The team is actively engaging with accounts and has shown strong share of voice among customers on par with leading MS therapy. I'm extremely proud of the team's performance to date and their continued commitment to the MS community. Our growing patient demand in the form of enrollment and new patient effusions, increasing breadth of adoption by prescribers and centers, and an effective J-code as of July 1st, we believe, puts us in a great position for the second half of the year.

Adam Waldman: I am also very pleased to report that we now have achieved pair coverage for approximately 80% of commercial and Medicare lives, giving us coverage for Brionby at parity with Ogrevis across the vast majority of these plans.

Adam Waldman: If you recall, our corporate goal was to achieve 80% coverage by the end of the year. Accomplishing that by mid-year far exceeds our expectations and is a testament to the attractiveness of Rambita payers and the strong efforts of our market access team. We also made solid, solid progress in the quarter securing additional institutional formulary coverage. While many of these institutions have been slower moving than we anticipated, we expect they will increase adoption into the second half of the year.

Adam Waldman: Following a strong start in Q1, this was another very solid quarter for the BrieMV launch. We continue to make progress across all fronts and believe BromV offers a best in class profile. We continue to see MS specialists expand their use of CD20s and anticipate this trend will continue, given the therapeutic index of the drugs in this class, and further believe IV therapies will continue to lead the market. We now have a permanent J-Code in effect, which helps with reimbursement.

Adam Waldman: Hair coverage is significantly ahead of schedule, and major health systems have added and are continuing to add Rambi to their formulas. While we still have a lot of work to do, we are really pleased with the progress we've made in Q2. If that's not enough, I'll turn the call over to Sean Power, RCS. Thank you, Adam, and thanks everyone for joining us.

Sean A. Power: Earlier this morning, we reported our detailed second quarter 2003 financial results, which can be viewed in the investors and media section of our website. I'd like to begin today's call by touching on our cash position. As we released earlier this morning and as highlighted by Mike, we are pleased to report that the XUS commercialization agreement, the Nerox Farm, contains an upfront cash payment of $140 million and additional near-term cash milestones of approximately $12.5 million.

Sean A. Power: During the second quarter, we were also able to take advantage of favorable market conditions to bolster our balance sheet and raised approximately $46 million in net proceeds from the utilization of our ATM facility at an average price of approximately $34. All told, we ended the second quarter with approximately $145 million in cash, and when accounting for the $140 million upfront payment, have a current pro forma cash balance of approximately $285 million.

Sean A. Power: We believe our current capital, when coupled with modest premium revenue assumptions, will take us into the foreseeable future without the need to raise incremental capital. Turning to some of the other key financial metrics for the quarter. First, as Adam previously reported, we are pleased to announce 16 million in Bramvi net sales in our first full quarter since launch, representing 100% growth over the first quarter of 2020 and 23.8 million in cumulative net sales since long.

Sean A. Power: As for our broader financial results, our net loss for the second quarter of 2023, excluding non-cash items, was approximately $35.1 million, roughly in line with the first quarter of 2023, where we saw a net loss of $32.4 million when excluding non-cash items. Our gap net loss for the second quarter of 2023 is approximately 47.6 million, or 34 cents per share, compared to a gap net loss of 40.5 million, or 30 cents per share, in the second quarter of 2022. With that, I will now turn the call back over to the conference operator to begin the Q&A.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.

Operator: You may press star 2 if you would like to remove your question from this. For participants using speaker equipment, and may be necessary to pick up your handset before pressing the start button, one moment please while we poll for questions. Thank you. And our first question is from Eric Joseph with J.P. Morgan. Please proceed with your question.

Eric William Joseph: Good morning. Thanks for taking the questions. Can you talk a little bit about the cadence of new prescriptions for Brumby over the course of 2Q and throughout July to date? I'm curious to know whether the demand curve is accelerating, or plateauing is choppy, and then are you seeing a material impact so far from now having the J-code in place? Yeah, thanks, Eric. Adam, want to go ahead and tackle that.

Adam Waldman: Yeah, I would characterize it as steady growth. And I would say, you know, we saw a little bit of a slowdown in July 4th week, which is a down week, I think, across the board. But we've seen acceleration since. That said, you know, we wouldn't expect an immediate impact on the J-code. It takes time for this J-code to get loaded into payer systems, loaded into institutional systems.

Eric William Joseph: We do believe it's a net positive. We do believe that it will lead to continued growth and will lead to more picking up a Breundi, but it will take time, as I think I've said. Okay, that's helpful. Maybe just to follow it if I could.

Michael S. Weiss: Just when it comes to your updated cash guidance, right, having been funded through operations for the foreseeable future, can you just talk about what that encompasses, if anything beyond Reumbry commercialization in the U.S.? Does it anticipate any further development of the product, perhaps for other indications or formulations? Yeah, thanks, so yeah, it does.

Michael S. Weiss: We are continuing to evaluate the subfew formulation of Breon V, so that's also included in that. We've got our eye on potentially additional clinical studies for BrionVee. We've got some of them.

Michael S. Weiss: We've obviously got the BTK inhibitor in our portfolio that we're evaluating. We're kind of waiting to see what the data looks like from some of the competing products to see if there's an avenue for us to move forward there. And we've said, and we continue to be active in looking at new operational opportunities, and all of that would be included in that cash guidance. Yeah, none of it would be so material to impact where we're going, which appears to be quarter over quarter. Our net loss should continue to decline. Great. Thanks for taking the time to answer the question.

Operator: Thank you. And our next question is from Ed White with H.C. Wainwright. Please proceed with your questions.

Edward Patrick White: Good morning. Congratulations on the second quarter sales and also on the deal announced this morning. Thanks, Anne. You're welcome, Mike.

Michael S. Weiss: Just two questions for me. First, Mike, I just wanted to get your thoughts on the Okravis subcutaneous base three data and the potential impact that will have on the market and where you are as far as you have just mentioned your subcutaneous formulation. And then the second question I have is just for Sean. You know, R&D was up dramatically sequentially in the second quarter. I just wanted to get your thoughts on R&D expenses for the second half of the year. Great, thanks, Ed.

Michael S. Weiss: Yeah, so the Okerva sub-Q, so a few points on that. Obviously, it's made somewhat of a splash among the investment community, which I find interesting in that it wasn't a surprise, right, that this had been telegraphed for quite some time that this data was coming. I think the data that they presented is in line with what we won't expect from a top-line data release. I do think that the details, what's the expression of the devil's in the details, we all look forward to seeing the detailed data presentation.

Michael S. Weiss: I do know that there's a pain measure, which I think is a co-primary endpoint, so we'll be interested to see what that pain level looks like. Anecdotally, we have heard that pain associated with the subcube can be significant in some patients.

Michael S. Weiss: So I think we're all in a position of waiting to see what the actual profile of that product looks like. I think, as we sit here today, Brion, with its one-hour infusion, is the gold standard for convenience and efficacy in the CD20 space. And I think the fact that folks are excited and potentially interested in the fact that Roche is excited and interested in a faster and more convenient, I'll call it the quote-unquote infusion options since it's not a rapid infusion, you know, it's not a simple subcue similar to Cosmta, but it's a process that will take 10 to 15 minutes.

Michael S. Weiss: It will require significant nursing attention to get that in, which we think also will deter centers from getting too excited about using it as a more efficient product. There's nothing more efficient than setting up an hour-long infusion for multiple patients and sitting there.

Michael S. Weiss: So, we do think that Breonvi is setting the standard. We're excited that investors and our competitors are excited about trying to improve the patient experience and trying to compete with us in that patient experience. But for the next year or more, we're going to have a monopoly on that part of the market, and potentially longer. And we'll see what their product looks like. So I think overall, for us, it's all net positive. I think it highlights the fact that there is a need in the marketplace for a more convenient product, and Brombe is the gold standard today.

Sean A. Power: Sean, do you want to tackle that R&D difference? Yeah, sure. Good morning, Ed. Thanks for the question. The increase in R&D over the first quarter of 23 relates primarily to a milestone due to LFB on the EU approval of Brandi. $6 million. Great. Thank you for taking my questions.

Edward Patrick White: Thank you. And our next question is from Roger Song with Jeffreys. Please proceed with your question.

Roger Song: Great, thanks for taking the question. Maybe, Mike, if you can, should give us a little bit of color around the XUS deal regarding the buyback options. So what's the term associated with it?

Michael S. Weiss: For example, what will be the valuation for the buyback, and will that be tied to the commercialization results? Thank you. Sure, thanks for the question, Roger. So yeah, the buyback option is basically designed to provide Nurex with a return, essentially on investment. So whatever they pay us, we basically will pay them back that amount plus a return on their investment. So we think it's a very reasonable approach. I think it accounts for the risk that they're taking in building out what they need to build out to commercialize and building out the market for us and then losing that. But it's also not punitive at all, which would inhibit our ability to conduct a strategic transaction. Got it. Yeah, that's helpful.

Roger Song: And then in terms of the sales, we all track Acuvia and the Symphony. Seems the number, in terms of dollar value, is pretty on track from, at least from Symphony. So we know your market this through the specialty, and you have your own hub. So how should we think about reconciliation of, you know, multiple third-party databases versus your Q&Q sales numbers? Thank you.

Michael S. Weiss: Yeah, so I'll take a quick crack at this, and I'll let Adam speak on this as well. You know, we've been cautioning all along that trying to create some sort of reconciliation between Symphony or Tivia and our numbers at this point is not a useful endeavor. We have said that we believe that over time, once we have several quarters to maybe more than several quarters of utilization, we will reach what I've described as steady state, and at that point, I think people can probably take that data and try to use a multiplier effect or something.

Michael S. Weiss: Some sort of algorithm to calculate what the sales are going to be. But since we're so early in the launch, I think that's a pretty dangerous game to play, and we've warned everyone multiple times publicly in every setting we can that that's not a good idea at this point to try to gauge.

Michael S. Weiss: Having said that, you know, we, you know, sales for the sales for the quarter. We're ahead of R&S expectations.

Michael S. Weiss: We were ahead of all of Wall Street's expectations, honestly, until about two days ago. So we think it was a very good quarter. We're obviously super excited about it. We're right on track of where we want to be.

Michael S. Weiss: So it's obviously a little disheartening when folks somehow, you know, changed the consensus two days before the reporting and then assume that it was a bad quarter. And similarly, to use Symphony numbers to try to gauge what that, that, that's a bad quarter. And similarly, to use symphony numbers to try to try to gauge that sales number is going to be, again, I just, like I said, we find that to be a very dangerous game to play.

Michael S. Weiss: And we've said that multiple times. On that note, I'll let Adam add some more, call it Sure. I mean, Roger, thanks for the question. If you look at other IV products, including in the MS space, you'll see the ratio between Synchony and Icubia and reported net sales is often highest in the launch quarter. Um, you know, I think it can be, and it does come down often.

Adam Waldman: Um, as we said, it can be helpful in understanding directional trends, but it does a poor job capturing the launch dynamics that all new products exist. And as I said, and I think Mike has said, it doesn't capture sales through our direct channel. We've also said that that's going to be highly variable quarter to quarter, especially in the beginning as people figure out how they want to purchase. And that will also impact the ratio between symphony sales and net sales. So again, we recommend not using Symphony or QV as a way to estimate our quarterly nut sales going forward, and I hope that helps.

Roger Song: Excellent. Thank you. That's it on us. Thanks, Roger.

Operator: Thank you. And our next question is from Mayank Mamtsani with B. Riley Securities. Please proceed with your questions.

Mayank Mamtani: Good morning, team. Thanks for taking your questions. Just to quickly follow up on questions previously asked, if you could comment on inventory, on average, held by distributors and offices and also on some of those launch metrics, what percentage you're tracking for, you know.