| ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Description of Business We
are a biopharmaceutical company focused on the acquisition, development and commercialization of novel treatments for B-cell malignancies
and autoimmune diseases. Currently, we are developing two therapies targeting hematologic malignancies. TG-1101 (ublituximab)
is a novel, glycoengineered monoclonal antibody that targets a specific and unique epitope on the CD20 antigen found on mature
B-lymphocytes. We are also developing TGR-1202 (umbralisib), an orally available PI3K delta inhibitor. The delta isoform of PI3K
is strongly expressed in cells of hematopoietic origin and is believed to be important in the proliferation and survival of B-lymphocytes.
Both TG-1101 and TGR-1202 are in clinical development for patients with hematologic malignancies, with TG-1101 also in clinical
development for autoimmune disorders. The Company also has pre-clinical programs to develop IRAK4 (interleukin-1 receptor-associated
kinase 4) inhibitors, BET (Bromodomain and Extra Terminal) inhibitors, and anti-PD-L1 and anti-GITR antibodies. We
also actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment
opportunities. To date, we have not received approval for the sale of any of our drug candidates in any market and, therefore,
have not generated any product sales from our drug candidates. The accompanying
unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles,
or GAAP, for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation
S-X of the Exchange Act. Accordingly, they may not include all of the information and footnotes required by GAAP for complete
financial statements. All adjustments that are, in the opinion of management, of a normal recurring nature and are necessary for
a fair presentation of the condensed consolidated financial statements have been included. Nevertheless, these condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial statements contained in our Annual
Report on Form 10-K for the year ended December 31, 2016. The accompanying condensed December 31, 2016 balance sheet has been
derived from these statements. The results of operations for the three and six months ended June 30, 2017 are not necessarily
indicative of the results that may be expected for the entire fiscal year or any other interim period. Liquidity and Capital Resources We have incurred
operating losses since our inception and expect to continue to incur operating losses for the foreseeable future and, may never
become profitable. As of June 30, 2017, we have an accumulated deficit of approximately $292.5 million. Our major sources
of cash have been proceeds from the private placement and public offering of equity securities. We have not yet commercialized
any of our drug candidates and cannot be sure if we will ever be able to do so. Even if we commercialize one or more of our drug
candidates, we may not become profitable. Our ability to achieve profitability depends on many factors, including our ability
to obtain regulatory approval for our drug candidates; successfully completing any post-approval regulatory obligations; and successfully
commercializing our drug candidates alone or in partnership. We may continue to incur substantial operating losses even if we
begin to generate revenues from our drug candidates. As of June 30,
2017, we had approximately $86.5 million in cash, cash equivalents, investment securities, and interest receivable. [The Company
believes its cash, cash equivalents, investment securities, and interest receivable on hand as of June 30, 2017 combined with
the proceeds raised subsequent to the quarter end will be sufficient to fund the Company’s planned operations through 2018].
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 future financing to provide the
cash necessary to execute our current strategic plan, including the commercialization of any of our drug candidates (see Note
5 for further details). Our common stock
is listed on the Nasdaq Capital Market and trades under the symbol “TGTX.” Recently Issued Accounting Standards In
May 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No.
2017-09, “Scope of Modification Accounting” (“ASU 2017-09”). ASU 2017-09 provides guidance about which
changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity
should account for the effects of a modification unless all the following are met:
● The
fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award
is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used)
of the original award immediately before the original award is modified. If the modification does not affect any of the inputs
to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately
before and after the modification.
● The
vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the
original award is modified.
● The
classification of the modified award as an equity instrument or a liability instrument is the same as the classification of
the original award immediately before the original award is modified. ASU
2017-09 is effective for annual and interim periods beginning on or after December 15, 2017. Early adoption is permitted for public
business entities for reporting periods for which financial statements have not yet been issued, and all other entities for reporting
periods for which financial statements have not yet been made available for issuance. The amendments should be applied prospectively
to an award modified on or after the adoption date. We are currently evaluating the impact the adoption of ASU 2017-09 will have
on our consolidated financial statements. In
January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”).
ASU 2017-04 removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of
the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment
test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the
amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed
the total amount of goodwill allocated to that reporting unit. In addition, ASU 2017-04:
● Clarifies the requirements for excluding and
allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting
units for goodwill impairment.
● Clarifies that an entity should consider income
tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment
loss, if applicable.
● Makes minor changes to the overview and background
sections of certain Accounting Standards Codification (“ASC” or “Codification”) subtopics and topics
as part of the Board’s initiative to unify and improve those sections throughout the Codification. ASU
2017-04 is effective prospectively for annual and interim periods beginning on or after December 15, 2019, and early adoption
is permitted on testing dates after January 1, 2017. We are currently evaluating the impact the adoption of ASU 2017-04 will have
on our consolidated financial statements. Other pronouncements
issued by the FASB or other authoritative accounting standards with future effective dates are either not applicable or not significant
to our consolidated financial statements. Use of Estimates The preparation
of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the applicable reporting period. Actual results could differ from those estimates.
Such differences could be material to the consolidated financial statements. Cash and Cash Equivalents We treat liquid
investments with original maturities of three months or less when purchased as cash and cash equivalents. Restricted Cash We record cash
pledged or held in trust as restricted cash. As of June 30, 2017 and December 31, 2016, we have approximately $0.6 million of
restricted cash pledged to secure a line of credit as a security deposit for an Office Agreement
Investment Securities Investment
securities at June 30, 2017 and December 31, 2016 consist of short-term government securities. We classify these securities as
held-to-maturity. Held-to-maturity securities are those securities in which we have the ability and intent to hold the security
until maturity. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums
or discounts. Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment
to yield using the effective interest method. A decline in the
market value of any investment security below cost, that is deemed to be other than temporary, results in a reduction in the carrying
amount to fair value. The impairment is charged to operations and a new cost basis for the security is established. Other-than-temporary
impairment charges would be included in interest and other (income) expense, net. Dividend and interest income are recognized
when earned. Credit Risk Financial instruments
that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and short-term
investments. The Company maintains its cash and cash equivalents and short-term investments with high-credit quality financial
institutions. At times, such amounts may exceed federally-insured limits. Revenue Recognition We recognize license
revenue in accordance with the revenue recognition guidance of the FASB Accounting Standards Codification (or “Codification”).
We analyze each element of our licensing agreement to determine the appropriate revenue recognition. The terms of the license
agreement may include payments to us of non-refundable up-front license fees, milestone payments if specified objectives are achieved,
and/or royalties on product sales. We recognize revenue from upfront payments over the period of significant involvement under
the related agreements unless the fee is in exchange for products delivered or services rendered that represent the culmination
of a separate earnings process and no further performance obligation exists under the contract. We recognize milestone payments
as revenue upon the achievement of specified milestones only if (1) the milestone payment is non-refundable, (2) substantive effort
is involved in achieving the milestone, (3) the amount of the milestone is reasonable in relation to the effort expended or the
risk associated with achievement of the milestone, and (4) the milestone is at risk for both parties. If any of these conditions
are not met, we defer the milestone payment and recognize it as revenue over the estimated period of performance under the contract. Research and Development Costs Generally, research
and development costs are expensed as incurred. Non-refundable advance payments for goods or services that will be used or rendered
for future research and development activities are deferred and amortized over the period that the goods are delivered or the
related services are performed, subject to an assessment of recoverability. We make estimates of costs incurred in relation to
external clinical research organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including
levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the
related prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued
liability 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. Accrued CRO costs are
subject to revisions as such trials progress to completion. Revisions are charged to expense in the period in which the facts
that give rise to the revision become known. With respect to clinical site costs, the financial terms of these agreements are
subject to negotiation and vary from contract to contract. Payments under these contracts may be uneven, and depend on factors
such as the achievement of certain events, the successful recruitment of patients, the completion of portions of the clinical
trial or similar conditions. The objective of our policy is to match the recording of expenses in our financial statements to
the actual services received and efforts expended. As such, expense accruals related to clinical site costs are recognized based
on our estimate of the degree of completion of the event or events specified in the specific clinical study or trial contract. Prepaid research
and development in our consolidated balance sheets includes, among other things, costs related to agreements with CRO’s,
certain costs to third party service providers related to development and manufacturing services as well as clinical development.
These agreements often require payments in advance of services performed or goods received. Accordingly, as of June 30, 2017 and
December 31, 2016, we recorded approximately $9.7 million and $5.7 million, respectively, in prepaid research and development
related to such advance agreements. Income Taxes Income taxes are
accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period
that includes the enactment date. If the likelihood of realizing the deferred tax assets or liability is less than “more
likely than not,” a valuation allowance is then created. We, and our subsidiaries,
file income tax returns in the U.S. Federal jurisdiction and in various states. We have tax net operating loss carryforwards that
are subject to examination for a number of years beyond the year in which they were generated for tax purposes. Since a portion
of these net operating loss carryforwards may be utilized in the future, many of these net operating loss carryforwards will remain
subject to examination. We recognize interest and penalties, if any, related to uncertain income tax positions in income tax expense. Stock-Based Compensation We recognize all
share-based payments to employees and non-employee directors (as compensation for service) as noncash compensation expense in
the condensed consolidated financial statements based on the fair values of such payments. Stock-based compensation expense recognized
each period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the
period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates. For share-based
payments to consultants and other third-parties (including related parties), noncash compensation expense is determined at the
“measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is
reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of
the award at the reporting date. The awards to consultants and other third-parties (including related parties) are then revalued,
or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date. In addition, because
some of the restricted stock issued to employees, consultants and other third-parties vest upon achievement of certain milestones,
the total expense is uncertain. Compensation expense for such awards that vest upon the achievement of milestones is recognized
when the achievement of such milestones becomes probable. Basic and Diluted Net Loss Per
Common Share Basic net loss
per share of our common stock is calculated by dividing net loss applicable to the common stock by the weighted-average number
of our common stock outstanding for the period. Diluted net loss per share of common stock is the same as basic net loss per share
of common stock since potentially dilutive securities from stock options, stock warrants and convertible preferred stock would
have an antidilutive effect either because we incurred a net loss during the period presented or because such potentially dilutive
securities were out of the money and the Company realized net income during the period presented. The amounts of potentially dilutive
securities excluded from the calculation were 4,290,943 and 6,449,737 for the three and six months ended June 30, 2017 and 2016,
respectively. The following outstanding shares of common stock equivalents were excluded from the computation of net loss per
share attributable to common stockholders for the periods presented because including them would have been antidilutive:
Three and Six Months Ended
June 30,
2017 2016
Unvested restricted shares 4,275,762 5,270,084
Shares issuable upon note conversion 15,181 14,945
Warrants -- 1,164,708
Total 4,290,943 6,449,737 Long-Lived Assets and Goodwill Long-lived assets
are reviewed for potential impairment when circumstances indicate that the carrying value of long-lived tangible and intangible
assets with finite lives may not be recoverable. Management’s policy in determining whether an impairment indicator exists,
a triggering event, comprises measurable operating performance criteria as well as qualitative measures. If an analysis is necessitated
by the occurrence of a triggering event, we make certain assumptions in determining the impairment amount. If the carrying amount
of an asset exceeds its estimated future cash flows, an impairment charge is recognized. Goodwill is reviewed
for impairment annually, or earlier when events arise that could indicate that an impairment exists. We test for goodwill impairment
using a two-step process. The first step compares the fair value of the reporting unit with the unit's carrying value, including
goodwill. When the carrying value of the reporting unit is greater than fair value, the unit’s goodwill may be impaired,
and the second step must be completed to measure the amount of the goodwill impairment charge, if any. In the second step, the
implied fair value of the reporting unit’s goodwill is compared with the carrying amount of the unit’s goodwill. If
the carrying amount is greater than the implied fair value, the carrying value of the goodwill must be written down to its implied
fair value. We will continue to perform impairment tests annually, at December 31, and whenever events or changes in circumstances
suggest that the carrying value of an asset may not be recoverable. Rent Expense and Deferred Rent Rent expense and
lease incentives, including landlord construction allowances, are recognized on a straight-line basis over the lease term, commencing
generally on the date the Company takes possession of the leased property. The Company records lease incentives as deferred rent
and recognizes the lease incentives as reductions of rental expense. The unamortized portion of deferred rent is included in deferred
rent in the condensed consolidated balance sheets. |
