| ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | DESCRIPTION OF BUSINESS We are a biopharmaceutical
company dedicated to developing and delivering medicines for patients with B-cell mediated diseases, including Chronic Lymphocytic
Leukemia (CLL), non-Hodgkin’s Lymphoma (NHL) and Multiple Sclerosis (MS). We have developed a robust B-cell directed research
and development (R&D) platform for identification of key B-cell pathways of interest and rapid clinical testing. Currently,
we have five B-cell targeted drug candidates in clinical development, with the lead two therapies, ublituximab (TG-1101) and umbralisib
(TGR-1202), in pivotal trials for CLL, NHL and MS. Ublituximab is a novel anti-CD20 monoclonal antibody (mAb) that has been glycoengineered
for enhanced potency over first generation antibodies. Umbralisib is an oral, once daily inhibitor of PI3K delta. Umbralisib also
uniquely inhibits CK1-epsilon, which may allow it to overcome certain tolerability issues associated with first generation PI3K
delta inhibitors. When used together in combination therapy, ublituximab and umbralisib are referred to as ("U2"), or
"1303". Additionally, in early clinical development we have an anti-PD-L1 monoclonal antibody referred to as 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.
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. 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
December 31, 2018, we have an accumulated deficit of $528.3 million. Our major sources of cash have been proceeds
from the private placement and public offering of equity securities, and in 2019 from our loan and security agreement executed
with Hercules (See Note 14 for more information). 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 complete any post-approval regulatory obligations; and successfully commercialize 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 December 31, 2018, we had $68.9 million
in cash and cash equivalents, investment securities, and interest receivable. The Company believes its cash, cash equivalents,
investment securities, and interest receivable on hand as of December 31, 2018 combined with the additional capital being raised
in the first quarter of 2019 and flexible vendor payment arrangements (see Notes 6 and 14) will be sufficient to fund the Company’s
planned operations into mid 2020. 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 operations, including the commercialization of any of our
drug candidates. Our common stock is quoted
on the Nasdaq Capital Market and trades under the symbol “TGTX.” RECENTLY ISSUED ACCOUNTING STANDARDS In July 2018, the Financial Accounting Standards
Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2018-11, “Leases - Targeted Improvements”
(“ASU 2018-11”) as an update to ASU 2016-02, Leases (“ASU 2016-02” or “Topic 842”) issued on
February 25, 2016. ASU 2016-02 is effective for public business entities for fiscal years beginning January 1, 2019. ASU 2016-02
required companies to adopt the new leases standard at the beginning of the earliest period presented in the financial statements,
which is January 1, 2017, using a modified retrospective transition method where lessees must recognize lease assets and liabilities
for all leases even though those leases may have expired before the effective date of January 1, 2017. Lessees must also provide
the new and enhanced disclosures for each period presented, including the comparative periods. ASU 2018-11 provides an entity with an additional
(and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies
the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings
in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements
in which it adopts the new lease standard will continue to be in accordance with ASC 840, Leases. An entity that elects this additional
(and optional) transition method must provide the required ASC 840 disclosures for all periods that continue to be in accordance
with ASC 840. The amendments do not change the existing disclosure requirements in ASC 840. ASU 2018-11 is effective for public business
entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with earlier adoption
permitted. The Company adopted ASU 2018-11 on January 1, 2019 using a modified retrospective method and will not restate comparative
periods. We elected the package of practical expedients permitted under the transition guidance, which allows us to carryforward
our historical lease classification and our assessment on whether a contract is or contains a lease. The adoption of this guidance
resulted in the addition of material balances of right of use assets and lease liabilities to our consolidated balance sheets at
January 1, 2019, primarily relating to our lease of office space (see Note 9). We do not currently expect a material impact to
our consolidated statements of operations as a result of this standard. In June 2018, the FASB issued
ASU No. 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07
expands the scope of FASB Topic 718, Compensation – Stock Compensation (“Topic 718”) to include share-based payment
transactions for acquiring goods and services from nonemployees. 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. The entity must not remeasure assets that are completed. Disclosures required at transition include the nature of
and reason for the change in accounting principle and, if applicable, quantitative information about the cumulative effect of the
change on retained earnings or other components of equity. ASU 2018-07 is effective
for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.
Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company adopted ASU 2018-07
on January 1, 2019. The adoption of ASU 2018-07 did not have a material effect on our consolidated financial statements as of January
1, 2019. The adoption of ASU 2018-07 had no impact on nonemployee performance awards as they are measured based on the outcome
that is probable. In May 2017, the FASB issued
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. The Company adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09 did not have a material effect
on our consolidated financial statements as of and for the year ended December 31, 2018. In November 2016, the FASB
issued ASU No. 2016-18, “Statement of Cash Flows – Restricted Cash” (“ASU 2016-18”). ASU 2016-18
requires that a statement of cash flows explain the change during the period for the total of cash, cash equivalents, and amounts
generally described as restricted cash or restricted cash equivalents. ASU 2016-18 does not provide a definition of restricted
cash or restricted cash equivalents, and does not change the balance sheet presentation for such items. The Company adopted ASU
2016-18 on January 1, 2018. The adoption of ASU 2016-18 did not have a material effect on our consolidated financial statements
as of December 31, 2018. In May 2014, the FASB issued ASU No. 2014-09,
"Revenue from Contracts with Customers" (Topic 606) (“ASU 2014-09”), which supersedes all existing revenue
recognition requirements, including most industry-specific guidance. ASU 2014-09 provides a single set of criteria for revenue
recognition among all industries. The new standard requires a company to recognize revenue when it transfers goods or services
to customers in an amount that reflects the consideration that the Company expects to receive for those goods or services. ASU 2014-09 includes guidance for determining
whether a license transfers to a customer at a point in time or over time based on the nature of the entity’s promise to
the customer. To determine whether the entity’s promise is to provide a right to access its intellectual property or a right
to use its intellectual property, the entity should consider the nature of the intellectual property to which the customer will
have rights. ASU 2014-09 is effective
for interim and annual periods beginning after December 15, 2017. The standard allows for two transition methods - full retrospective,
in which the standard is applied to each prior reporting period presented, or modified retrospective, in which the cumulative effect
of initially applying the standard is recognized at the date of initial adoption. The Company adopted ASU 2014-09 on January
1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material effect on our consolidated
financial statements as of December 31, 2018. Other pronouncements issued by the FASB or other
authoritative accounting standards with future effective dates are either not applicable or not significant to our condensed consolidated
financial statements. USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“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. On an ongoing basis, we evaluate our estimates and judgments, including those related
to accrued expenses and stock-based compensation. Actual results could differ from those estimates. Such differences could
be material to the financial statements. CASH AND CASH EQUIVALENTS We treat liquid investments with original maturities
of less than three months when purchased as cash and cash equivalents. RESTRICTED CASH We record cash pledged or held in trust as restricted
cash. As of December 31, 2018 and December 31, 2017, we have approximately $1.2 million and $0.6 million, respectively, of restricted
cash pledged to secure a line of credit as a security deposit for an Office Agreement INVESTMENT SECURITIES Investment securities at
both December 31, 2018 and 2017 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 are included in interest and other income (expense), net. Unrealized gains, if determined to be temporary, are
included in accumulated other comprehensive income in equity. 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 Effective January 1, 2018,
the Company began recognizing revenue under ASC Topic 606, Revenue from Contracts
with Customers
● Step 1: Identify the contract with the customer
● Step 2: Identify the performance obligations in the contract
● Step 3: Determine the transaction price
● Step 4: Allocate the transaction price to the performance obligations in the contract
● Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the
performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and
identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct”
good or service (or bundle of goods or services) if both of the following criteria are met:
● The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct).
● The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is
not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified
that is distinct. The transaction price is
the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to
a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised
in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the transaction
price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not
occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is
allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each
performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. RESEARCH AND DEVELOPMENT COSTS Generally, research and development
costs are expensed as incurred. Nonrefundable 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 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 December 31, 2018 and December 31, 2017, we recorded approximately
$9.7 million and $8.1 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 related to uncertain income tax positions in income tax expense. Refer to Note 7 for further
information for impact of tax reform. 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 6,528,932, 4,835,706 and 8,033,779 at December 31, 2018, 2017 and 2016, respectively. During the years ended December
31, 2018, 2017 and 2016 the Company incurred a net loss, therefore, all of the securities are antidilutive and excluded from the
computation of diluted loss per share.
December 31,
2018 2017 2016
Unvested restricted stock 4,595,689 4,820,143 7,142,055
Options 1,916,900 -- --
Shares issuable upon note conversion 16,343 15,563 14,812
Warrants -- -- 876,912
Total 6,528,932 4,835,706 8,033,779 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. There was no impairment to goodwill as of December 31, 2018. |
