UroGen Pharma Ltd. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Unaudited results; amounts below are in U.S. dollars unless otherwise noted. UroGen is a biotechnology company commercializing Jelmyto and developing UGN-102 and other urothelial cancer candidates.
Financial performance and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $21.1 million | $16.6 million | $38.3 million | $30.2 million |
| Gross profit | $18.7 million | $14.8 million | $33.6 million | $26.8 million |
| Gross margin | 88.4% | 88.9% | 87.7% | 88.8% |
| Operating loss | $(15.4) million | $(18.7) million | $(37.4) million | $(40.7) million |
| Net loss | $(24.1) million | $(26.7) million | $(54.3) million | $(55.1) million |
| Basic and diluted loss per share | $(1.03) | $(1.18) | $(2.33) | $(2.43) |
| Operating cash used | $46.1 million | $48.2 million |
- All reported revenue was from Jelmyto. Management attributed year-over-year growth to higher sales volume.
- Q2 operating expenses were $34.1 million, versus $33.5 million a year earlier. Lower R&D spending was offset by higher selling and marketing and general and administrative costs.
- Interest expense on long-term debt rose to $7.3 million for the first half from $2.5 million, reflecting the Pharmakon loan’s full-period impact, its second tranche, and higher rates. The company also recorded $10.6 million of financing expense on the RTW prepaid forward obligation.
- At June 30, cash and cash equivalents were $20.1 million and marketable securities were $35.1 million, or $55.3 million combined. Current assets were $81.3 million and current liabilities $26.8 million. The company reported an accumulated deficit of $631.5 million.
- Debt carrying value was $98.3 million. The RTW prepaid forward obligation was $104.5 million; payments to RTW are tied to product sales and the arrangement is secured by specified product-related assets. The Pharmakon facility is senior secured, bears interest at SOFR plus a 0.26161% adjustment plus 8.25% from July 2023, and has interest-only payments for its first 48 months.
Material developments and outlook
- After quarter-end, UroGen agreed to a private placement for gross proceeds of $120.0 million, before fees and other expenses. The $3.6 million placement and advisory fee is additional to other expenses. The transaction involved 12,579,156 ordinary shares or pre-funded warrants; the filing states $115 million closed August 2 and the remaining $5 million closed August 9, 2023. Management said cash, investments, projections, and the proceeds are expected to fund operations beyond one year from issuance of the statements.
- The July financing improves near-term liquidity but increases potential dilution. The company stated it will need additional capital in the future and may have to reduce or delay programs if financing is unavailable on acceptable terms.
- On July 27, UroGen reported topline Phase 3 results: ENVISION met its primary endpoint with a 79.2% complete-response rate at three months; ATLAS met its primary disease-free-survival endpoint, with a reported 55% reduction in risk of recurrence, progression, or death. Further ENVISION duration-of-response data were anticipated in 2024. These are subsequent-event topline disclosures and remain subject to full data review and regulatory assessment.
- No financial forecast or quantified revenue guidance is provided. Management expects continuing losses, negative operating cash flows, and significant R&D spending as it advances clinical programs. Jelmyto sales may fluctuate quarter to quarter; the company has observed possible third-quarter seasonality but said it is too early to confirm a trend.
- Jelmyto Medicare pass-through status was expected to expire in Q4 2023; the filing warns that its loss could adversely affect access and revenue. Coverage and reimbursement, adoption, clinical and regulatory outcomes, and supply availability are significant uncertainties.
Risks, contingencies, and other notable items
- The company has a history of losses and depends on Jelmyto, its only approved product, while UGN-102 and other candidates remain subject to development and regulatory risks. Jelmyto sales are recognized through one national specialty distributor.
- Key risks include access to future capital; debt and RTW payment obligations and restrictions; dependence on single-source suppliers and contract manufacturers; physician adoption and reimbursement; clinical trial outcomes; and competition. The filing also cites potential disruption from geopolitical and military conditions in Israel and from the Russia-Ukraine conflict affecting trial follow-up.
- Investments had $155,000 of net unrealized losses at June 30, primarily attributed to higher interest rates. Management said it did not intend to sell before maturity and expected to recover amortized cost; no credit-loss allowance was recorded.
- The company reported no legal proceedings considered likely to have a material adverse effect, no material changes in internal control over financial reporting, and effective disclosure controls and procedures.
Important facts for investors to verify
- Final Phase 3 ATLAS and ENVISION data, including ENVISION duration of response, safety results, and the regulatory path and timing for UGN-102.
- Jelmyto sales trajectory, gross-to-net reserves, customer concentration, reimbursement continuity after Medicare pass-through status, and any evidence of seasonality.
- Actual net proceeds and share or warrant issuance from the July-August private placement, resulting dilution, and updated shares outstanding.
- Cash burn and liquidity after the financing, future funding needs, Pharmakon interest and repayment terms, and RTW’s sales-linked payments and collateral rights.
- Availability and continuity of critical suppliers, manufacturing capacity, and the potential impact of geopolitical conditions on operations and clinical follow-up.