STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2020

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 5 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.

Common Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 150,000,000 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 FBR, 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 pay the 2020 Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock.

During the nine months ended September 30, 2020, we sold an aggregate of 5,945,608 shares of common stock pursuant to the 2020 ATM for total gross proceeds of approximately $113.3 million at an average selling price of $19.06 per share, resulting in net proceeds of approximately $111.3 million after deducting commissions and other transactions costs.

Subsequent to the end of the third quarter, from October 1, 2020 through November 5, 2020, we sold an aggregate of 2,582,678 shares of common stock pursuant to the 2020 ATM for aggregate total gross proceeds of approximately $74.2 million at an average selling price of $28.73 per share, resulting in net proceeds of approximately $72.9 million after deducting commissions and other transactions costs

In May 2020, we completed an underwritten public offering of 8,500,000 shares of our common stock (plus an underwriter option to purchase up to an additional 1,275,000 shares of common stock, which was exercised) at a price of $18 per share. Net proceeds from this offering, including the overallotment, were approximately $165.1 million, net of underwriting discounts and offering expenses of approximately $10.8 million.

The 2019 WKSI Shelf is currently our only active shelf-registration statement. We may offer any combination of the securities registered under the 2019 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 believe that the 2019 WKSI Shelf provides us with the flexibility to raise additional capital to finance our operations as needed.

Equity Incentive Plans

The TG Therapeutics, Inc. Amended and Restated 2012 Incentive Plan (the “2012 Incentive Plan”) was approved by stockholders in June 2020. As of September 30, 2020, 9,909,709 shares of restricted stock and 2,529,133 options were outstanding and up to an additional 5,054,913 shares may be issued under the 2012 Incentive Plan.

Stock Options

The following table summarizes stock option activity for the nine months ended September 30, 2020:

				Weighted-
				average
		Weighted-		Contractual
	Number of	average		Term	Aggregate
	shares	exercise price		(in years)	intrinsic value
Outstanding at December 31, 2019	2,605,730	$	6.73	8.92	$	11,706,110
Granted	75,000		8.21
Exercised	(32,847)		4.10
Forfeited	(118,750)		10.16
Expired	—		—
Outstanding at September 30, 2020	2,529,133	$	6.99	8.35	$	50,757,217

Total expense associated with the stock options was approximately $0.8 million during each of the three months ended September 30, 2020 and 2019, respectively, and $5.2 million and $2.3 million during the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, there was approximately $2.4 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 1.3 years. As of September 30, 2020, 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 occurs.

The fair value of the Company’s option awards granted during the nine months ended September 30, 2020 and 2019 were estimated on the grant date using the Black-Scholes option-pricing model using the assumptions below:

	Nine months ended
	September 30, 2020		September 30, 2019
Volatility	186.91-191.05		172.99-291.61
Expected term (in years)	5.0-6.25		5.0-6.25
Risk-free rate	0.34-0.54	%	1.96-2.49	%
Expected dividend yield	—	%	—	%

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 nine months ended September 30, 2020:

		Weighted Average
		Grant Date Fair
	Number of Shares	Value
Outstanding at December 31, 2019	7,091,789	$	7.78
Granted	3,897,829		18.47
Vested	(963,243)		7.80
Forfeited	(116,666)		8.81
Outstanding at September 30, 2020	9,909,709	$	11.92

Total expense associated with restricted stock grants was approximately $27.5 million and $1.3 million during the three months ended September 30, 2020 and 2019, respectively, and $41.6 million and $3.4 million during the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, there was approximately $55.0 million of total unrecognized compensation cost related to unvested time-based restricted stock, which is expected to be recognized over a weighted-average period of 1.0 year. This amount does not include, as of September 30, 2020, 2,860,511 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones. Until the measurement date is reached for milestone awards, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of the award at the grant date.

Stock-Based Compensation

The following table summarizes stock-based compensation expense information about restricted stock and stock options for the three and nine months ended September 30, 2020:

	Three months and Nine months ended
	September 30,		September 30,
(in thousands)	2020		2020
Stock-based compensation expense associated with restricted stock	$	27,520	$	41,615
Stock-based compensation expense associated with option grants		810		5,153
Total	$	28,330	$	46,768

Warrants

The following table summarizes warrant activity for the nine months ended September 30, 2020:

		Weighted-
		average exercise		Aggregate
	Warrants	price		intrinsic value
Outstanding at December 31, 2019	147,058	$	4.08	$	1,032,347
Issued	—		—		—
Exercised	—		—		—
Expired	—		—		—
Outstanding at September 30, 2020	147,058	$	4.08	$	3,335,275

There was no stock compensation expense related to warrants during the nine months ended September 30, 2020 and 2019.