SEC Filing—Ultragenyx Pharmaceutical Inc.

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10-Q

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 September 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 October 28, 2021, the registrant had 68,162,225 shares of common stock issued and outstanding.

ULTRAGENYX PHARMACEUTICAL INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 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	22

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

	Item 4.	Controls and Procedures	35

Part II –	Other Information

	Item 1.	Legal Proceedings	35

	Item 1A.	Risk Factors	35

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70

	Item 3.	Defaults Upon Senior Securities	70

	Item 4.	Mine Safety Disclosures	70

	Item 5.	Other Information	70

	Item 6.	Exhibits	71

	Signatures		72

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)


	September 30,			December 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	197,538		$	713,526
Marketable debt securities		539,579			488,007
Accounts receivable, net		25,383			23,093
Inventory		15,191			13,048
Prepaid expenses and other current assets		69,193			57,630
Total current assets		846,884			1,295,304
Property, plant, and equipment, net		119,069			73,515
Equity investments		86,215			155,375
Marketable debt securities		204,243			10,506
Right-of-use assets		36,696			40,524
Intangible assets, net		130,869			131,113
Goodwill		44,406			44,406
Other assets		16,419			8,812
Total assets	$	1,484,801		$	1,759,555

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	15,575		$	12,923
Accrued liabilities		109,660			108,491
Contract liabilities		—			59,219
Lease liabilities		10,698			8,976
Total current liabilities		135,933			189,609
Lease liabilities		33,344			39,251
Deferred tax liabilities		33,306			33,306
Liability related to the sale of future royalties		348,073			335,665
Other liabilities		471			7,349
Total liabilities		551,127			605,180
Stockholders’ equity:
Preferred stock — 25,000,000 shares authorized; nil outstanding as of September 30, 2021 and December 31, 2020		—			—
Common stock — 250,000,000 shares authorized; 67,961,963 and 66,818,520 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		68			67
Additional paid-in capital		2,884,695			2,773,195
Accumulated other comprehensive income		54			689
Accumulated deficit		(1,951,143	)		(1,619,576	)
Total stockholders’ equity		933,674			1,154,375
Total liabilities and stockholders’ equity	$	1,484,801		$	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 September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenues:
Collaboration and license	$	55,048		$	66,924		$	197,998		$	144,300
Product sales		21,950			11,215			56,809			25,760
Non-cash collaboration royalty revenue		4,649			3,331			13,210			9,428
Total revenues		81,647			81,470			268,017			179,488
Operating expenses:
Cost of sales		4,175			2,348			12,499			648
Research and development		113,417			87,314			374,140			280,984
Selling, general and administrative		53,883			42,123			160,551			131,891
Total operating expenses		171,475			131,785			547,190			413,523
Loss from operations		(89,828	)		(50,315	)		(279,173	)		(234,035	)
Interest income		408			1,338			1,488			6,054
Change in fair value of equity investments		25,702			(11,520	)		(25,963	)		91,348
Non-cash interest expense on liability related to the sale of future royalties		(8,683	)		(8,582	)		(25,618	)		(25,093	)
Other income (expense)		(415	)		547			(1,277	)		308
Loss before income taxes		(72,816	)		(68,532	)		(330,543	)		(161,418	)
Provision for income taxes		(182	)		(313	)		(1,024	)		(1,137	)
Net loss	$	(72,998	)	$	(68,845	)	$	(331,567	)	$	(162,555	)
Net loss per share, basic and diluted	$	(1.08	)	$	(1.13	)	$	(4.91	)	$	(2.73	)
Weighted-average shares used in computing net loss per share, basic and diluted		67,875,363			60,687,177			67,533,671			59,564,163

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Net loss	$	(72,998	)	$	(68,845	)	$	(331,567	)	$	(162,555	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(166	)		374			(348	)		414
Unrealized gain (loss) on available-for-sale securities		(12	)		(645	)		(287	)		746
Other comprehensive income (loss):		(178	)		(271	)		(635	)		1,160
Total comprehensive loss	$	(73,176	)	$	(69,116	)	$	(332,202	)	$	(161,395	)

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 June 30, 2021		67,764,950	$	68	$	2,850,016	$	232		$	(1,878,145	)	$	972,171
Stock-based compensation		—		—		27,005		—			—			27,005
Issuance of common stock under equity plan awards, net of tax		197,013		—		7,674		—			—			7,674
Other comprehensive loss		—		—		—		(178	)		—			(178	)
Net loss		—		—		—		—			(72,998	)		(72,998	)
Balance as of September 30, 2021		67,961,963	$	68	$	2,884,695	$	54		$	(1,951,143	)	$	933,674


	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		—		—		78,324		—			—			78,324
Issuance of common stock under equity plan awards, net of tax		1,143,443		1		33,176		—			—			33,177
Other comprehensive loss		—		—		—		(635	)		—			(635	)
Net loss		—		—		—		—			(331,567	)		(331,567	)
Balance as of September 30, 2021		67,961,963	$	68	$	2,884,695	$	54		$	(1,951,143	)	$	933,674


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balance as of June 30, 2020		60,413,756	$	60	$	2,220,963	$	1,284		$	(1,526,720	)	$	695,587
Stock-based compensation		—		—		20,527		—			—			20,527
Issuance of common stock under equity plan awards, net of tax		401,934		1		19,192		—			—			19,193
Other comprehensive loss		—		—		—		(271	)		—			(271	)
Net loss		—		—		—		—			(68,845	)		(68,845	)
Balance as of September 30, 2020		60,815,690	$	61	$	2,260,682	$	1,013		$	(1,595,565	)	$	666,191

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 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		—		20,391		—			—			20,391
Stock-based compensation		—		—