UroGen Pharma Ltd. — Q2 2020 Form 10-Q
Reporting period: Three and six months ended June 30, 2020. UroGen is a clinical-stage biopharmaceutical company transitioning to commercialization after FDA approval of Jelmyto on April 15, 2020. It began the U.S. launch in June 2020.
Key financial metrics
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $0.372 million | $0.018 million | $0.372 million | $0.018 million |
| Gross profit | $0.324 million | $0.018 million | $0.324 million | $0.018 million |
| Research and development | $8.106 million | $9.996 million | $24.694 million | $19.722 million |
| Selling, general and administrative | $24.018 million | $13.775 million | $45.991 million | $26.482 million |
| Operating loss | $31.800 million | $23.753 million | $70.361 million | $46.186 million |
| Net loss | $31.349 million | $22.477 million | $69.142 million | $43.921 million |
| Basic and diluted loss per share | $1.44 | $1.08 | $3.22 | $2.19 |
Q2 gross margin was approximately 87% on very low sales; the filing does not present this as a reported margin. Revenue was entirely Jelmyto product sales in 2020, recognized through one national specialty distributor. No revenue from the Allergan collaboration was recorded in 2020.
At June 30, cash and cash equivalents were $36.350 million and marketable securities were $115.272 million, totaling $151.622 million. Current assets were $129.943 million; current liabilities were $16.423 million; total liabilities were $18.417 million. The filing reports no borrowings; liabilities included lease obligations. Accumulated deficit was $297.159 million.
Six-month operating cash use was $59.564 million, compared with $32.489 million a year earlier. Investing activities provided $30.539 million, primarily reflecting marketable-security maturities; financing provided $16.388 million, including net ATM proceeds. Cash, cash equivalents and restricted cash declined $12.637 million to $37.574 million.
Material changes versus prior periods
- Q2 revenue increased from $18,000 to $372,000 following Jelmyto approval and initial sales.
- Q2 operating loss increased $8.047 million year over year. Selling and marketing expense rose $9.547 million with the launch and commercial-team buildout, while R&D fell $1.890 million as UGN-101’s pivotal trial and regulatory work were completed.
- For the first half, operating loss increased $24.175 million. Higher commercialization spending and a one-time $6.6 million Israeli Innovation Authority (IIA) payment contributed to the increase; R&D also reflected this payment.
- The company sold 700,000 shares under its ATM program in Q2, generating approximately $15.8 million net. Approximately $83.4 million of capacity remained.
Outlook, commentary and risks
- Management believes cash, cash equivalents and marketable securities will fund planned operations for at least 12 months from the filing’s projections. The company expects continuing losses and negative operating cash flows and may need additional capital; future financing availability is not assured.
- Management expected R&D spending to rise as programs advance and commercialization expenses to increase during 2020. The company was finalizing a Phase 3 UGN-102 protocol and expected to begin the pivotal study by year-end 2020.
- In the Phase 2b OPTIMA II interim analysis, UGN-102 showed a 65% complete-response rate at three months (41 of 63 patients). Among responders evaluated, 97% and 85% remained disease-free at six and nine months, respectively. These are interim findings, not final pivotal-trial results.
- Jelmyto’s Phase 3 OLYMPUS results included a 58% complete-response rate in the intent-to-treat population. The filing notes ureteric obstruction and other adverse events; post-marketing follow-up includes annual duration-of-response updates for five years.
- COVID-19 could disrupt clinical trials, healthcare access, Jelmyto promotion and prescriptions, reimbursement, supply chains, and access to capital. The company said the potential impact could not be reliably quantified; its sales force was using virtual engagement.
- Key commercial risks include uncertain physician adoption, reimbursement and market size, the company’s limited commercialization experience, and reliance on single-source suppliers for important materials and components. The company reported more than 12 months of mitomycin API and finished Jelmyto on hand for planned operations at the time of filing.
- The IIA approved the release of prior grant-related obligations after a $6.6 million payment in Q1 2020. The company stated that it retained a commitment to maintain at least 75% of its Israeli R&D jobs, as measured at settlement, for at least three years.
- Marketable securities had $17.6 million fair value in an unrealized-loss position across 10 securities. Management attributed losses mainly to industry impacts and credit-rating decreases, expected recovery of amortized cost, and recorded no credit impairment.
Important facts for investors to verify
- Jelmyto launch progress: prescriptions, net sales, reimbursement coverage, treatment access and any post-marketing safety developments.
- Whether UGN-102’s pivotal Phase 3 trial starts on the stated timeline, and how its final protocol, enrollment and results compare with interim Phase 2b data.
- Cash burn, available ATM capacity and the assumptions underlying management’s at-least-12-month runway estimate.
- Supply continuity and any progress securing second sources for Jelmyto’s key materials and delivery components.
- COVID-19 effects on commercialization, patient enrollment, trial timelines and product supply.