Note 6 - Stockholders' Equity

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

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

NOTE 6 – STOCKHOLDERS’ EQUITY

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 December 31, 2024, 3,803,752 shares of restricted stock and 2,202,716 options were outstanding, and no additional shares were available to be issued under the 2012 Incentive Plan.

The TG Therapeutics, Inc. 2022 Incentive Plan (the 2022 Incentive Plan) was approved by stockholders in June 2022 with 17,000,000  shares available to be issued. As of December 31, 2024, 8,039,834 shares of restricted stock and 2,267,500 options were outstanding, and up to an additional 4,238,185 shares were available to be issued under the 2022 Incentive Plan.

During July of 2024, the Company identified an error related to the expense recognition of a single restricted stock award granted in 2021. The impact of the error was an understatement of non-cash compensation expense (SG&A) in the years ended December 31, 2022, and 2021 and a corresponding understatement of additional paid in capital (APIC). The Company has concluded the error did not result in a material misstatement of the Company’s previously issued consolidated financial statements. The cumulative impact of the error has been corrected as an immaterial correction of the December 31, 2023 consolidated balance sheet by increasing accumulated deficit and APIC by approximately $38.2 million. In addition, the consolidated statement of operations for the year ended December 31, 2022 has been revised to reflect the immaterial correction by increasing noncash compensation (selling, general and administrative) by $25.5 million and basic and diluted net loss per common share increased from ($1.46) to ($1.65).

Total stock-based compensation expense included in the consolidated statements of operations was $42.5 million, $37.9 million and $44.6 million during the years ended December 31, 2024, 2023 and 2022, respectively. The $42.5 million and $37.9 million are net of $3.8 million and $2.9 million of stock-based compensation expense that was capitalized into inventory during the year ended December 31, 2024 and 2023, respectively.

   Restricted Stock

Certain employees, directors and consultants have been awarded restricted stock. The vesting terms associated with restricted stock may include service, performance, or market conditions. The following table summarizes restricted share activity for the years ended December 31, 2024, 2023 and 2022:

				Weighted-average
				grant date fair
	Number of shares			value
Outstanding at January 1, 2022		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
Granted		4,751,729			18.27
Vested		(2,252,438	)		14.78
Forfeited		(294,773	)		13.49
Outstanding at December 31, 2024		11,843,586		$	18.22

Total compensation expense associated with restricted stock grants was $40.1 million, $34.1 million and $41.3 million during the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, there was approximately $36.0 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 2.8 years. This amount does not include, as of December 31, 2024, 1,160,000 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones, and 3,067,678 shares of restricted stock that vest based on market conditions. Milestone-based noncash compensation expense will be measured and recorded if and when a milestone becomes probable.  Equity awards with market conditions are valued using advanced option-pricing models, such as a Monte Carlo simulation. The effect of a market condition is reflected in the award’s fair value on the grant date. Stock-based compensation expense for an award that has a market condition is recognized over the requisite service period derived from the award valuation on the grant date, even if the market condition is never satisfied. As of December 31, 2024, there was approximately $22.0 million of total unrecognized compensation expense related to unvested milestone-based restricted stock. As of December 31, 2024, there was approximately $29.1 million of total unrecognized compensation expense related to restricted stock with market conditions, which is expected to be recognized over a weighted-average period of 3.5 years.

Stock Options

The estimated fair value of the options granted in the years ended December 31, 2024, 2023 and 2022 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, 2024, 2023 and 2022:

						Weighted-
						average
				Weighted-		contractual
	Number of			average		term		Aggregate
	shares			exercise price		(in years)		intrinsic value
Outstanding at January 1, 2022		2,467,537			7.06		6.99	$	29,503,551
Granted		2,975,000		$	7
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
Granted		—			—
Exercised		(151,813	)		6.02
Forfeited		(75,000	)		13.25
Expired		—			—
Outstanding at December 31, 2024		4,470,216			6.90		3.08	$	103,691,060
Exercisable at December 31, 2024		3,147,293			6.77		3.29	$	73,417,302

Total expense associated with stock options was approximately $2.5 million, $3.9 million and $3.3 million during the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, there was approximately $1.6 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 1.58 years. As of December 31, 2024, 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, 2024 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, 2024		December 31, 2023		December 31, 2022
Volatility		N/A		N/A		88.37 - 89.67	%
Expected term (in years)		N/A		N/A		3.13 - 4.0
Risk-free rate		N/A		N/A		2.99 - 3.35	%
Expected dividend yield		N/A		N/A		—	%

Warrants

The Company’s only outstanding warrants are warrants issued to Hercules as part of the prior loan agreements to purchase 115,042 and 50,172 shares of our common stock with exercise prices of $17.95 and $14.70, respectively. During the year ended December 31, 2024, Hercules exercised a portion of their outstanding warrants from a prior loan agreement to purchase 147,058 shares via cashless exercise. The First Amendment (as defined below) also contains warrant coverage of 2.95% of each advance amount funded. A warrant was issued by the Company to Hercules to purchase 50,172 shares of common stock with an exercise price of $14.70 (the First Amendment Warrant). The First Amendment Warrant shall be exercisable for seven years from the date of issuance. Hercules may exercise the First Amendment Warrant either by (a) cash or check or (b) through a net issuance conversion. There will not be any ongoing stock compensation expense associated with these warrants.

The Company estimated the fair value of the Warrant using the Black-Scholes model based on the following key assumptions:

	Amended Term Loan			The Amended Loan Agreement
Exercise price	$	14.70		$	17.95
Common share price on date of issuance	$	15.04		$	19.35
Volatility		0.88	%		184.4	%
Risk-free interest rate		3.6	%		1.4	%
Expected dividend yield		—	%		—	%
Contractual term (in years)		7.00			7.00

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). The rights under the Rights Agreement expired at the close of business on July 18, 2024.

Common Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 190,000,000 shares of $0.001 par value common stock.

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. 

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. We had no activity on the 2022 ATM during the year ended December 31, 2024. 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. 

Share Repurchase Program and Treasury Stock

On August 2, 2024, the Company announced that its Board of Directors (the Board) had authorized and approved a share repurchase program for up to $100 million of the currently outstanding shares of the Company’s common stock.  Under the share repurchase program, the Company intends to repurchase shares through open market purchases, privately-negotiated transactions, block purchases or other methods in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the Exchange Act). For the year ended December 31, 2024, the Company repurchased 326,594 shares of common stock at a cost of $8.8 million. As of December 31, 2024, 367,903 shares of common stock are being held in Treasury, at a cost of approximately $9.0 million, representing the fair market value on the date the shares were surrendered to the Company, mainly as part of our share repurchase program.