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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 September 30, 2022

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 October 28, 2022, the registrant had 70,105,654 shares of common stock issued and outstanding.

 


 

ULTRAGENYX PHARMACEUTICAL INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022

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

 

33

 

 

 

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

34

 

 

 

 

 

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

 

71

 

 

 

 

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

71

 

 

 

 

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

71

 

 

 

 

 

 

 

 

 

Item 5.

 

Other Information

 

71

 

 

 

 

 

 

 

 

 

Item 6.

 

Exhibits

 

72

 

 

 

 

 

 

 

 

 

Signatures

 

 

 

74

 

 

 

 


 

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

1


 

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.

2


 

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,

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

391,651

 

 

$

307,584

 

Marketable debt securities

 

497,024

 

 

 

432,612

 

Accounts receivable, net

 

31,164

 

 

 

28,432

 

Inventory

 

21,849

 

 

 

16,231

 

Prepaid expenses and other current assets

 

70,980

 

 

 

71,745

 

Total current assets

 

1,012,668

 

 

 

856,604

 

Property, plant, and equipment, net

 

234,614

 

 

 

141,247

 

Equity investments

 

13,786

 

 

 

34,925

 

Marketable debt securities

 

107,563

 

 

 

258,933

 

Right-of-use assets

 

28,751

 

 

 

34,936

 

Intangible assets, net

 

158,401

 

 

 

130,788

 

Goodwill

 

44,406

 

 

 

44,406

 

Other assets

 

18,285

 

 

 

20,558

 

Total assets

$

1,618,474

 

 

$

1,522,397

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

23,533

 

 

$

17,138

 

Accrued liabilities

 

189,051

 

 

 

145,555

 

Contract liabilities

 

2,958

 

 

 

7,609

 

Lease liabilities

 

11,819

 

 

 

11,066

 

Total current liabilities

 

227,361

 

 

 

181,368

 

Contract liabilities

 

 

 

 

1,467

 

Lease liabilities

 

22,865

 

 

 

30,904

 

Deferred tax liabilities

 

33,306

 

 

 

33,306

 

Liabilities related to the sale of future royalties

 

862,063

 

 

 

351,786

 

Other liabilities

 

4,050

 

 

 

1,005

 

Total liabilities

 

1,149,645

 

 

 

599,836

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock — 25,000,000 shares authorized; nil outstanding as of September 30, 2022 and
   December 31, 2021

 

 

 

 

 

Common stock — 250,000,000 shares authorized; 70,079,777 and 69,344,998 shares issued
   and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

70

 

 

 

69

 

Additional paid-in capital

 

3,108,170

 

 

 

2,997,497

 

Accumulated other comprehensive loss

 

(10,222

)

 

 

(1,404

)

Accumulated deficit

 

(2,629,189

)

 

 

(2,073,601

)

Total stockholders’ equity

 

468,829

 

 

 

922,561

 

Total liabilities and stockholders’ equity

$

1,618,474

 

 

$

1,522,397

 

See accompanying notes.

3


 

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Collaboration and license

$

52,827

 

 

$

55,048

 

 

$

154,328

 

 

$

197,998

 

Product sales

 

32,503

 

 

 

21,950

 

 

 

90,019

 

 

 

56,809

 

Non-cash collaboration royalty revenue

 

5,373

 

 

 

4,649

 

 

 

15,634

 

 

 

13,210

 

Total revenues

 

90,703

 

 

 

81,647

 

 

 

259,981

 

 

 

268,017

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

8,631

 

 

 

4,175

 

 

 

23,001

 

 

 

12,499

 

Research and development

 

237,297

 

 

 

113,417

 

 

 

534,981

 

 

 

374,140

 

Selling, general and administrative

 

69,841

 

 

 

53,883

 

 

 

205,290

 

 

 

160,551

 

Total operating expenses

 

315,769

 

 

 

171,475

 

 

 

763,272

 

 

 

547,190

 

Loss from operations

 

(225,066

)

 

 

(89,828

)

 

 

(503,291

)

 

 

(279,173

)

Interest income

 

3,483

 

 

 

408

 

 

 

4,876

 

 

 

1,488

 

Change in fair value of equity investments

 

(1,626

)

 

 

25,702

 

 

 

(21,139

)

 

 

(25,963

)

Non-cash interest expense on liabilities related to the sale of future
    royalties

 

(14,505

)

 

 

(8,683

)

 

 

(27,141

)

 

 

(25,618

)

Other expense

 

(1,105

)

 

 

(415

)

 

 

(1,746

)

 

 

(1,277

)

Loss before income taxes

 

(238,819

)

 

 

(72,816

)

 

 

(548,441

)

 

 

(330,543

)

Provision for income taxes

 

(6,287

)

 

 

(182

)

 

 

(7,147

)

 

 

(1,024

)

Net loss

$

(245,106

)

 

$

(72,998

)

 

$

(555,588

)

 

$

(331,567

)

Net loss per share, basic and diluted

$

(3.50

)

 

$

(1.08

)

 

$

(7.96

)

 

$

(4.91

)

Weighted-average shares used in computing net loss per share,
    basic and diluted

 

70,054,173

 

 

 

67,875,363

 

 

 

69,834,037

 

 

 

67,533,671

 

See accompanying notes.

4


 

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

$

(245,106

)

 

$

(72,998

)

 

$

(555,588

)

 

$

(331,567

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(420

)

 

 

(166

)

 

 

(1,211

)

 

 

(348

)

Unrealized loss on available-for-sale securities

 

(888

)

 

 

(12

)

 

 

(7,607

)

 

 

(287

)

Other comprehensive loss

 

(1,308

)

 

 

(178

)

 

 

(8,818

)

 

 

(635

)

Total comprehensive loss

$

(246,414

)

 

$

(73,176

)

 

$

(564,406

)

 

$

(332,202

)

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

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance as of June 30, 2022

 

 

70,010,398

 

 

$

70

 

 

$

3,071,000

 

 

$

(8,914

)

 

$

(2,384,083

)

 

$

678,073

 

Stock-based compensation

 

 

 

 

 

 

 

 

36,096

 

 

 

 

 

 

 

 

 

36,096

 

Issuance of common stock under
   equity plan awards, net of tax

 

 

69,379

 

 

 

 

 

 

1,074

 

 

 

 

 

 

 

 

 

1,074

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,308

)

 

 

 

 

 

(1,308

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(245,106

)

 

 

(245,106

)

Balance as of September 30, 2022

 

 

70,079,777

 

 

$

70

 

 

$

3,108,170

 

 

$

(10,222

)

 

$

(2,629,189

)

 

$

468,829

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2021

 

 

69,344,998

 

 

$

69

 

 

$

2,997,497

 

 

$

(1,404

)

 

$

(2,073,601

)

 

$

922,561

 

Stock-based compensation

 

 

 

 

 

 

 

 

101,862

 

 

 

 

 

 

 

 

 

101,862

 

Issuance of common stock under
   equity plan awards, net of tax

 

 

734,779

 

 

 

1

 

 

 

8,811

 

 

 

 

 

 

 

 

 

8,812

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(8,818

)

 

 

 

 

 

(8,818

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(555,588

)

 

 

(555,588

)

Balance as of September 30, 2022

 

 

70,079,777

 

 

$

70

 

 

$

3,108,170

 

 

$

(10,222

)

 

$

(2,629,189

)

 

$

468,829

 

 

 

 

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