UroGen Pharma - Q2 2024

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the 2024 second quarter UroGen Pharma earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Vincent Perrone, Head of Investor Relations. Please go ahead.

Vincent Perrone (Head of Investor Relations)

Thank you, operator. Good morning, everyone, and welcome to UroGen Pharma's second quarter 2024 financial results and business update conference call. Earlier this morning, we issued a press release providing an overview of our recent corporate highlights and financial results for the quarter ended June 30, 2024. 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; David Lin, 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 expectation, 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 a primary growth driver for UroGen, if approved, future research and development efforts, our corporate goals, and 2024 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 Barrett, President and CEO. Liz?

Liz Barrett (President and CEO)

Thank you, Vincent, and thank you for everyone joining this morning. The clear highlight of the second quarter was from our lead product candidate, our announcement of positive 12-month duration of response data from the ENVISION study, evaluating UGN-102 in patients with low-grade, intermediate-risk non-muscle invasive bladder cancer. We previously announced a compelling complete response rate of 79.6% at 3 months. The durability data showed that for those patients who had achieved a CR at 3 months, the duration of response was an unprecedented 82.3% at 12 months by Kaplan-Meier analysis. This is the highest duration of response ever reported in this patient population. We presented these data during a virtual event on June 13th. The event included presentations by several key opinion leaders with expertise in urology.

We also interviewed a patient who spoke about his experience in the ENVISION trial and the challenges that come with the surgical standard of care. This was an excellent opportunity to hear the perspectives of both physicians and patients in the urology community. The replay is available on our website, and I would encourage those unable to join to listen to the replay. The body of clinical data that supports UGN-102 is very compelling, with consistent three-month complete response rates across ENVISION, ATLAS, and the prior Phase II OPTIMA II study. Duration of response across all trials was also impressive, giving us confidence in the ability of UGN-102 to improve patient outcomes and quality of life. Our immediate priority is to complete our NDA submission for UGN-102 in low-grade intermediate-risk non-muscle invasive bladder cancer, which we expect in the very near term.

The NDA is a rolling submission that was initiated earlier this year. Assuming priority review, we expect an approval decision as early as the first quarter of 2025. The estimated market opportunity for UGN-102 is over $5 billion, and if approved, it would be the first FDA-approved medicine for this patient population. We expect UGN-102 will transform the treatment paradigm for this patient population as well as our company. There are an estimated 82,000 patients treated with low-grade intermediate risk non-muscle invasive bladder cancer in the U.S. each year. This is over 10 times the size of the Jelmyto market in upper tract urothelial carcinoma, or UTUC. Unlike most rare diseases, which are constant and concentrated, UTUC is episodic, dispersed, and treated by a wide range of physicians, making patient distribution more challenging.

In contrast, bladder cancer is prevalent and is regularly treated by nearly all urologists. UGN-102 is relatively easy for physicians and their staff to administer. Perhaps most importantly, we believe it can fit seamlessly into current practice based on physician feedback. This is critical as we expect it would not disrupt a physician's practice. Instead, it could expand their practice by better utilizing staff, as they can easily be administered by a nurse or physician extender with minimal training and does not require special equipment. We have learned from our experience over the past few years and are prepared to aggressively drive market penetration for UGN-102, if approved. David Lin, our recently appointed Chief Commercial Officer, will provide more details on our plans in a few minutes. In April, we announced the FDA acceptance of the IND for UGN-103, marking a significant step in our lifecycle management strategy.

Developed with technology licensed from Medac, UGN-103 is expected to offer manufacturing efficiencies and additional IP protection through June 2035, utilizing current Medac-issued patents, and potentially until December 2041 with our pending U.S. patents. We have activated our first sites and expect to have our first patient dosed in the very near future. As previously disclosed, assuming positive data and approval, we plan to launch the next generation product of UGN-102 in the first half of 2027. Jelmyto generated net product revenue of $21.8 million in the second quarter. This represented approximately 16% growth sequentially versus the first quarter and 3% growth over the same period in 2023. This is due in part to growing 340B and wastage provision headwinds, as well as a contraction in past conversions from the prior year.

While the revenue results were below expectations, we remain optimistic on the continued growth of Jelmyto for patients with low-grade UTUC. Notwithstanding the single-digit year-over-year growth in net revenue, we saw 14% growth in patient enrollment forms in the first half of the year as compared to the same period in 2023. The lower conversion rate and higher discounts muted the actual patient demand. Our capital resources continue to be a priority. In June, we took the opportunity to strengthen our balance sheet through a successful public offering. This raised net proceeds of approximately $116.2 million, which will support our launch of UGN-102. It also gives us the flexibility to evaluate business development opportunities to advance our leadership in urologic and specialty cancers. We expect to end the year with approximately $220 million on the balance sheet, which will support a strong launch of UGN-102.

Assuming approval in the first quarter of 2025, and based on our latest projections and financial models, we estimate that we now have sufficient cash to support our business to and through profitability. I will now turn the call over to Dr. Mark Schoenberg, our Chief Medical Officer, for a clinical update. Mark?

Mark Schoenberg (Chief Medical Officer)

Thank you, Liz. We discussed the latest ENVISION clinical results in detail during our virtual event in June, but let me spend a few minutes on the highlights. ENVISION was a Phase III multinational, single-arm pivotal study in patients with low-grade intermediate-risk non-muscle invasive bladder cancer. A total of 240 patients were enrolled, the median age was 70, and two-thirds of patients were male. All patients enrolled had at least one TURBT and experienced a recurrence of bladder cancer within the past year. Therefore, this patient population represents approximately 75% of the estimated annual cases in the U.S. of low-grade intermediate-risk non-muscle invasive bladder cancer, equating to around 60,000 estimated cases annually. UGN-102 was administered once weekly via intravesical instillation for six consecutive weeks. Participants then returned approximately three months after the first instillation for determination of response.

Assessing a response was based on visual observation during cystoscopy, for-cause biopsy, and urine cytology. The 3-month complete response rate was 79.6%. Of those patients that were not complete responders, less than 3% progressed to high-grade disease, which is lower than the published range for disease progression in patients with this disease treated by TURBT. In June, we announced results from the key secondary endpoint of duration of response. Among patients who achieved a complete response at 3 months, the estimated duration of response at 12 months was an unprecedented 82.3%. It's too early to estimate median duration of response, given that so few patients who achieved a complete response subsequently went on to have disease recurrence.

However, we can use secondary predictive models such as a Weibull model, which estimates a median duration of response of 40 months for complete responders based on the data thus far. The side effect profile was consistent with previous clinical trials of UGN-102. Adverse events were, in general, mild to moderate in severity. The vast majority were lower urinary tract symptoms, and these are symptoms that urologists see commonly and typically can manage. These latest results demonstrate a strong duration of response for UGN-102 across three clinical trials. In the phase IIb OPTIMA II study, the estimated nine-month duration of response was 69.9%. In ATLAS, for those patients that received UGN-102 alone and demonstrated a complete response rate, the estimated 12-month duration of response in the CR population was 79.6%. The consistency of these data is obviously very encouraging.

We believe the overall body of evidence for UGN-102 will help us make a compelling case for FDA approval and support widespread use by urologists, if approved. Low-grade IR NMIBC is characterized by a high recurrence rate, but a low risk of progression. This condition is essentially chronic, necessitating long-term monitoring and management. The current standard of care for these patients is transurethral resection. TURBT will typically require 7-10 days for initial recovery. Approximately 1/3 of patients who undergo this procedure will experience some form of postoperative complication, typically within 3 months of surgery. The average age for diagnosis of bladder cancer is in the mid-70s, so many of these patients are not great candidates for surgery. Repeated rounds of anesthesia pose a risk of cognitive decline in the elderly population, with the literature also indicating a potential mortality risk.

Additionally, for younger patients, repeated TURBT can cause cumulative bladder damage and negatively impact quality of life. We believe that the ability of UGN-102 to achieve durable, complete responses non-surgically and to potentially reduce recurrence rates while extending disease-free intervals will provide an advance in the care of this patient population. As Liz mentioned, the execution of the single-arm phase III clinical trial for UGN-103, the next-generation successor to UGN-102, are progressing well. We have onboarded three clinical sites in the U.S. and plan to enroll approximately 87 patients. We expect to dose the first patients in the next few weeks, and a full enrollment is anticipated in the first half of 2025, with an NDA filing in the first half of 2026 and a potential approval in the first half of 2027.

We foresee a similar development plan for UGN-104, our next-generation formulation of Jelmyto, and expect to commence a single-arm phase III study early next year. Turning to our pipeline, we continue to develop our immuno-oncology candidate, UGN-301. UGN-301 is an anti-CTLA-4 antibody delivered using our proprietary RTGel technology. We are conducting a phase I clinical study to evaluate the safety, tolerability, and to establish a recommended phase II dose for UGN-301 as monotherapy as well as combination therapy. We plan to report safety and tolerability data for the monotherapy arm in late 2024. We've also initiated combination therapy arms evaluating UGN-301 plus gemcitabine and UGN-301 plus UGN-201, our proprietary formulation of imiquimod, a TLR7 agonist in high-grade NMIBC patients. We look forward to providing updates as the program moves forward. Now, over to David Lin for a commercial update.

David Lin (Chief Commercial Officer)

Thank you, Mark, and good morning, everyone. I'm incredibly excited to take on the role of Chief Commercial Officer at UroGen. The team has done a fantastic job revolutionizing patient care. With the potential commercialization of UGN-102, there is incredible opportunity for significant value creation. While we will continue to support adoption of Jelmyto to maximize the value of that product, my number one priority this year is to prepare for the commercial launch of UGN-102. We will apply all that we have learned with Jelmyto to the launch of UGN-102, if approved. UGN-102 commercialization planning is well underway, targeting an early 2025 launch, assuming priority review. I would like to highlight five key components of our commercialization plan with further details on our plans as the year progresses. Liz and Mark have already discussed the remarkable body of clinical evidence supporting UGN-102.

We are already engaging with the medical community through various educational initiatives to broaden awareness of the needs in low-grade intermediate-risk non-muscle invasive bladder cancer, as well as our clinical data, so the value proposition of the product is well understood upon approval. Second, we want to make it easy for accounts to integrate UGN-102 into their treatment protocols upon approval. We can streamline this process by offering comprehensive support, including training for healthcare professionals and their office staff. Third, we will focus on informing and supporting confidence in access and reimbursement. We are currently planning engagement initiatives that will inform stakeholders about UGN-102's coverage options and reimbursement processes. Fourth, we believe that 102 will ultimately offer a better experience for patients, with the potential for both improved clinical outcomes as well as a reduced burden from surgery.

We want to drive a productive patient-physician dialogue with the goal of fostering a collaborative decision-making process. Finally, the planned launch of UGN-102 means that UroGen will transition from a diffuse rare disease focus to selling a specialty product that has much broader potential. We will scale our commercial capabilities, notably patient support and distribution infrastructure, as well as an incremental increase in our sales force, noting that there is already significant prescriber overlap with Jelmyto. As we think about leveraging our experience with Jelmyto, we have learned that there are certain clinical practices that tend to respond better to increased contact with our sales and support personnel. Based on these findings, we are increasing the frequency of interaction with these accounts now with Jelmyto. Lastly, I'll note that together with our collaborators in academia, we continue to generate new real-world data for Jelmyto.

This is a great opportunity to reinforce its value proposition with the urology community. Jelmyto was recently featured in three presentations at AUA. The data included independent, long-term, real-world analyses that demonstrated a very high recurrence-free survival of 86% at 24 months for patients who had responded to initial induction. There were also new data supporting the value of maintenance use of Jelmyto, and how maintenance appears to be associated with significantly better recurrence-free survival. These studies generated a lot of interest at AUA, and our commercial and medical affairs teams are now incorporating them into their communications with clinicians. I will now turn the call over to Don Kim to discuss our financials.

Don Kim (CFO)

Thank you, David. For the second quarter of 2024, we reported Jelmyto net product revenues of $21.8 million. Cost of revenue for the second quarter ended June 30, 2024, was $2.2 million, compared with $2.4 million for the second quarter of 2023. The overall decrease year-over-year was primarily attributable to certain non-recurring payments made in connection with our supply arrangement in the prior year. Research and development expenses in the second quarter were $15.4 million, as compared to $11.6 million for the same period in 2023. The overall increase year-over-year was primarily due to higher costs related to manufacturing of UGN-102, as well as R&D expenses in connection with our initiation of a phase III study for UGN-103, partially offset by lower UGN-102 clinical trial costs.

Selling and marketing expenses in the second quarter were $18.9 million, compared with $13.9 million for the same period in 2023. The increase year-over-year was primarily attributable to UGN-102 brand marketing costs, as well as an increase in overall commercial operation costs. General and administrative expenses were $11.2 million in the second quarter, compared with $8.6 million for the second quarter ended 2023. The increase was primarily attributable to legal and compliance activities, pre-commercial marketing communication expenses related to UGN-102, third-party advisory services, and ongoing managed services. Non-cash financing expense related to the prepaid forward obligation to RTW Investments was $5.8 million for the second quarter of 2024, compared with $5.3 million in the same period in 2023.

Interest expense in the second quarter was $3.5 million, compared with $3.8 million for the same period in 2023. The decrease was primarily attributed to the decrease in the margin interest rate and the related impact to amortization of the discount on the Pharmakon loan as a result of the amended and restated loan agreement in March 2024. Net loss for the second quarter was $33.4 million, or $0.91 net loss per basic and diluted ordinary share, as compared to $24.1 million, or basic and diluted net loss per ordinary share of $1.03 for the same period in 2023. Cash, cash equivalents and marketable securities on June 30 were approximately $241.3 million.

In June 2024, we completed an underwritten public offering of 5 million ordinary shares at a price of $17.50 per share, and to certain investors, in lieu of issuing ordinary shares, we sold pre-funded warrants to purchase approximately 1.1 million ordinary shares at a purchase price of $17.499 per pre-funded warrant. Gross proceeds from the offering, before deducting underwriting discounts and commissions and estimated offering expenses, were approximately $107.5 million. In July 2024, the underwriters exercised their option to purchase the full over allotment of approximately 921,000 additional shares. This yielded further gross proceeds to the company of $16.1 million before deducting underwriting discounts and commissions and estimated offering expenses.

With respect to our previously provided Jelmyto 2024 full year revenue guidance, we see a path towards the lower end of that range. With respect to our previously provided full year 2024 OpEx guidance, we expect to be towards the higher end of this range, with revised non-cash share-based compensation expense of $9 million-$13 million, subject to market conditions. Our anticipated full year 2024 non-cash financing expense related to the prepaid obligation to RTW Investments is unchanged and expected to be in the range of $21 million-$26 million. The rate for the cash component of RTW obligation will be 13% of global net product sales of Jelmyto in 2024. For further details on our financials, including results for the six months ended June 30, 2024, please refer to our quarterly report on Form 10-Q, which has been filed with the SEC. We are now ready to open the call for questions. Operator?

Operator (participant)

Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you'll need to 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 the line of Tara Bancroft of TD Cowen. Your line is now open.

Tara Bancroft (Director and Senior Analyst)

Hi, good morning, and thanks for taking the questions. So I was wondering if you could give us some more detailed expectations for what Jelmyto revenue can look like by quarter for the rest of the year to result in your guidance, like such as whether it be mostly back-end weighted or anything else? Thanks.

Liz Barrett (President and CEO)

Yeah. Hi, Tara, it's Liz. Appreciate the question, but we're not going to provide. We've never provided quarterly guidance, and we, you know, won't do so. I think the important thing in what we said is that we're not going to give additional guidance for the year, given the variability that we've seen so far to date. Again, you know, this is the first time we've seen the conversion rate decline. We've seen increases in our gross to-net. And so because of that, we feel like it's probably more prudent just to kind of leave things where they are. And what we've said is that we do see a path to the low end of the guidance, you know, if things go well for the next few months.

You know, interestingly, what we continue to learn is, this being a very rare disease, if you look at the top 20 accounts from last year, they're not the top 20 accounts from this year. So, I really do also wanna just comment, I'm gonna turn it over to David now. Really love what David's doing, digging into what we need to do to ensure the high touch support that we need to provide. Because these patients, you don't know where they are, right? One, you know, again, you know, one month they're in one place, they're in a different place. So our ability to increase our reach and frequency and the high touch nature of it.

David, can you just sort of give some additional color on some of the things that you're doing and working on to ensure that the rest of the year, you know, we actually see that conversion go back up to our normal, normal rate?

David Lin (Chief Commercial Officer)

Yeah, thanks for the questions. I'm really enthusiastic about what we're seeing with Jelmyto, particularly because the significant unmet need is significant. And one of the things that the organization has learned over time is that, the support that UroGen provides to the physicians and their practices is really an important component to seeing that conversion through, from the time of patient enrollment, all the way through receiving the six doses of treatment. So we are doubling down in terms of higher touch with many of the accounts that, are seeing more patient volume, to make sure that we are supporting them appropriately. Not only in the, the logistical components of administering Jelmyto, but also making sure that their, confidence around access and reimbursement is at a very high level. So the continued unmet need is there, and we are very much looking forward to supporting our customer base in getting their patients to treatment.

Tara Bancroft (Director and Senior Analyst)

Okay, great. Yeah, thanks so much for all that detail.

Operator (participant)

Thank you. We'll move for our next question. Our next question comes from the line of Raghuram Selvaraju of H.C. Wainwright & Co. Your line is now open.

Raghuram Selvaraju (Managing Director)

Thanks very much for taking my questions. Can you hear me?

Liz Barrett (President and CEO)

Yes, Raghu, we can. Thank you.

Raghuram Selvaraju (Managing Director)

So I just wanted to see if you could perhaps give us some more granularity as you look towards the potential commercial introduction of UGN-102. And, you know, again, speaking to what you were just saying before, Liz, about the high touch approach that you wanna take to continued commercialization of Jelmyto. Maybe give us some both qualitative and quantitative metrics regarding how you intend to implement the sales and marketing infrastructure to support UGN-102. Ultimately, what you think the field sales force is gonna look like, both in terms of size as well as account targeting, as and when UGN-102 gets to the market, and how much of the existing infrastructure you expect to be able to place in the service of support of UGN-102 once that new product comes online? Thanks.

Liz Barrett (President and CEO)

Sure. Thanks. So David, why don't you start, and I'll add in any additional commentary. Thank you.

David Lin (Chief Commercial Officer)

Yeah, thanks very much for the question. As we've talked about, we think UGN-102 is a really transformative opportunity for patient care in low-grade, intermediate-risk, non-muscle invasive bladder cancer. So the things we'll take into account at this point in terms of commercialization, we know we've got to educate the physician base around the unmet need, and also make sure that the remarkable data around UGN-102 is well understood. The second thing we'll do is ensure that we have comprehensive support around integrating UGN-102 into their workflows. And then importantly, we will also focus on driving confidence in access and reimbursement. How that translates into scaling up our organization, I think as we've previously stated, we anticipate a modest increase in our sales force. We are contemplating somewhere between 10 and 15 sales reps, or we call them territory business managers.

And then the important thing is the matrix team that surrounds that group, which handles nursing support as well as field reimbursement. We'll also be looking at how to scale that capability up to provide the appropriate level of support for a new medicine such as UGN-102. Most of the, actually, all of the Jelmyto learnings have taught us that we can leverage pretty much everything that we're doing for Jelmyto, and then supplementing it in specific instances. Because as we've said, the patient population is slightly larger or considerably larger, and we will scale appropriately. So those final tweaks are being planned right now.

Liz Barrett (President and CEO)

Yeah. And so I think the thing that David, you know, talked about here, and what we, the difference, and we've talked about this a lot, there's a significant difference, right? When you think about, the integration, the, into the physician practice. So the most important thing for physicians, and, and look, this is, you know, experiences within oncology as well, you have to make it seamless for their practice, or they will not adopt, adopt the product, regardless of how great the data is. And so that's been the number one thing that David's been focused on, is how do we ensure the seamless integration? And the difference, as we've talked about many times between UGN-102 and Jelmyto, is Jelmyto is hard. It's hard because you've got to have a fluoroscopy, so you have, it has to be done by a physician.

So you, most of the time, have to go to a surgery center or to the hospital. Very different, UGN-102 can be done by an extender. Fits very nicely. They already have these, quote, unquote, "IVT days" in their practice, so it fits very nicely into that. But we will not sort of assume that to be the case, and to David's point, make sure that we do have the types of roles that we need to support that. And, and, you know, we're you know, David's already brought up, you know, things that, you know, in the current plan where he feels like we need to augment, and we're going to do that.

We will ensure that the increased acceleration of adoption for UGN-102, and then we don't just do a plug and play with Jelmyto, but we're really looking at it as a fresh new launch, although we are fortunate enough to have a nice overlap. So, you know, from the physician standpoint, relationships that we've built and, you know, those physicians are excited about, that have used Jelmyto, are excited about UGN-102. Physicians that have not used Jelmyto are excited about UGN-102. And, so again, you know, all of that is in the works as, you know, as we're working on right now. Ram, we'll continue to provide additional color around that as we, you know, as we work it out in the next few months.

Raghuram Selvaraju (Managing Director)

Do you think that the presence of UGN-102, just in and of itself, might actually provide a tailwind to Jelmyto sales as well?

Liz Barrett (President and CEO)

Yeah, that's been, you know, and I've said that before. I actually do think it's what I call a reverse halo. Because after physicians see the, you know, their experience with UGN-102, you know, they may be more willing to work a little bit harder for Jelmyto. I also believe that patients will become more engaged as well. It's very difficult to engage, you know, do anything, you know, dramatic with patients, when there's only 6,000 of them annually. Very different when there's 80,000 of them, and we can do more around, you know, educating and engaging the patient and ensuring that sort of patient-physician dialogue is productive and that there's shared sort of decision making between the two of them. But absolutely agree, Ram, that there's an opportunity for a reverse halo there.

Raghuram Selvaraju (Managing Director)

Very quickly on the pipeline, can you comment on any specific efforts you expect to be making to further accelerate the development of 103 and 104, which are central to your lifecycle management strategy? As well as clarify that when you said earlier that you think the company may, at this point, be sustainably financed through to achievement of profitability, that this also includes the expected investments you plan to make, not just in 103 and 104, but in potentially 301 as well.

Liz Barrett (President and CEO)

Yeah, absolutely. Great, great question. We do believe that we are financed through profitability, you know, and beyond, given including what you just talked about, including the, you know, where we need to be with 103 and 104. You know, one of the reasons that, you know, we took our expenses, well, we didn't take them up, obviously, they're still within range, but we guided to the higher end, is because we've accelerated both 103 and 104. And so we want to make sure that we, we get those done as quickly as possible, and so we, we are financed that way. And so to, to your point, lifecycle management, you know, we're excited about the fact we already started. We've already, you know, have sites, that have started with 103.

We anticipate first patient dose very shortly, and we'll obviously announce that as that comes out. And then again, as quickly as we can behind that, start with UGN-104. The nice thing about those lifecycle management clinical studies is they don't have to be as big, right? So they're smaller. Now that there's experience in this patient population with our own medicines, with Jelmyto and UGN-102, we're able to you know, discuss with the FDA what would typically, what they would expect to see. So as long as those they deliver in that range, we should be able to go to them with fewer patients, so those should be accelerated. And that allows us to still have money to you know, for their other areas.

We've talked to other companies that are interested in putting their medicines in our gel, and we're gonna be talking about a few of those over the next few months, and we'll be announcing those. And this, our current financing allows us to continue to do some of those as well, collaborations. Now, we can't go out and do a massive, you know, acquisition, but we will be able to fund and finance collaborations as we go forward, taking our technology and adding potentially to our technology, as well as going into, you know, using new medicines in this space. So hope that helps. If there's something I missed, please let me know.

Raghuram Selvaraju (Managing Director)

No, thank you, that's very helpful. Thank you so much.

Liz Barrett (President and CEO)

Thanks, Ram.

Operator (participant)

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

Leland Gershell (Managing Director and Senior Biotechnology Analyst)

Good morning. Thanks for taking my questions. Wanted to ask with respect to, you know, could be a larger potential for the gel technology in perhaps more advanced disease. Wondering, Liz, if you guys have contemplated the look at UGN-102 in high-grade NMIBC, either on its own or perhaps paired with another agent, given that there has been data showing that, you know, there could be a role for mitomycin in high-grade NMIBC and perhaps with the gel and higher dwell time, that could sort of, you know, turbocharge, you know, that potential benefit?

Liz Barrett (President and CEO)

Absolutely. We definitely are. That's part of our life cycle planning. You know, we do believe, as you know, that combination therapies, as we get into high-grade disease, will probably be more relevant. And so we'll do it. Mark and his team are doing that work as we speak, to come up with where we will go next, right? You know, we have a list of potential opportunities, but definitely be looking at UGN-102 in high-grade disease.

Leland Gershell (Managing Director and Senior Biotechnology Analyst)

Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Kelsey Goodwin of Guggenheim Securities. Your line is now open.

Kelsey Goodwin (VP and Senior Research Analyst)

Oh, hey, thanks for taking our questions, and congrats on the progress this quarter. Two from us. First, when we think about the Jelmyto headwinds that you faced, maybe could you just remind us to what extent they're relevant or have read through to UGN-102? And then separately, now that you have ENVISION durability data in hand, can you provide more color on what you've been hearing in recent weeks, from KOLs in the intermediate risk space? Thank you so much.

Liz Barrett (President and CEO)

Sure. Thanks, Kelsey. I'll turn the first question over to David, and also ask for Mark to comment. Well, you know, so David on both of those, and then Mark, please add in any color as well.

David Lin (Chief Commercial Officer)

Yeah, thanks for the question. So with regard to the question on Jelmyto, as we discussed, a lot of the headwinds from a gross net perspective were on 340B chargebacks and also Medicare refunds for discarded drug. We expect those to be significantly less exposure when it comes to UGN-102. Because UGN-102, when you think about where it would be administered, it will be more heavily focused in community practices. And then with regard to discarded drug provisions, we anticipate that to be considerably less and under the threshold. So, as we look forward, I think many of those headwinds will be less of an issue.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Matt Kaplan of Ladenburg Thalmann. Your line is now open.

Matt Kaplan (Managing Director)

Hey, good morning, guys. Just, first question: How should we think about the potential for a priority review being granted for UGN-102 as you near the submission here?

Liz Barrett (President and CEO)

Yeah. Look, it's a great question, Matt. You know, we, my regulatory guy, you know, has very, very high confidence. I'm just laughing because I tease him all the time because, you know, he thinks I probably don't. It's better than I give a percentage, but it's, it's very, very likely. The reason is because of the things we've been talking about, right? The data is very compelling. There are no other drugs approved. Of course, there is, you know, surgical, but there's, if you look at the, what the FDA publishes around priority review, you know, we fit into their guidelines, and so we believe that we should, you know, we should get priority review. Having just said that, we all know that there's no guarantees. And so, you know, we'll be sharing, obviously, as soon as we file, and then we get our acceptance, and when we get the acceptance, which is 60 days later, you know, that's when they'll tell us whether we have priority review.

But we feel very confident that we'll get Priority Review, but obviously, you know, can't guarantee that to be the case. But we feel like we do definitely, you know, with that, we definitely fit nicely, you know, into that.

Matt Kaplan (Managing Director)

Great, great. That, that's helpful. Thanks, Liz.

Liz Barrett (President and CEO)

Sure.

Matt Kaplan (Managing Director)

And then, just shifting to your commercial product, Jelmyto. Talk a little bit about the performance during the second quarter and how the potential for improved growth going forward. Specifically, can you address some of the headwinds that you, you're running into, the chargebacks, the unused drug, and just in terms of the transition of patients that are in the queue there and to treated patients as well going forward?

Liz Barrett (President and CEO)

Yeah, Matt, look, it's a great question. I'll make a few comments and then turn it over to David to add anything. Yes, I absolutely believe it. You know, I've been out myself, obviously, talking to you know, to physicians who use Jelmyto. Those that are clinically convicted are clinically convicted. And what I mean by that is there are major institutions around the country are top, top KOLs in this space, who use Jelmyto on every single one of their patients. And you know, I say every single one. Yeah, maybe, maybe there's a couple that they don't, but for the most part, they treat all of their patients. That tells me that there is clinical conviction and that they believe in Jelmyto.

So a lot of it is around what David talked about earlier, and just, you know, what we really hear is, and even Dr. Linehan, when we had the event for 102, she talked about the, you know, the logistics around Jelmyto, and that being the single largest barrier to, you know, to adoption. And I believe the real largest barrier is actually around patient identification. You've got 6,000 patients, you've got 10,000 urologists, you know. And so, as I mentioned earlier, you know, when we, you know, take a look at our top 20 accounts from in 2024, they're different than our top 20...

You know, there's obviously some overlap, but more than half of the top 20 accounts in 2024 are not the ones in 2023. And it's not a matter of that there was a negative experience, and therefore they're not using. It's just when the patient, you know, is there. And so I think that that is one of the things that we're really focused on and one of the things that David has implemented just over the last few weeks is ensuring that we are increasing and improving our reach and frequency so that we are there to help identify those patients. To your point, the gross to net and the wastage, they are gonna be what they are. Those are. It's in some respects, a lot of respects, uncontrollable for us.

So what we have to do is we have to double down on patient identification and adoption, and that's what we're focused on. And the conversion. There were a myriad of different reasons, nothing, no one thing, but, you know, you have to be there from the beginning of when that patient was identified. If we had just translated the patient enrollment from growth in the first half, we would be well, you know, well within- we would have, we would have not had to miss this, you know, this quarter or last quarter. So, you know, that also tells me that the demand is there, and it's something else that's holding it up, and those are the things that we're working on. I don't know, David, if you want to, if you want to add any additional color to that.

David Lin (Chief Commercial Officer)

Thanks, Liz. No, the only thing I would add is, as we've talked about, the clinical conviction of the customers that we speak to is very high, and those, particularly with experience administering Jelmyto, as well as what their patients have told them, is that it's a positive experience. Our biggest challenge is being at the right place at the right time, as it is a very diffuse patient population. So when we are with a customer that has identified a patient, it is incumbent upon us to deliver the most seamless process we can in supporting them with training and scheduling. So, I think our fundamentals are very strong, and we are doubling down to make sure that we execute flawlessly when offices find or identify patients.

Matt Kaplan (Managing Director)

Thank you, guys.

Liz Barrett (President and CEO)

Thanks, Matt. And I do wanna go back to Kelsey. I'm sorry, we didn't answer your second question. I'm just gonna ask Mark to comment. He recently got back from a BCAN event, and obviously, we've all had a lot of interaction with KOLs. So Mark, maybe you can give some color on the recent event and your recent conversations with, you know, with KOLs-

Mark Schoenberg (Chief Medical Officer)

Yeah. Thanks, Liz.

Liz Barrett (President and CEO)

To answer Kelsey's second question.

Mark Schoenberg (Chief Medical Officer)

Yeah, Kelsey, thanks for the question, and it's an exciting time in the community, as represented by the Bladder Cancer Advocacy Network, as this audience may know, is already very aware of the ENVISION data as well as the predicate data from ATLAS and OPTIMA, the phase II trial. And there is growing excitement about the potential availability of this drug, if approved. And I think people are really beginning to understand, and I heard this from KOLs just this past week in San Diego at the meeting.

A lot of excitement about the possibility that this is gonna be available for patients, that it will make it possible in an office setting, in a manner that is much less technically complex than the delivery of Jelmyto, to provide chemoablation for patients who heretofore have really only had TURBT available as the option for treating this disease. So I would say in aggregate, both... And this is a mixed audience, this is both patients and docs and people from industry. Patients and doctors are excited about the potential for the approval of UGN-102, as are we. So, exciting times, I think, as reflected by that conversation.

Liz Barrett (President and CEO)

Operator, any additional questions?

Operator (participant)

Yes, our next question is from Paul Choi of Goldman Sachs. Your line is now open.

Paul Choi (Biotechnology Analyst)

Hi, good morning, everyone. Thank you for taking our questions. My first question is just a follow-up on 340B commentary. Can you elaborate on this and whether you think this is just more a seasonal one-timer impact in the quarter, or do you sort of anticipate this to be more the ongoing mix for Jelmyto? And then, for UGN-102, it's hard to be off it here with regard to drug waste and so forth, having a prefilled device and do you expect that to be mitigated by that? And then my second question for Mark is with regards to UGN-103 and UGN-104. Appreciate the detailed timeline that you've laid out, Mark.

Can you maybe elaborate whether you would potentially have any interim data updates for those programs in 25 or 26, or are you just planning to present top-line results and proceed with the filing? Thanks for taking our questions.

Liz Barrett (President and CEO)

Yeah, and thanks, Paul. I'll just comment on the gross-to-net, and, and, you know, I wish I had a, a crystal ball where that's concerned. We see quite a bit of variability quarter-to-quarter. So I do think, I think we have hit, you know, a place where we're not going to go back to the, to the higher, you know, to the lower discounts. You know, we'll continue to see that. So I think in aggregate over the year, so I think there continue to be variability quarter-over-quarter, so that making it very difficult and, but I do, but I think that we're gonna continue to see that as a headwind. I don't think it will increase, much more than we've already seen, this, you know, the variability now.

Like I said, it's at a new low, only because we don't see that, obviously, as much with, you know, with, nephrostomy tube administration, you know, as you do, as you do with other. Although, you know, I do think this is the single biggest issue facing our industry today. You hear it from a lot of people around 340B. I think we need to, we need to figure out a way to have that addressed, because what you're seeing is, you know, institutions, they buy practices and, you know, they get the 340B, you know, discount, even though, you know, it's delivered in, you know, into a physician account.

So I don't think that we'll see further erosion, but I think that the, what is here is gonna be here to stay, from a gross to net perspective. So again, as I mentioned before, even with the headwinds of gross to net, and the, and the waste provision, I think we've learned now pretty good at what we can anticipate. I think what you know, it's incumbent upon us to drive adoption and drive the demand, and ensure that that demand translates to an actual patient being treated. And that's something you know, that, again, David is really, really focused on. So I think that that's gonna be the key, identifying the patients and translating every patient to a, you know, to a dose.

And again, we're seeing that a little bit better in, you know, the third quarter so far, but I don't wanna get ahead of ourselves. And that's what we saw in the first six months, which we had not seen before. And if we had simply done that, even with the headwinds, you know, we would be where we needed to be. So, you know, feel good about our ability, like I said, we believe there's a path to the lower end of the guidance. I feel really good about the stuff that David is implementing, and so I, you know, we'll continue to drive that. But be assured, it's gonna continue to be a slog, right, with Jelmyto.

Very, very different than UGN-102, which we know will be not only the practice economics, but the ease of use, and the learning, and ensuring that we have, you know, all the things that, you know, we underestimated with Jelmyto, that we don't do that, and we will not make that, you know, you know, we won't do that again, where we underestimate the logistics. And so that's one of the things that David's really, really focused on. So with that, Mark, why don't you answer the question around UGN-103 and UGN-104?

Mark Schoenberg (Chief Medical Officer)

Yeah, Paul, thanks. So as Liz said in her remarks, 103 is already rolling in. Because it is a smaller trial, we anticipate rapid accrual completing in sort of early to mid-2025. Candidly, it's premature to talk about the timeline on 104, but with respect to releasing interim data on either program, I'd have to defer to Liz, because they are gonna be fast accruing trials with an approach to disease with which we are already familiar. I'm not certain that we would wanna do that, but again, I have to defer to Liz as to how she's gonna approach the availability and release of interim data from those trials.

Liz Barrett (President and CEO)

Yeah, I think the one thing that we would consider is the CR data, right? Being able to, given that that is in and of itself, you know, we may be able to disclose and share that. The most important thing for us is we have been very, you know, conservative in the sense of we don't wanna jeopardize anything with the FDA. An example, you know, some of the other companies out there have been giving, you know, updating on all of their durability data on an ongoing basis. We chose not to do that, because we did not want the FDA to have any reason to question our data, and so the integrity of our data.

So we would not share ongoing durability data, but I think what we would be able to share is sort of the initial CR. And I think, you know, that, that's something that we'll, you know, we'll look at doing. But other than that, we would not share on the durability. I just don't think it's good practice. And like I said, we don't wanna, we don't want to do anything that could jeopardize, you know, our filings. So we will continue to be very conservative from that perspective.

Paul Choi (Biotechnology Analyst)

Got it. Appreciate the call, Liz. Thank you.

Operator (participant)

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Liz Barrett, CEO, for closing remarks.

Liz Barrett (President and CEO)

Yeah, thank you. And thanks, everybody, for joining us today. I think you heard from us today, our real shift in focus is toward UGN-102. You know, we will be finishing our filing, as we've talked about very shortly, and we'll share that with you. We'll anticipate the feedback from the FDA and, you know, in short order after that, and we'll keep you posted on things. I think the compelling nature of the data, the durability, the recurrence-free survival, both frankly for UGN-102 and Jelmyto, show that we have and we have the ability and potential to transform the way that these patients are treated. That's always been our mission and our vision for our company.

So, not only will it transform that for, for patients, but also for our company. So we'll keep you posted. Thanks, for your, questions and participation today, and we look forward to the ongoing dialogue. Operator, you can disconnect now.

Operator (participant)

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.