UroGen Pharma Ltd. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020. UroGen is a clinical-stage biopharmaceutical company preparing to commercialize its first product, Jelmyto. Figures below are in U.S. dollars; financial statement amounts are in millions unless noted.
Financial results and liquidity
| Metric | Q1 2020 | Q1 2019 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development | $16.6 | $9.7 |
| Selling and marketing | $10.7 | $2.6 |
| General and administrative | $11.3 | $10.1 |
| Operating loss | $(38.6) | $(22.4) |
| Net loss | $(37.8) | $(21.4) |
| Operating cash used | $(35.6) | $(17.9) |
- Gross profit and margins were not meaningful: the company reported no revenue or cost of revenue in either period.
- At March 31, cash and cash equivalents were $26.5 million and marketable securities were $132.8 million, totaling approximately $159.2 million. Current assets were $121.9 million versus current liabilities of $14.2 million.
- Total liabilities were $16.5 million, including lease liabilities; the filing reports no borrowings or other financial debt. Accumulated deficit was $265.8 million.
- Management said available cash, cash equivalents and marketable securities were expected to fund planned operations for at least 12 months. This is management’s estimate and depends on operating plans and cash use.
Changes and notable items
- Net loss increased $16.3 million year over year. R&D expense rose $6.9 million, largely due to a one-time $6.6 million payment to the Israel Innovation Authority (IIA) to unwind grant-related obligations. The payment was made and expensed in Q1.
- Selling and marketing expense increased $8.1 million as UroGen prepared for the Jelmyto launch. G&A increased $1.2 million, primarily due to pre-launch hiring and severance for a departing senior officer.
- Investing activities provided $13.0 million, mainly from marketable-security maturities. Financing provided $0.1 million in Q1 2020, compared with $163.5 million in Q1 2019, which included proceeds from a public offering.
- Share-based compensation was $7.6 million in Q1 2020, compared with $7.4 million a year earlier.
Business developments, outlook and risks
- Jelmyto: After quarter-end, on April 15, 2020, the FDA approved Jelmyto for adults with low-grade upper tract urothelial cancer (LG-UTUC). UroGen expected a commercial launch by mid-2020 and described its sales and support organization and launch preparations. The approval was based on the OLYMPUS Phase 3 trial, which reported a 58% complete-response rate in the intent-to-treat population. The filing also reports ureteric obstruction, flank pain and urinary tract infection among common adverse events; it states no treatment-related deaths occurred.
- UGN-102: In April 2020, UroGen reported an interim complete-response rate of 65% (41 of 63 patients) in its Phase 2b OPTIMA II trial. Among patients who achieved complete response and underwent follow-up assessment, 97% and 85% remained disease-free at six and nine months, respectively. The company was discussing a pivotal Phase 3 design with FDA and expected to start the study in the second half of 2020.
- Other programs and agreements: UroGen and Janssen mutually terminated their early-stage feasibility evaluation in March 2020. Under the Agenus license, UroGen may owe up to $115 million in development and regulatory milestones and up to $85 million in commercial milestones, plus royalties of 14%–20% on licensed-product net sales.
- Post-quarter financing: In April, UroGen sold 700,000 shares under its at-the-market facility, receiving approximately $16.1 million net; about $83.4 million of facility capacity remained.
- Risks and contingencies: UroGen warned that COVID-19 could disrupt the Jelmyto launch, clinical trials, supply chain and access to capital, with the impact not yet quantifiable. Commercialization, physician adoption, reimbursement, product safety, manufacturing capacity and reliance on single-source suppliers are material risks. The company also committed to maintain at least 75% of its Israel-based R&D jobs, measured at settlement, for three years following the IIA settlement.
- Management reported effective disclosure controls as of March 31, 2020 and no material change in internal control over financial reporting during the quarter. It reported no legal proceedings believed likely to have a material adverse effect.
Important facts for investors to verify
- Jelmyto’s launch timing, sales uptake, reimbursement and real-world safety following FDA approval.
- Whether the stated cash runway remains adequate as commercialization and R&D spending continue, and whether additional financing is needed.
- UGN-102’s final trial data, FDA-agreed Phase 3 design and expected start date; interim results may change as data mature.
- Potential COVID-19 effects on clinical trials, product supply, launch execution and healthcare access.
- Future obligations under the Agenus license, and the company’s ability to meet product supply and IIA employment commitments.