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, 2017
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 |
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27-2546083 |
(State or other jurisdiction of |
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(I.R.S. Employer |
60 Leveroni Court |
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94949 |
(Address of principal executive offices) |
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(Zip Code) |
(415) 483-8800
(Registrant’s telephone number, including area code)
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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). YES ☑ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. (Check one):
Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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☐ (Do not check if a smaller reporting company) |
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Smaller reporting company |
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Emerging growth company |
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☐ |
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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 24, 2017, the registrant had 42,458,458 shares of common stock issued and outstanding.
ULTRAGENYX PHARMACEUTICAL INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2017
INDEX
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Part I – |
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Item 1. |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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13 |
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Item 3. |
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20 |
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Item 4. |
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20 |
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Part II – |
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Item 1. |
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21 |
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Item 1A. |
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21 |
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Item 2. |
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49 |
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Item 3. |
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49 |
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Item 4. |
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50 |
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Item 5. |
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50 |
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Item 6. |
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50 |
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51 |
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,” “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:
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our expectations regarding the timing of clinical study commencements and reporting results from same; |
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the timing and likelihood of regulatory approvals for our product candidates; |
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the anticipated indications for our product candidates, if approved; |
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the potential market opportunities for commercializing our product candidates; |
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our expectations regarding the potential market size and the size of the patient populations for our product candidates, if approved for commercial use; |
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estimates of our expenses, future revenue, capital requirements, and our needs for additional financing; |
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our ability to develop, acquire, and advance product candidates into, and successfully complete, clinical studies; |
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the implementation of our business model and strategic plans for our business and product candidates; |
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the initiation, timing, progress, and results of ongoing and future preclinical and clinical studies, and our research and development programs; |
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the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates; |
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our ability to maintain and establish collaborations or obtain additional funding; |
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our ability to maintain and establish relationships with third parties, such as contract research organizations, suppliers, and distributors; |
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our financial performance and the expansion of our organization; |
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our ability to obtain supply of our product candidates; |
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developments and projections relating to our competitors and our industry; and |
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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 discussed 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, or derived such data based on information in, 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.
1
ULTRAGENYX PHARMACEUTICAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
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June 30, |
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December 31, |
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2017 |
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2016 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ |
90,751 |
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$ |
161,120 |
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Short-term investments |
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308,897 |
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219,028 |
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Restricted cash |
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461 |
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1,411 |
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Prepaid expenses and other current assets |
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19,685 |
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20,136 |
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Total current assets |
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419,794 |
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401,695 |
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Property and equipment, net |
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16,405 |
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17,055 |
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Restricted cash |
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1,805 |
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2,076 |
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Long-term investments |
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57,802 |
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117,963 |
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Other assets |
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1,736 |
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1,837 |
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Total assets |
$ |
497,542 |
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$ |
540,626 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
$ |
11,876 |
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$ |
5,364 |
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Accrued liabilities |
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50,130 |
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54,554 |
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Deferred rent—current portion |
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669 |
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341 |
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Total current liabilities |
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62,675 |
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60,259 |
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Other liabilities |
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5,414 |
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6,393 |
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Total liabilities |
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68,089 |
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66,652 |
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Stockholders’ equity: |
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Preferred stock — 25,000,000 shares authorized; nil outstanding as of June 30, 2017 and |
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December 31, 2016 |
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— |
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— |
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Common stock — 250,000,000 shares authorized; 42,428,124 and 41,240,230 shares issued |
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and outstanding as of June 30, 2017 and December 31, 2016, respectively |
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42 |
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41 |
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Additional paid-in capital |
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1,105,348 |
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1,003,561 |
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Accumulated other comprehensive income (loss) |
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(4,223 |
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905 |
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Accumulated deficit |
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(671,714 |
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(530,533 |
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Total stockholders’ equity |
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429,453 |
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473,974 |
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Total liabilities and stockholders’ equity |
$ |
497,542 |
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$ |
540,626 |
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See accompanying notes.
2
ULTRAGENYX PHARMACEUTICAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2017 |
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2016 |
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2017 |
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2016 |
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Revenue |
$ |
— |
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$ |
17 |
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$ |
— |
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$ |
17 |
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Operating expenses: |
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Research and development |
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58,436 |
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43,332 |
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109,705 |
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83,747 |
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General and administrative |
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20,005 |
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14,738 |
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38,690 |
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27,945 |
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Total operating expenses |
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78,441 |
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58,070 |
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148,395 |
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111,692 |
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Loss from operations |
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(78,441 |
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(58,053 |
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(148,395 |
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(111,675 |
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Other income (expense), net: |
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Interest income |
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1,151 |
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971 |
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2,233 |
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1,955 |
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Other income (expense), net |
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4,413 |
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159 |
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4,995 |
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40 |
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Total other income (expense), net |
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5,564 |
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1,130 |
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7,228 |
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1,995 |
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Loss before income taxes |
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(72,877 |
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(56,923 |
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(141,167 |
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(109,680 |
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Income tax provision |
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(14 |
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— |
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(14 |
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— |
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Net loss |
$ |
(72,891 |
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$ |
(56,923 |
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$ |
(141,181 |
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$ |
(109,680 |
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Net loss per share, basic and diluted |
$ |
(1.72 |
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$ |
(1.46 |
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$ |
(3.35 |
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$ |
(2.81 |
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Shares used in computing net loss per share, basic and diluted |
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42,346,830 |
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39,028,701 |
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42,095,750 |
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38,999,439 |
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See accompanying notes.
3
ULTRAGENYX PHARMACEUTICAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2017 |
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2016 |
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2017 |
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2016 |
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Net loss |
$ |
(72,891 |
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$ |
(56,923 |
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$ |
(141,181 |
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$ |
(109,680 |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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(4,403 |
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11 |
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(5,051 |
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11 |
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Unrealized gain (loss) on available-for-sale securities |
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(51 |
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149 |
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(77 |
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1,109 |
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Other comprehensive income (loss): |
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(4,454 |
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160 |
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(5,128 |
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1,120 |
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Total comprehensive loss |
$ |
(77,345 |
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$ |
(56,763 |
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$ |
(146,309 |
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$ |
(108,560 |
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See accompanying notes.
4
ULTRAGENYX PHARMACEUTICAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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Six Months Ended June 30, |
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2017 |
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2016 |
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Operating activities: |
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Net loss |
$ |
(141,181 |
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$ |
(109,680 |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation |
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31,293 |
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21,077 |
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Amortization of premium on investment securities, net |
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1,051 |
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3,215 |
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Depreciation and amortization |
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2,216 |
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1,236 |
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Foreign currency remeasurement gain |
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(4,604 |
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— |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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469 |
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(4,554 |
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Other assets |
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101 |
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(851 |
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Accounts payable |
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6,353 |
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2,825 |
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Accrued liabilities and other liabilities |
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(5,725 |
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2,182 |
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Net cash used in operating activities |
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(110,027 |
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(84,550 |
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Investing activities: |
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Purchase of property and equipment |
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(861 |
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(6,521 |
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Purchase of investments |
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(207,208 |
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(223,123 |
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Proceeds from the sale of investments |
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21,642 |
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54,332 |
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Proceeds from maturities of investments |
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154,730 |
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222,616 |
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(Increase) decrease in restricted cash |
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1,221 |
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(1,543 |
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Net cash provided by (used in) investing activities |
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(30,476 |
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45,761 |
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Financing activities: |
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Proceeds from issuance of common stock in connection with at-the-market offering, net |
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67,616 |
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— |
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Proceeds from issuance of common stock from equity awards, net |
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2,879 |
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289 |
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Net cash provided by financing activities |
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70,495 |
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289 |
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Effect of exchange rate changes on cash |
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(361 |
) |
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— |
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Net decrease in cash and cash equivalents |
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(70,369 |
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(38,500 |
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Cash and cash equivalents at beginning of period |
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161,120 |
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|
93,569 |
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Cash and cash equivalents at end of period |
$ |
90,751 |
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$ |
55,069 |
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See accompanying notes.
5
ULTRAGENYX PHARMACEUTICAL INC.
Notes to Condensed Consolidated Financial Statements
1. |
Organization |
Ultragenyx Pharmaceutical Inc. (the Company) is a biopharmaceutical company and was incorporated in California on April 22, 2010. The Company subsequently reincorporated in the state of Delaware in June 2011.
The Company is focused on the identification, acquisition, development, and commercialization of novel products for the treatment of rare and ultra-rare diseases, with a focus on serious, debilitating genetic diseases. The Company has completed a Phase 3 study of vestronidase alpha (recombinant human beta-glucuronidase or rhGUS) in patients with mucopolysaccharidosis 7 (MPS 7), a rare lysosomal storage disease, and is conducting a Phase 3 study of aceneuramic acid extended-release (Ace-ER) in patients with GNE myopathy, a progressive muscle-wasting disorder; Phase 2 and Phase 3 studies of burosumab (KRN23 or UX023), an antibody targeting fibroblast growth factor 23 (FGF23), in pediatric and adult patients with X-linked hypophosphatemia (XLH) and a Phase 2 study in tumor induced osteomalacia (TIO), both rare diseases that impair bone mineralization; a Phase 3 study for UX007 in patients with glucose transporter type-1 deficiency syndrome (Glut1 DS), a brain energy deficiency, who are experiencing movement disorders; and a Phase 2 clinical study of UX007 in patients severely affected by long-chain fatty acid oxidation disorders (LC-FAOD), a genetic disorder in which the body is unable to convert long chain fatty acids into energy. The Company operates as one reportable segment.
2. |
Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the amounts of the Company and our wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the preceding fiscal year contained in the Company’s Annual Report on Form 10-K filed on February 17, 2017 with the United States Securities and Exchange Commission (SEC).
The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017. The condensed consolidated balance sheet as of December 31, 2016 has been derived from audited financial statements at that date, but does not include all of the information required by GAAP for complete financial statements.
Use of Estimates
The accompanying consolidated financial statements have been prepared in accordance with GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities and the reported amounts of expenses in the consolidated financial statements and the accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to clinical trial accruals, fair value of assets and liabilities, income taxes, and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (FASB), issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASC 606), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in a contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In March, April, May and December 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, ASU 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients to provide supplemental adoption guidance and clarification to ASU 2014-09, and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, respectively. The effective date for these new standards is the same as the effective date and transition requirements for ASU 2014-09. The Company has early adopted the new revenue standard as of January 1, 2017 using a full retrospective application to each prior reporting period presented. Through January 1, 2017, the
6
Company had recorded a cumulative inception to date total of $0.1 million of revenues. The adoption did not have an effect on the Consolidated Financial Statements on the adoption date and no adjustment to prior year consolidated financial statements was required.
Product sales revenue
The Company recognizes revenue from sales of vestronidase alpha (UX003) on a “named patient” basis, which is allowed in certain countries prior to the commercial approval of the product in the territory. Under ASC 606, revenue from product sales is recognized at the point in time when the product is shipped to the customer. Prior to recognizing revenue, the Company makes estimates of the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
License and collaboration revenue
The Company has license and collaboration agreements with Kyowa Hakko Kirin Co., Ltd. (KHK) and Takeda Pharmaceutical Company Limited (Takeda). The license and collaboration agreements are within the scope of ASC 808, Collaborative Agreements, which provides guidance on the presentation and disclosure of collaborative arrangements. Funding received related to research and development services and pre-commercialization costs are classified as a reduction of research and development expenses and general and administrative expenses, respectively in the consolidated statement of operations because the provision of such services for collaborative partners are not considered to be part of the Company’s ongoing major or central operations.
In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for employee share-based payments, including income tax consequences, application of award forfeitures to expense, classification on the statement of cash flows, and classification of awards as either equity or liabilities. The Company adopted ASU 2016-09 as of January 1, 2017. On January 1, 2017, there was $19.7 million of cumulative unrecognized excess tax benefits which was fully offset by a corresponding increase in the valuation allowance. The adoption did not have any other impact on the Consolidated Financial Statements on the adoption date.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires an entity that is a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. This guidance also requires disclosures about the amount, timing, and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, using a modified retrospective approach, and early adoption is permitted. The Company is evaluating the effect that this guidance will have on its Consolidated Financial Statements and related disclosures.
In October 2016, the FASB issued ASU 2016-16, Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year. The new standard must be adopted using a modified retrospective transition method which is a cumulative-effective adjustment to retained earnings as of the beginning of the first effective reporting period. The Company is evaluating the effect that this guidance will have on its Consolidated Financial Statements and related disclosures.
7
Financial assets and liabilities are recorded at fair value. The carrying amount of certain financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
The following tables set forth the fair value of the Company’s financial assets remeasured on a recurring basis based on the three-tier fair value hierarchy (in thousands):
|
June 30, 2017 |
|
|
|||||||||||||
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
$ |
75,956 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
75,956 |
|
|
Corporate bonds |
|
— |
|
|
|
153,928 |
|
|
|
— |
|
|
|
153,928 |
|
|
Commercial paper |
|
— |
|
|
|
5,984 |
|
|
|
— |
|
|
|
5,984 |
|
|
Asset-backed securities |
|
— |
|
|
|
6,001 |
|
|
|
— |
|
|
|
6,001 |
|
|
U.S. Government Treasury and agency securities |
|
— |
|
|
|
200,786 |
|
|
|
— |
|
|
|
200,786 |
|
|
Total financial assets |
$ |
75,956 |
|
|
$ |
366,699 |
|
|
$ |
— |
|
|
$ |
442,655 |
|
|
|
December 31, 2016 |
|
|
|||||||||||||
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
$ |
123,536 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
123,536 |
|
|
Corporate bonds |
|
— |
|
|
|
207,726 |
|
|
|
— |
|
|
|
207,726 |
|
|
Commercial paper |
|
— |
|
|
|
11,970 |
|
|
|
— |
|
|
|
11,970 |
|
|
Asset-backed securities |
|
— |
|
|
|
27,713 |
|
|
|
— |
|
|
|
27,713 |
|
|
U.S. Government Treasury and agency securities |
|
— |
|
|
|
111,931 |
|
|
|
— |
|
|
|
111,931 |
|
|
Total financial assets |
$ |
123,536 |
|
|
$ |
359,340 |
|
|
$ |
— |
|
|
$ |
482,876 |
|
|
4. |
Balance Sheet Components |
Cash Equivalents and Investments
The fair values of cash equivalents, short-term investments, and long-term investments classified as available-for-sale securities, consisted of the following (in thousands):
|
June 30, 2017 |
|
|||||||||||||
|
|
|
|
|
Gross Unrealized |
|
|
|
|
|
|||||
|
Amortized Cost |
|
|
Gains |
|
|
Losses |
|
|
Estimated Fair Value |
|
||||
Money market funds |
$ |
75,956 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
75,956 |
|
Corporate bonds |
|
154,039 |
|
|
|
13 |
|
|
|
(124 |
) |
|
|
153,928 |
|
Commercial paper |
|
5,984 |
|
|
|
— |
|
|
|
— |
|
|
|
5,984 |
|
Asset-backed securities |
|
6,002 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
6,001 |
|
U.S. Government Treasury and agency securities |
|
201,168 |
|
|
|
— |
|
|
|
(382 |
) |
|
|
200,786 |
|
Total |
$ |
443,149 |
|
|
$ |
13 |
|
|
$ |
(507 |
) |
|
$ |
442,655 |
|
8
|
December 31, 2016 |
|
|||||||||||||
|
|
|
|
|
Gross Unrealized |
|
|
|
|
|
|||||
|
Amortized Cost |
|
|
Gains |
|
|
Losses |
|
|
Estimated Fair Value |
|
||||
Money market funds |
$ |
123,536 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
123,536 |
|
Corporate bonds |
|
207,909 |
|
|
|
14 |
|
|
|
(197 |
) |
|
|
207,726 |
|
Commercial paper |
|
11,970 |
|
|
|
— |
|
|
|
— |
|
|
|
11,970 |
|
Asset-backed securities |
|
27,712 |
|
|
|
3 |
|
|
|
(2 |
) |
|
|
27,713 |
|
U.S. Government Treasury and agency securities |
|
112,166 |
|
|
|
10 |
|
|
|
(245 |
) |
|
|
111,931 |
|
Total |
$ |
483,293 |
|
|
$ |
27 |
|
|
$ |
(444 |
) |
|
$ |
482,876 |
|
At June 30, 2017, the remaining contractual maturities of available-for-sale securities were less than two years. There have been no significant realized gains or losses on available-for-sale securities for the periods presented. All marketable securities with unrealized losses at June 30, 2017 have been in a loss position for less than twelve months or the loss is not material and were temporary in nature. The Company does not intend to sell the investments that are in an unrealized loss position before recovery of their amortized cost basis.
Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2017 |
|
|
2016 |
|
||
Research and clinical study expenses |
|
$ |
17,461 |
|
|
$ |
18,593 |
|
Payroll and related expenses |
|
|
15,396 |
|
|
|
17,226 |
|
Repayment and contract liability under collaboration agreement |
|
|
11,205 |
|
|
|
13,650 |
|
Other |
|
|
6,068 |
|
|
|
5,085 |
|
Total accrued liabilities |
|
$ |
50,130 |
|
|
$ |
54,554 |
|
5. |
License and Research Agreements |
Kyowa Hakko Kirin Collaboration and License Agreement
In August 2013, the Company entered into a collaboration and license agreement with Kyowa Hakko Kirin Co., Ltd. (KHK). Under the terms of this collaboration and license agreement, as amended, the Company and KHK will collaborate on the development and commercialization of certain products containing burosumab in the field of orphan diseases in the United States and Canada, or the profit share territory, and in the European Union and Switzerland, or the European territory, and the Company will have the right to develop and commercialize such products in the field of orphan diseases in Mexico and Central and South America, or Latin America. In the field of orphan diseases, and except for ongoing studies being conducted by KHK, the Company will be the lead party for development activities in the profit share territory and in the European territory until the applicable transition date; the Company will also be the lead party for core development activities conducted in Japan and Korea, for which the core development plan is limited to clinical trials mutually agreed to by the Company and KHK. The Company will share the costs for development activities in the profit share territory and the European territory conducted pursuant to the development plan before the applicable transition date equally with KHK, and KHK shall be responsible for 100% of the costs for development activities in Japan and Korea. On the applicable transition date in the profit share territory and the European territory, KHK will become the lead party and be responsible for the costs of the development activities. However, the Company will continue to share the costs of the studies commenced prior to the applicable transition date equally with KHK. The Company has the primary responsibility for conducting certain research and development services. If burosumab is approved, the Company and KHK will share commercial responsibilities and profits in the profit share territory until the applicable transition date and KHK will commercialize burosumab in the European territory. The Company will develop and commercialize burosumab in Latin America.
KHK will manufacture and supply burosumab for clinical use globally and will manufacture and supply burosumab for commercial use in the profit share territory and Latin America. The remaining profit or loss from commercializing products in the profit-share territory, until the applicable transition date, will be shared between the Company and KHK on a 50/50 basis. Thereafter, the Company will be entitled to receive a tiered double-digit revenue share in the mid-to-high 20% range in the profit share territory. The Company will also be entitled to receive a royalty of up to 10% on net sales in the European territory. In Latin America, the Company will pay to KHK a low single-digit royalty on net sales.
In May 2017, Ultragenyx signed an agreement with a wholly-owned subsidiary of KHK pursuant to which Ultragenyx was granted the right to commercialize burosumab in Turkey. KHK’s subsidiary has the option to assume responsibility for commercialization efforts from Ultragenyx, after a certain minimum period.
9
The Company’s expenses were reduced by $7.9 million and $5.9 million for the three months ended June 30, 2017 and 2016, and $15.3 million and $10.5 million for the six months ended June 30, 2017 and 2016, respectively, for KHK’s share of the research and development expenses and were reduced by $0.6 million and $0.2 million for the three months ended June 30, 2017 and 2016, and $1.1 million and $0.5 million for the six months ended June 30, 2017 and 2016, respectively, for KHK’s share of the general and administrative expenses. As of June 30, 2017 and December 31, 2016, the Company had receivables in the amount of $8.5 million and $8.6 million, respectively, for this collaboration arrangement.
Takeda License and Collaboration and Purchase Agreements
In June 2016, the Company executed a collaboration and license agreement with Takeda Pharmaceutical Company Limited (Takeda). Pursuant to the agreement, which became effective in July 2016, the Company obtained an exclusive license for a pre-clinical compound from Takeda in a pre-determined field of use, which includes an option to an additional field of use for this product with the terms to be negotiated, and an option to a specified product candidate (identified option product). The Company is responsible for the development costs for the pre-clinical compound and the identified option product pursuant to an initial development plan. Because the license to the pre-clinical compound has no alternative future use, the estimated fair value of $0.7 million was recorded as a research and development expense upon acquisition. Under the license for the pre-clinical compound, the Company may be required to make future milestone payments to Takeda of up to $7.5 million if certain development milestones are met, $75.0 million if certain regulatory milestones are met, and $150.0 million if certain commercial milestones are met, as well as royalties with respect to net sales in the high-single digits to low-teens. Any products resulting from the pre-clinical compound or the identified option product is referred to in this report as the “licensed product.”
As part of the agreement, the Company and Takeda established a five-year research collaboration whereby the parties may mutually agree to add additional option products candidates to the collaboration, in which case the Company will bear the cost of the development activities, with certain exceptions.
In July 2016, the Company consummated a common stock purchase agreement, executed in conjunction with the collaboration and license agreement, whereby Takeda purchased 374,590 shares of the Company’s common stock for $40.0 million in cash. The fair market value of the common stock issued to Takeda was $27.3 million, based on the closing stock price of $72.95 on the date of issuance, resulting in a $12.7 million premium paid to the Company. The Company also received a put option to require Takeda to purchase an additional $25.0 million in shares of the Company’s common stock at the then-current 30-day volume-weighted average price (VWAP). The put option was exercised in October 2016, whereby Takeda purchased 352,530 shares of the Company’s common stock for $25.0 million in cash. Takeda is subject to a five-year standstill (subject to customary exceptions or release). The Company estimated the fair value of the put options to be $0.9 million and recorded the put options in additional paid-in capital.
The Company also granted Takeda an exclusive option for Asian rights, for a limited period, to any licensed products and any additional products resulting from the collaboration, as well as an option to exclusively license one of the Company’s products for development and commercialization in Japan. If Takeda exercises any of its option rights to license a product pursuant to the agreement, Takeda will pay for the development costs within the licensed territory, will share in a portion of the global development costs, and will make a milestone payment upon regulatory approval. Takeda will also owe royalties on net sales in the licensed territory for any licensed product, depending on the development stage when the product is licensed as well as sales levels. The royalties related to the option to license the Company’s product, as well as the additional product are subject to future good faith negotiations at the time that the option is exercised.
The research and license agreement and the stock purchase agreement are being accounted for as one arrangement because they were entered into at the same time with interrelated financial terms. The Company analogized to ASC 606 for the accounting for the arrangements. The Company concluded that there are multiple promised goods and services under the collaboration agreement, including obligations related to research and development services with respect to licensed products as well as committee participation, which were determined to represent distinct performance obligations. The total consideration received from Takeda was $14.3 million and was comprised of the $12.7 million premium on the sale of the common stock, the $0.9 million estimated fair value of the put options, and the $0.7 million estimated fair value of the pre-clinical compound.
The Company is responsible for the costs under the initial development plan. A significant portion of this work is expected to be performed by Takeda which has an estimated cost of approximately $10.0 million to $13.7 million and is subject to changes as development activities are adjusted and cost estimates are refined. The Company concluded that the payment to Takeda is not in return for a distinct service that Takeda transfers to the Company, therefore, the payment made to Takeda is accounted for as a reduction in the transaction price. As of June 30, 2017, the Company concluded that $0.6 million of the estimated transaction price should not be constrained because it is probable that a significant reversal in the amount to be recognized will not occur. The unconstrained transaction price was allocated to the distinct performance obligations on a relative standalone selling price basis, and $0.3 million was recognized as a reduction of research and development expenses by measuring the progress toward complete satisfaction of the individual performance obligation using an input measure. The performance obligations are estimated to be substantially complete by March 2018.
Based on the high level of uncertainty in the amount of transaction price that is refundable to Takeda, the Company concluded that the remaining transaction price should continue to be constrained as of June 30, 2017. The Company will continue to re-evaluate the application of the constraint to the transaction price at each reporting period end date.
10
Costs incurred by the Company associated with co-development activities performed under this collaboration are included in research and development expense in the accompanying consolidated statements of operations. As of June 30, 2017, the Company recorded a repayment liability under a collaboration agreement in the amount of $12.5 million and a contract liability in the amount of $0.3 million. The Company acknowledges that the FASB added a project to its agenda in November 2016 to evaluate the interaction between ASC 808 and ASC 606, which may result in changes to the conclusions reached by the Company if new guidance is issued by the FASB.
6. |
Stock-Based Awards |
The 2014 Incentive Plan (the 2014 Plan) provides for automatic annual increases in shares available for grant, beginning on January 1, 2015 through January 1, 2024. As of June 30, 2017, there were 1,785,639 shares reserved under the 2014 Plan for the future issuance of equity awards and 1,816,052 shares reserved for the 2014 Employee Stock Purchase Plan.
The table below sets forth the functional classification of stock-based compensation expense, net of estimated forfeitures, for the periods presented (in thousands):
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
||||||||||
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
||||
Research and development |
$ |
10,034 |
|
|
$ |
6,495 |
|
|
$ |
18,577 |
|
|
$ |
13,070 |
|
|
General and administrative |
|
6,760 |
|
|
|
4,365 |
|
|
|
12,716 |
|
|
|
8,007 |
|
|
Total stock-based compensation |
$ |
16,794 |
|
|
$ |
10,860 |
|
|
$ |
31,293 |
|
|
$ |
21,077 |
|
|
7.Net Loss Per Share
Basic net loss per share has been computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock and potential dilutive securities outstanding during the period.
The following weighted-average outstanding common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|||||||||||||||
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
||||
Options to purchase common stock and restricted stock units |
|
5,767,660 |
|
|
|
4,489,875 |
|
|
|
5,536,816 |
|
|
|
4,264,589 |
|
Employee stock purchase plan |
|
6,760 |
|
|
|
— |
|
|
|
3,399 |
|
|
|
— |
|
Common stock warrants |
|
149,700 |
|
|
|
149,700 |
|
|
|
149,700 |
|
|
|
149,700 |
|
|
|
5,924,120 |
|
|
|
4,639,575 |
|
|
|
5,689,915 |
|
|
|
4,414,289 |
|
|
8. |
Equity Transactions |
In July 2016, the Company entered into an At-The-Market, or ATM, sales agreement, with Cowen and Company, LLC (Cowen), whereby the Company could sell up to $150.0 million in aggregate proceeds of common stock from time to time, through Cowen as its sales agent. During the three months ended March 31, 2017, the Company sold 912,351 shares of common stock, resulting in net proceeds of approximately $67.6 million, after commissions and other offering costs, which completed the sales of the total amount authorized in the agreement.
On July 27, 2017, the Company entered into an additional ATM sales agreement with Cowen whereby the Company can sell up to $150.0 million in aggregate proceeds of common stock from time to time, through Cowen as its sales agent.
11
Total accumulated other comprehensive income (loss) consisted of the following (in thousands):
|
|
December 31, 2016 |
|
|
June 30, 2017 |
|
||
Unrealized loss on securities available-for-sale |
|
$ |
(417 |
) |
|
$ |
(494 |
) |
Foreign currency translation adjustments |
|
|
1,322 |
|
|
|
(3,729 |
) |
Total accumulated other comprehensive income (loss) |
|
$ |
905 |
|
|
$ |
(4,223 |
) |
12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “Annual Report”).
Overview
We are a clinical-stage biopharmaceutical company focused on the identification, acquisition, development, and commercialization of novel products for the treatment of serious rare and ultra-rare diseases, with a focus on serious, debilitating genetic diseases. We target diseases for which the unmet medical need is high, the biology for treatment is clear, and for which there are no currently approved therapies. Since our inception in 2010, we have in-licensed potential treatments for multiple rare genetic disorders. Our strategy, which is predicated upon time- and cost-efficient drug development, allows us to pursue multiple programs in parallel with the goal of delivering safe and effective therapies to patients with the utmost urgency.
Clinical Product Candidates
Our current clinical-stage pipeline consists of two product categories: biologics (including a monoclonal antibody and an enzyme replacement therapy) and small-molecule substrate replacement therapies. Enzymes are proteins that the body uses to process materials needed for normal cellular function, and substrates are the materials upon which enzymes act. When enzymes or substrates are missing, the body is unable to perform its normal cellular functions, often leading to significant clinical disease. Several of our therapies are intended to replace deficient enzymes or substrates.
Our biologics pipeline includes the following product candidates in clinical development for the treatment of three diseases:
|
• |
Burosumab (KRN23 or UX023) is an antibody targeting fibroblast growth factor 23, or FGF23, in development for the treatment of X-linked hypophosphatemia, or XLH, a rare genetic disease that impairs bone growth. We are developing burosumab pursuant to our collaboration with Kyowa Hakko Kirin Co., Ltd., or KHK. We announced positive 64-week data from a Phase 2 study in pediatric patients in April 2016, and we have an ongoing Phase 3 pediatric study with data expected in 2018. We also announced positive topline data from a Phase 3 study in adult XLH patients in April 2017. We plan to submit a biologics license application, or BLA, for adult and pediatric patients, to the FDA for burosumab in August 2017. In July 2017, we announced that our partners, KHK/KKI, decided to separate the adult and pediatric indications. A filing for adults is planned after a decision is first reached on the pediatric indication. An opinion from the Committee for Medicinal Products for Human Use, or CHMP, on the pediatric indication is expected around the end of 2017. |
|
• |
Burosumab is also being developed for the treatment of tumor-induced osteomalacia, or TIO. TIO results from typically benign tumors that produce excess levels of FGF23, which can lead to severe hypophosphatemia, osteomalacia, fractures, fatigue, bone and muscle pain, and muscle weakness. We expect data from a Phase 2 study of burosumab in adult inoperable TIO patients in the second half of 2017. |
|
• |
Vestronidase alpha, or recombinant human beta-glucuronidase, or rhGUS or UX003, is an enzyme replacement therapy we are developing for the treatment of mucopolysaccharidosis 7, or MPS 7, a rare lysosomal storage disease that often leads to multi-organ dysfunction, pervasive skeletal disease, and death. We announced positive 24-week data from a pivotal Phase 3 study in July 2016. In May 2017 we announced that the BLA and MAA for vestronidase alpha were accepted for review. The Prescription Drug User Fee Act (PDUFA) goal date for the BLA is November 16, 2017 and a CHMP opinion is expected in the first half of 2018. |
Our substrate replacement therapy pipeline includes the following product candidates in clinical development for the treatment of three diseases:
|
• |
UX007 is a synthetic triglyceride with a specifically designed chemical composition being studied in an open-label Phase 2 study for the treatment of long-chain fatty acid oxidation disorders, or LC-FAOD. LC-FAOD is a set of rare metabolic diseases that prevents the conversion of fat into energy and can cause low blood sugar, muscle rupture, and heart and liver disease. We continue to plan for discussions with regulatory authorities regarding the Phase 3 study. |
|
• |
UX007 is also being studied for the treatment of glucose transporter type-1 deficiency syndrome, or Glut1 DS, a rare metabolic disease of brain energy deficiency that is characterized by seizures, developmental delay, and movement disorder. Topline data from the Phase 2 seizure study, which we announced in the first quarter of 2017, indicated that the study did not meet the primary endpoint of reducing the frequency of the total number of observable and absence seizures among patients treated from baseline to Week 8 with UX007 compared to placebo. When evaluating seizure type independently, UX007 treatment did reduce absence seizures captured on EEG, but not observable seizures captured by diary. Based on these results, we are evaluating our plans in the seizure indication. We also screened the first patient in a Phase 3 study in movement disorders in April 2017. If positive, the movement disorder study could serve as the basis for regulatory submissions. |
13
The following table summarizes our current clinical-stage product candidate pipeline:
Recent program updates
Burosumab for the treatment of XLH
In June 2017 we announced that we had reached agreement with the FDA at a pre- BLA meeting on the clinical package to support the burosumab BLA filing for XLH. At the meeting, the FDA agreed that the BLA can be submitted based on available clinical data and confirmed that both pediatric and adult indications would be included in the review. Specifically for pediatric patients the filing will include the 64-week data from our Phase 2 study in 5-12 year olds and 24-week data from the phase 2 study in 1-4 year olds. The FDA confirmed that data from the ongoing pediatric Phase 3 study would not be required. To support the adult indication, the submission will include the 24-week placebo-controlled data from the adult Phase 3 study. Additionally, FDA agreed to accept any available bone biopsy data from the 48 week open label bone quality study in adults as supportive evidence.
The BLA submission will also include two new pieces of data on adult patients, the bone biopsy results from the first two patients in the bone quality study, and statistical analyses of bone fracture healing in the adult Phase 3 placebo-controlled study. In the bone quality study in adults, baseline biopsies obtained from 11 patients confirmed that a majority of the patients had severe osteomalacia with a mean osteoid volume/bone volume of 26% vs. normal range of 0.3%-3.1%. These data verify that adult XLH patients have severe underlying bone disease even many years past puberty. Follow-up biopsies after 48 weeks of burosumab treatment are available from the first two patients. For these two patients, osteoid volume/bone volume was decreased from 24% and 29% to 9% and 7%, respectively. Osteomalacia was characterized by the pathologist as improving from severe to mild disease. Additionally, a post-hoc statistical analysis of bone fracture healing in the recently announced adult Phase 3 placebo-controlled study showed an odds ratio of 7.76 for complete healing of fractures and pseudofractures in the burosumab group compared to the placebo group (p=0.0004) at 24 weeks.
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We also announced that in order to ensure the expeditious availability of burosumab for pediatric XLH patients in Europe and avoid any potential delays in the review procedure due to the large amount of recent data from the adult XLH Phase 3 study to be filed, our partners Kyowa Hakko Kirin Co., Ltd. (Kyowa Hakko Kirin) and Kyowa Kirin International PLC have decided to separate the adult and pediatric indications and submit a Type II Variation to the MAA for adults after a decision is first reached on the pediatric indication. A filing for the adult indication is planned after a decision is first reached on the pediatric indication.
The FDA’s Office of Orphan Drug Development (OOPD) has recently designated burosumab for the treatment of XLH as a drug for a “rare pediatric disease”. Under FDA's Rare Pediatric Disease Priority Review Voucher program, companies who receive approval for a new drug application or BLA for a rare pediatric disease may be eligible to receive a voucher for a Priority Review of a subsequent marketing application for a different product. The Priority Review Voucher may be used by the company or sold to a third party.
UX003 for the treatment of Mucopolysaccharidosis VII
In May 2017 we announced that the BLA and MAA filings for vestronidase alpha were accepted for review. The FDA granted vestronidase alpha Priority Review status, which is available for drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists. The PDUFA goal date for a decision is November 16, 2017 and an opinion from the CHMP is expected in the first half of 2018. The review process with the FDA is moving along normally and we do not expect an Advisory Committee meeting at this time.
Preclinical Pipeline
rhPPCA (UX004) for the treatment of galactosialidosis
Recombinant human protective protein cathepsin-A, or rhPPCA, which we in-licensed from St. Jude Children’s Research Hospital, or St. Jude, in September 2012, is in preclinical development as an enzyme replacement therapy for galactosialidosis, a rare lysosomal storage disease for which there are no currently approved drug therapies. Similar to MPS patients, patients with galactosialidosis present with both soft tissue storage in the liver, spleen, and other tissues, as well as connective tissue (bone and cartilage) related disease. As with MPS 7, an enzyme deficiency results in accumulation of substrates in the lysosomes, causing skeletal and organ dysfunction, and death. We are continuing preclinical development of rhPPCA. Please see “—License and Collaboration Agreements—St. Jude Children’s Research Hospital” in our Annual Report for a description of our license agreement with St. Jude.
Collaboration with Arcturus Therapeutics, Inc. for mRNA therapeutics
We signed a research collaboration and license agreement with Arcturus Therapeutics, Inc. to develop mRNA therapeutics for select rare disease targets in October 2015. The Arcturus collaboration may help us address a wider range of rare diseases than possible with current approaches. As part of the collaboration, Arcturus will utilize its UNA Oligomer™ chemistry and LUNAR™ nanoparticle delivery platform to initially design and optimize mRNA therapeutics for two targets selected by us; we also have the option to add up to eight additional targets during the collaborative research period.
Collaboration with Takeda Pharmaceutical Company Limited
We entered into a strategic partnership with Takeda Pharmaceutical Company Limited, or Takeda, to develop and commercialize therapies to treat rare genetic diseases in June 2016. As part of the collaboration, we received an exclusive license to one preclinical Takeda product candidate in a pre-determined field of use, and we have an exclusive option to co-develop and co-commercialize the product candidate in additional therapeutic areas. We have also established a five-year research collaboration with Takeda in which we will have the option to license up to five additional Takeda product candidates for rare diseases.
Other preclinical programs
We continue to work on other compounds in various preclinical stages of development.
Financial Operations Overview
We are a clinical-stage company and have only a limited operating history. To date, we have invested substantially all of our efforts and financial resources in identifying, acquiring, and developing our product candidates, including conducting clinical studies and providing general and administrative support for these operations. To date, we have funded our operations primarily from the sale of equity securities.
We have never been profitable and have incurred net losses in each year since inception. Our net losses were $72.9 million and $56.9 million for the three months ended June 30, 2017 and 2016, and $141.2 and $109.7 million for the six months ended June 30, 2017 and 2016, respectively. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations.
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Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no significant and material changes in our critical accounting policies during the six months ended June 30, 2017, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report.
Results of Operations
Comparison of the three months and six months ended June 30, 2017 to the three months and six months ended June 30, 2016:
Revenue (dollars in thousands)
|
Three and Six Months Ended June 30, |
|
|
Dollar |
|
|
% |
||||||
|
2017 |
|
|
2016 |
|
|
Change |
|
|
Change |
|||
Revenue |
$ |
— |
|
|
$ |
17 |
|
|
$ |
(17 |
) |
|
* |
* not meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
No revenue was recognized during the three and six months ended June 30, 2017. We recognized revenue for a nominal amount of named patient sales of UX003 in Europe for the three and six months ended June 30, 2016.
Research and Development Expenses (dollars in thousands)
|
Three Months Ended June 30, |
|
|
Dollar |
|
|
% |
|
|
|||||||
|
2017 |
|
|
2016 |
|
|
Change |
|
|
Change |
|
|
||||
Development candidate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
burosumab |
$ |
10,698 |
|
|
$ |
8,787 |
|
|
$ |
1,911 |
|
|
|
22% |
|
|
vestronidase alpha |
|
9,218 |
|
|
|
7,010 |
|
|
|
2,208 |
|
|
|
31% |
|
|
UX007 |
|
8,853 |
|
|
|
7,246 |
|
|
|
1,607 |
|
|
|
22% |
|
|
Ace-ER |
|
10,949 |
|
|
|
7,710 |
|
|
|
3,239 |
|
|
|
42% |
|
|
Other research costs and preclinical costs |
|
18,718 |
|
|
|
12,579 |
|
|
|
6,139 |
|
|
|
49% |
|
|
Total research and development expenses |
$ |
58,436 |
|
|
$ |
43,332 |
|
|
$ |
15,104 |
|
|
|
35% |
|
|
|
Six Months Ended June 30, |
|
|
Dollar |
|
|
% |
|
|||||||
|
2017 |
|
|
2016 |
|
|
Change |
|
|
Change |
|
||||
Development candidate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
burosumab |
$ |
20,392 |
|
|
$ |
15,530 |
|
|
$ |
4,862 |
|
|
|
31% |
|
vestronidase alpha |
|
17,644 |
|
|
|
14,095 |
|
|
|
3,549 |
|
|
|
25% |
|
UX007 |
|
19,596 |
|
|
|
16,365 |
|
|
|
3,231 |
|
|
|
20% |
|
Ace-ER |
|
17,186 |
|
|
|
15,507 |
|
|
|
1,679 |
|
|
|
11% |
|
Other research costs and preclinical costs |
|
34,887 |
|
|
|
22,250 |
|
|
|
12,637 |
|
|
|
57% |
|
Total research and development expenses |
$ |
109,705 |
|
|
$ |
83,747 |
|
|
$ |
25,958 |
|
|
|
31% |
|
Research and development expenses increased $15.1 million and $26.0 million for the three months and six months ended June 30, 2017, respectively, compared to the same periods in 2016. The increase in research and development expenses shown above is primarily due to:
|
• |
for burosumab, an increase of $1.9 million and $4.9 million for the three months and six months ended June 30, 2017, respectively, related to the continued development of our clinical program, the enrollment of our Phase 3 adult and pediatric studies, regulatory filing preparation costs, and other development planning activities, net of KHK reimbursement; |
|
• |
for vestronidase alpha, an increase of $2.2 million and $3.5 million for the three months and six months ended June 30, 2017, respectively, related to regulatory filing preparation costs and the timing of manufacturing-related costs; |
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|
• |
for Ace-ER, an increase of $3.2 million and $1.7 million for the three months and six months ended June 30, 2017, respectively, primarily related to the timing of manufacturing-related expenses, the continued development of our clinical program, and the enrollment of our Phase 3 and extension studies; and |
|
• |
an increase of $6.1 million and $12.6 million for the three months and six months ended June 30, 2017, respectively, in other research and development costs including expenses in support of our clinical product candidate pipeline, expenses related to our research stage programs and research collaborations, and certain cost allocations. |
We expect our research and development expenses to increase in the future as we advance our product candidates through clinical development. The timing and amount of expenses incurred will depend largely upon the outcomes of current or future clinical studies for our product candidates as well as the related regulatory requirements, manufacturing costs, and any costs associated with the advancement of our preclinical programs.
General and Administrative Expenses (dollars in thousands)
|
Three Months Ended June 30, |
|
|
Dollar |
|
|
% |
|
|||||||
|
2017 |
|
|
2016 |
|
|
Change |
|
|
Change |
|
||||
General and administrative |
$ |
20,005 |
|
|
$ |
14,738 |
|
|
$ |
5,267 |
|
|
|
36 |
% |
|
Six Months Ended June 30, |
|
|
Dollar |
|
|
% |
|
|||||||
|
2017 |
|
|
2016 |
|
|
Change |
|
|
Change |
|
||||
General and administrative |
$ |
38,690 |
|
|
$ |
27,945 |
|
|
$ |
10,745 |
|
|
|
38 |
% |
General and administrative expenses increased $5.3 million and $10.7 million for the three months and six months ended June 30, 2017, respectively, compared to the same periods in 2016. The increase in general and administrative expenses was primarily due to increases in commercial planning costs, professional services costs, stock-based compensation, and personnel costs resulting from an increase in the number of employees in support of our activities.
We expect general and administrative expenses to increase to support our organizational growth and for our expected staged build out of our commercial organization over the next several years related to multiple late-stage product candidates.
Interest Income (dollars in thousands)