Note 6 - Stockholders' Equity

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Shareholders' Equity and Share-Based Payments [Text Block]

NOTE 6 – STOCKHOLDERS’ EQUITY

Preferred Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock, $0.001 par value, with rights senior to those of our common stock, issuable in one or more series. Upon issuance, we can determine the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock.

Stockholder Rights Plan

On July 18, 2014, we adopted a stockholder rights plan. The stockholder rights plan is embodied in the Stockholder Protection Rights Agreement dated as of July 18, 2014 (the Rights Agreement), between us and American Stock Transfer & Trust Company, LLC, as rights agent (the Rights Agent).

Accordingly, the Board of Directors declared a distribution of one right (a “Right”) for each outstanding share of common stock, to stockholders of record at the close of business on July 28, 2014, for each share of common stock issued (including shares distributed from Treasury) by us thereafter and prior to the Separation Time (as defined in the Rights Agreement), and for certain shares of common stock issued after the Separation Time. Following the Separation Time, each Right entitles the registered holder to purchase from us one one-thousandth (1/1,000) of a share of Series A Junior Participating Preferred Stock, par value $0.001 per share (the Preferred Stock), at a purchase price of $100.00 (the Exercise Price), subject to adjustment. The description and terms of the Rights are set forth in the Rights Agreement. Each one one-thousandth of a share of Preferred Stock has substantially the same rights as one share of common stock. Subject to the terms and conditions of the Rights Agreement, Rights become exercisable ten days after the public announcement that a “Person” has become an “Acquiring Person” (as each such term is defined in the Rights Agreement). Any Rights held by an Acquiring Person are void and may not be exercised.

The Rights Agreement was approved by our Board of Directors on July 18, 2014. The Rights will expire at the close of business on its ten-year anniversary, unless earlier exchanged or terminated by us.

Common Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 175,000,000 shares of $0.001 par value common stock.

On September 5, 2019, we filed an automatic “shelf registration” statement on Form S-3 (the 2019 WKSI Shelf) as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act, which registered an unlimited and indeterminate amount of debt or equity securities for future issuance and sale. The 2019 WKSI Shelf was declared effective in September 2019. In connection with the 2019 WKSI Shelf, we entered into an At-the-Market Issuance Sales Agreement (the 2020 ATM) with Jefferies LLC, Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (each a 2020 Agent and collectively, the 2020 Agents), relating to the sale of shares of our common stock. Under the 2020 ATM, we paid the 2020 Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock. In November 2020, we entered into an At-the-Market Issuance Sales Agreement (the 2021 ATM) with the same terms and agents (each a 2021 Agent and collectively, the 2021 Agents) as the 2020 ATM.

During the year ended December 31, 2021, we sold a total of 72,000 shares of common stock under the 2021 ATM for aggregate total gross proceeds of approximately $2.5 million at an average selling price of $34.25 per share, resulting in net proceeds of approximately $2.4 million after deducting commissions and other transactions costs.

On September 2, 2022, we filed an automatic “shelf registration” statement on Form S-3 (the 2022 WKSI Shelf) as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act, which registered an unlimited and indeterminate amount of debt or equity securities for future issuance and sale. The 2022 WKSI Shelf was declared effective in September 2022. In connection with the 2022 WKSI Shelf, we entered into an At-the-Market Issuance Sales Agreement (the 2022 ATM) with Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (each a 2022 Agent and collectively, the 2022 Agents), relating to the sale of shares of our common stock. Under the 2022 ATM, we will pay the 2022 Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock. The 2022 ATM has replaced the 2021 ATM as the only active ATM program.

During the year ended December 31, 2023, we sold a total of 1,385,700 shares of common stock under the 2022 ATM for aggregate total gross proceeds of approximately $47.1 million at an average selling price of $34.01 per share, resulting in net proceeds of approximately $46.3 million after deducting commissions and other transactions costs. The 2022 WKSI Shelf is currently our only active shelf-registration statement. We may offer any combination of the securities registered under the 2022 WKSI Shelf from time to time in response to market conditions or other circumstances if we believe such a plan of financing is in the best interests of our stockholders. We may need to file additional shelf-registration statements in the future to provide us with the flexibility to raise additional capital to finance our operations as needed. 

Treasury Stock

As of December 31, 2023 and 2022, 41,309 shares of common stock are being held in Treasury, at a cost of approximately $0.2 million, representing the fair market value on the date the shares were surrendered to the Company to satisfy employee tax obligations.

Equity Incentive Plans

The TG Therapeutics, Inc. 2022 Incentive Plan (the 2022 Incentive Plan) was approved by stockholders in June 2022 with 17 million shares available to be issued, of which not more than 10 million shares may be issued pursuant to “full-value awards.” Full-value awards include any award other than an option or stock appreciation right and which is settled by the issuance of stock. As of December 31, 2023, 4,631,204 shares of restricted stock and 2,272,500 options were outstanding, and up to an additional 8,751,892 shares were available to be issued under the 2022 Incentive Plan.

The TG Therapeutics, Inc. Amended and Restated 2012 Incentive Plan (the 2012 Incentive Plan) was approved by stockholders in June 2020. As of December 31, 2023, 5,007,864 shares of restricted stock and 2,424,529 options were outstanding, and no additional shares were available to be issued under the 2012 Incentive Plan as the 2022 Incentive Plan is now the only active incentive plan.

Total stock-based compensation expense included in the consolidated statements of operations was $37.9 million, $19.2 million and $61.3 million during the years ended December 31, 2023, 2022 and 2021, respectively. The $37.9 million is net of $2.9 million of stock-based compensation expense that was capitalized into inventory during the year ended December 31, 2023.

Stock Options

The estimated fair value of the options granted in the years ended December 31, 2023, 2022 and 2021 was determined utilizing the Black-Scholes option-pricing model at the date of grant. The following table summarizes stock option activity for the years ended December 31, 2023, 2022 and 2021:

						Weighted-
						average
				Weighted-		contractual
	Number of			average		term		Aggregate
	shares			exercise price		(in years)		intrinsic value
Outstanding at January 1, 2021		2,526,166			6.99		8.10	$	115,472,832
Granted		—		$	—
Exercised		(52,694	)		4.10
Forfeited		(5,935	)		4.10
Expired		—			—
Outstanding at December 31, 2021		2,467,537		$	7.06		6.99	$	29,503,551
Granted		2,975,000			7.00
Exercised		(142,409	)		4.10
Forfeited		(164,443	)		7.84
Expired		—			—
Outstanding at December 31, 2022		5,135,685		$	7.10		5.09	$	25,064,799
Granted		—			—
Exercised		(246,156	)		6.08
Forfeited		(192,500	)		11.30
Expired		—			—
Outstanding at December 31, 2023		4,697,029		$	6.98		4.10	$	47,607,209
Exercisable at December 31, 2023		2,133,273		$	6.60		4.72	$	22,518,984

Total expense associated with stock options was approximately $3.9 million, $3.3 million and $2.9 million during the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, there was approximately $4.1 million of total unrecognized compensation cost related to unvested time-based stock options, which is expected to be recognized over a weighted-average period of 2.6 years. As of December 31, 2023, the stock options outstanding include options granted to both employees and non-employees which are both time-based and milestone-based. Stock-based compensation for milestone-based options will be recorded if and when a milestone becomes probable. We did not recognize stock-based compensation expense during the year ended December 31, 2023 for these stock options.

The fair value of the Company’s option awards granted in each of the following years were estimated using the assumptions below:

	Year Ended
	December 31, 2023		December 31, 2022			December 31, 2021
Volatility		N/A		88.37 - 89.67	%		N/A
Expected term (in years)		N/A		3.13 - 4.0			N/A
Risk-free rate		N/A		2.99 - 3.35	%		N/A
Expected dividend yield		N/A		—	%		N/A

Restricted Stock

Certain employees, directors and consultants have been awarded restricted stock. The restricted stock vesting consists of milestone and time-based vesting. The following table summarizes restricted share activity for the years ended December 31, 2023, 2022 and 2021:

				Weighted-average
				grant date fair
	Number of shares			value
Outstanding at January 1, 2021		10,785,034			13.38
Granted		2,738,974			39.49
Vested		(1,302,737	)		18.14
Forfeited		(189,231	)		21.80
Outstanding at December 31, 2021		12,032,040			18.67
Granted		5,179,201			12.75
Vested		(6,291,999	)		11.28
Forfeited		(2,186,956	)		22.44
Outstanding at December 31, 2022		8,732,286			16.12
Granted		3,620,237			13.77
Vested		(2,500,263	)		11.98
Forfeited		(213,192	)		12.14
Outstanding at December 31, 2023		9,639,068		$	17.05

Total compensation expense associated with restricted stock grants was $34.1 million, $15.8 million and $58.4 million during the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, there was approximately $27.8 million of total unrecognized compensation expense related to unvested time-based restricted stock, which is expected to be recognized over a weighted-average period of 2.7 years. This amount does not include, as of December 31, 2023, 2,470,770 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones. Milestone-based noncash compensation expense will be measured and recorded if and when a milestone becomes probable.

Warrants

The Company’s only outstanding warrants are the warrants issued to Hercules as part of the Loan Agreement, the Amended Loan Agreement and the First Amendment (please refer to Note 7– Loan Payable) to purchase 147,058, 115,042 and 50,172 shares of our common stock with exercise prices of $4.08, $17.95 and $14.70, respectively. See Note 7 for further details. As the warrants could not require cash settlement, the warrants were classified as equity. There will not be any ongoing stock compensation expense volatility associated with these warrants.