Ultragenyx Pharmaceutical Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report. Unless otherwise indicated, amounts are in U.S. dollars.
Business context and reporting period
Ultragenyx is a commercial-stage biopharmaceutical company focused on rare and ultrarare genetic diseases. It sells four approved products: Crysvita, Mepsevii, Dojolvi and, outside the U.S., Evkeeza. Its clinical pipeline includes gene therapies, biologics and a nucleic-acid candidate. More than half of 2023 revenue came from collaboration partner Kyowa Kirin (KKC).
Key financial metrics
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Total revenue | $434.2 million | $363.3 million |
| Product sales | $180.4 million | $118.9 million |
| Net loss | $606.6 million | $707.4 million |
| Net loss per share, basic and diluted | $8.25 | $10.12 |
| Operating cash used | $474.8 million | $380.5 million |
- Revenue rose 20%. Product sales increased 52%; by product, Crysvita sales were $75.7 million, Mepsevii $30.4 million, Dojolvi $70.6 million and Evkeeza $3.6 million.
- Crysvita royalty revenue was $182.7 million, compared with $21.7 million in 2022. This includes royalty revenue associated with the 2023 transition of U.S. and Canadian commercial responsibilities to KKC and royalty arrangements under which future Crysvita royalties were sold. The filing reports $69.4 million of non-cash collaboration royalty revenue in 2023.
- Cost of sales was $45.2 million. Revenue less cost of sales was approximately $389.0 million, or 89.6% of revenue; this simple measure includes revenue streams with differing economics. Operating loss was $569.2 million, approximately 131% of revenue.
- Research and development expense decreased 8% to $648.4 million, principally because 2022 included a $75.0 million GeneTx acquisition charge; 2023 included a $9.0 million UX143 milestone. Selling, general and administrative expense increased 11% to $309.8 million, including a one-time $6.2 million legal settlement.
- Cash, cash equivalents and marketable debt securities totaled $777.1 million at year-end. Current assets were $732.2 million and current liabilities $280.4 million. The company said these resources were expected to fund projected operating needs for at least 12 months.
- Cash used in investing activities was $168.0 million, mainly reflecting net marketable-security activity, offset by $44.3 million of property and equipment purchases. Financing provided $388.1 million, including $326.5 million net from an October public offering and $53.3 million from ATM stock sales.
- No conventional borrowings are identified in the supplied financial statements. However, liabilities for sales of future royalties were $891.6 million at year-end, including $29.2 million current and $862.3 million noncurrent; these arrangements also generated $66.0 million of non-cash interest expense in 2023.
Material changes versus the prior comparable period
- Total revenue increased $70.9 million. Product sales grew across the portfolio, while Crysvita revenue shifted in presentation and economics after KKC assumed U.S. and Canadian commercialization in April 2023. Ultragenyx moved from a 50/50 profit share to a tiered revenue share, and continued U.S. field support under a cost-sharing arrangement through December 31, 2024.
- Net loss narrowed by $100.8 million, while operating cash use increased by $94.3 million. The loss improvement reflected higher revenue and lower total operating expenses; operating cash use reflects cash timing and noncash items, including royalty-related accounting.
- Non-cash interest expense on sold future royalties rose to $66.0 million from $43.0 million, largely because 2023 included a full year of expense related to the OMERS transaction.
- The company completed construction of its Bedford, Massachusetts gene-therapy manufacturing facility in 2023. Property, plant and equipment purchases fell from $116.1 million to $44.3 million as construction spending declined.
Outlook, management commentary, risks and unusual items
- Management expects annual losses to continue for the foreseeable future. It expects R&D and SG&A expenses to moderate, but provides no specific revenue or earnings guidance in the supplied filing text.
- Key anticipated pipeline updates included Phase 3 DTX401 results in the first half of 2024; DTX301 Phase 3 enrollment completion in the first half of 2024; GTX-102 safety and efficacy data in the first half of 2024; and UX701 Stage 1 data in mid-2024, with Stage 2 expected to begin in the second half of 2024. UX143 studies also had enrollment milestones targeted for 2024. These are forward-looking expectations, not assured outcomes.
- The Dojolvi drug-product manufacturer notified the company it would close its facility by the end of 2023. Ultragenyx identified a replacement manufacturer and was qualifying and transferring production; existing inventory was expected to support demand through at least the end of 2025, with transfer activities expected to finish before the end of 2024.
- Major risks include clinical-trial failure or delay, regulatory uncertainty, limited rare-disease patient populations, reimbursement and pricing pressure, dependence on KKC and other single-source suppliers, gene-therapy manufacturing execution, and potential need for additional capital. The company says additional financing may be required to fund its plans.
- The company reported no material legal proceedings. It disclosed a prior government review of a sponsored genetic-testing program that was settled for an immaterial amount without admission of liability. Management and the auditor reported effective internal control over financial reporting; the financial-statement audit opinion was unqualified.
Most important facts for investors to verify
- How much of revenue growth is supported by product demand versus Crysvita collaboration/royalty accounting, including non-cash revenue and obligations to royalty purchasers.
- Whether product sales growth and KKC’s post-transition commercialization sustain Crysvita revenue and the company’s royalty receipts.
- Cash burn, future financing needs and potential dilution after the 2023 public offering and ATM issuance; compare subsequent cash balances with the $777.1 million year-end liquidity figure.
- Clinical results and regulatory progress for DTX401, DTX301, GTX-102, UX143, UX111 and UX701, including any changes to the stated timelines.
- Successful qualification and supply continuity for Dojolvi’s replacement drug-product manufacturer, and broader reliance on single-source manufacturing.