UroGen Pharma - Q2 2023

Transcript

Operator (participant)

Good morning, ladies and gentlemen. Thank you for standing by and welcome to the UroGen Pharma's Q2 2023 earnings call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Vincent Perrone, Head of Investor Relations. You may begin.

Vincent Perrone (Head of Investor Relations)

Thank you. Good morning, everyone. Welcome to UroGen Pharma's Q2 2023 financial results and business update conference call. Earlier this morning, we issued a press release providing an overview of our recent corporate highlights and preliminary financial results for the quarter ended June 30, 2023. The press release can be accessed on the investors portion of our website at investors.urogen.com. Joining me today are Liz Barrett, President and Chief Executive Officer, Dr. Mark Schoenberg, Chief Medical Officer, Jeff Bova, Chief Commercial Officer, and Don Kim, Chief Financial Officer. During today's call, we will be making certain forward-looking statements.

These may include statements regarding our ongoing commercialization activities related to Jelmyto, our ongoing and planned clinical trials, commercial and clinical milestones, market and revenue opportunities, our commercialization strategy and expectations, as well as potential future commercialization activities for UGN-102, if approved, anticipated data, regulatory filings and decisions, including UGN-102, potentially receiving priority review. UGN-102 being the primary growth driver for UroGen, if approved, future research and development efforts, our corporate goals, and 2023 financial guidance, among other things. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change. A description of potential risks can be found in our earnings press release and latest SEC disclosure documents. You are cautioned not to place undue reliance on these forward-looking statements, and UroGen disclaims any obligation to update these statements. I'll now turn the call over to Liz. Liz?

Liz Barrett (CEO)

Thank you, Vincent, and thank you to everyone joining us today. I'm excited to speak to you during what I can only describe as a transformative time for UroGen. UroGen is committed to revolutionizing patient care by developing and commercializing novel therapies targeting urothelial and specialty cancers for patients that deserve better. We recently announced unprecedented results from two phase III clinical trials investigating the use of UGN-102 to treat patients with low-grade, intermediate-risk, non-muscle invasive bladder cancer. Both the ATLAS and ENVISION trials met their primary endpoints, demonstrating meaningful and consistent results overall and relative to TURBT. In the ATLAS trial, UGN-102 met its primary endpoint of disease-free survival, reducing risk of recurrence, progression, or death by 55%.

Disease-free survival, 15 months after randomization, was estimated to be 72% for patients in the UGN ± TURBT arm, compared to 50% for patients in the TURBT arm by Kaplan-Meier analysis. UGN102 also showed a 65% complete response rate at three months for patients who only received UGN102, compared to a 64% complete response rate at three months for patients who've only received a TURBT. The ENVISION trial also met its primary endpoint by demonstrating that patients treated with UGN102 had a 79.2% rate of complete response at three months following the initiation of treatment. UGN102 has now demonstrated a consistent and what we believe compelling therapeutic and safety profile across multiple clinical trials, while showcasing the limitations of TURBT in this patient population.

Looking ahead, data evaluating the secondary endpoint of duration of response is expected in the first half of 2024. Assuming positive findings, we anticipate submitting an NDA to the FDA in 2024. The goal would be to receive priority review, which, if granted, may potentially result in approval as early as the end of 2024 or early 2025. If approved, we anticipate UGN-102 to be the primary growth driver for UroGen as the first-ever non-surgical treatment option for disease afflicting approximately 82,000 new patients in the US each year, with an annual total market opportunity of more than $3 billion. The shift away from traditional surgical care has the potential to improve the quality of life of tens of thousands of individuals battling this highly recurrent disease. This patient-centric focus underscores UroGen's dedication to having a meaningful impact on patient care.

Turning to Jelmyto, Q2 net revenues were a record $21.1 million, a 27% increase from the same quarter one year prior. We're pleased to see the continued and consistent growth in adoption as additional recent real-world data strengthens the case for Jelmyto's therapeutic value and safety across different practice patterns. We will leverage Jelmyto's recent success as we shape UGN-102's prospective pre-commercialization strategy. In parallel, strategic steps were taken to strengthen our financial position. The recent $120 million private placement of ordinary shares provides us with the resources to support our business, including our anticipated pre-commercialization and launch strategy for UGN-102. We are proud to partner with a group of high-quality biotech investors who believe in the opportunity of UroGen's portfolio to address significant unmet needs in urothelial and specialty cancers.

I am thrilled for the progress we've made in 2023 and for the road ahead as we plan for an FDA submission of UGN-102 next year. We believe UGN-102 and Jelmyto together represent over a billion-dollar revenue opportunity. UroGen is positioned to pioneer a new era in urologic and specialty cancer care, while creating significant value for our patients and shareholders. With that, I'll pass the call over to Mark. Mark?

Mark Schoenberg (CMO)

Thank you, Liz. Hello, everyone. As Liz has now gone through and described the details and strength of our recently announced phase III ATLAS and ENVISION top-line data, I would like to spend some time putting this information in the context of actual clinical practice and patient care. To do so, I will draw from information shared by UroGen and key stakeholders from the presentation and panel discussion at our recent New Horizons data event, which I hope you were able to attend. If not, I would encourage you to access the replay available on our website. In addition, The Journal of Urology, earlier this week, published a peer-reviewed article highlighting results from the phase III ATLAS study. We continue to encounter a surprise when people learn that bladder cancer is actually one of the most prevalent cancers, with over 700,000 patients in the U.S. alone.

Of the 82,000 patient subset with low-grade intermediate-risk NMIBC, recurrence is high, with 68% of those having 2 or more recurrences and 23% with 5 or more recurrences. When we examine UGN-102 for the treatment of low-grade intermediate-risk NMIBC, we often draw parallels to Jelmyto for low-grade upper tract urothelial carcinoma. It is well characterized that the genetic and molecular makeup of tumors are similar in both, and while the medicines are different drugs, they leverage the same RTGel technology and active with similar dosing schedules. Interestingly, while the similarities between Jelmyto and UGN-102 work to our advantage, the differences are significant. For one, the patient population for UGN-102, as mentioned, is an order of magnitude larger than Jelmyto.

Because the bladder is easier to access than the upper urinary tract, UGN-102 can be administered in a clinic setting by a nurse or advanced practice provider using a standard urethral catheter. TURBT remains the standard of care for this patient population and is one of the most common procedures performed in urologic oncology. TURBT is not without risk, and 33% of patients encountered adverse events within 90 days of surgery based on data from the published literature. Others have shown that patients who undergo 2-4 TURBTs have a significantly increased risk of mortality. If approved, UGN-102 stands to offer an efficacious treatment alternative, while also allowing this patient population to avoid the risks associated with repetitive surgery. With that, I'll turn the call over to Jeff for a commercial update. Jeff?

Jeff Bova (CCO)

Thanks, Mark. The Q2 represented our strongest quarter performance ever for Jelmyto. During the Q2, we saw further strengthening of the Jelmyto ramp and an increase in uptake in several developing territories. Growing awareness and adoption of Jelmyto remains attributable to several key factors. First, the benefits of our revised sales strategy continue to deliver consistency and growth in the developing territories. Second, the extension of the stability period of the Jelmyto admixture from 8 to 96 hours has eliminated several operational and logistical challenges, including allowing for day-prior delivery, enabling HCP preferred early morning installation. Currently, more than 50% of doses consist of day-prior delivery, facilitating expansion of the geographic coverage of our mixing partner and optimizing our Territory Business Managers' time in the field.

Finally, the growing body of outcomes from real-world evidence data continues to strengthen and reinforce Jelmyto's efficacy and safety profile, supporting its multimodal use across various practice patterns. Jelmyto's traction and adoption appears to be accelerating as the product becomes increasingly proven in a real-world setting, easier to administer and incorporate across multiple practice patterns. Reimbursement remains at approximately 96% across all payer types. This reinforces our optimism and lays the foundation for the potentially much larger opportunity with UGN-102 in low-grade, intermediate-risk, non-muscle invasive bladder cancer. On the heels of the positive ATLAS and ENVISION data, we've begun executing our pre-commercialization plan in preparation for a prospective UGN-102 NDA. With 95% overlap in our prescriber base and well-established practice patterns, we expect a seamless integration of UGN-102 into our commercial organization, if approved. With that, I'll turn the call over to Don to discuss our financials.

Don?

Don Kim (CFO)

Thank you, Jeff, and thank you to everyone for joining today's call. I'm pleased to review our financial results for the Q2 ended June 30, 2023. For the Q2 of 2023, we reported Jelmyto net product revenues of $21.1 million in line with consensus estimates and an increase of 27% compared to $16.6 million in the same period last year. For the Q2 of 2023, research and development expenses were $11.6 million, as compared to $12.6 million for the same period in 2022. The decrease is primarily due to lower expenses related to the conclusion of the ATLAS trial and lower cost of ENVISION trial for UGN-102, offset by higher R&D expense related to the phase I study for UGN-301.

Selling, general, and administrative expenses for the Q2 2023 were $22.5 million. This compares to $20.8 million for the same period in 2022. Increase to SG&A is primarily due to higher marketing, commercial operations, professional services, and trainings, offset by lower market research-related expenses. UroGen reported a non-cash financing expense related to the prepaid forward obligation to RTW Investments of $5.3 million for the Q2 of 2023. UroGen reported a net loss of $24.1 million for basic and diluted net loss per ordinary share of $1.03 for the second quarter 2023, as compared to $26.7 million for a basic and diluted net loss per ordinary share of $1.18 for the same period in 2022. Turning to forward guidance.

We reiterate anticipated full year 2023 net product revenues from Jelmyto to be in the range of $76 million to $86 million. We reiterate the full year 2023 operating expenses to be in the range of $135 million to $145 million, including non-cash share-based compensation expense of $6 million to $11 million, subject to market conditions. The company reiterates anticipated full year 2023 non-cash finance expense related to the prepaid forward obligation to RTW Investments in the range of $21 million to $26 million. Of this amount, approximately $9.9 million to $11.2 million is expected to be in cash.

We ended the Q2 with $55.3 million in cash and cash equivalents and marketable securities, not including the proceeds of the $120 million private placement financing announced on July 27, 2023. With that, I'd like to turn the call over to Operator for questions. Operator?

Operator (participant)

Thank you. We will now conduct a question-and-answer session. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Raghuram Selvaraju of H.C. Wainwright.

Raghuram Selvaraju (Managing Director and Senior Healthcare Equity Research Analyst)

Thanks very much for taking my questions, and congratulations on a very well-executed quarter. I wanted to, first of all, focus on Jelmyto. If you could give us a sense of what the key underlying trends are that you're seeing in the marketplace right now that are driving uptake. To what extent, for example, the use of anterograde installation is driving adoption, that would be very helpful and much appreciated. Also, if you could clarify whether you expect to continue to revise guidance or issue revisions to guidance as necessary as we go further into 2023. Thank you.

Liz Barrett (CEO)

Thanks, Ram, it's Liz. Yeah, I think for now, we will not be changing guidance. I think we're comfortable with the guidance and where we are. You know, as, as everyone knows, Q3 is the summer months, I think we wanna wait and see how things go in Q3 before we, you know, try to narrow the guidance, maybe at our next call. With that, I'll turn it over to Jeff, and he can answer your other questions. Jeff?

Jeff Bova (CCO)

Yeah, thanks, Ram. We continue to have a lot of momentum from AUA, where, as you know, they put out guidelines. We're mentioned in those guidelines an ablative option. They reinforce the fact that you shouldn't be pulling or if at all costs, you shouldn't be pulling kidneys in low-grade disease. We had two presentations there. We had an Industry Theater. We continued to talk about the real-world evidence, which partners us with urologists. They go in, they endoscopically resect, and then they bring in six doses of Jelmyto. I think it was a, it was a positive AUA from us. We've seen a lot of data come out this year that answered a lot of unanswered questions from Olympus, the field has been able to get that access.

We also see a convenience standpoint when the 8-96 hour administer or stability time increased. Physicians are happy that they can get the product the day before. They can do the procedure in the morning. Just a lot of good momentum, a lot of good things that are opening doors and allowing the territory business managers to really talk about all of the latest data. You mentioned Antegrade, somewhere, it's 60-65% are Antegrade administrations. I'll see that continue to go up. There are some physicians, institutions that still prefer retrograde. Some patients actually prefer retrograde. All of the data that we've published from Dr. Rose to to Dr.

Jacob at, at the AUA, shows a lower stenosis rate. I do, I do see anterograde continuing to increase, probably a little bit of a slower rate, but that's a, you know, as I said, that's mainly due to just physician preference or patient preference.

Raghuram Selvaraju (Managing Director and Senior Healthcare Equity Research Analyst)

Then just with respect to UGN-102, can you comment on whether you expect the real-world data analyses that are currently being reported at a steady pace for Jelmyto to be a useful model for us to think about in the context of a putative UGN-102 approval? Would you be collecting that same kind of data on UGN-102 real-world use, once if, if, and when the product, the product comes in?

Liz Barrett (CEO)

Yeah, absolutely. We will definitely continue with the registry and expand the registry with the UGN-102, not only by adding 102, but adding more sites as well when 102 gets approved. It's, it's as Jeff mentioned, you know, we're starting really to see a lot of real-world data out there. I think that's been a big driver. You know, we know just from, you know, recent questions around how can you use UGN-102, we've seen, you know, many different uses of Jelmyto through the registry and through the retrospective analysis, and we expect to do the same. It's a good way for us to get learning. It's a good way for physicians to see, you know, you know, the optimal way of treating their patients. Absolutely.

Raghuram Selvaraju (Managing Director and Senior Healthcare Equity Research Analyst)

Thank you.

Operator (participant)

All right. Thank you. One moment for our next question. Our next question comes from the line of Boris Peaker of TD Cowen.

Boris Peaker (Managing Director and Senior Equity Research Analyst)

Good morning, let me add my congratulations, both on the commercial and clinical side of things. First question is on the ATLAS study. Obviously, we saw very impressive data there. I'm curious if you've had any interactions with the FDA to discuss whether or not that could be the basis of a pivotal study, potentially allowing you to file earlier than waiting out for ENVISION?

Liz Barrett (CEO)

We have not, as of yet, had conversations with the FDA. We will be requesting a meeting with them, you know, how long the FDA takes. It takes them 60 days to award us a meeting. As soon as we can talk to them, we will talk to them. I think the, the base case and what I think we should expect from the FDA, based on the conversations we had with them, is that they're gonna wanna see durability in ENVISION. We feel very confident, given the, the not only the OPTIMA data, but the, the durability in ATLAS. We feel very confident about the durability, the FDA has been very clear all along that durability is very important.

We, you know, we will talk to them about to see if there's any wiggle room from a timing standpoint, but at this point in time, I think it's fair to say that we're sticking with our current timeline as far as the FDA is concerned.

Boris Peaker (Managing Director and Senior Equity Research Analyst)

Yeah, great. My second question is: Can you just outline what exactly is the formulation difference between Jelmyto and UGN-102? I guess the purpose of the question is just to get a sense of, can UGN-102, once approved, be used in place of Jelmyto?

Liz Barrett (CEO)

Yeah, Mark, can you talk, talk about that and why that's, it can't be interchanged, but the differences in them?

Mark Schoenberg (CMO)

Yeah, sure. Boris, thanks for the question. There are some very specific differences, the first of which is UGN-102 is a much larger volume with a lower concentration of mitomycin per cc compared to Jelmyto. I think it's important to understand that while both are efficacious, different doses of medication are actually delivered by the different medications. They are not interchangeable, and UGN-102 would not be an acceptable agent for use in the upper urinary tract based on our published data.

Boris Peaker (Managing Director and Senior Equity Research Analyst)

Great. Thanks for taking my questions.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Leland Gershell of Oppenheimer.

Leland Gershell (Managing Director and Senior Analyst)

Hey, good morning. Thank you for taking my questions. A couple from me. First, I know it's a little bit early, but would you expect that the data section of the UGN-102 label, therefore, to feature both the full complement of the ATLAS and ENVISION data? Secondly, you know, as we think about operating expense for the company, you know, going forward, clearly lots of overlap here with the existing commercial infrastructure. You mentioned 95% overlap in prescriber base. You know, what should we contemplate for modeling purposes as we think about what additional expense UroGen may need to incur as the company expands its scope to be selling UGN-102? Thank you.

Liz Barrett (CEO)

Well, thanks, Leland. I think we don't, we don't know, but we would expect all of the data to, you know, be in the label, just, you know, obviously in the clinical trial section of the label, if nowhere else. We obviously will have those discussions with the FDA. To your point, it's, it's early, I don't see any reason why that data would not be included. I'm just gonna ask Jeff to comment on expenses from a standpoint of launching UGN-102 and the leverageability of, across with Jelmyto. Jeff?

Jeff Bova (CCO)

Sure, thanks. Yeah, obviously, with the 95% overlap, you could also say 100% overlap with wherever we would be conference-wise for Jelmyto, we will, we will be there for UGN-102. Obviously, we'll, we'll, we'll build in launch expenses, the synergies... for meetings, for conferences, for other events, for the overlap and, and the target. I don't see a significant expansion in, in, in the field because of the overlap in the targets. We will adequately prepare for a strong launch with one zero two. Yes, there are significant synergies that, that we can take from Jelmyto.

Liz Barrett (CEO)

Yeah, I think having said that, though, we do expect that there will be an increase, you know, in the field. It's just, you know, much smaller than you might expect, obviously, for a big opportunity like UGN-102. We would add, you know, some territories just from a physical, geographical perspective. And, you know, we as Jeff mentioned, a lot of the other, other leverages that we can do, we absolutely will do, but there'll be incremental expenses for launching UGN-102.

Leland Gershell (Managing Director and Senior Analyst)

Yeah. Actually, another quick question that comes to mind there is, you know, with respect to the premixing task, you know, for many community or urologists, you know, that's something that's done by third parties. I know you have a number of, of kind of agreements or, or you've established, you know, that, that facility for, for various practices. How should we think about the need for increased coverage across the urological practice base for premixing needs? Would that have any impact on your, your spend? Thank you.

Liz Barrett (CEO)

Yeah. Jeff?

Jeff Bova (CCO)

Sure. Yeah. No, like Jelmyto, we have a mixed option for those community accounts that don't prefer to mix. We will do the same. We are looking at either a Jelmyto-like model or a all mixed, so everyone would receive the product mixed. Obviously, yes, there are incurred expenses, but there's also operational efficiency. There's not training that's needed to mix. The stability, we believe will be long enough that we can deliver the product on Monday, they can keep it and administer it or anytime during that week. We're evaluating that decision now. What we won't do is require folks to mix, everyone to mix this. It'll either be very similar to Jelmyto or a 100% deliver it mixed.

Leland Gershell (Managing Director and Senior Analyst)

Great. Thanks. Thanks very much.

Operator (participant)

Thank you.

Liz Barrett (CEO)

Thank you, Leland.

Jeff Bova (CCO)

Thanks, Leland.

Operator (participant)

One moment for our next question. Our next question comes from the line of Matthew Kaplan of Ladenburg Thalmann.

Matthew Kaplan (Managing Director and Head of Healthcare Equity Research)

Hi, good morning, guys. Thanks for taking the questions. I guess just going back a little bit, based on the comments at the recent KOL day by some of the panel members, how do you think, you know, given the strength of the UGN-102 data and their enthusiasm for it, how do you think it will be utilized in the treatment of MIBC, especially given the ongoing BCG shortage?

Liz Barrett (CEO)

Yeah. Mark, comment on that?

Mark Schoenberg (CMO)

Yeah, sure. Hi, Matt. Thanks. So I think, you know, obviously, our data have focused on patients with intermediate risk, low-grade pathology. So my expectation would be, after approval, that the indication would be in patients who have new and recurrent, intermediate risk disease. Having said that, obviously, we've seen, and the Jelmyto experience I think, exemplifies this, that once physicians have a new tool available to them, they can be creative in, in, you know, in their management of patients. Obviously, that would, you know, in the setting of patients who are appropriate for treatment with BCG, entail off-label use in high-grade histology, which we obviously, could not and would not promote.

My expectation is that the lion's share of use would be for the indication, namely for low-grade intermediate risk disease, either de novo disease or recurrent disease. Liz may want to comment on this as well.

Liz Barrett (CEO)

Yeah, I guess I'll just add to Mark's point. You know, we obviously in no way would, would promote for high-grade disease. I think the, the ongoing shortage of the BCG just, you know, underlines the need for more treatments. I think one of the things that we're considering is now with the data being so strong, do we study UGN-102 in high-grade disease? Where else do we study UGN-102? I think we have a lot of opportunity and a lot of ideas on where we can take it next. There's just still, again, a high unmet need in this space, so. I think from Mark's perspective, I think you'll see it really in the intermediate risk patient population in which we studied.

Matthew Kaplan (Managing Director and Head of Healthcare Equity Research)

Okay. Thanks. That's helpful. Just one quick question for Jeff, perhaps. I guess, the learnings from the Jelmyto commercialization, which you think can be applied to UGN-102, once approved, to help facilitate the ramp of that uptake?

Jeff Bova (CCO)

Yeah, no, great question. The, so the convenience that UGN-102 offers, you just don't have as big of a operational lift. You know, as I said earlier, if we deliver product mixed, you know, I believe most of this will be given in the clinic. It can be given by an extender, so you don't have to worry about setting up OR time, getting this product through formulary at the, at the hospital institution. I think we'll. We, we, we've learned that having a mixed product delivered is something that we, we definitely need for the community accounts. And, and, you know, that, that level of, you know, aggressiveness with regards to being partners with the urologist. They're surgeons, they, they do surgery.

You know, making sure that our messaging and positioning are strong, to partner with them, and, and, and, you know, not be reserved for someone who has, you know, 6 or 7 TURBTs. The other thing that, you know, we'll caveat is that certainly the from a business standpoint, the convenience for the urologists, from that as, as, as well. This will be another buy and bill drug that can be given in the clinic. A lot of learnings will be overcome just by the sheer convenience of UGN-102. Certainly how we message, how we partner with urologists, that's going to significantly help with the launch curve of UGN-102.

Matthew Kaplan (Managing Director and Head of Healthcare Equity Research)

All right. Thanks. Thanks, guys.

Operator (participant)

Okay, thank you. I'm showing no further questions at this time. I would now like to turn the conference back to Liz Barrett for closing remarks.

Liz Barrett (CEO)

Great. Thank you, operator. As always, you know, we appreciate you taking the time to join us today. You know, as I mentioned earlier, it's an unprecedented time, not only for our company, but for patients with urothelial cancers. You know, I'm inspired every day by the commitment of our colleagues that have remained steadfast in their belief in our ability to advance care for patients in need. We look forward to the next few months and to continue dialogue with you. Thanks again for your interest in UroGen, and for joining us today. Operator, you can disconnect now. Thank you.

Operator (participant)

This concludes today's conference call. Thank you for participating. Everyone may disconnect.