UroGen Pharma Ltd. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Amounts below are in U.S. dollars; financial statement figures are in millions unless otherwise noted.
Business context
UroGen is a biopharmaceutical company developing local therapies for urological cancers using its RTGel sustained-release technology. Its first and only approved product, Jelmyto, was launched in the U.S. in June 2020 for adults with low-grade upper tract urothelial cancer (UTUC). UGN-102 is in Phase 3 development for low-grade intermediate-risk non-muscle-invasive bladder cancer (NMIBC); other pipeline programs include UGN-302 for high-grade NMIBC.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | $7.485 | $0 |
| Cost of revenue | $0.897 | $0 |
| Gross profit / reported gross margin | $6.588 / approximately 88% | $0 |
| Research and development | $10.513 | $16.588 |
| Selling and marketing | $11.435 | $10.651 |
| General and administrative | $10.754 | $11.322 |
| Operating loss | $(26.114) | $(38.561) |
| Net loss | $(25.935) | $(37.793) |
| Basic and diluted loss per share | $(1.17) | $(1.79) |
| Net cash used in operations | $(27.401) | $(35.635) |
Reported gross margin was approximately 88%. Management said it would have been approximately 85.6% excluding sales of Jelmyto inventory costs expensed before FDA approval; those legacy costs are expected to affect cost of revenue through Q2 2022.
At March 31, cash and cash equivalents were $40.492 million and marketable securities were $35.417 million, totaling $75.9 million. Current assets were $93.082 million and current liabilities were $17.005 million. Cash, cash equivalents and restricted cash declined $12.373 million during the quarter. There was no conventional borrowings balance identified in the provided filing text; liabilities include lease obligations and a $2.717 million uncertain-tax-position liability. Accumulated deficit was $382.436 million.
Changes versus the prior comparable period
- Revenue rose from zero to $7.485 million following Jelmyto’s 2020 approval and launch.
- Net loss narrowed by $11.858 million and operating cash use declined by $8.234 million.
- R&D expense fell by $6.075 million, primarily because Q1 2020 included a one-time $6.6 million payment to unwind obligations to the Israeli Innovation Authority (IIA). Excluding that payment, R&D was described as broadly consistent, with Q1 2021 spending primarily related to UGN-102.
- Selling and marketing expense increased $0.784 million, while G&A declined $0.568 million. Interest and other income fell $0.589 million, mainly because cash and marketable securities were lower.
Outlook, commentary and risks
- Management expects continuing losses and negative operating cash flows, anticipates losses for at least the next two years, and expects R&D and selling and marketing costs to increase as trials progress and Jelmyto commercialization continues. It did not provide numerical revenue or earnings guidance.
- Management stated that projected cash and marketable securities, after the RTW transaction, were expected to fund planned operations for at least 12 months. The $75 million RTW funding was received in May 2021, after quarter-end; the company recorded a long-term liability and agreed to tiered future payments based on global annual net sales of Jelmyto and, if approved, UGN-102.
- COVID-19 affected the business: the company reported delayed UGN-102 site initiation in some countries and softer Q1 2021 Jelmyto revenue. It attributed commercial headwinds to delayed patient procedures, healthcare resource prioritization and restricted sales-force access, while noting increased new patient starts in March and April.
- Key risks include dependence on Jelmyto commercial adoption and reimbursement, uncertain clinical and regulatory outcomes, and reliance on single-source suppliers and contract manufacturers. Jelmyto’s known adverse events include ureteric obstruction and renal-related effects; post-marketing safety and required follow-up remain relevant. UGN-102’s Phase 3 ATLAS trial was enrolling; the earlier Phase 2b OPTIMA II trial reported a 65% complete-response rate at three months from treatment start.
- The AbbVie-partnered Phase 2 APOLLO trial did not meet its primary endpoint; UroGen said it continued exploring RTGel combinations with other AbbVie products. No legal proceeding was identified as likely to have a material adverse effect. Management reported disclosure controls were effective; a new ERP system was implemented during the quarter and requires effectiveness testing.
Investor facts to verify
- Jelmyto sales trajectory, patient starts, reimbursement coverage and the impact of COVID-19 on procedures and access.
- RTW transaction terms, accounting for the long-term liability, and how sales-based future payments affect economics and cash flows.
- ATLAS enrollment, timing and eventual clinical results for UGN-102, along with any regulatory or trial-design changes.
- Manufacturing capacity, single-source supply continuity and the progression of second-source efforts.
- Jelmyto gross-margin trends as previously expensed inventory is depleted, and cash runway relative to operating and trial spending.