UroGen Pharma Ltd. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Financial statements are unaudited. UroGen is a biotechnology company developing and commercializing treatments for urothelial and specialty cancers. Its only approved product is Jelmyto; UGN-102 and UGN-301 remain investigational.
Financial performance
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $20.9 million | $16.1 million | $59.2 million | $46.3 million |
| Gross profit / margin | $18.5 million / 88.6% | $14.1 million / 87.5% | $52.1 million / 88.0% | $40.9 million / 88.3% |
| Operating loss | $13.5 million | $18.1 million | $50.9 million | $58.8 million |
| Net loss | $21.9 million | $25.8 million | $76.2 million | $80.9 million |
| Basic and diluted loss per share | $0.68 | $1.13 | $2.89 | $3.56 |
- All revenue was from Jelmyto. Revenue increased 29.5% in Q3 and 27.9% for the nine-month period, primarily on higher sales volume.
- Q3 operating expenses were $32.0 million, little changed year over year: lower R&D spending was largely offset by higher selling and marketing and general and administrative expenses. Nine-month operating expenses rose to $103.0 million from $99.6 million.
- For the nine months, net cash used in operations was $63.4 million, versus $65.8 million a year earlier. Investing activities provided $10.4 million; financing activities provided $116.9 million, principally from the 2023 private placement. Cash, cash equivalents and restricted cash ended at $120.1 million.
- At September 30, cash and cash equivalents were $119.3 million and marketable securities totaled $34.6 million, or $153.9 million combined. Current assets were $182.1 million against current liabilities of $25.8 million.
- Long-term debt had a carrying value of $98.5 million. The separate RTW prepaid forward obligation was $107.3 million; it entails tiered future payments tied to product sales and is secured by Jelmyto and UGN-102-related assets. Total liabilities were $235.6 million, exceeding total assets of $193.6 million; shareholders’ deficit was $42.0 million.
Material changes and financing
- Net loss improved by $4.0 million in Q3 and $4.7 million for the nine months compared with the prior-year periods. Higher Jelmyto revenue and lower R&D costs helped, while interest expense on the Pharmakon loan increased.
- In July and August 2023, UroGen completed a private placement with gross proceeds of $120.0 million, reported as approximately $116.1 million net of issuance costs. It issued 7.30 million ordinary shares and 5.28 million pre-funded warrants. Shares outstanding at September 30 were 30.85 million, compared with 23.13 million at year-end 2022.
- The Pharmakon loan is a $100 million senior secured facility, with interest-only payments for the first 48 months and quarterly interest at three-month SOFR plus a 0.26161% adjustment and 8.25%. Principal repayments follow the interest-only period. The loan is secured by substantially all relevant credit-party assets and includes restrictive covenants.
Outlook, commentary and risks
- Management stated that September 30 cash, cash equivalents and marketable securities, together with projected cash flows, should fund operations beyond one year from issuance of the statements. The company expects continuing losses and negative operating cash flows and says it will need additional capital in the future; financing may dilute shareholders or require less favorable terms.
- Management expects R&D expense to remain significant and potentially increase as programs advance. Jelmyto sales may fluctuate quarter to quarter; the company cited a possible summer-season effect but said it was too early to establish a reliable seasonal pattern.
- In July 2023, UroGen reported that UGN-102 met the primary endpoint in both Phase 3 ATLAS and ENVISION. ENVISION showed a 79.2% complete-response rate at three months; ATLAS reported a 55% reduction in risk of recurrence, progression or death for UGN-102 versus the trial comparator. ENVISION duration-of-response data were expected in 2024, and the filing cautions that topline results may change as data are finalized.
- In October 2023, the FDA agreed that the existing UGN-102 development plan, including 12-month duration-of-complete-response evaluation from ENVISION, could support an NDA submission. The FDA also agreed to rolling review; UroGen planned to submit the CMC section in January 2024. An advisory committee may be sought, and approval is not assured.
- Key risks include reliance on Jelmyto as the sole approved product and revenue source; uncertain adoption, reimbursement and market size; clinical and regulatory uncertainty for UGN-102 and UGN-301; single-source suppliers and manufacturing dependencies; financing needs, debt and RTW obligations; and competition, intellectual-property, product-safety and regulatory risks.
- The filing specifically discusses the October 2023 Israel war and potential effects on employees, research and development, suppliers, logistics and operations. The company also notes foreign-exchange exposure to the Israeli shekel, although a hypothetical 10% exchange-rate change was not material to operating expenses for the period.
- Management reported effective disclosure controls as of September 30, 2023. It reported no material legal proceedings and no subsequent events.
Important facts for investors to verify
- Whether UGN-102 achieves the expected 12-month duration-of-response endpoint and whether the planned NDA submission, CMC filing and FDA review proceed on schedule.
- Jelmyto sales growth, quarter-to-quarter variability, customer concentration (sales flow through one national specialty distributor), reimbursement and accrued sales reserves.
- Cash use and runway against the stated expectation of funding beyond one year, and the amount, timing and dilution or restrictions associated with any future financing.
- Debt interest and repayment terms, covenant compliance, and the cash impact of RTW’s sales-linked payments and security interest.
- Whether Israel-related disruption or reliance on single-source suppliers affects clinical programs, manufacturing, or commercial supply.