UroGen Pharma(US:URGN)2024-03-14 12:17PART I Business UroGen Pharma develops and commercializes urothelial and specialty cancer treatments using its proprietary RTGel® reverse-thermal hydrogel technology, with Jelmyto® as its primary approved product Overview and Technology The company's core is the RTGel® reverse-thermal hydrogel, a proprietary technology that is liquid at cool temperatures and becomes a gel at body temperature, allowing sustained drug release - UroGen's proprietary RTGel® is a reverse thermal hydrogel that is liquid when cool and gels at body temperature, designed to enable longer exposure of urinary tract tissue to medications2425 - RTGel technology increases the dwell time of mitomycin in the upper urinary tract from approximately five minutes (standard aqueous formulation) to about six hours, enhancing drug-tissue coverage29 Product Pipeline UroGen's pipeline is led by Jelmyto®, approved for low-grade UTUC, with lead candidate UGN-102 targeting low-grade intermediate-risk NMIBC, and other next-generation formulations and an immuno-oncology program in development UroGen Pharma Product Pipeline Status | Product Candidate | Indication | Development Stage | | :--- | :--- | :--- | | Jelmyto® (UGN-101) | Low-Grade UTUC | Approved & Commercialized | | UGN-102 | Low-Grade Intermediate Risk NMIBC | Phase 3 (NDA Submission Planned) | | UGN-103 | Low-Grade Intermediate Risk NMIBC | Phase 3 (Planned 2024) | | UGN-104 | Low-Grade UTUC | Phase 3 (Planned 2024) | | UGN-301 (Zalifrelimab) | High-Grade NMIBC | Phase 1 | - Jelmyto® (mitomycin) for pyelocalyceal solution was approved by the FDA on April 15, 2020, for the treatment of adult patients with low-grade UTUC, holding Orphan Drug exclusivity until April 15, 202733 - The Phase 3 ENVISION trial for UGN-102 met its primary endpoint, showing a 79.2% rate of complete response (CR) at three months, with a rolling NDA submission planned for September 20245658 - The company is developing UGN-103 and UGN-104, next-generation formulations of UGN-102 and Jelmyto, respectively, in partnership with medac, with Phase 3 studies planned for 20245960 Strategy, Competition, and Intellectual Property UroGen's strategy focuses on establishing Jelmyto as the standard of care, advancing UGN-102, and expanding its uro-oncology pipeline, while facing competition from surgical procedures and other pharmaceutical companies, supported by a robust intellectual property portfolio - Key growth strategies include establishing Jelmyto as the standard of care, advancing UGN-102 towards regulatory approval, expanding the uro-oncology pipeline with candidates like UGN-301, UGN-103, and UGN-104, and exploring collaborations808182 - The company holds a strong intellectual property position with 43 granted patents worldwide and over 45 pending applications, with U.S. patents protecting Jelmyto, UGN-102, and RTGel technology expiring between 2024 and 20377886 - Competition arises from the current standard of care (surgical tumor resection) and other pharmaceutical companies such as Janssen, Lipac, Bristol Myers Squibb, Merck, and Ferring Pharmaceuticals, developing drugs for NMIBC and other uro-oncology indications939496 Government Regulation The company is subject to extensive FDA and global regulations covering product development, manufacturing, and marketing, utilizing the 505(b)(2) pathway for its mitomycin-based products, with ongoing post-approval oversight and compliance with healthcare laws - The FDA approval process is extensive, requiring nonclinical studies, an effective IND, and adequate and well-controlled human clinical trials (Phase 1-3) to establish safety and efficacy before an NDA submission100101103 - The company utilizes the 505(b)(2) regulatory pathway, which allows an NDA to rely on FDA's prior findings of safety and efficacy for a previously approved drug, potentially streamlining development108 - Jelmyto received Orphan Drug Designation, providing seven years of marketing exclusivity in the U.S. for its approved indication, ending in April 202733115 - The business is subject to numerous healthcare laws, including the federal Anti-Kickback Statute, False Claims Act, HIPAA, and the Sunshine Act, which regulate relationships with healthcare professionals and government reimbursement programs135136140141 Manufacturing, Commercial Operations, and Corporate Information UroGen relies on third-party contract manufacturers for all raw materials and finished products, has established a U.S. commercial team of approximately 80 representatives for Jelmyto, and as of January 31, 2024, had 201 employees worldwide, with principal executive offices in Princeton, NJ - The company does not own manufacturing facilities and relies on third-party contract manufacturers for all raw materials, active ingredients, and finished products for both clinical trials and commercial supply159 - A customer-facing team of approximately 80 representatives, including territory business managers, clinical nurse educators, and medical science liaisons, has been established to support the commercialization of Jelmyto in the U.S162 - As of January 31, 2024, the company had 201 employees, with 161 located in the United States and 40 in Israel165 Risk Factors The company faces significant risks including historical losses, financing needs, high dependency on Jelmyto and UGN-102, competition, supply chain issues, IP challenges, and regulatory and geopolitical instability - The company has a history of significant losses ($102.2 million in 2023) and an accumulated deficit of $679.3 million, raising substantial doubt about its ability to continue as a going concern without additional financing170180 - High dependency on the successful commercialization of Jelmyto and the regulatory approval and success of UGN-102 are primary business risks194215 - Reliance on third-party, single-source suppliers for key components like mitomycin API and RTGel hydrogel presents significant supply chain risks257258 - The company faces intellectual property risks, highlighted by a Paragraph IV Certification Notice from Teva Pharmaceuticals seeking to market a generic version of Jelmyto by challenging its patents209321 - Operations in Israel expose the company to political, economic, and military instability, which could disrupt research and development activities425 Unresolved Staff Comments The company reports that it has no unresolved staff comments from the SEC - None450 Cybersecurity The company has implemented an information security program supervised by the Chief Financial Officer and IT Department to manage cybersecurity risks, with Audit Committee oversight, utilizing third-party service providers, and maintaining an incident response policy - The company's cybersecurity risk management is supervised by the Chief Financial Officer and the IT Department, with oversight from the Audit Committee of the Board of Directors452458 - The company's strategy includes using third-party service providers for security management roles to identify, assess, and manage cybersecurity threats through various methods like monitoring, threat assessments, and vulnerability scans452455 - A cybersecurity incident response policy is in place, designed to escalate significant incidents to management and the Audit Committee to ensure proper mitigation and remediation461 Properties The company leases approximately 20,913 square feet in Princeton, NJ for its principal executive offices and an 11,495 square foot facility in Israel for research and development, which management deems adequate for current needs - The company's principal executive offices are leased in Princeton, NJ (~20,913 sq. ft.), and its primary R&D laboratories are in a leased facility in Israel (~11,495 sq. ft.)463 Legal Proceedings The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business - The company is not currently party to any material legal proceedings464 Mine Safety Disclosures This item is not applicable to the company - Not applicable465 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities UroGen's ordinary shares trade on the Nasdaq Global Market under the symbol 'URGN', with 16 registered holders as of March 7, 2024, and the company has never paid dividends, intending to retain earnings for business development, also restricted by its loan agreement - The company's ordinary shares trade on the Nasdaq Global Market under the symbol URGN468 - The company has never paid dividends and does not expect to in the foreseeable future, due to its policy of retaining earnings for growth and restrictions under its loan agreement470 Management's Discussion and Analysis of Financial Condition and Results of Operations UroGen's 2023 revenue increased, net loss improved, and liquidity was bolstered by financing, though current resources are projected to fund operations only until Q1 2025, raising going concern doubts Results of Operations For 2023, revenue increased by 28.5% to $82.7 million, gross profit grew, operating loss narrowed to $65.5 million due to lower R&D expenses, partially offset by increased SG&A and interest expenses, resulting in a net loss of $102.2 million Results of Operations (2023 vs. 2022) | Metric | 2023 (in thousands) | 2022 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Revenue | $82,713 | $64,357 | $18,356 | | Gross Profit | $73,352 | $56,703 | $16,649 | | Research and development | $45,614 | $52,906 | ($7,292) | | Selling and marketing | $54,703 | $51,920 | $2,783 | | General and administrative | $38,571 | $30,918 | $7,653 | | Operating loss | ($65,536) | ($79,041) | $13,505 | | Net loss | ($102,244) | ($109,783) | $7,539 | - Revenue increased by $18.3 million (28.5%) in 2023 compared to 2022, primarily due to increased sales volume of Jelmyto529 - Research and development expenses decreased by $7.3 million, mainly due to the conclusion of the ATLAS trial and lower costs for the Phase 3 ENVISION trial for UGN-102531 Liquidity and Capital Resources As of December 31, 2023, the company had $141.5 million in cash and equivalents, funded by equity offerings, debt, and product sales, including a $120.0 million private placement in 2023 and an amended loan agreement with Pharmakon, though current resources are projected to fund operations only until Q1 2025, raising substantial doubt about its going concern ability - The company had $141.5 million in cash, cash equivalents, and marketable securities as of December 31, 2023538 - In July 2023, the company raised aggregate gross proceeds of $120.0 million through a private placement of ordinary shares and pre-funded warrants544 - The company's existing resources are estimated to be sufficient to fund operations only until the first quarter of 2025, which raises substantial doubt about its ability to continue as a going concern546 - In March 2024, the company amended its loan agreement with Pharmakon, securing access to an additional $25.0 million tranche (mandatory draw by Sept 2024) and an optional $75.0 million tranche contingent on UGN-102 FDA approval543 Quantitative and Qualitative Disclosures about Market Risk The company is exposed to interest rate risk on its investment portfolio and significant foreign currency exchange risk due to New Israeli Shekel operating expenses, but does not currently use hedging instruments - The company's primary market risks are interest rate fluctuations on its marketable securities and foreign currency exchange risk574576 - A significant portion of operating expenses are incurred in New Israeli Shekels (NIS), exposing the company to fluctuations between the NIS and the U.S. dollar, its reporting currency576 - The company does not currently engage in currency hedging activities to reduce its foreign currency exposure577 Financial Statements and Supplementary Data This section contains the company's audited consolidated financial statements for 2023 and 2022, including the Independent Registered Public Accounting Firm's report highlighting going concern doubt, and various financial statements with accompanying notes - The Report of Independent Registered Public Accounting Firm expresses substantial doubt about the Company's ability to continue as a going concern due to its history of losses and negative operating cash flows583 Key Financial Statement Data (as of Dec 31, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Assets | | | Cash and cash equivalents | $95,002 | | Total Current Assets | $169,186 | | Total Assets | $178,311 | | Liabilities & Equity | | | Total Current Liabilities | $31,212 | | Long-term debt | $98,551 | | Total Liabilities | $243,523 | | Total Shareholders' Deficit | ($65,212) | Key Financial Statement Data (Year ended Dec 31, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Revenue | $82,713 | | Gross Profit | $73,352 | | Operating Loss | ($65,536) | | Net Loss | ($102,244) | | Net cash used in operating activities | ($76,376) | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None746 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2023, with no material changes identified - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023748 - Based on the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2023750 Other Information This section discloses the Chief Medical Officer's Rule 10b5-1 trading plan, the March 2024 amended loan agreement with Pharmakon providing up to $100 million in additional financing, and notice for the 2024 Annual Meeting of Shareholders - On March 13, 2024, the company entered into an amended and restated loan agreement with Pharmakon for up to $100 million in additional financing, structured in two tranches753 - The Chief Medical Officer, Mark Schoenberg, entered into a Rule 10b5-1 trading plan on December 26, 2023, to sell up to 30,000 ordinary shares752 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable761 PART III Directors, Executive Officers and Corporate Governance The information required for this item, including details on directors, executive officers, and corporate governance, will be provided in an amendment to the Form 10-K, to be filed by April 29, 2024 - Information will be provided in a future amendment to the Form 10-K763 Executive Compensation The information required for this item regarding executive compensation will be provided in an amendment to the Form 10-K, to be filed by April 29, 2024 - Information will be provided in a future amendment to the Form 10-K765 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required for this item concerning security ownership will be provided in an amendment to the Form 10-K, to be filed by April 29, 2024 - Information will be provided in a future amendment to the Form 10-K766 Certain Relationships and Related Transactions, and Director Independence The information required for this item regarding related party transactions and director independence will be provided in an amendment to the Form 10-K, to be filed by April 29, 2024 - Information will be provided in a future amendment to the Form 10-K767 Principal Accountant Fees and Services The information required for this item regarding principal accountant fees and services will be provided in an amendment to the Form 10-K, to be filed by April 29, 2024 - Information will be provided in a future amendment to the Form 10-K768 PART IV Exhibits, Financial Statement Schedules This section lists the financial statements, included in Item 8, and provides a comprehensive list of all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and officer certifications - This item contains a list of all exhibits filed with the annual report, including corporate governance documents, material contracts, and required certifications772773 Form 10-K Summary The company indicates that there is no Form 10-K summary - None775