Ultragenyx Pharmaceutical Inc. — Q2 2017 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2017. Ultragenyx is a clinical-stage biopharmaceutical company developing treatments for rare and ultra-rare diseases. It reported no significant product-sales revenue and continued to incur losses.
Financial results and liquidity
Amounts in millions, except per-share data.
| Metric | Q2 2017 | Q2 2016 | Six months 2017 | Six months 2016 |
|---|---|---|---|---|
| Revenue | $0.0 | $0.017 | $0.0 | $0.017 |
| Research and development expense | $58.4 | $43.3 | $109.7 | $83.7 |
| General and administrative expense | $20.0 | $14.7 | $38.7 | $27.9 |
| Operating loss | $(78.4) | $(58.1) | $(148.4) | $(111.7) |
| Net loss | $(72.9) | $(56.9) | $(141.2) | $(109.7) |
| Net loss per share | $(1.72) | $(1.46) | $(3.35) | $(2.81) |
| Cash used in operating activities | — | — | $(110.0) | $(84.6) |
At June 30, cash and cash equivalents were $90.8 million and investments were $366.7 million, for total cash, cash equivalents and investments of $457.5 million. Current assets were $419.8 million versus current liabilities of $62.7 million. Total liabilities were $68.1 million; the balance sheet reports no debt balance. The filing does not provide a cash-runway estimate. No operating margin is meaningful given negligible revenue and ongoing losses.
H1 investing cash use was $30.5 million, primarily reflecting net investment purchases and $0.9 million of property and equipment purchases. Financing provided $70.5 million, including $67.6 million net proceeds from the ATM stock offering. Cash and cash equivalents decreased $70.4 million during H1. The company had $37.9 million of binding operating lease and manufacturing/service commitments at June 30.
Changes versus comparable periods
- Q2 R&D expense increased 35% and H1 R&D increased 31% year over year, reflecting continued clinical development, regulatory preparation, manufacturing costs and expanded research programs.
- Q2 G&A expense rose 36% and H1 G&A rose 38%, primarily from commercial planning, professional services, stock compensation and increased personnel.
- Net loss widened to $72.9 million in Q2 and $141.2 million in H1, versus $56.9 million and $109.7 million, respectively, in 2016.
- Other income was $4.4 million in Q2 and $5.0 million in H1, largely due to foreign-exchange movements on intercompany balances; related translation effects were largely reflected in other comprehensive loss.
- Shares outstanding increased to 42.4 million at June 30 from 41.2 million at December 31, 2016. A further ATM agreement for up to $150 million was entered into July 27, 2017.
Outlook, programs and key risks
- Management expects continued losses and rising R&D and G&A costs as programs advance and the company builds commercial capabilities. It expects to fund operations through existing capital and potentially further equity or other financing; no specific earnings or revenue guidance was provided.
- Burosumab: following positive topline Phase 3 adult XLH results, the company planned an FDA BLA submission in August 2017. In July, partners decided to separate adult and pediatric European filings; a pediatric CHMP opinion was expected around year-end 2017. Phase 2 TIO data were expected in H2 2017.
- Vestronidase alfa for MPS 7: FDA and EU applications had been accepted for review; FDA Priority Review carried a November 16, 2017 target action date, with an EU opinion expected in H1 2018.
- UX007 in Glut1 DS seizures failed its primary Phase 2 endpoint. The company was evaluating that indication. A Phase 3 movement-disorder study had begun; Ace-ER Phase 3 data were expected in H2 2017.
- Principal risks include clinical or regulatory failure and delays, limited rare-disease patient populations, uncertain market access and reimbursement, dependence on partners and single-source manufacturers, future financing needs and potential shareholder dilution. The company disclosed no material legal proceedings. Management reported effective disclosure controls and no material change in internal control over financial reporting.
Important facts for investors to verify
- Progress and regulatory decisions for vestronidase alfa and burosumab, including timing and scope of filings and approvals.
- Results and regulatory path for UX007 movement disorders, TIO, and Ace-ER; whether plans change for the failed UX007 seizure endpoint.
- Quarterly cash burn, spending growth, financing needs and any use of the additional $150 million ATM facility.
- Clinical and commercial supply capacity, partner responsibilities, and the potential impact of manufacturing costs and collaboration terms.