Ultragenyx Pharmaceutical(RARE) - 2022 Q1 - Quarterly Report

Part I – Financial Information Financial Statements The unaudited condensed consolidated financial statements detail the company's financial position and performance as of March 31, 2022 Condensed Consolidated Balance Sheets The balance sheet shows total assets of $1.38 billion and stockholders' equity of $796.4 million as of March 31, 2022 Balance Sheet Summary (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $707,519 | $856,604 | | Total Assets | $1,384,029 | $1,522,397 | | Total Current Liabilities | $167,231 | $181,368 | | Total Liabilities | $587,605 | $599,836 | | Total Stockholders' Equity | $796,424 | $922,561 | Condensed Consolidated Statements of Operations The company reported a net loss of $152.3 million on total revenues of $79.9 million for the first quarter of 2022 Q1 Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Total Revenues | $79,935 | $99,395 | | Collaboration and license | $48,413 | $79,010 | | Product sales | $26,684 | $16,513 | | Total Operating Expenses | $216,567 | $205,964 | | Research and development | $143,155 | $147,518 | | Selling, general and administrative | $67,312 | $53,258 | | Loss from Operations | $(136,632) | $(106,569) | | Net Loss | $(152,320) | $(136,141) | | Net Loss Per Share | $(2.19) | $(2.03) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $117.5 million for the first three months of 2022 Cash Flow Summary (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(117,521) | $(159,346) | | Net cash used in investing activities | $(37,362) | $(182,424) | | Net cash provided by financing activities | $1,612 | $12,649 | | Net decrease in cash, cash equivalents and restricted cash | $(153,379) | $(329,892) | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, revenue breakdowns, and significant collaborations with partners like Kyowa Kirin and Regeneron - The company is a biopharmaceutical firm focused on rare and ultra-rare genetic diseases with four commercially approved products: Crysvita®, Mepsevii®, Dojolvi®, and Evkeeza® (commercialized outside the U.S. via collaboration)[24][25][27] - In January 2022, the company entered a collaboration with Regeneron to commercialize Evkeeza® outside the U.S., making a $30.0 million upfront payment which was recorded as an intangible asset[85][87] - The company sold its right to receive European royalty payments for Crysvita to RPI Finance Trust, a transaction accounted for as a liability with an effective annual interest rate of approximately 9.6% as of March 31, 2022[93][94][95] Q1 Revenue Breakdown (in thousands) | Revenue Source | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Collaboration & License | | | | Crysvita profit share | $45,164 | $36,260 | | Daiichi Sankyo | $3,249 | $42,750 | | Product Sales | | | | Crysvita | $9,394 | $5,872 | | Mepsevii | $4,861 | $3,607 | | Dojolvi | $12,429 | $7,034 | | Non-cash Royalty Revenue | $4,838 | $3,872 | | Total Revenues | $79,935 | $99,395 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management analyzes Q1 2022 performance, noting a 20% revenue decrease to $79.9 million and a net loss of $152.3 million - The COVID-19 pandemic has continued to affect business operations, causing interruptions to clinical trials, delays in materials, and difficulties in identifying new patients for commercial products[109][110] - As of March 31, 2022, the company had $813.8 million in available cash, cash equivalents, and marketable debt securities, which management believes is sufficient to fund operations for at least the next twelve months[133][156] Approved Therapies and Clinical Product Candidates The company's portfolio includes four approved therapies and a clinical pipeline focused on rare genetic diseases - The company's pipeline is categorized into biologics, small molecules, gene therapy, and nucleic acid product candidates[111] - Key upcoming milestones include additional Phase 1/2 data for GTX-102 in mid-2022 and Phase 1/2 single ascending dose data for UX053 in the second half of 2022[119] - Patient enrollment and dosing are ongoing in the Phase 3 study of DTX401 for GSDIa and the Phase 1/2/3 study of UX701 for Wilson Disease, with Phase 3 start-up activities ongoing for DTX301 for OTC deficiency[121][122][123] Results of Operations Q1 2022 revenue decreased 20% YoY, driven by lower collaboration revenue, while SG&A expenses increased by 26% - Selling, general and administrative (SG&A) expenses increased by $14.1 million (26%) year-over-year, primarily due to higher personnel costs, commercialization activities, and professional services[145] Q1 2022 vs Q1 2021 Revenue Changes (in thousands) | Revenue Source | Change ($) | Change (%) | | :--- | :--- | :--- | | Daiichi Sankyo | $(39,501) | -92% | | Total product sales | $10,171 | 62% | | Crysvita profit-share | $8,904 | 25% | | Total revenues | $(19,460) | -20% | Q1 2022 vs Q1 2021 R&D Expense Changes (in thousands) | R&D Program | Change ($) | Change (%) | | :--- | :--- | :--- | | Upfront license and milestone fees | $(50,000) | -100% | | Gene therapy programs | $18,918 | 89% | | Nucleic acid and other biologic programs | $11,450 | 127% | | Total R&D expenses | $(4,363) | -3% | Liquidity and Capital Resources The company held $813.8 million in cash and equivalents, which is considered sufficient for the next twelve months - The company's primary sources of funding have been equity sales, product revenues, sale of future royalties, and strategic collaborations[155] - An Open Market Sale Agreement (ATM) with Jefferies allows for the sale of up to $350.0 million in common stock, with $78.9 million in net proceeds raised to date under this facility[157] - The company anticipates generating annual losses for the foreseeable future and will require additional capital to fund operations, clinical studies, and commercialization efforts[166] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from equity investments, interest rates, and foreign currency fluctuations - The company holds equity investments in Arcturus and Solid, valued at $13.5 million and $9.4 million, respectively, as of March 31, 2022, exposing it to equity price volatility[173] - Interest rate risk primarily relates to the $813.8 million in cash, cash equivalents, and marketable debt securities, with a hypothetical 100 basis point change not having a material impact[174] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes in internal control - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[176] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[177] Part II – Other Information Legal Proceedings The company is not currently a party to any material legal proceedings - As of the filing date, the company is not a party to any material legal proceedings[178] Risk Factors Key risks include a history of operating losses, clinical development uncertainties, and reliance on third parties - The company has a history of operating losses and anticipates they will continue for the foreseeable future due to high R&D and commercialization costs[185] - Clinical drug development is highlighted as a lengthy, complex, and expensive process with uncertain outcomes, and results from earlier studies may not predict future success[196] - The company faces significant manufacturing risks, particularly for its novel gene therapy and mRNA candidates, and relies on third-party and single-source suppliers for its products[216][237][242] - The ongoing COVID-19 pandemic has impacted and could continue to materially and adversely affect business operations, clinical trials, and commercialization efforts[304] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - None[354] Exhibits This section lists all exhibits filed with the Form 10-Q, including required certifications and data files - The exhibits include the CEO and CFO certifications required under the Sarbanes-Oxley Act and XBRL interactive data files[358]