Greetings, and welcome to the TG Therapeutics First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It would now like to turn the call over to Jenna Bosco. Thank you.

You may begin..

Thank you. Welcome, everyone, and thanks for joining us this morning. I’m Jenna Bosco, and with me today to discuss the first quarter 2023 financial results and provide a business update are Michael Weiss, our Chairman and Chief Executive Officer; Adam Waldman, our Chief Commercialization Officer; and Sean Power, our Chief Financial Officer.

Following our Safe Harbor statement, Mike will provide an overview of our recent corporate developments. Adam will provide 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.

Before we begin, I’d like to remind everyone that we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements about our anticipated future operating and financial performance, including sales performance, projected regulatory 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. Factors that may affect TG Therapeutics operations include various risk factors that can be found in our SEC filings.

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. With that, I’d like to turn the call over to Mike Weiss, our CEO..

Thanks, Jenna, and good morning, everyone, and thanks for joining us on today's call.

2023 is off to an excellent start for us at TG, with the US approval and commercial launch of BRIUMVI, and we are excited to be able to offer patients the first and only anti-CD20 monoclonal antibody approved for relapsing forms of MS that can be administered in a one-hour infusion twice a year following the starting dose.

We believe that BRIUMVI’s clinical profile has best-in-class potential in the treatment of multiple sclerosis, and offers an exciting value proposition for all key constituents, including patients, providers, and payers. Today, we are pleased to share the results of our first partial quarter of sales commencing on January 26, 2023.

As such, we are essentially reporting on the first two months of BRIUMVI commercial availability. Our Chief Commercialization Officer, Adam Waldman, will join us shortly to provide some detailed metrics surrounding the first quarter results.

Accordingly, I will keep my comments regarding the launch at a high level, and touch on a few other topics that may be of interest to investors.

With respect to the launch, we have said for some time that the profile of BRIUMVI has been well received by healthcare providers, and we are pleased to see such enthusiasm carrying through to the launch phase. Early adoption has come from both major academic centers and community practices.

Geographically, all of our territories have seen HCPs prescribing BRIUMVI, and we have seen nice adoption within our target accounts.

In terms of patients, we are also seeing a nice distribution of those that are new to MS treatment, new to CD20 treatment, and also switches from other CD20s, which we believe further underscores the attractiveness of the BRIUMVI profile.

Overall, I believe our commercial teams and medical teams are doing a fantastic job introducing BRIUMVI to, and educating healthcare providers on, the attributes of BRIUMVI, as well as building payer access, and I'm very pleased with the launch thus far.

With that, I'll move on and I want to briefly talk about our European marketing authorization application, and our ex-US launch plans.

At the end of March, about a month ago, we announced that the Committee for Medicinal Products for Human Use of the European Medicines Agency, such as the EMA, issued a positive opinion recommending the approval of BRIUMVI for the treatment of adult RMS patients with active disease defined by clinical or imaging features.

With this opinion, we expect to hear a final decision from the EMA by early June. We continue to evaluate the best commercial pathway for us in Europe, either go it alone or partner, and we will seek to answer that question in the coming months to enable a European launch later this year, if approved.

Whatever pathway we select, we see Europe as another opportunity to create additional shareholder value by making BRIUMVI available internationally. Finally, let me discuss TG's cash position.

As reported, we ended the quarter with approximately $160 million in cash, when you include the $20 million of additional capacity available to us under our Hercules facility. We continue to believe our current cash and associated incremental Hercules capacity, along with modest assumptions of revenue, will be sufficient to take us into mid-2024.

Of course, if revenues continue to exceed those in our cash model, our current cash should last even longer With our growing revenues and relatively stable burn, it is not clear how much, if any, amounts we would need to raise prior to cashflow breakeven.

Accordingly, we are quite comfortable with our current cash position and with our many options for adding to the balance sheet in non-dilutive or minimally dilutive ways. With that, let me turn the call over to Adam Waldman, our Chief Commercialization Officer, to share some additional color on our first quarter of launch.

Adam?.

Yep. Thank you, Mike, and good morning, everybody. I'm excited to provide an update on our first quarter commercial performance. As Mike noted, BRIUMVI was approved by the end of 2022, and drugs first became available at the end of January 2023.

We are pleased with the initial adoption of BRIUMVI by the MS community, highlighted by net sales of $7.8 million in just the first two months of commercial launch, exceeding our internal expectations.

We believe our commercial teams executed exceptionally well in the first quarter, successfully engaging with nearly 100% of our initial targeted accounts, educating on BRIUMVI’s product profile, proper infusion techniques, and helping to activate accounts to be ready to prescribe.

We invested heavily to build on what we believe is a best-in-class patient support program, and the team is operating effectively to support our accounts and help patients to navigate the access and insurance process, and the hurdles that are common in the first stages of a launch.

The feedback from our customers on the responsiveness of our team has been positive, and I believe we've made a lot of progress in a short period of time establishing TG as a committed partner in the MS community. Based on the feedback from customers, we continue to believe that the BRIUMVI profile is attractive.

Many of our healthcare providers have let us know that the one-hour infusion, combined with the lowest ARR seen in a Phase 3 trial, are important and relevant differentiators in a competitive space. We believe in an important indicator of early success is measured by both breadth and depth of use.

Accordingly, we were pleased to see that over 165 physicians from more than 125 centers in the US, prescribed BRIUMVI in the first partial quarter of our launch. Additionally, we believe prescriptions leading to registrations in our patient support hub are a strong leading indicator of demand for BRIUMVI.

Accordingly, we were pleased to see that in our first partial quarter, more than 400 patients were prescribed BRIUMVI and enrolled in our hub, which we believe captures approximately 80% to 90% of total prescriptions in the quarter, as not all prescriptions will lead to registration at the hub.

It was also nice to see that there was significant acceleration of prescriptions in March over February, and we continue to see acceleration of prescriptions in April. Overall, we believe this represents strong demand for BRIUMVI in the early stages of launch, which we believe is being driven by BRIUMVI’s highly attractive therapeutic profile.

In terms of patient access, our pricing strategy was aimed at providing broad and fast access to BRIUMVI, and we believe that strategy is working, as we continue to track ahead of our internal estimates on payer coverage.

I'm pleased to share that we now have coverage policies in place for over 50% of covered lives across the US, which puts us well ahead of our mid-year goal and in good position to be able to hit our corporate goal of achieving broad access to BRIUMVI, with greater than 80% coverage by the end of 2023.

We also recently announced that the US Centers for Medicare and Medicaid Services, or CMS, has issued a permanent J-Code for BRIUMVI, which will become effective on July 1, 2023. This is great news.

In addition to streamlining the reimbursement process, we believe this will facilitate additional patient access, as there are many accounts that will wait to use BRIUMVI until the J-Code becomes effective on July 1.

Additionally, some of our largest academic institutions in the country are not yet prescribing BRIUMVI, as they have formulary processes that can take up to six months or more.

Accordingly, we see BRIUMVI accelerating in the second half of the year once the permanent J-Code is effective, and as these larger centers gain formulary approval and we continue to expand our payer coverage. So, to conclude, we feel as though we are off to a solid start on the BRIUMVI launch.

We believe we have the right team focused in the right places with a drug that we believe provides an attractive profile for physicians, patients, and payers. We are seeing strong early demand and willingness to try BRIUMVI from the top volume MS centers and top tier physicians across the country in both the academic and private practice settings.

Payer coverage is ahead of schedule, and we believe operational hurdles such as the J-Code and institutional formulary access, will continue to improve throughout the year. With that, let me turn the call over to Sean Power, our CFO, to discuss the quarterly financial results..

Thanks, Adam, and thanks, everyone, for joining us. Earlier this morning, we reported our detailed first quarter 2023 financial results, which can be viewed on the Investors and Media section of our website.

I'd like to begin today's call by again highlighting that we are pleased to report $7.8 million of BRIUMVI net product revenue in the first quarter.

As for our broader financial results, our net loss for the first quarter of 2023, excluding non-cash items, was approximately $32.6 million, down more than 50% from the first quarter of 2022, where we saw net loss, excluding non-cash items, of approximately $67 million.

The year-over-year decrease is primarily the result of our disciplined and focused approach to spending, and the streamlining of our R&D programs. Our GAAP net loss for the first quarter of 2023 was $39.4 million or $0.28 per share compared to a GAAP net loss of $69 million or $0.51 per share in the first quarter of 2022.

And finally, on our cash position, we ended the first quarter with approximately $140 million in cash, cash equivalents, and investment securities, which includes $25 million of capital drawn in the first quarter under our existing Hercules facility.

Additionally, we recently amended our Hercules facility and now have the ability to draw $20 million at our discretion into September of this year, leaving us with available capital of approximately $160 million. We believe our available capital, when coupled with modest BRIUMVI revenue assumptions, will take us out into mid-2024.

With that, I'll now turn the call back over to the conference operator to begin the Q&A..

Thank you. [Operator Instructions] Our first questions come from the line of Eric Joseph with JPMorgan. Please proceed with your questions..

Hi, good morning. Thanks for taking the questions. Nice trends on the quarter.

Maybe Adam, could you elaborate a little bit more on sort of the mix you're seeing between sort of new to CD20 versus switches? Is it sort of more or less than you anticipated? And then I'm also curious about any, I guess, feedback you're getting on infusion times in the commercial setting beyond that initial dose, right, I guess is, are you seeing at all any deviation I guess from the anticipated one-hour infusion time for folks getting their follow-up treatment - follow-up infusion? Thank you,.

Adam, go ahead..

Yep. Thanks, Eric, for the question. Yes, as Mike noted, we're seeing a mix of both naive and switch patients. And we're seeing - with the switch patients, we're seeing a distribution of patients coming from a broad set of disease-modifying therapies, including CD20s, Tysabri, and the orals, and injectables.

So, we're seeing a nice mix across all of that. It's a little too early to give more specifics here. We'll wait a little bit on that. As far as the infusion experience, all as expected. I think we're - we don't - we have good feedback on what we're seeing right now is as expected.

We're not seeing any unexpected adverse events, and the feedback on the infusion so far has been largely positive..

Great. And then just ….

And I'll just add ….

Oh, go ahead..

So, I'll just add on top of that, I've obviously been out in the field myself, and everything I've heard is that the infusion time is on target..

Okay, great.

And just, and then Mike, unpacking the print a little bit, is there an inventory component here or a channel component we should be thinking about? And to the extent there is, I guess, how should we be thinking about that sort of building or not, going forward?.

Yes. Adam, you want to go ahead.

Adam, did we lose you?.

Yes, I'm here. Sorry. We did not see a lot of stocking at the distributors in the first quarter, Eric. Inventory is what you would expect in a launch and the vast majority of sales was demand-driven..

Okay, great. Thanks for taking the questions..

Thank you. Now our next questions come from the line of Ed White with H. C. Wainwright. Please proceed with your questions..

Good morning. Thanks for taking my questions and congratulations on the sales number. Perhaps you can give us a few comments on percentage of free drug, what percentage of patients you're seeing take advantage of the patient access programs..

Sure.

Adam?.

Yes, we saw - Ed, thanks for the question. We saw about 10% to 15% of free goods on top of the sales that we saw. So, 10% to 15%. The majority of that was through our quick-start program. We do expect that those patients will convert to commercial drug in the second half of the year..

Great, thanks. And just a question on expenses.

R&D was dramatically lower in the first quarter versus the fourth quarter of last year, and the SG&A was much higher as you're proceeding with the launch, I'm just wondering if there's any guidance you can give us on what those expenses are going to look like quarter-over-quarter throughout the year and how they ramp..

Sure.

Sean, you want to tackle that one?.

Yep, sure. Thanks, Ed. One thing to note on the R&D front is prior to approval, the manufacturing of BRIUMVI would've run through R&D. That'll now run through inventory. So, that is, of course, part of the decrease there, as well as sort of the streamlining of our broader R&D programs.

So, I would say, I'd expect R&D to remain pretty consistent with what you saw in the first quarter over the remainder of ‘23. And I would express the same sentiment for SG&A as well. .

Okay, great. Thanks, Sean, for taking my questions..

Thank you. Our next questions come from the line of Prakhar Agrawal with Cantor Fitzgerald. Please proceed with your questions..

Hi, good morning. Thanks for getting my questions and congrats on the great quarter. So, firstly, maybe a clarification, out of the greater than 400 prescriptions, how many patients were infused in the first quarter? And I had a follow-up..

Yes, sure. I'll take a crack and then Adam, want to share on top. So, we don't know exactly how many patients get infused. We don't have access to that information.

So, we only know of what - we only actually know when the script is written, and only the scripts that go through the hub, right? So, we don't have perfect information total scripts, and we don't have very much information other than anecdotal from the field on what actually gets infused and when it gets infused.

So, and I think the 400 plus, up to maybe another 50 to 100 perhaps, we don't know exactly prescriptions were written during the quarter, most or some of those will be fulfilled in the quarter. We don't know. Some will be fulfilled in the next quarter perhaps. But - and perhaps some won’t get filled it off, to be honest.

So, I think the demand, as Adam mentioned in his prepared remarks, was quite strong, and we'll see those conversions into final infusions over time, and we'll get some of - we will, I think over time, be able to capture the infusions that occur for people who went to the hub.

But that's - and that's basically just our reps going to the sites and actually collecting that information. And so, at this point, that's - it's way too early for us to have a good number on that.

Adam, any thoughts there?.

No, you're right. I mean, we just don't have the accurate information at this point, so..

Got it. And my second question, consensus for the full year is around $65 million to $70 million, which, based on my math, would imply 2000 to 2,500 patients on BRIUMVI, depending on how gross to net discounts pan out.

So, I know you guys are not giving guidance right now, but if you can comment on your comfort level on where the Street is at based on the trends you're seeing right now. Thank you..

Adam, what would you like to say to that?.

Yes, I think it's still too early. We're still early in this launch. I think we'd like another quarter of time to give you guidance on that..

I guess if I can have one more question. How do you expect the gross to net discounts to track over the course of the year, and what was the gross, net for this quarter? Thank you..

Yep. Gross, net in the quarter was 77%. We do expect that to fluctuate quarter-to-quarter. Source of business will change. There will be some fluctuation. So, in the first quarter was 77%. We are not going to give any guidance yet the full year. As we get more information, we'll continue to update you..

Thank you..

Thank you. Our next questions come from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your questions..

Hi. Good morning, guys, and congrats in the quarter.

I guess just starting off a little bit, can you elaborate a little bit more on your ex-US plans, and how you're thinking about partnering versus going it alone?.

Yes. So, I mean, again, we are just continuing to do the analysis of what the ex-US market looks like. I mean, we've kind of narrowed it down that if we’re going alone, we'd probably focus primarily in Germany where we think the vast majority of the ex-US market resides. There's obviously more global opportunity than that.

But again, if it's going to be a go it alone strategy, we'll probably be more focused and at least start there. And obviously, there's other European countries we could add on pretty easily. On the partnership side, look, we continue to evaluate potential partners.

Obviously, one of the biggest concerns we have is doing a partnership when we recognize the value we can achieve for a partnership is going to be less than we probably get for the ex-US rights in a strategic relationship. So, it's important to us to manage that, make sure we have flexibility with the ex-US territory.

So, I think, again, we're looking into and we're evaluating the opportunities available to us, both alone and with partners, and we're getting close. Hopefully, we're going to make that decision in the coming months, and again, like we said in the prepared remarks, hopefully to be prepared to launch later this year..

Okay. And then in terms of maybe a question for Adam, how you’re messaging and specifically I guess the infusion times and the current label, the product, is initially resonating with the prescribers out there in the field.

What type of feedback are you getting?.

Yes, thanks, Matt. I think where we're focused on is feedback that we've gotten from our customers is that it's really the efficacy combined with the efficiency. So, the efficacy of the drug is important to all physicians that are taking care of patients. But what BRIUMVI adds is the efficiency of a faster infusion and overall infusion experience.

So, that's what's resonating with customers. Of course, the overall experience that they have with the infusion itself, we’ll certainly be tracking and watching, as we noted before. And we think the consistency of being able to - in our trial, if you remember, 95% of the infusions were delivered without interruption.

And that's an important thing for us to continue to watch in the real world and make sure that that’s consistent with the trial results. But if that does play out, that will also be a very important thing to physicians and infusion centers going forward..

Okay, that's helpful.

And then the last question in terms of IMS and Symphony databases, how should we think about the capture rate there kind of now and going forward and the usefulness of those sources?.

Yes. I’ll jump in for a quick commentary, and then Adam, provide some more. I think in the early days, people should use those resources with severe caution. I don't think they tracked very well early on.

I assume at some point later on in the launch, probably closer to third, fourth quarter, into next year, there'll be an established pattern and we can get a sense of what they're actually capturing versus what's actually happening. But I think personally, I would use those numbers with extreme caution.

Adam, any thoughts?.

Yes. I mean, the only thing I would add is that we do have a direct distribution program that is not captured in the Symphony data, which makes it even more difficult to interpret those numbers. So, I agree with Mike's comments..

Thanks, and congrats again..

Thank you. Our next questions come from the line of Mayank Mamtani with B. Riley. Please proceed with your questions..

Good morning team. Thanks for taking our questions and congrats also on the progress.

So, maybe just at a higher level, if you could kind of talk about the distribution network and maybe specifically the prescription trends that you may have visibility from the institutional buyer versus the direct purchase by clinics and what sort of revenue recognition mix exist, given patient support programs may apply more to one channel versus the other.

And if you could comment on how that trend may evolve over the course of the year. Then I have a follow-up..

Go ahead, Adam..

Yes, Mike, if I understood the question, we have addition - I mean, the way we set this up was to make sure that we're meeting customers where they want to be. We have a - we are selling at all the major distributors for BRIUMVI, and we also have our own direct distribution program.

I'm not going to get into the percentages of each at this point, but that’s the general layout of our distribution program..

Okay.

And how you expect to see this evolve through the course of the year? Are there - with academic centers coming on board and also the impact of J-Code and are you able to comment on how this mix may evolve through 2023 and beyond?.

Yes, I think we've been consistent in saying that we do believe this launch will gradually accelerate as some of these operational challenges alleviate throughout the year. The J-Code is one very good news that we got the J-Code that will become effective on July 1st.

As I mentioned in the prepared remarks, we'll continue to see formulary wins at major academic centers. So, that will continue to increase our academic prescribing. So, we do expect an acceleration in the second half of the year as these operational hurdles continue to alleviate. And yes, I hope that answers your question..

Yes, no, thank you. And just ….

Yes. I could add, if you want, I'll add on top of that a little bit ahead.

I mean, I think - as I think Adam mentioned in his prepared remarks, I mean, we've had a really nice distribution between community and academic, probably slightly skewed toward the community side, which, again, getting back to the cautionary notes on IMS and Symphony, the community's more likely to use the direct channel, which does not get captured.

So, that's one portion of the distribution. I think to Adam's point, as we knock down these hurdles, each side will open up a little bit more, right? So, the community side, the J-Code is probably more of a problem than formula access because they're smaller and they do their own formulary, and they don't have a big bureaucracy.

On the academic side, it's going to be the formulary which will open up more access to a lot more academic centers. My guess is, if I had to guess, my guess is the blend later in the year probably goes back toward the academic side. But again, it's hard to really know at this point.

We're seeing great demand from both sides, and we know that there's a lot of pent-up potential from both sides. So, I'm looking forward to seeing how that all plays out myself, actually..

Got it. Yes, thanks for that entire color from both of you. And then on EU just quickly, I know it's a little early. We are not in the market yet, but we know that anti-CD20 penetration may not have been that prolific that we've seen in the US.

So, I was just curious to hear your thoughts on whether - what your understanding is, the reasons for that, and if at all, you expect that you could participate in that increased penetration of (indiscernible) going drug class in EU, if there's any incremental color there.

And then lastly, in your cashflow estimate, are you incorporating any EU revenues? And also on the cost side, doing additional clinical trials, for example the SubQ study is something, Mike, you talked about in the prior call, if there's been any progress on making a decision on that, or if you're just waiting for the Roche Phase 3 readout in the third?.

Yes. So, on the EU revenue front, I don't think we have anything incremental other than we do see nice growth ex-US for CD20. And I think as you noted, there's a lot of potential to grow the CD20 class. And again, we think with BRIUMVIs best-in-class profile potential, we think that it's a nice offering.

We've had really good discussions with some KOLs in Germany. So, we do feel very good about the potential opportunity. And we agree with you that there's plenty of room for growth of CD20 s outside the US. So, I don't have much more for you on that, but I do take your point.

In terms of cost of goods, the clinical trials, so in terms of some of the trial expenses, yes, I don't see a major increase during the course of this year. In terms of the SubQ development right now it's a CMC project. So, we need to understand exactly what the properties, the physical, chemical properties of that SubQ will look like.

So, that’s not going to really hit probably from a clinical trial perspective significantly this year. We have some other clinical trials that we're working on that are not going to be costing that much, and we continue to lower the burn from the legacy trials.

So, there's still room to save money on clinical trials that we've had to carry on and carry forward, some for ethical reasons, but we're winding those things down at this point. So, I think as those come down, some of the new clinical stuff that we're doing will come in.

But as Sean mentioned, I think our R&D line should be pretty stable throughout the year..

Thank you for taking my questions..

Thank you. Our next questions come from the line at Josh Schimmer with Evercore. Please proceed with your questions..

Thanks for taking the question, and apologies if I missed this, but the cost of goods line is relatively low considering that you do owe a royalty. Was there capitalized cost of goods that you're working through? And if so, how much and what do you expect the normalized cost of goods as a percentage of sales to be going forward? Thanks..

Yes, so that's a great point. I'm going to let Sean handle that, but yes, we did capitalize from the inventory that we built up prior to launch. But go ahead, Sean, perhaps some more detail there..

Yes, that's exactly right, Mike. Any goods that we produced prior to approval were expensed through R&D. So, the early part of the launch, we’ll work through that stack of goods, if you will. I don't want to call it inventory because it's not that.

In the first quarter, we did capitalize some inventory on the balance sheet that amounted to about $25 million, and that will likely be the sole campaign in 2023, and then we'll see some again in ‘24..

Got it. Thanks very much..

Thank you. That is all the time we have for questions today. I would now like to turn the call back over to Mike Weiss for any closing comments..

Great. Thank you. So, again, as I believe you've heard today, we are quite pleased with the launch to date. We remain confident that BRIUMVI offers patients a differentiated CD20 option in a growing class.

We believe the BRIUMVI profile, along with the convenient one-hour infusion administered twice a year at the lowest price of any branded MS treatment, together affirm our belief that BRIUMVI has the best-in-class potential. I want to thank everyone at TG for a fabulous effort.

In addition to the commercial and medical teams that are on the front lines, our clinical, regulatory, safety, manufacturing, supply chain, quality, legal and compliance, and finance teams, have all performed at the highest levels to make this early launch possible. Everyone at TG remains committed to serving the MS community.

And everything we do, we do with the focus on improving the lives of those living with MS. Thanks again for joining us today, and have a great day..

Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day..