SEC Filing - Ultragenyx Pharmaceutical Inc.

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rare-10q_20210630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to .

Commission File No. 001-36276

ULTRAGENYX PHARMACEUTICAL INC.

(Exact name of registrant as specified in its charter)

Delaware			27-2546083
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

60 Leveroni Court Novato, California		94949
(Address of principal executive offices)		(Zip Code)

(415) 483-8800

(Registrant’s telephone number, including area code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	RARE	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 28, 2021, the registrant had 67,836,060 shares of common stock issued and outstanding.

ULTRAGENYX PHARMACEUTICAL INC.

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2021

INDEX

			Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			1

Part I –	Financial Information

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets	2

		Condensed Consolidated Statements of Operations	3

		Condensed Consolidated Statements of Comprehensive Loss	4

		Condensed Consolidated Statements of Stockholders’ Equity	5

		Condensed Consolidated Statements of Cash Flows	7

		Notes to Condensed Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

	Item 4.	Controls and Procedures	32

Part II –	Other Information

	Item 1.	Legal Proceedings	33

	Item 1A.	Risk Factors	33

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67

	Item 3.	Defaults Upon Senior Securities	68

	Item 4.	Mine Safety Disclosures	68

	Item 5.	Other Information	68

	Item 6.	Exhibits	69

	Signatures		70

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the Quarterly Report) contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words, or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

our commercialization, marketing, and manufacturing capabilities and strategy;

•

our expectations regarding the timing of clinical study commencements and reporting results from same;

•

the timing and likelihood of regulatory approvals for our product candidates;

•

the anticipated indications for our product candidates, if approved;

•

the potential market opportunities for commercializing our products and product candidates;

•

our expectations regarding the potential market size and the size of the patient populations for our products and product candidates, if approved for commercial use;

•

the impact of the COVID-19 pandemic and related health measures on our business, financial condition and liquidity;

•

estimates of our expenses, revenue, capital requirements, and our needs for additional financing;

•

our ability to develop, acquire, and advance product candidates into, and successfully complete, clinical studies;

•

the implementation of our business model and strategic plans for our business, products and product candidates and the integration and performance of any businesses we have acquired or may acquire;

•

the initiation, timing, progress, and results of ongoing and future preclinical and clinical studies, and our research and development programs;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our products and product candidates;

•

our ability to maintain and establish collaborations or strategic relationships or obtain additional funding;

•

our ability to maintain and establish relationships with third parties, such as contract research organizations, contract manufacturing organizations, suppliers, and distributors;

•

our financial performance and the expansion of our organization;

•

our ability to obtain supply of our products and product candidates;

•

the scalability and commercial viability of our manufacturing methods and processes;

•

developments and projections relating to our competitors and our industry; and

•

other risks and uncertainties, including those listed under Part II, Item 1A. Risk Factors.

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those discussed under Part II, Item 1A. Risk Factors and elsewhere in this Quarterly Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report also contains estimates, projections, and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)

	June 30,			December 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	290,875		$	713,526
Marketable debt securities		554,881			488,007
Accounts receivable, net		24,720			23,093
Inventory		15,083			13,048
Prepaid expenses and other current assets		63,933			57,630
Total current assets		949,492			1,295,304
Property, plant, and equipment, net		104,568			73,515
Equity investments		103,710			155,375
Marketable debt securities		128,031			10,506
Right-of-use assets		38,619			40,524
Intangible assets, net		130,950			131,113
Goodwill		44,406			44,406
Other assets		12,668			8,812
Total assets	$	1,512,444		$	1,759,555

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	21,790		$	12,923
Accrued liabilities		91,060			108,491
Contract liabilities		3,912			59,219
Lease liabilities		10,305			8,976
Total current liabilities		127,067			189,609
Contract liabilities		—			7,349
Lease liabilities		35,861			39,251
Deferred tax liabilities		33,306			33,306
Liability related to the sale of future royalties		344,039			335,665
Total liabilities		540,273			605,180
Stockholders’ equity:
Preferred stock — 25,000,000 shares authorized; nil outstanding as of June 30, 2021 and December 31, 2020		—			—
Common stock — 250,000,000 shares authorized; 67,764,950 and 66,818,520 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		68			67
Additional paid-in capital		2,850,016			2,773,195
Accumulated other comprehensive income		232			689
Accumulated deficit		(1,878,145	)		(1,619,576	)
Total stockholders’ equity		972,171			1,154,375
Total liabilities and stockholders’ equity	$	1,512,444		$	1,759,555

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenues:
Collaboration and license	$	63,940		$	50,161		$	142,950		$	77,376
Product sales		18,346			8,066			34,859			14,545
Non-cash collaboration royalty revenue		4,689			3,482			8,561			6,097
Total revenues		86,975			61,709			186,370			98,018
Operating expenses:
Cost of sales		3,136			1,803			8,324			(1,700	)
Research and development		113,205			80,709			260,723			193,670
Selling, general and administrative		53,410			42,252			106,668			89,768
Total operating expenses		169,751			124,764			375,715			281,738
Loss from operations		(82,776	)		(63,055	)		(189,345	)		(183,720	)
Interest income		441			1,797			1,080			4,716
Change in fair value of equity investments		(31,046	)		95,200			(51,665	)		102,868
Non-cash interest expense on liability related to the sale of future royalties		(8,517	)		(8,429	)		(16,935	)		(16,511	)
Other income (expense)		(67	)		217			(862	)		(239	)
Income (loss) before income taxes		(121,965	)		25,730			(257,727	)		(92,886	)
Provision for income taxes		(463	)		(415	)		(842	)		(824	)
Net income (loss)	$	(122,428	)	$	25,315		$	(258,569	)	$	(93,710	)
Net income (loss) per share:
Basic	$	(1.81	)	$	0.42		$	(3.84	)	$	(1.59	)
Diluted	$	(1.81	)	$	0.41		$	(3.84	)	$	(1.59	)
Weighted-average shares used in computing net income (loss) per share:
Basic		67,607,752			59,995,617			67,356,443			58,996,278
Diluted		67,607,752			61,146,231			67,356,443			58,996,278

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)

	Three Months Ended June 30,					Six Months Ended June 30,
	2021			2020		2021			2020
Net income (loss)	$	(122,428	)	$	25,315	$	(258,569	)	$	(93,710	)
Other comprehensive income (loss):
Foreign currency translation adjustments		103			89		(182	)		40
Unrealized gain (loss) on available-for-sale securities		73			2,740		(275	)		1,391
Other comprehensive income (loss):		176			2,829		(457	)		1,431
Total comprehensive income (loss)	$	(122,252	)	$	28,144	$	(259,026	)	$	(92,279	)

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share amounts)

	Common Stock				Additional Paid-In		Accumulated Other Comprehensive		Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income (Loss)		Deficit			Equity
Balance as of March 31, 2021		67,439,477	$	67	$	2,810,176	$	56	$	(1,755,717	)	$	1,054,582
Stock-based compensation		—		—		27,099		—		—			27,099
Issuance of common stock under equity plan awards, net of tax		325,473		1		12,741		—		—			12,742
Other comprehensive income		—		—		—		176		—			176
Net loss		—		—		—		—		(122,428	)		(122,428	)
Balance as of June 30, 2021		67,764,950	$	68	$	2,850,016	$	232	$	(1,878,145	)	$	972,171

	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balance as of December 31, 2020		66,818,520	$	67	$	2,773,195	$	689		$	(1,619,576	)	$	1,154,375
Stock-based compensation		—		—		51,319		—			—			51,319
Issuance of common stock under equity plan awards, net of tax		946,430		1		25,502		—			—			25,503
Other comprehensive loss		—		—		—		(457	)		—			(457	)
Net loss		—		—		—		—			(258,569	)		(258,569	)
Balance as of June 30, 2021		67,764,950	$	68	$	2,850,016	$	232		$	(1,878,145	)	$	972,171

	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balance as of March 31, 2020		59,488,873	$	59	$	2,162,667	$	(1,545	)	$	(1,552,035	)	$	609,146
Issuance of common stock in connection with at-the-market offering, net of issuance costs		283,333		—		20,391		—			—			20,391
Stock-based compensation		—		—		22,428		—			—			22,428
Issuance of common stock under equity plan awards, net of tax		641,550		1		15,477		—			—			15,478
Other comprehensive income		—		—		—		2,829			—			2,829
Net income		—		—		—		—			25,315			25,315
Balance as of June 30, 2020		60,413,756	$	60	$	2,220,963	$	1,284		$	(1,526,720	)	$	695,587

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share amounts)

	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balance as of December 31, 2019		57,838,220	$	58	$	2,086,863	$	(147	)	$	(1,433,010	)	$	653,764
Issuance of common stock in connection with license agreement, net of issuance costs		1,243,913		1		55,267		—			—			55,268
Issuance of common stock in connection with at-the-market offering, net of issuance costs		283,333		—