Ultragenyx Pharmaceutical Inc. — Q1 2015 Form 10-Q
Reporting period: Three months ended March 31, 2015. Ultragenyx is a clinical-stage biopharmaceutical company developing treatments for rare and ultra-rare diseases. It had no approved products and generated no revenue.
Financial performance and liquidity
| Metric | Q1 2015 | Q1 2014 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $17.4 million | $8.4 million; up 108% |
| General and administrative expense | $4.1 million | $2.0 million; up 108% |
| Operating loss | $21.5 million | $10.3 million |
| Net loss | $21.4 million | $13.6 million |
| Net loss per share, basic and diluted | $0.63 | $0.85 |
| Cash used in operating activities | $17.7 million | $10.6 million |
| Cash, cash equivalents and short-term investments | $342.6 million at March 31 | $187.5 million at December 31, 2014 |
Q1 2015 total comprehensive loss was $21.3 million. No meaningful operating margin is available because the company had no revenue. No borrowings or debt balance are reported in the provided balance sheet; total liabilities were $14.7 million. Current assets were $350.5 million and current liabilities $14.2 million.
Changes and financing
- Operating expenses rose as clinical, manufacturing, personnel and public-company activities expanded. R&D spending increased across the reported programs, particularly SA-ER and rhGUS.
- Net loss increased year over year, while loss per share decreased from $0.85 to $0.63; the share base increased substantially, and the 2014 comparison included preferred-stock accretion/dividends and a $3.3 million warrant remeasurement expense.
- A February 2015 public offering of 3.45 million shares at $54 per share generated approximately $174.5 million in net proceeds after discounts and estimated offering expenses. Financing cash flow was $175.4 million, including stock-option and warrant exercises. Shares outstanding were 35.6 million at quarter-end and 35.9 million as of May 6.
- Management said existing capital resources were expected to fund current operations into 2018, while also anticipating future financing needs and continued losses.
Outlook, programs and key risks
- Management expected R&D expenses to rise as programs advanced and stated that losses were likely to continue for the foreseeable future. No revenue or earnings guidance was provided.
- Planned or expected milestones included a Phase 3 SA-ER study in HIBM around mid-2015 and an intended EU conditional-approval application in the second half of 2015; interim triheptanoin data in LC-FAOD and Glut1 DS in the second half of 2015; and rhGUS Phase 3 data in the first half of 2016. KRN23 pediatric study data were expected during 2015, with further adult and TIO study results anticipated later.
- Key risks include clinical and regulatory failure or delay, small patient populations and enrollment challenges, uncertain market access and reimbursement, reliance on third-party manufacturers and CROs, and dependence on Kyowa Hakko Kirin for KRN23 development and supply. The company also highlighted intellectual-property, competition, financing and product-safety risks.
- There were no material legal proceedings disclosed. The company reported approximately $6.5 million in operating lease and services-contract obligations. It posted a roughly $1.1 million letter of credit for construction at its expanded Novato premises. The filing reported effective disclosure controls and no material first-quarter change in internal control over financial reporting; ERP implementation was ongoing.
Important facts for investors to verify
- Whether the stated cash runway into 2018 remains supportable as clinical, manufacturing and commercialization-preparation costs increase.
- Whether announced clinical milestones are achieved on schedule and whether results support regulatory filings, particularly for SA-ER and rhGUS.
- The terms and financial impact of the KRN23 collaboration, including supply, cost-sharing and commercial responsibilities with KHK.
- Future dilution from equity financing and employee equity plans, and the effect of the expanded facility and related commitments on cash needs.
- Whether manufacturing capacity, rare-disease patient identification, and reimbursement prospects support eventual commercialization.