SEC Filing—Ultragenyx Pharmaceutical Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

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 March 31, 2023

☐ 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 May 1, 2023, the registrant had 70,814,462 shares of common stock issued and outstanding.

ULTRAGENYX PHARMACEUTICAL INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2023

INDEX


			Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			1

Part I –	Financial Information

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets	3

		Condensed Consolidated Statements of Operations	4

		Condensed Consolidated Statements of Comprehensive Loss	5

		Condensed Consolidated Statements of Stockholders’ Equity	6

		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	31

	Item 4.	Controls and Procedures	31

Part II –	Other Information

	Item 1.	Legal Proceedings	31

	Item 1A.	Risk Factors	32

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69

	Item 3.	Defaults Upon Senior Securities	69

	Item 4.	Mine Safety Disclosures	69

	Item 5.	Other Information	69

	Item 6.	Exhibits	69

	Signatures		71

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q , or 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;

•

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;

•

stagnating or worsening business and economic conditions and increasing geopolitical instability, including inflationary pressures, general economic slowdown or a recession, rising interest rates, foreign exchange rate volatility, financial institution instability, and changes in monetary policy; 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 such 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)


	March 31,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	85,768		$	132,944
Marketable debt securities		543,586			614,818
Accounts receivable, net		42,991			40,445
Inventory		26,616			26,766
Prepaid expenses and other current assets		67,375			68,926
Total current assets		766,336			883,899
Property, plant, and equipment, net		277,873			259,726
Equity investments		5,197			5,531
Marketable debt securities		85,213			148,970
Right-of-use assets		22,949			25,961
Intangible assets, net		159,171			160,105
Goodwill		44,406			44,406
Other assets		22,259			16,846
Total assets	$	1,383,404		$	1,545,444
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	58,981		$	43,274
Accrued liabilities		144,404			204,678
Contract liabilities		—			1,479
Lease liabilities		11,261			11,779
Liabilities for sales of future royalties		3,533			—
Total current liabilities		218,179			261,210
Lease liabilities		17,340			19,814
Deferred tax liabilities		31,667			31,667
Liabilities for sales of future royalties		886,480			875,439
Other liabilities		9,257			4,820
Total liabilities		1,162,923			1,192,950
Stockholders’ equity:
Preferred stock — 25,000,000 shares authorized; nil outstanding as of March 31, 2023 and December 31, 2022		—			—
Common stock — 250,000,000 shares authorized; 70,660,249 and 70,197,297 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		71			70
Treasury stock, at cost, 7,812 and nil shares held as of March 31, 2023 and December 31, 2022, respectively		(356	)		—
Deferred compensation obligation		356			—
Additional paid-in capital		3,169,371			3,140,019
Accumulated other comprehensive loss		(3,967	)		(6,573	)
Accumulated deficit		(2,944,994	)		(2,781,022	)
Total stockholders’ equity		220,481			352,494
Total liabilities and stockholders’ equity	$	1,383,404		$	1,545,444

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended March 31,
	2023			2022
Revenues:
Collaboration and license	$	51,385		$	48,413
Product sales		44,229			26,684
Royalty revenue		4,882			4,838
Total revenues		100,496			79,935
Operating expenses:
Cost of sales		12,257			6,100
Research and development		165,698			143,155
Selling, general and administrative		76,646			67,312
Total operating expenses		254,601			216,567
Loss from operations		(154,105	)		(136,632	)
Interest income		6,290			494
Change in fair value of equity investments		(334	)		(9,329	)
Non-cash interest expense on liabilities for sales of future royalties		(15,636	)		(6,584	)
Other income		308			289
Loss before income taxes		(163,477	)		(151,762	)
Provision for income taxes		(495	)		(558	)
Net loss	$	(163,972	)	$	(152,320	)
Net loss per share, basic and diluted	$	(2.33	)	$	(2.19	)
Weighted-average shares used in computing net loss per share, basic and diluted		70,368,478			69,516,668

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2023			2022
Net loss	$	(163,972	)	$	(152,320	)
Other comprehensive income (loss):
Foreign currency translation adjustments		144			(60	)
Unrealized gain (loss) on available-for-sale securities		2,462			(5,090	)
Other comprehensive loss:		2,606			(5,150	)
Total comprehensive loss	$	(161,366	)	$	(157,470	)

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			Treasury			Deferred Compensation		Total Stockholders'
	Shares		Amount		Capital			Income (Loss)			Deficit			Stock			Obligation		Equity
Balance as of December 31, 2022		70,197,297	$	70	$	3,140,019		$	(6,573	)	$	(2,781,022	)	$	—		$	—	$	352,494
Stock-based compensation		—		—		30,103			—			—			—			—		30,103
Issuance of common stock under equity plan awards, net of tax		462,952		1		(751	)		—			—			—			—		(750	)
Deferred compensation		—		—		—			—			—			(356	)		356		—
Other comprehensive income		—		—		—			2,606			—			—			—		2,606
Net loss		—		—		—			—			(163,972	)		—			—		(163,972	)
Balance as of March 31, 2023		70,660,249	$	71	$	3,169,371		$	(3,967	)	$	(2,944,994	)	$	(356	)	$	356	$	220,481


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Treasury		Deferred Compensation		Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Stock		Obligation		Equity
Balance as of December 31, 2021		69,344,998	$	69	$	2,997,497	$	(1,404	)	$	(2,073,601	)	$	—	$	—	$	922,561
Stock-based compensation		—		—		29,578		—			—			—		—		29,578
Issuance of common stock under equity plan awards, net of tax		451,942		1		1,754		—			—			—		—		1,755
Other comprehensive loss		—		—		—		(5,150	)		—			—		—		(5,150	)
Net loss		—		—		—		—			(152,320	)		—		—		(152,320	)
Balance as of March 31, 2022		69,796,940	$	70	$	3,028,829	$	(6,554	)	$	(2,225,921	)	$	—	$	—	$	796,424

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2023			2022
Operating activities:
Net loss	$	(163,972	)	$	(152,320	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		31,952			29,396
Amortization of (discount) premium on marketable debt securities, net		(2,994	)		1,894
Depreciation and amortization		5,236			4,088
Change in fair value of equity investments		334			9,329
Non-cash royalty revenue		(4,882	)		(4,838	)
Non-cash interest expense on liabilities for sales of future royalties		15,636			6,584
Other		187			35
Changes in operating assets and liabilities:
Accounts receivable		(2,508	)		33
Inventory		150			(1,475	)
Prepaid expenses and other assets		(519	)		9,126
Accounts payable, accrued, and other liabilities		(34,008	)		(16,164	)
Contract liabilities		(1,479	)		(3,209	)
Net cash used in operating activities		(156,867	)		(117,521	)
Investing activities:
Purchase of property, plant, and equipment		(25,034	)		(32,184	)
Purchase of marketable debt securities		(62,024	)		(203,710	)
Proceeds from sale of marketable debt securities		10,715			39,422
Proceeds from maturities of marketable debt securities		191,598			188,990
Payment for intangible asset		—			(30,000	)
Other		(3,951	)		120
Net cash provided by (used in) investing activities		111,304			(37,362	)
Financing activities:
Proceeds from the issuance of common stock under equity plan awards, net of tax		(750	)		1,755
Other		28			(143	)
Net cash (used in) provided by financing activities		(722	)		1,612
Effect of exchange rate changes on cash		211			(108	)
Net decrease in cash, cash equivalents and restricted cash		(46,074	)		(153,379	)
Cash, cash equivalents and restricted cash at beginning of period		137,601			309,585