10-Q
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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

OR

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. YesNo

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). YesNo

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). YesNo

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

1


 

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.

2


 

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.

3


 

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.

4


 

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.

 

5


 

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.

6


 

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