Business context and reporting period
UroGen Pharma Ltd. filed this unaudited Form 10-Q for the quarter and nine months ended September 30, 2019. The clinical-stage biopharmaceutical company is developing localized therapies for urological cancers using its RTGel technology. Its lead candidates are UGN-101 for low-grade upper tract urothelial cancer (LG UTUC) and UGN-102 for intermediate-risk low-grade non-muscle-invasive bladder cancer (LG NMIBC). The company had no approved products and had not generated product-sale revenue.
Financial performance and position
| Metric | Q3 2019 | Nine months 2019 | Comparable 2018 period |
|---|---|---|---|
| Revenue | $0 | $18,000 | $283,000 Q3; $1.128 million nine months |
| Research and development | $9.481 million | $29.203 million | $9.574 million Q3; $25.469 million nine months |
| General and administrative | $13.972 million | $40.454 million | $10.743 million Q3; $27.019 million nine months |
| Operating loss | $23.453 million | $69.639 million | $21.089 million Q3; $53.163 million nine months |
| Net loss | $22.252 million | $66.173 million | $20.533 million Q3; $51.940 million nine months |
| Basic and diluted loss per share | $1.06 | $3.25 | $1.28 Q3; $3.30 nine months |
Interest and other income was $1.201 million for Q3 and $3.466 million for the nine months, primarily reflecting interest earned on cash and investments. Gross margin is not meaningful given negligible collaboration supply revenue and no product sales.
At September 30, 2019, cash and cash equivalents were $66.1 million and marketable securities were $155.6 million, totaling $221.7 million in cash and securities. Current assets were $159.9 million, total assets $226.8 million, and total liabilities $15.8 million. The filing reports no borrowings; lease liabilities totaled $2.875 million. Accumulated deficit was $189.0 million.
Operating cash use was $45.0 million for the nine months, versus $27.1 million in 2018. Investing cash use was $154.9 million, mainly reflecting purchases of marketable securities; financing provided $165.0 million, including approximately $161.4 million net proceeds from the January 2019 public offering. Cash, cash equivalents and restricted cash decreased by $34.9 million to $66.7 million.
Material changes versus prior period
- Nine-month operating loss widened by $16.5 million and net loss by $14.2 million year over year. R&D rose $3.7 million, principally with UGN-101 Phase 3 and UGN-102 Phase 2b activity; G&A increased $13.4 million, reflecting staffing, commercialization preparation and share-based compensation.
- Q3 G&A increased $3.2 million year over year, partly offset by a slight decline in R&D. Lower Allergan RTGel supply revenue contributed to the revenue decline in both comparison periods.
- The January 2019 offering raised approximately $161.4 million net and increased shares outstanding. Cash and investments grew substantially from year-end 2018, while the company allocated significant funds to marketable securities.
- Adoption of lease accounting on January 1, 2019 resulted in recognition of right-of-use assets and lease liabilities; the filing says it materially affected the balance sheet but not the income statement.
Outlook, developments and risks
- Management believed cash and marketable securities would fund planned operations for at least the next 12 months. The company expected continued losses and negative operating cash flows, with further capital potentially needed; it gave no revenue or earnings guidance.
- Final primary-endpoint analysis from the 71-patient OLYMPUS study reported a 59% complete-response rate (42 of 71). Estimated response durability was 89% at six months and 84% at 12 months; median time to recurrence was estimated at 13 months. Follow-up remained ongoing. Common treatment-emergent adverse events included ureteric stenosis (43.7%), urinary tract infection (32.4%) and haematuria (31.0%); 36.6% reported at least one serious adverse event.
- The company completed its rolling UGN-101 NDA submission in October 2019 and was awaiting FDA acceptance. UGN-101 had Orphan Drug, Fast Track and Breakthrough Therapy designations. UGN-102 Phase 2b enrollment was complete. These designations and trial results do not ensure approval.
- In November 2019, after quarter-end, UroGen entered an Agenus license for AGEN1884 in urinary-tract cancers. It paid a $10 million upfront fee and agreed to up to $115 million in development/regulatory milestones, up to $85 million in commercial milestones, and 14%–20% royalties. UroGen bears development and commercialization costs. A new New Jersey lease carried approximately $1.7 million of minimum obligations.
- Key risks include FDA filing and approval decisions, clinical durability and safety, ability to scale and validate manufacturing, reliance on single-source suppliers including Teva for mitomycin API, reimbursement and adoption uncertainty, and future financing needs. IIA-funded technology is subject to Israeli transfer/manufacturing restrictions and royalty terms. The filing also states that UroGen expected to be classified as a PFIC for 2019.
- Management reported disclosure controls were effective as of September 30, 2019 and identified no material quarterly change in internal control over financial reporting. The company reported no material pending legal proceedings and no off-balance-sheet arrangements.
Most important facts for investors to verify
- FDA acceptance, review timeline and any additional clinical, manufacturing or regulatory requirements for the UGN-101 NDA.
- Longer-term OLYMPUS durability and safety results, particularly ureteric stenosis and other serious events, and the implications for use and labeling.
- UGN-102 trial results and the timing, design and funding of subsequent development; progress and economics of the Agenus program.
- Cash runway assumptions, future operating burn and whether additional financing will be required.
- Manufacturing validation, supply continuity and commercialization readiness, as well as eventual reimbursement and physician adoption.