Ultragenyx Pharmaceutical Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report; the supplied filing text does not provide standalone fourth-quarter results. Amounts below are in U.S. dollars.
Business context
Ultragenyx develops and commercializes therapies for rare and ultra-rare genetic diseases. At year-end it had four commercially approved products: Crysvita, Mepsevii, Dojolvi and Evkeeza. More than half of 2021 revenue was generated under its Crysvita collaboration with Kyowa Kirin (KKC). The company operates as one reportable segment.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $351.4 million | $271.0 million |
| Product sales | $77.0 million | $38.7 million |
| Operating expenses | $733.1 million | $601.1 million |
| Operating loss | $381.7 million | $330.1 million |
| Net loss | $454.0 million | $186.6 million |
| Net loss per share, diluted | $6.70 | $3.07 |
| Cash used in operating activities | $338.7 million | $132.2 million |
- Revenue rose 30%. Crysvita collaboration revenue in the U.S./Canada profit-share territory was $171.2 million; Daiichi Sankyo collaboration revenue was $85.0 million. Product sales increased 99%, including Dojolvi sales of $39.6 million, Crysvita sales of $21.4 million and Mepsevii sales of $16.0 million. An additional $18.0 million was non-cash Crysvita royalty revenue.
- Research and development expense was $497.2 million, up 21%; selling, general and administrative expense was $220.0 million, up 20%. Operating loss was approximately 108.6% of revenue.
- Net loss widened substantially, in part because the company recorded a $42.1 million loss from changes in fair value of equity investments in 2021, versus a $170.4 million gain in 2020.
- At December 31, 2021, cash, cash equivalents and marketable debt securities totaled $999.1 million ($307.6 million cash and cash equivalents; the balance in marketable debt securities). Total assets were $1.52 billion and stockholders’ equity was $922.6 million.
- Investing activities used $195.4 million, including $73.1 million for property and equipment, principally the gene therapy facility. Financing activities provided $118.6 million, including $78.9 million net ATM proceeds.
- No interest-bearing borrowings are presented in the supplied balance sheet. The company reported a $351.8 million liability related to the sale of future Crysvita royalties and $42.0 million of lease liabilities.
Material changes and notable items
- Product sales growth reflected Dojolvi’s U.S. launch in 2020, increased demand and named-patient sales. Crysvita profit-share revenue grew 33% as more patients received therapy.
- Operating cash use increased to $338.7 million, partly reflecting higher operating spending and a $57.5 million decrease in net contract liabilities as Daiichi Sankyo revenue was recognized.
- In 2021, Ultragenyx sold 1.7 million Arcturus shares for $79.8 million. Its remaining Arcturus and Solid investments were valued at $18.5 million and $13.7 million, respectively, at year-end.
- The company raised $78.9 million through its ATM offering and reported $269.5 million of remaining capacity under that facility. Shares outstanding increased to 69.3 million from 66.8 million at year-end 2020.
- In January 2022, after year-end, Ultragenyx entered an agreement with Regeneron for Evkeeza commercialization outside the U.S., paying $30.0 million upfront; up to $63.0 million in milestones may be payable.
Outlook, management commentary and risks
- Management said existing capital resources were expected to fund projected operating requirements for at least the next 12 months. It also expects annual losses to continue for the foreseeable future and anticipates needing additional capital; no quantitative revenue or earnings guidance is provided.
- Research and development spending is expected to rise as clinical programs advance. DTX401’s Phase 3 study began enrolling; DTX301 Phase 3 initiation was planned for the first half of 2022. The company also anticipated further clinical development of UX143, GTX-102 and other candidates during 2022.
- Material risks include uncertain clinical and regulatory outcomes, patient-enrollment challenges, reliance on third-party and single-source manufacturers, reimbursement and pricing uncertainty, and continued COVID-19 impacts on trials, supply and commercialization.
- Ultragenyx was transitioning Mepsevii fill-and-finish manufacturing to an alternative supplier. It was also constructing a gene therapy manufacturing facility, then expected to be completed in 2023; delays, cost overruns or operational challenges could affect supply and spending.
- KKC is a key Crysvita partner and supplier. Ultragenyx’s exclusive promotion right in the U.S. and Canada was scheduled to transition in April 2023, after which its economics and commercial responsibilities change.
- GTX-102’s earlier study pause followed reports of lower-extremity weakness; the FDA removed the clinical hold in 2021. Subsequent dosing under amended protocols had begun, with safety and efficacy still requiring evaluation.
- The company reported no material legal proceedings. Its financial statements received an unqualified audit opinion, and management and the auditor reported effective internal control over financial reporting.
Important facts for investors to verify
- Whether product demand and revenue growth—especially for Crysvita and Dojolvi—continue, and how much revenue depends on collaborations and non-cash royalty accounting.
- Cash-burn trends, the timing of further financing needs, and potential dilution from additional equity issuance.
- Clinical trial enrollment, data and regulatory progress for lead candidates, including DTX401, DTX301 and GTX-102, alongside safety findings.
- Execution and cost of the gene therapy facility build, Mepsevii supplier transition, and ongoing dependence on third-party manufacturers.
- The effects of the April 2023 Crysvita commercial transition and the economics, uptake and obligations under the Evkeeza agreement.
- How fair-value movements in equity investments and estimates underlying the future-royalty liability affect reported earnings and cash-flow interpretation.