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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
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 number: 001-38079
UROGEN PHARMA LTD.
(Exact name of registrant as specified in its charter)
Israel
98-1460746
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
400 Alexander Park, Princeton, NJ
08540
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code:
(646) 768-9780
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of exchange on which registered
Ordinary Shares, par value NIS 0.01 per share
URGN
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☑
Smaller reporting company
☑
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements. ☑
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the ordinary shares held by non-affiliates of the registrant as of June 28, 2024 totaled approximately $675.1 million based on the closing
price of the registrant’s ordinary shares on that day as reported by the Nasdaq Stock Market LLC. Such value excludes ordinary shares held by executive officers,
directors and certain entities affiliated with directors as of June 28, 2024.
As of March 3, 2025, there were 46,094,352 of the registrant’s ordinary shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Description
10-K Part
Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A not later than April 30, 2024 are incorporated by reference into Part III of this report.
III
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Page
PART I.
1
Item 1.
Business
3
Item 1A.
Risk Factors
23
Item 1B.
Unresolved Staff Comments
61
Item 1C.
Cybersecurity
61
Item 2.
Properties
61
Item 3.
Legal Proceedings
61
Item 4.
Mine Safety Disclosures
61
PART II.
62
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
62
Item 6.
[Reserved]
62
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
63
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
73
Item 8.
Financial Statements and Supplementary Data
74
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
97
Item 9A.
Controls and Procedures
97
Item 9B.
Other Information
97
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
97
PART III.
98
Item 10.
Directors, Executive Officers and Corporate Governance
98
Item 11.
Executive Compensation
98
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
98
Item 13.
Certain Relationships and Related Transactions and Director Independence
98
Item 14.
Principal Accountant Fees and Services
98
PART IV.
99
Item 15.
Exhibits, Financial Statement Schedules
99
Item 16.
Form 10-K Summary
100
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PART I
INTRODUCTION
Unless otherwise indicated, “UroGen Pharma,” "UroGen," “the Company,” “our Company,” “we,” “us” and “our” refer to UroGen Pharma Ltd. and its subsidiary, UroGen
Pharma, Inc.
UroGen RTGel and Jelmyto are trademarks of ours that we use in this Annual Report on Form 10-K (this "Annual Report"). This Annual Report also includes trademarks,
tradenames, and service marks that are the property of other organizations. Solely for convenience, our trademarks and tradenames referred to in this Annual Report
appear without the ® or ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our
rights, or the right of the applicable licensor to our trademark and tradenames. We do not intend our use or display of other companies’ trade names or trademarks to
imply a relationship with, or endorsement or sponsorship of us by, any other companies.
We maintain our books and records in U.S. dollars, and prepare our financial statements in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), as
issued by the Financial Accounting Standards Board.
The terms “shekel,” “Israeli shekel” and “NIS” refer to New Israeli Shekels, the lawful currency of the State of Israel, and the terms “dollar,” “U.S. dollar” and “$” refer to
United States dollars, the lawful currency of the United States. All references to “shares” in this Annual Report refer to ordinary shares of UroGen Pharma Ltd., par value
NIS 0.01 per share.
We have made rounding adjustments to some of the figures included in this Annual Report. Accordingly, numerical figures shown as totals in some tables may not be an
arithmetic aggregation of the figures that preceded them.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are subject to the “safe harbor” created by those sections. Our actual results could differ
materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below under Part I, Item 1A, “Risk Factors”
in this Annual Report.
We may, in some cases, use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,”
“should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking
statements. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements and are based upon our
current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control.
Forward-looking statements in this Annual Report include, but are not limited to, statements about:
•
the timing and conduct of our clinical trials of UGN-102 and our other product candidates, including statements regarding the timing, progress and results of
current and future nonclinical studies and clinical trials, and our research and development programs;
•
the clinical utility, potential advantages and timing or likelihood of regulatory filings and approvals of UGN-102 and our other product candidates;
•
our expectations regarding timing for application for and receipt of a regulatory review decision for any of our product candidates;
•
our ongoing and planned development of product candidates including UGN-103, UGN-104, UGN-201 and UGN-301, and our discovery of new product
candidates;
•
our expectations regarding future growth, including our ability to develop, and obtain regulatory approval for, new product candidates;
•
our ability to obtain additional financing to support our operations;
•
our ability to obtain and maintain adequate intellectual property rights and adequately protect and enforce such rights;
•
our ability to maintain our existing collaboration and licensing arrangements and enter into and maintain other collaborations, licensing arrangements or in-
license or acquire rights to other products, product candidates or technologies;
•
our plans to develop and commercialize our in-line and investigational product candidates;
•
our estimates regarding the commercial potential and market opportunity for our product pipeline and investigational products;
•
our estimates regarding expenses, future revenues, capital requirements and the need for additional financing;
•
the impact of our research and development expenses as we continue developing investigational product candidates;
•
the future nonclinical and clinical development of licensed products, including UGN-103, UGN-104, UGN-201 and UGN-301, and their commercial opportunity;
and
•
the impact of government laws and regulations.
We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to
you. In addition, we cannot guarantee future results, level of activity, performance or achievements. You should refer to the section of this Annual Report under Part I,
Item 1A, “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-
looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. In addition,
statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to
us as of the date of this Annual Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or
incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant
information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
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If our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements,
you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time
frame or at all. Any forward-looking statement made by us in this Annual Report speaks only as of the date of this Annual Report or as of the date on which it is made.
We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required
by law.
You should read this Annual Report and the documents that we reference in this Annual Report and have filed as exhibits to this Annual Report completely and with the
understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary
statements.
This Annual Report may contain market data and industry forecasts that were obtained from industry publications. These data involve a number of assumptions and
limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified any third-party information. While we believe the
market position, market opportunity and market size information included in this Annual Report is generally reliable, such information is inherently imprecise.
RISK FACTOR SUMMARY
Below is a summary of the material factors that make an investment in our ordinary shares speculative or risky. This summary does not address all of the risks that we
face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors,” and
should be carefully considered, together with other information in this Annual Report and our other filings with the U.S. Securities and Exchange Commission ("SEC")
before making investment decisions regarding our ordinary shares.
•
We may require additional financing to fund our operations and achieve our goals, and a failure to obtain this capital when needed and on acceptable terms,
or at all, could force us to delay, limit, reduce or terminate our product development, commercialization efforts or other operations.
•
We are highly dependent on the successful commercialization of our only approved product, Jelmyto.
•
We have limited experience as an organization in marketing and distributing products and are therefore subject to certain risks in relation to the
commercialization of Jelmyto and any of our product candidates that receive regulatory approval.
•
The market opportunities for Jelmyto and our product candidates may be smaller than we anticipate or limited to those patients who are ineligible for
established therapies or for whom prior therapies have failed and may be small.
•
Jelmyto and any of our product candidates that receive regulatory approval may fail to achieve the broad degree of physician adoption and use and market
acceptance necessary for commercial success.
•
Jelmyto and our product candidates, if approved, will face significant competition with competing technologies and our failure to compete effectively may
prevent us from achieving significant market penetration.
•
In addition to Jelmyto, we are dependent on the success of our lead product candidate, UGN-102, and our other product candidates, including obtaining
regulatory approval to market our product candidates in the United States.
•
The data from our pivotal Phase 3 ENVISION trial and supporting ATLAS and OPTIMA II trials may be insufficient to support regulatory approval of UGN-102.
•
Clinical drug development involves a lengthy and expensive process with an uncertain outcome, results of earlier studies and trials may not be predictive of
future trial results, and our clinical trials may fail to adequately demonstrate the safety and efficacy of our product candidates.
•
We have entered into collaboration and licensing agreements and in the future may enter into collaboration and licensing arrangements with other third
parties for the development or commercialization of our product candidates. If our collaboration and licensing arrangements are not successful, we may not
be able to capitalize on the market potential of these product candidates.
•
We currently contract with third-party subcontractors and single-source suppliers for certain raw materials, compounds and components necessary to
produce Jelmyto for commercial use, and to produce UGN-102, UGN-103, UGN-104, UGN-201, and UGN-301 for nonclinical studies and clinical trials, and
expect to continue to do so to support commercial scale production of UGN-102, UGN-103, UGN-104 and UGN-201, if approved, as well as any approved
product that includes UGN-301. There are significant risks associated with the manufacture of pharmaceutical products and contracting with contract
manufacturers, including single-source suppliers. Furthermore, our existing third-party subcontractors and single-source suppliers may not be able to meet the
increased need for certain raw materials, compounds and components that may result from our commercialization efforts. This increases the risk that we will
not have sufficient quantities of Jelmyto, UGN-102, UGN-103, UGN-104, UGN-201 or UGN-301 or be able to obtain such quantities at an acceptable cost, which
could delay, prevent or impair our development or commercialization efforts.
•
If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of any of our other
products we develop.
•
If we fail to attract and keep senior management and key personnel, we may be unable to successfully develop our product candidates, conduct our clinical
trials and commercialize any of the products we develop.
•
We have a limited operating history and have incurred significant losses and negative cash flows since our inception, and we anticipate that we will continue to
incur significant losses and negative cash flows for the foreseeable future, which makes it difficult to assess our future viability.
•
Our indebtedness resulting from our loan agreement with Pharmakon Advisors, L.P. ("Pharmakon") could adversely affect our financial condition or restrict our
future operations.
•
If our efforts to obtain, protect or enforce our patents and other intellectual property rights related to our product candidates and technologies are not
adequate, we may not be able to compete effectively, and we otherwise may be harmed.
•
We may become involved in lawsuits to protect or enforce our patents or other intellectual property rights or the patents of our licensors, which could be
expensive and time consuming.
•
If the FDA does not conclude that UGN-102 satisfies the requirements under 505(b)(2), or if the requirements for our product candidates are not as we expect,
the approval pathway for these product candidates will likely take significantly longer, cost significantly more and entail significantly greater complications and
risks than anticipated, and in either case may not be successful.
•
We expect current and future legislation affecting the healthcare industry, including healthcare reform, to impact our business generally and to increase
limitations on reimbursement, rebates and other payments, which could adversely affect third-party coverage of our products, our operations, and/or how
much or under what circumstances healthcare providers will prescribe or administer our products, if approved.
•
Jelmyto and any of our product candidates that receive regulatory approval will be subject to ongoing regulatory obligations and continued regulatory review,
which may result in significant additional expenses, limit or withdraw regulatory approval and subject us to penalties if we fail to comply with applicable
regulatory requirements.
•
It may be difficult for us to profitably sell our product candidates that receive regulatory approval if coverage and reimbursement for these products is limited
by government authorities and/or third-party payor policies.
•
Our research and development and other significant operations are located in Israel and, therefore, our results may be adversely affected by political,
economic and military instability in Israel.
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Item 1. Business
Overview
We are a biotechnology company dedicated to developing and commercializing innovative solutions that treat urothelial and specialty cancers. We have developed
RTGel® reverse-thermal hydrogel, a proprietary sustained release, hydrogel-based technology that has the potential to improve therapeutic profiles of existing drugs.
Our technology is designed to enable longer exposure of the urinary tract tissue to medications, making local therapy a potentially more effective treatment option. Our
approved product Jelmyto® (mitomycin) for pyelocalyceal solution, and our investigational candidates, UGN-102 (mitomycin) for intravesical solution, UGN-103
(mitomycin) for intravesical solution and UGN-104 (mitomycin) for pyelocalyceal solution, are designed to ablate tumors by non-surgical means and to treat several
forms of non-muscle invasive urothelial cancer, including low-grade upper tract urothelial cancer (“low-grade UTUC”) in the case of Jelmyto and UGN-104 and low-grade
intermediate risk non-muscle invasive bladder cancer (“low-grade intermediate risk NMIBC”) in the case of UGN-102 and UGN-103. In addition, our immuno-uro-
oncology pipeline includes UGN-301 (zalifrelimab), an anti-CTLA-4 antibody, which we are currently studying as both a monotherapy and combination therapy.
RTGel: Our Reverse Thermal Hydrogel Technology
RTGel is a novel proprietary polymeric biocompatible, reverse thermal gelation hydrogel technology, which, unlike the general characteristics of most forms of matter, is
liquid at lower temperatures and converts into gel form when warmed to body temperature. We believe that these characteristics promote ease of delivery into and
retention of drugs in body cavities, including the bladder and the upper urinary tract, forming a transient reservoir of drug that dissolves over time while preventing
rapid excretion, providing for increased dwell time. RTGel leverages the physiologic flow of urine to provide a natural exit from the body.
RTGel’s components are polymer-based and are inactive ingredients that are used in U.S. Food and Drug Administration (“FDA”) approved Jelmyto. We formulate RTGel
with an active drug: mitomycin in the case of Jelmyto and UGN-102. The resulting formulations are instilled intravesically in liquid form directly into the upper urinary
tract or bladder using standard instillation methodologies via catheters or nephrostomy tube, and thereafter convert into gel form at body temperature. Subsequently,
upon contact with urine, RTGel gradually dissolves and releases the active drug over a period of several hours and is less affected by urine creation and voiding cycles as
compared to water formulations.
We believe that RTGel, when formulated with an active drug, may allow for the improved efficacy of treatment of various types of urothelial and specialty cancers and
urologic diseases without compromising the safety of the patient or interfering with the natural flow of fluids in the urinary tract. RTGel achieves this by:
•
increasing the exposure of active drugs in the bladder and upper urinary tract by significantly extending the dwell time of the active drug while conforming to
the anatomy of the bladder and the upper urinary tract, which allows for enhanced drug tissue coverage. For example, the average dwell time of the standard
aqueous mitomycin formulation, currently used as adjuvant treatment, in the upper urinary tract is approximately five minutes, compared to approximately six
hours when mitomycin is formulated with RTGel;
•
administering higher doses of an active drug than would otherwise be possible using standard water-based formulations. For instance, it is only possible to
dissolve 0.5 mg of mitomycin in 1 mL of water, while it is possible to formulate up to 8 mg of mitomycin with 1 mL of RTGel; and
•
maintaining the active drug’s molecular structure and mode of action.
These characteristics of RTGel enable sustained release of mitomycin in the urinary tract for Jelmyto, UGN-102, UGN-103 and UGN-104. Further, RTGel may be
particularly effective in the bladder and upper urinary tract where tumor visibility and access are challenging, and where there exists a significant amount of urine flow
and voiding. We believe that these characteristics of RTGel may prove useful for the local delivery of active drugs to other bodily cavities in addition to the bladder and
upper urinary tract.
Mitomycin—Our Target Active Drug for the Treatment of Low-Grade UTUC and Low-Grade Intermediate Risk NMIBC
Mitomycin is a generic drug currently utilized off-label as an adjuvant chemotherapy for the treatment of low-grade NMIBC after trans-urethral resection of bladder
tumor ("TURBT"). Off-label means that while the FDA has not approved mitomycin as adjuvant treatment in the post-TURBT setting for low-grade intermediate risk
NMIBC patients, physicians are permitted to utilize it as standard of care for this indication as part of medical practice. Mitomycin is administered using a water-based
solution, which has a relatively short dwell time in the bladder limited to first voiding. Mitomycin often causes temporary irritation of the urinary tract, including the
need to urinate frequently and urgently. In the upper urinary tract, the dwell time of aqueous mitomycin is limited to approximately five minutes as urine flows
continuously and no active retention by the patient is feasible. Numerous in vitro models, in vivo studies and computer simulations have shown that increased dwell
time of mitomycin in the bladder results in increased time to recurrence of urothelial cancer. In one such study, it was shown that mitomycin activity increased with
exposure time. Specifically, the MIC90, or mean inhibitory concentration that causes 90% inhibition in cell growth, was 11-fold lower when exposure time was increased
from 30 minutes to eight hours.
Mitomycin’s mechanism of action is on the cancer cell’s DNA and has been demonstrated to be most effective when the cancer cell is in its S-phase, or synthesis phase,
during which the DNA is replicated. Each cancer cell goes through various phases during the cell cycle. However, the cell cycle is not synchronized in all cancer cells,
which means that at any given point in time only a portion of the cancer cells are at their S-phase, or susceptible to the instilled mitomycin. Increased dwell time,
facilitated by our RTGel preparations Jelmyto, UGN-102, UGN-103 and UGN-104, is designed to increase cell killing in vitro when compared to aqueous solutions of
mitomycin.
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Our Pipeline
The following chart summarizes the current status of our pipeline:
Jelmyto
Jelmyto is our novel sustained-release RTGel-based formulation of mitomycin that we have developed for the treatment of low-grade UTUC. RTGel is liquid at lower
temperatures and converts into gel form at body temperature. This temperature-dependent viscosity characteristic allows for instillation of the chilled Jelmyto in its
liquid form to the upper urinary tract via standard urinary procedures utilizing a catheter or nephrostomy tube. Once instilled, Jelmyto converts into gel form at body
temperature. Subsequently, upon contact with urine, Jelmyto gradually dissolves and releases the active drug, mitomycin, over a period of several hours versus several
minutes for mitomycin in its water-based formulation. We believe that this substantial increase in dwell time of mitomycin positions Jelmyto as a chemoablation
treatment for low-grade UTUC, potentially sparing patients from repeated tumor resection procedures and potentially reducing the need for upper urinary tract
surgeries, including kidney removal.
Upper Tract Urothelial Carcinoma ("UTUC")
UTUC refers to malignant changes of the urothelium (the epithelial lining) of the upper urinary tract of the calyces, renal pelvis and ureter. Low-grade UTUC managed
with endoscopic resection typically exhibits a high rate of local recurrence. High-grade UTUC is associated with renal parenchymal invasion and the development of
metastases. UTUC accounts for approximately 5% to 10% of all new cases of urothelial cancer, which together with recurrent cases, results in an estimated annual
incidence in the United States of up to 7,000 cases. UTUC is nearly three times more common in men than women and is typically diagnosed in patients in their 60s and
70s. Tumor grade is the key prognostic factor at the time of diagnosis of UTUC and is assigned based upon microscopic examination of tumor tissue. Approximately 40%
of the patients diagnosed annually with UTUC in the United States have low-grade UTUC.
Limitations of Other Treatments for Low-Grade Upper Tract Urothelial Carcinoma
Before the approval of Jelmyto in April 2020, there were no drugs approved by the FDA for the treatment of low-grade UTUC, representing a significant unmet medical
need. The current standard of care for the treatment of low-grade UTUC is radical nephroureterectomy ("RNU"), which is complete kidney and upper urinary tract
removal. Recent advances in resection instrument technology have allowed physicians to treat patients with low-grade UTUC using endoscopic tumor resection, a
kidney-sparing treatment, rather than nephroureterectomy followed by adjuvant chemotherapy, typically mitomycin, treatment. However, the specific anatomy and
physiology of the upper urinary tract can impede the effectiveness of organ-sparing endoscopic tumor resection and instillation of adjuvant chemotherapy, leading to
high recurrence rates. Patients often undergo multiple endoscopic resection procedures, which increases the probability of potential complications of resection,
including perforation and ureteral stricture, or a narrowing of the ureter. Endoscopic tumor resection, which aims to be a kidney sparing surgical procedure, is
conducted only in patients with low-grade disease and with limited tumor burden (unifocal tumor, low grade histology, less than 2 cm in greatest dimension). Treatment
is further complicated by the fact that low-grade UTUC is most commonly diagnosed in patients over 70 years of age, who may already have compromised kidney
function and other comorbidities such as cardiovascular disease, diabetes and pulmonary disease and may suffer further complications as a result of major surgery.
Our Solution: Jelmyto (Mitomycin) for Pyelocalyceal Solution
On April 15, 2020, the FDA approved our new drug application (“NDA”) for Jelmyto (mitomycin) for pyelocalyceal solution, formerly known as UGN-101, for the
treatment of adult patients with low-grade UTUC. Jelmyto consists of mitomycin, an established chemotherapy, and sterile hydrogel, using our proprietary sustained
release RTGel technology. It has been designed to prolong exposure of urinary tract tissue to mitomycin, thereby enabling the treatment of tumors by non-surgical
means. New product exclusivity for Jelmyto expired on April 15, 2023; however, Orphan Drug exclusivity extends until April 15, 2027. Additionally, the main patents that
protect Jelmyto in the United States are set to expire in January 2031. These patents were listed in the FDA's Orange Book (Approved Drug Products with Therapeutic
Equivalence Evaluations).
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The FDA evaluated the Jelmyto NDA under Priority Review, which is reserved for medicines that may represent significant improvements in safety or efficacy in treating
serious conditions. Jelmyto was also granted Breakthrough Therapy Designation by the FDA, which was created to expedite the development and review of drugs
developed for serious or life-threatening conditions with high unmet need.
The FDA approval was based on results from our Phase 3 OLYMPUS trial showing Jelmyto achieved clinically significant disease eradication in adults with low-grade
UTUC. Findings from the final study results include:
•
Complete response (“CR”) (primary endpoint) of 58% (41/71) in the intent-to-treat population and in the sub-population of patients who were deemed not
capable of surgical removal at diagnosis.
•
At the 12-month time point for assessment of durability, 23 patients remained in CR of a total of 41 patients, eight had experienced recurrence of disease and
10 patients were unable to be evaluated.
•
Durability of response was estimated to be 81.8% at 12 months by Kaplan-Meier analysis. The median duration of response was not reached.
•
The most commonly reported adverse events (≥ 20%) were ureteric obstruction, flank pain, urinary tract infection, hematuria, abdominal pain, fatigue, renal
dysfunction, nausea, dysuria and vomiting. Most adverse events were mild to moderate and manageable. No treatment-related deaths occurred.
In December 2022, we presented new data from a follow-up study to the OLYMPUS trial designed to obtain long‐term data on Jelmyto. Based on data available for 16 of
the 23 patients who had remained in CR at the end of the OLYMPUS study, the median duration of response in that subset of patients was 28.9 months. Thirteen
patients remained in CR, two patients had recurrence of low grade‐UTUC on the same side as treated in OLYMPUS, and one patient underwent RNU due to ureteral
stricture without evidence of UTUC at the time of surgery. No patient had progressed to high‐grade disease. In November 2024, we published results from a long-term
follow-up study with Jelmyto evaluating 20 of the 41 patients from the OLYMPUS trial who achieved a CR after primary chemoablation with Jelmyto. The median
duration of response in this subset of patients was 47.8 months. The study results are published online in the Journal of Urology.
In June 2020, we initiated our commercial launch of Jelmyto in the United States. We have staffed, trained and prepared a customer-facing team that includes territory
business managers with deep experience in both urology and oncology. These territory business manager positions are led by eight regional business director positions,
who are in turn supported by eight regional operations manager positions. Each region is additionally supported by one to two clinical nurse educators to provide
education and training around instillation, as well as a field reimbursement manager to help ensure access and reimbursement for appropriate patients and a key
account director who engages with C-suite individuals to introduce a Jelmyto service line. In addition, our organization currently includes several medical science
liaisons who appropriately engage with physicians interested in learning more about UroGen, Jelmyto and our technology, both in person and virtually. In total, our
customer-facing team comprises approximately 100 representatives.
We are committed to helping patients access Jelmyto. Our market access teams have laid the foundation for coverage and reimbursement, meeting multiple times with
payors. Medicare patients with supplemental coverage are covered and the vast majority of commercial plans have policies in place, in whole covering over 150 million
lives. In addition to reimbursement and access, we have also been focused on ensuring seamless integration into physician practices. We have implemented processes
to help make Jelmyto preparation and administration seamless for practitioners and patients, including entering into agreements with various national, regional and
local specialty pharmacies under which the pharmacy, following receipt of a patient prescription, prepares and dispenses the Jelmyto admixture on our behalf. In
September 2022, the FDA authorized an extension of the in-use period for the Jelmyto admixture from eight hours to 96 hours (four days) following reconstitution of
the product, adding convenience and flexibility in managing patient care.
In October 2020, a Medicare C-Code was issued for Jelmyto. The Centers for Medicare & Medicaid Services ("CMS") established a permanent and product-specific J-
code for Jelmyto that took effect on January 1, 2021 and replaced the C-Code. CMS has granted Jelmyto a New Technology Ambulatory Payment Classification ("APC"),
effective from October 1, 2023. We have also launched a registry to capture data and evaluate real world outcomes in patients with low-grade UTUC who have been or
will be treated with Jelmyto. The purpose of the registry is to study the use of Jelmyto in clinical practice in the United States and address specific clinical questions.
Uro-Oncological Indications Targeted by Our Product Candidates
UGN-102 (mitomycin) for intravesical solution
UGN-102 is our sustained-release formulation of mitomycin that we are developing for the treatment of low-grade intermediate risk NMIBC. It is administered locally
using standard urinary procedures utilizing a catheter inserted into the bladder, and is designed to persist in the bladder despite urine flow and bladder movement.
Once instilled, UGN-102 converts into a semisolid gel form at body temperature. Subsequently, upon contact with urine, UGN-102 gradually dissolves and releases the
active drug, mitomycin, over a period of several hours. In contrast, mitomycin in its current water-based formulation, is released at the time of first voiding, which is
often less than an hour. We believe that the resulting significantly increased dwell time of mitomycin in the bladder prolongs exposure of mitomycin to the tumor tissue
and therefore has the potential to chemoablate both visible and undetectable tumors. With regard to UGN-102, we own three issued U.S. patents and two issued
patents in Europe. These issued patents are expected to expire in 2031. Moreover, we filed two new U.S. patent applications with the USPTO, that relate to
compositions comprising UGN-102 and for the method of treating bladder cancer.
Bladder Cancer
The bladder is a hollow organ in the pelvis with flexible muscular walls. Its main function is to store urine before it leaves the body. Urine is produced by the kidneys and
is then carried to the bladder through the upper urinary tract tubes, called ureters. The bladder wall has four main layers. The innermost lining is comprised of cells
called urothelial or transitional cells, and this inner layer is called the urothelium or transitional epithelium. Beneath the urothelium, there is a layer called the lamina
propria. Next is a thick layer of muscle called the muscularis propria followed by a layer of perivesical fat.
Bladder cancer accounts for approximately 90% to 95% of all new cases of urothelial cancer in the United States (estimated new cases in 2023 of 82,290). Bladder
cancer is nearly three to four times more common in men than women, and is most commonly diagnosed in their 70s. Bladder cancers are described as non-muscle
invasive or muscle-invasive based on how far into the wall of the bladder they have invaded. Non-muscle invasive bladder cancer ("NMIBC") can then be characterized
as low, intermediate, or high risk and can also be characterized as low- or high-grade. Patients with low-grade intermediate risk NMIBC have frequent recurrences of
disease that can be difficult to control using contemporary standards of care.
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Low Grade Intermediate Risk Non-Muscle Invasive Bladder Cancer
NMIBC can be characterized as low, intermediate, or high risk, which is determined based on tumor grade and stage. Tumors are graded as low or high (approximately
70% of NMIBC patients have a tumor that is classified as low-grade). Low-grade intermediate risk NMIBC is defined as having one or two of following characteristics: a
tumor larger than 3 cm, multiple tumors in the bladder and a recurrence in less than one year from the prior tumor.
The standard of care for treating low-grade intermediate risk NMIBC patients is TURBT. TURBT is a surgical procedure for tumor removal usually conducted under
general anesthesia in a hospital setting and may require an overnight stay. There are known risks associated with the surgical procedure itself, including bleeding,
hospitalization and an increased risk of death in patients in their 60s and 70s. Moreover, TURBT’s success is tied to the physician’s ability to overcome challenges in
properly identifying, reaching and resecting all tumors. No drugs have been approved by the FDA for the primary treatment of low-grade intermediate risk NMIBC.
Efficacy of drug treatments has historically been limited due to challenges presented by bladder physiology, specifically the fact that urine is produced and voided
frequently, thus diluting the concentration of the drug almost immediately and causing the excretion of the drug from the bladder at first urine voiding. A subset of low-
grade intermediate risk NMIBC patients is at risk for frequent local recurrences.
Due to lack of treatment options to reduce recurrences in these patients, they are managed with repeat TURBT for each subsequent recurrence. We estimate, based
upon a review of peer-reviewed and publicly available data, an addressable population of low-grade intermediate risk NMIBC patients of approximately 82,000 in the
U.S. annually.
Limitations of Current Therapies for Low-Grade Non-Muscle Invasive Bladder Cancer
Recurrence is the primary threat for patients with low-grade NMIBC. Up to 70% of NMIBC patients experience at least one recurrence and low-grade intermediate risk
NMIBC patients are even more likely to recur and face repeated TURBT procedures. Multiplicity, or number of tumors, tumor size and prior recurrence rate are the most
important variables in determining the likelihood and potential severity of recurrence. The current standard of care for low-grade NMIBC is TURBT. The most common
complications, risks and limitations of TURBT include:
•
bleeding at the time of surgery that requires clot irrigation;
•
infection of the bladder;
•
injury to the urethra and bladder perforation with potential intra-abdominal leakage;
•
reimplantation and cell migration;
•
repeat TURBT procedures, which are necessary for approximately 10% of patients within three months;
•
complete removal of tumor tissue often not being feasible;
•
potential recurrence of up to 25% of the tumors at the original treatment site; and
•
some tumors not being detectable.
Post-operative adjuvant treatments for low-grade NMIBC, which are given to prevent reimplantation of the cancerous cells, consist primarily of chemotherapy in the
case of low-grade tumors and immunotherapy in the case of high-grade tumors, and are administered intravesically via catheter. Adjuvant intravesical chemotherapy is
used in low-grade tumors following TURBT in order to try to delay tumor recurrence but is not used as a chemoablation agent. The rationale is to expose tumors to high
local drug concentrations while minimizing the systemic exposure, thereby enhancing the treatment effect and reducing the drug toxicity. In practice, in the U.S.,
adjuvant chemotherapy in this setting is only used in 0-30% of the eligible population.
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No drugs have been approved by the FDA for the primary treatment of low-grade NMIBC. Mitomycin is the drug used most often for intravesical chemotherapy in this
patient population. It is used off-label as an adjuvant treatment in the post-operative setting for low-grade tumors with high risk of recurrence. Other drugs that have
been used off-label include docetaxel and gemcitabine.
Our Solution: UGN-102 (Mitomycin) for Intravesical Solution
UGN-102 is our sustained-release formulation of mitomycin that we are developing for the treatment of low-grade intermediate risk NMIBC.
UGN-102 is administered locally using the standard practice of intravesical instillation directly into the bladder via a catheter. The instillation into the bladder is
expected to take place in a physician’s office as a non-operative outpatient treatment, in comparison with TURBT or similar surgical procedures, which are operations
often conducted under general anesthesia and may require an overnight stay. Complete surgical tumor removal often has limited success due to the inability to properly
identify, reach and resect all tumors. We believe that an effective chemoablation agent can potentially provide better eradication of tumors irrespective of the
detectability and location of the tumors. In addition, by reducing the need for surgery, patients may avoid potential complications associated with surgery and
anesthesia.
In October 2021, we reported final data from the Phase 2b OPTIMA II trial. The single-arm, open label trial completed enrollment of 63 patients at clinical sites across
the United States and Israel in September 2019. Patients were treated with six weekly instillations of UGN-102 and underwent assessment of CR (the primary endpoint)
four to six weeks following the last instillation; 65%, or 41 out of 63 patients, treated with UGN-102 achieved a CR three months after the start of therapy. In this subset
of patients, 39 (95%), 30 (73%), and 25 (61%) remained disease-free at six, nine, and 12 months after treatment initiation, respectively. The probability of durable
response nine months after CR (12 months after treatment initiation) was estimated to be 72.5% by Kaplan-Meier analysis. Thirteen patients had documented
recurrences. Fifty-seven of 63 (90%) patients completed all six instillations of UGN-102 according to the study protocol. Median duration of response was not reached.
The most common adverse events, greater than 10%, were most often reported as mild to moderate in severity and include dysuria, hematuria, urinary frequency,
fatigue, urgency and urinary tract infection. The final data was published online in The Journal of Urology in October 2021 and was included in the January 2022 print
edition.
In December 2022, we presented new data from a follow-up study to the OPTIMA II study designed to obtain long-term data on UGN-102 that shows median duration
of response of 24.4 months based on available data for 15 out of 25 patients who achieved a CR in OPTIMA II. Seven patients remained in CR, six patients had
recurrence of low-grade disease, one patient had progression to high-grade disease and one patient withdrew consent but remained in CR at the last evaluation prior to
discontinuation. All patients were alive at the last contact, and five patients were known to have had post-study treatment with TURBT or fulguration.
We initiated our Phase 3 ATLAS trial in December 2020 and until November 2021, were enrolling patients in this trial comparing UGN-102 with or without TURBT to
standard of care, TURBT. In parallel, we continued to engage in discussions with the FDA and, based on this dialogue, we designed a trial in order to demonstrate the
efficacy and safety of UGN-102. This Phase 3 ENVISION trial is a single-arm, multinational, multicenter study evaluating the efficacy and safety of UGN-102 as primary
chemoablative therapy in patients with low-grade intermediate risk NMIBC. The design of the Phase 3 ENVISION trial is similar to our Phase 2 OPTIMA II trial in that the
patient population has similar clinical characteristics, receives the same investigational treatment regimen and undergoes similar efficacy and safety assessments and
qualitative follow-up. Study participants receive six once-weekly intravesical instillations of UGN-102. The primary endpoint is CR rate at three months after the first
instillation, and the key secondary endpoint is durability of response in patients who achieve CR at the three-month assessment.
In June 2024, we announced positive secondary endpoint duration of response (“DOR”) data from the Phase 3 ENVISION trial investigating UGN-102 for intravesical
solution in patients with low-grade intermediate risk NMIBC. In the ENVISION trial, the 12-month DOR data by Kaplan-Meier estimate for patients who achieved a CR at
three months after the first instillation of UGN-102 was 82.3% (95% CI, 75.9%, 87.1%). The ENVISION trial met its primary endpoint with patients having a 79.6% (73.9%,
84.5%) CR rate at three months after the first instillation of UGN-102. Among the patients in the ENVISION trial who achieved a CR at three months, 76.4% (69.8%,
82.3%) maintained a CR at 12 months. Among all 240 patients enrolled in the ENVISION trial, 60.8% (54.3%, 67.0%) were in CR at 12 months. In the ENVISION trial, DOR
Kaplan-Meier estimates at 15 (n=43) and 18 (n=9) months were both 80.9% (95% CI, 73.9%, 86.2%) with a median follow-up time of 13.8 months after the 3-month
CR. The ENVISION trial demonstrated a similar safety profile to that observed in the OPTIMA II and ATLAS trials, with treatment-emergent adverse events typically mild-
to-moderate in severity. The ENVISION trial data was published online in The Journal of Urology in October 2024 and was included in the February 2025 print edition.
In March 2025, we announced updated 18-month DOR data from the Phase 3 ENVISION trial. The 18-month DOR by Kaplan-Meier estimate for patients who achieved a
CR at three months after the first instillation of UGN-102 remained consistent with the 12-month DOR data: 80.6% (95% CI, 74.0%, 85.7%) at 18-months (n=101)
compared to 82.5% (76.1%, 87.3%) at 12-months (n=146). Median follow-up time was 18.7 months after the 3-month CR.
We also completed a Phase 3b study with the objective of demonstrating whether UGN-102 can be administered at home by a qualified home health professional,
avoiding the need for repeated visits to a healthcare setting for instillation. As per the study design, patients in this study received six once-weekly intravesical
instillations of UGN-102 with the initial treatment visit occurring at the investigative site and instillation performed by a qualified physician. Treatment visits two to six
took place at the patient's home and instillations were performed by a properly trained and qualified home health professional. The primary endpoints of the study
include safety and tolerability, discontinuations from at home study treatment and feedback from patients, home health professionals and investigators via
standardized questionnaires. The study completed enrollment with a total of eight patients across four centers and all study visits for these enrolled patients have been
completed. Preliminary results were reported through a press release in February 2023, finding that UGN-102 was suitable to administer at home by a visiting nurse
under the supervision of a treating physician and resulted in 75% of patients achieving a CR, defined as no detectable disease three months after starting treatment.
Patients, nurses and investigators also completed home instillation feasibility questionnaires. These standardized feasibility questionnaires highlighted that all
eight patients preferred at-home to in-office treatment, and five of six patients recommended UGN-102 home instillation instead of TURBT. Home instillation was
reported as feasible for visiting nurses, and three of four investigators considered at-home treatment “not different” than in-office treatment.
In October 2023, we announced our agreement with the FDA on plans for submission of an NDA for UGN-102 (mitomycin) for intravesical solution. The FDA indicated
that the current clinical development plan for UGN-102, which includes evaluation of duration of CR at 12 months from the pivotal ENVISION trial, will support
submission of an NDA for the treatment of low-grade intermediate risk NMIBC. The FDA also agreed that the UGN-102 NDA can utilize a rolling review, allowing for early
submission of the Chemistry, Manufacturing and Controls ("CMC") sections of the NDA, which we submitted in January 2024. In August 2024, we completed the
submission of the rolling NDA for UGN-102. In October 2024, the FDA accepted our NDA for UGN-102 (mitomycin) for intravesical solution and assigned a Prescription
Drug User Fee Act ("PDUFA") goal date of June 13, 2025. We anticipate, and are preparing for, an FDA advisory committee meeting. If approved, UGN-102 would
become the first FDA-approved medicine for the treatment of low-grade intermediate-risk NMIBC.
UGN-103 (mitomycin) for intravesical solution and UGN-104 (mitomycin) for pyelocalyceal solution
In January 2024, we entered into a licensing and supply agreement with medac Gesellschaft für klinische Spezialpräparate m.b.H. (“medac”) to develop UGN-103 and
UGN-104, which are intended to be next-generation formulations of UGN-102 and Jelmyto, respectively, that combine medac’s proprietary 80 mg mitomycin
formulation with our RTGel technology, which we believe will provide advantages related to production, cost, supply and product convenience. Medac has intellectual
property protection for its proprietary mitomycin formulation technology expected through June 2035. In April 2024, we announced that the FDA accepted our
Investigational New Drug Application ("IND") for UGN-103 and we initiated our Phase 3 UTOPIA trial, a single-arm, multicenter study that will evaluate the efficacy and
safety of UGN-103 in low-grade intermediate risk NMIBC. We plan to enroll 87 patients in the UTOPIA trial, with patients receiving 75 mg of mitomycin via intravesical
instillation once a week for six weeks. Efficacy will be assessed by the CR rate at the three-month visit. Patients who have a CR at the three-month visit, defined as
having no detectable disease in the bladder, will enter the follow-up period of the study. Patients will remain on study until disease recurrence, disease progression,
death, or the last patient completes 12 months of follow-up (i.e., 15 months after the first instillation), whichever occurs first. In October 2024, we announced the first
patient dosed in the UTOPIA trial. An NDA submission is projected for 2026, followed by a standard review period and potential approval and, if approved, the
commercial launch in 2027. In February 2025, the FDA accepted our IND for UGN-104. We plan to initiate a Phase 3 trial of UGN-104 in low-grade UTUC in the first half
of 2025.
UGN-301 (zalifrelimab) intravesical solution
Our immuno-uro-oncology pipeline includes UGN-301 (zalifrelimab), an anti-CTLA-4 antibody, which we intend to study as a standalone agent and as a combination
therapy. The first combination we are investigating clinically involves the sequential use of UGN-201 (imiquimod), a toll-like receptor-7 ("TLR 7") agonist, and UGN-301
in high-grade non-muscle invasive bladder cancer ("high-grade NMIBC"). The second combination we are investigating clinically involves the sequential administration
of gemcitabine and UGN-301 to the bladder in high-grade NMIBC. UGN-301 is delivered using our proprietary RTGel technology, which has been designed to
significantly improve the effectiveness of certain intravesical therapies.
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High-Grade Non-Muscle Invasive Bladder Cancer
High-grade NMIBC is a highly aggressive form of bladder cancer. TURBT followed by adjuvant intravesical immunotherapy with Bacillus of Calmette and Guerin ("BCG")
is the current standard of care therapy for high-grade NMIBC. However, the high rates of recurrence and significant risk of progression to muscle-invasive tumors are
particularly dangerous. Radical cystectomy, or surgical removal of the bladder, is strongly advocated in patients with BCG-unresponsive NMIBC (i.e., patients with BCG-
refractory and BCG-relapsing tumors in whom further BCG therapy is not recommended) or for patients who cannot tolerate BCG. We estimate based upon a review of
peer-reviewed and publicly available data that there are approximately 18,700 BCG-unresponsive patients in the U.S. annually.
Limitations of Current Therapies for High-Grade NMIBC
Six drugs have been approved for high-grade NMIBC, all used as adjuvant treatment: Thiotepa, which was approved in 1959, and is no longer used in practice; BCG,
which was approved in 1989; Valstar® (valrubicin), which was approved in 1998; Keytruda® (pembrolizumab), which was approved by the FDA in 2020; Adstiladrin®
(nadofaragene firadenovec-vncg), which was approved by the FDA in 2022 for BCG unresponsive carcinoma in situ ("CIS") and Anktiva® (nogapendekin alfa inbakicept-
pmln) in combination with BCG, which was approved by the FDA in 2024 for BCG unresponsive CIS. However, despite the approvals of these novel treatments,
recurrence and progression rates remain high.
BCG, an immunotherapy-based drug, is used as an adjuvant treatment for patients with high-grade NMIBC. Upon recurrence, which occurs in approximately 70% of
patients, the patients undergo another round of BCG therapy with a response rate of approximately 30%. Radical cystectomy, or surgical removal of the bladder, is also
a common treatment option for patients who fail multiple intravesical BCG therapies. However, treatment with BCG is associated with undesirable side effects
(including local irritation, systemic symptoms of immune activation and a small but serious risk of systemic absorption leading to mycobacterial sepsis and death), as
evidenced by a boxed warning on the label, which is a warning placed on a prescription drug’s label by the FDA and is designed to call attention to serious or life-
threatening risks.
Our Solution: UGN-301 (zalifrelimab) intravesical solution
We are exploring the use of immunotherapy for the treatment of high-grade NMIBC and have pursued a series of nonclinical studies to determine whether our
proprietary RTGel technology might provide a method for delivering highly potent immunomodulators directly to the bladder surface, thereby avoiding toxicity
associated with systemic administration. Our immuno-uro-oncology pipeline includes UGN-301, an anti-CTLA-4 antibody, which we intend to study as a single agent and
as a combination therapy. CTLA-4 antibodies are seen as potentially potent and comprehensively acting immunomodulators due to the ability to stimulate cytotoxic T
cells, while simultaneously inhibiting suppressive T-regulatory cells. When administered systemically, they have led to improved outcomes in patients suffering from
advanced cancers. We believe that this approach leverages our unique drug delivery technology and provides an opportunity to evaluate intravesical delivery of UGN-
301 in combination with other immuno-modulators, chemotherapies, gene therapy and innate immune stimulators.
The first combination we are investigating clinically involves the sequential use of UGN-201 (imiquimod), a TLR 7 agonist, and UGN-301 in high-grade NMIBC. Toll-like
receptors are pattern recognition receptors whose importance in stimulating innate and adaptive immunity has been established by recent studies. Toll-like receptors
are able to sense microbial components as well as host-derived endogenous molecules released by injured tissues and play a critical role in defending against invading
pathogens. Imiquimod, in its topical formulation, is FDA approved for several indications, including superficial basal cell carcinoma. UGN-201 is a liquid formulation of
imiquimod for intravesical administration that has been optimized for delivery in the urinary tract. We acquired UGN-201 from Telormedix SA, a private Swiss-based
biotechnology company, in the fourth quarter of 2015. Telormedix conducted all of the previous studies related to UGN-201, including the Phase 1 and Phase 1b
studies. We have obtained Orphan Drug Designation for UGN-201 for the treatment of CIS in the bladder. We have an active IND for UGN-201, which has been effective
since 2013.
The second combination we are investigating clinically involves the sequential administration of gemcitabine and UGN-301 to the bladder in high-grade NMIBC.
Gemcitabine is a chemotherapy that is used intravesically to treat high grade NMIBC where it is administered as a liquid formulation.
We believe these two combinations could elicit both an innate and adaptive immune response, which may translate into a long-lasting acquired immune response, and
potentially represent a valid post-TURBT adjuvant treatment of high-grade NMIBC. UGN-301 is delivered using our proprietary RTGel technology, which has been
designed to significantly improve the effectiveness of certain intravesical therapy. We are investigating these combinations to determine if they may make local therapy
a potentially more effective treatment option while minimizing systemic exposure and potential side effects.
In March 2022, we announced FDA clearance of our IND to begin a novel Phase 1 clinical study of UGN-301 in patients with recurrent NMIBC. The novel study design
utilizes a Master Protocol that we believe is a more efficient and streamlined approach to development. It will provide more flexibility to add study arms as the trial
progresses and is expected to increase efficiency and potentially reduce costs. We expect the Master Protocol will allow us to more quickly evaluate safety, tolerability
and dosing of UGN-301 in combination with additional immunomodulators and chemotherapies, with the goal of developing optimized treatment regimens for
patients. The multi-arm Phase 1 study, which is expected to support the development of UGN-301 in high-grade NMIBC, was initiated in April 2022 and enrollment in all
three of the current arms of the study are complete. Safety and dosing data from the first arm evaluating UGN-301 as monotherapy was presented in late 2024.
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Research and Development and License Agreements
Agenus Agreement
In November 2019, we entered into a license agreement with Agenus Inc. ("Agenus"), pursuant to which Agenus granted us an exclusive, worldwide (not including
Argentina, Brazil, Chile, Colombia, Peru, Venezuela and their respective territories and possessions), royalty-bearing, sublicensable license under Agenus’s intellectual
property rights to develop, make, use, sell, import, and otherwise commercialize products incorporating a proprietary monoclonal antibody of Agenus known as
AGEN1884 (zalifrelimab), an anti-CTLA-4 antagonist, for the treatment of cancers of the urinary tract via intravesical delivery. UGN-301 is a formulation of zalifrelimab
administered using RTGel technology that is in Phase 1 clinical development for high-grade NMIBC.
Our Competitive Strengths
We believe our approved product and lead product candidates for uro-oncology, which are being developed by leveraging our expertise in drug development and our
proprietary formulation technology, have the ability to replace the repetitive, costly, sub-optimal and burdensome tumor resection procedures that represent the
current standards of care. Furthermore, we believe our proprietary formulation technology has broad applications and may allow us to develop additional product
candidates for indications within and beyond the urinary tract.
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Potential ability to develop additional minimally invasive, drug therapies for uro-oncology. Leveraging our innovative formulation technology, we developed Jelmyto,
our first commercial product and UGN-102, our lead product candidate, as potential replacements to treatment for low-grade UTUC and low-grade intermediate risk
NMIBC, respectively. Jelmyto is a chemoablation agent designed to overcome the challenges posed by the anatomy of the urinary tract by increasing the dwell time and
enhancing the tissue coverage of mitomycin. UGN-102 is also being developed as a chemoablative therapy that may provide a non-invasive durable treatment option
for patients. Clinical data generated to date supports our belief that our approved product and lead product candidate may provide new therapeutic options to the
current surgical procedures, providing chemoablation treatment that has the potential to better eradicate tumors irrespective of their detectability and location within
the urinary tract.
Expertise in developing proprietary formulations of drugs for clinical benefit. We focus on developing proprietary RTGel formulations of previously approved drugs and
novel therapeutics which we are investigating, whose efficacy for a particular indication is limited by current formulations or routes of administration. Our expertise has
enabled us to develop proprietary RTGel-based formulations for previously approved drugs and drugs in clinical development, including clinical-stage proprietary
formulations of mitomycin and zalifrelimab. Our formulations are designed to significantly increase the dwell time and exposure of the drugs to the target sites and
limit the need for urine retention, potentially providing enhanced clinical activity, reduced patient burden and increased patient compliance over existing formulations
and modes of administration. We have a strong research and development team to advance our product candidates.
Streamlined development risks and efficiencies for our pipeline product candidates. Jelmyto was approved with the FDA’s 505(b)(2) regulatory pathway, which
provides a streamlined, capital efficient pathway when compared to traditional drug development. We also expect to use the 505(b)(2) regulatory pathway for UGN-
102, UGN-103 and UGN-104. Furthermore, Jelmyto and UGN-201 have received Orphan Drug Designation from the FDA for the treatment of low-grade UTUC and CIS,
respectively, which provides seven years of regulatory exclusivity following FDA approval.
Leverageable proprietary formulation technology. We believe that RTGel has multiple potential applications beyond urology. Our formulation know-how may enable
us to develop different drug formulations to facilitate the delivery, retention and sustained release of active drugs to a variety of targeted body cavities. We believe that
our proprietary formulation technology can improve the efficacy of locally administered drugs in body cavities that present anatomical and physiological challenges
related to frequent wash out, rapid excretion and bodily secretions.
Strong intellectual property position. We have a robust intellectual property portfolio that includes 45 granted patents worldwide and more than 45 pending patent
applications filed in the US, Europe, Israel, Japan, Canada, China, Australia and Korea. In the United States, we currently have 18 granted unexpired patents that are
directed to protect our approved product, Jelmyto and our lead product candidate, UGN-102, a proprietary RTGel technology, various local compositions comprising
different active ingredients, including, inter alia, compositions comprising a Botulinum Toxin, UGN-201, UGN-301, the use of UGN-201 and UGN-301 and our other
product candidates in development, including UGN-103 and UGN-104 that are under company research. These patents claim methods, combination products and novel
compositions for treating different diseases, especially cancer in internal cavities, in particular urinary tract cancer. Our issued patents are set to expire between
2025 and 2041, and our patent applications, if issued, are set to expire between 2031 and 2043.
Experienced and accomplished leadership team with proven track record. We have an experienced management team, with each member possessing deep experience
in the biotechnology and related industries. Our President and Chief Executive Officer, Liz Barrett was CEO of Novartis Oncology and a member of the Executive
Committee of Novartis. She previously served as Global President of Oncology at Pfizer Inc. At Pfizer, she held numerous leadership positions, including President of
Global Innovative Pharma for Europe, President of the Specialty Care Business Unit for North America, and President of United States Oncology. Prior to Pfizer, she was
Vice President and General Manager of the Oncology Business Unit at Cephalon Inc. Ms. Barrett also worked at Johnson & Johnson. In addition, our Chairman, Arie
Belldegrun, M.D., is a seasoned biotech executive and was the founder, Chairman, Chief Executive Officer and President of Kite Pharma, Inc., which was sold to Gilead
Sciences, Inc. Dr. Belldegrun is also a urologist by training. We believe that our leadership team is well-positioned to lead us through clinical development, regulatory
approval and commercialization for our product candidates.
Our Growth Strategy
We are a biotechnology company dedicated to developing and commercializing innovative solutions that treat urothelial and specialty cancers. Some key growth drivers
are as follows:
Establish our approved product, Jelmyto, as standard of care in low-grade UTUC.
We secured FDA approval of Jelmyto in April 2020 and launched in June 2020. Our current priority is to continue our efforts to ensure the successful commercialization
of Jelmyto and to establish Jelmyto as standard of care in low-grade UTUC.
Advance our product candidate UGN-102 and establish it as the first primary non-surgical chemoablative therapy in its target indication following regulatory
approval.
In August 2024, we completed the submission of a rolling NDA for UGN-102. In October 2024, the FDA accepted our NDA for UGN-102 and assigned a PDUFA goal date
of June 13, 2025. We believe that UGN-102 has the potential to be the first FDA-approved therapeutic option for the treatment of low-grade intermediate risk NMIBC
patients.
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Expand our uro-oncology product pipeline.
We believe that UGN-301 in combination with other potential agents could represent an option for the post-TURBT adjuvant treatment of high-grade NMIBC. In April
2022, we initiated a multi-arm Phase 1 study, which is expected to support the development of UGN-301 in high-grade NMIBC. We believe that the combination
treatments make local therapy a potentially more effective treatment option while minimizing systemic exposure and its potential side effects. In October 2024, we
initiated a Phase 3 study to explore the safety and efficacy of UGN-103 in low-grade, intermediate risk NMIBC. We also plan to initiate a Phase 3 study in the first half of
2025 to explore the safety and efficacy of UGN-104 in low-grade UTUC. UGN-103 and UGN-104 combine medac’s proprietary mitomycin formulation technology with
our RTGel technology, which we believe will provide advantages related to production, cost, supply and product convenience.
Utilize our proprietary technology to expand our pipeline to other body cavities and indications.
We believe that RTGel may be suitable for multiple additional applications. Our know-how may enable us to develop different drug formulations to facilitate the
delivery, retention, increased dwell time and sustained release of active drugs to a variety of targeted body cavities. In the future, we may also choose to develop our
RTGel technology in combination with other drugs to treat cancer and other indications endemic to such body cavities.
Evaluate and selectively pursue potential collaborations in specialty oncology, uro-oncology and urology as well as to develop improved formulations and RTGel
product life-cycle management strategies.
We are focused on driving growth through business development and geographic footprint expansion focusing on sustained nearer-term revenue growth, innovation,
high unmet need and cost-effective value creation. We are seeking potential partnerships with leading academic institutions as well as other biotechnology and
pharmaceutical companies. Such collaborations may allow us to obtain financial support and to capitalize on the expertise and resources of our potential partners,
which could allow for new and improved versions of approved or clinical-stage drugs and could accelerate the development and commercialization of additional
product candidates.
Intellectual Property
Our patent estate includes patents and patent applications with claims directed to our approved product, Jelmyto and our lead product candidate, UGN-102, as well as
UGN-103 and UGN-104, a proprietary RTGel technology, local compositions comprising different active ingredients, including, inter alia, compositions comprising a
Botulinum Toxin, UGN-201, UGN-301, the use of UGN-201 and UGN-301, and our future product candidates that are under company research.
In total, our IP portfolio includes 45 granted patents worldwide and more than 45 pending patent applications filed in the US, Europe, Israel, Japan, Canada, China,
Australia and Korea. In the United States, we currently have 18 granted unexpired patents that are directed to protect our approved product, Jelmyto and our lead
product candidate, UGN-102, a proprietary RTGel technology, various local compositions comprising different active ingredients, including, inter alia, compositions
comprising a Botulinum Toxin, UGN-201, UGN-301, the use of UGN-201 and UGN-301 and our other product candidates in development, including UGN-103 and UGN-
104 that are under company research. These patents claim methods, combination products and novel compositions for treating different diseases, especially cancer in
internal cavities, in particular urinary tract cancer. Our issued patents are set to expire between 2025 and 2041, and our patent applications, if issued, are set to expire
between 2031 and 2043.
As noted earlier, companies are required as part of the NDA submission process to list patents with the FDA whose claims cover the applicant’s product. Accordingly, we
have listed two patents for Jelmyto in the FDA’s Orange Book upon approval of Jelmyto for commercial sale, as part of the NDA process.
Our worldwide intellectual property portfolio includes patents and patent applications filed in many jurisdictions such as the US, Europe, Israel, Japan, Canada, China,
Australia and Korea of which are expected to remain in effect until 2043, if allowed:
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Hydrogel-based pharmaceutical compositions for optimal delivery of various therapeutic agents to internal cavities such as the bladder and/or urinary tract.
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The method for treating bladder cancer, upper urinary tract cancer and urothelial cancer using hydrogel-based compositions.
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Proprietary mitomycin formulation for treating bladder cancer, upper urinary tract cancer and urothelial cancer.
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The method for treating overactive bladder and interstitial cystitis topically without a need for injections in the bladder wall.
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Special catheters and in-dwelling ureter-catheter systems for optimal delivery of a drug into the renal cavity.
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Pharmaceutical compositions comprising an imidazoquinolin-amine (specifically imiquimod) for treating bladder cancer diseases.
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Composition comprising immunomodulators such as anti-CTLA4 (for example, zalifrelimab) for topical/intravesical administration as a monotherapy or a
combo-therapy with immunomodulators or chemotherapy drugs.
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Novel phospholipid drug analogs (new chemical entities) for treating cancer or infections.
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Hydrogel for removal ureteral and renal stones.
In addition to patents, we have filed applications for trademark registration with the United States Patent and Trademark Office (the "USPTO"), as well as certain other
international jurisdictions for Jelmyto ®, RTGel ® and UroGen ® and for certain other tradenames and logos. In addition, we have a registered trademark in the U.S.
covering a stylized design of our UroGen Pharmaceutical logo.
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Furthermore, we rely upon trade secrets, know-how and continuing technological innovation to develop and maintain our competitive position. Preparing and filing
patent applications is a joint endeavor of our research and development team and our in-house and external patent attorneys. Our patent attorneys conduct patent
prior-art searches and then analyze the data in order to provide our research and development team with recommendations on a routine basis. This results in:
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protecting our product candidates that are under development;
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encouraging pharmaceutical companies to negotiate development agreements with us; and
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preventing competitors from attempting to design-around our inventions.
Competition
We are developing products for patients with low-grade UTUC, low-grade NMIBC and high-grade NMIBC.
Prior to Jelmyto, there were no approved drugs used to treat low-grade UTUC. Tumor resection surgeries are conducted in some cases of low-grade UTUC; however,
complete kidney and upper urinary tract removal is the standard of care for recurring UTUC. We are aware of a company called ImPact Biotech with an IND granted in
December 2020 that has initiated a Phase 3 study of padeliporfin for the treatment of adult patients with low-grade and unifocal high-grade UTUC. We do not know
whether other competitors in the NMIBC space are already developing, or plan to develop, UTUC treatments. Competition may increase further as a result of advances
in the commercial applicability of technologies and greater availability of capital for investment in this industry. Our competitors may succeed in developing, acquiring
or licensing on an exclusive basis, products that are more effective, easier to administer or less costly than our product candidates.
The standard of care for treating low-grade NMIBC is repeated TURBT procedures. While effective, patients with low-grade intermediate risk NMIBC experience
frequent recurrences and repeated surgical procedures. Mitomycin is sometimes used off-label as adjuvant treatment in the post-TURBT setting for low-grade NMIBC
patients. However, off-label usage as a standard of care does not change the FDA’s approval criteria and does not suggest that FDA approval is more likely than for other
investigational drugs. Companies such as Johnson & Johnson, CG Oncology, Aura Biosciences and LIPAC Oncology are conducting, or have recently conducted, clinical
trials for product candidates for the treatment of low-grade intermediate risk NMIBC.
The standard of care for treating high-grade NMIBC patients is the TURBT procedure for papillary tumor resection, followed by post-operative adjuvant BCG. In the case
of high-grade disease without papillary tumor (CIS), BCG is used alone as primary therapy. BCG was approved by the FDA in 1989, and since its approval, only four other
drugs have been approved for high-grade NMIBC: Valstar, approved by the FDA in 1998; Keytruda, approved by the FDA in 2020; Adstiladrin, approved by the FDA in
2022 for BCG unresponsive CIS; and Anktiva, approved by the FDA in 2024, in combination with BCG for BCG unresponsive CIS. Valstar is indicated for patients with CIS
who do not respond to BCG treatment and is rarely used. Keytruda was approved for CIS with or without papillary involvement for patients who do not respond to BCG
treatment. Additionally, in January 2025 Johnson & Johnson announced the submission of their NDA for TAR-200 for the treatment of patients with BCG unresponsive
high-risk NMIBC with CIS.
It remains to be seen whether the broader urology community will adopt a systemic infused immunotherapy into their clinical management of BCG unresponsive
NMIBC. In addition to these approved options, off-label intravesical chemotherapy can be used (such as gemcitabine and cisplatin). If the disease can no longer be
controlled, patients will typically proceed to cystectomy, or surgical removal of the bladder, to prevent progression to muscle invasive and metastatic disease. There are
several products in the development pipeline, most of which are treatments targeted for high-grade NMIBC patients who have failed BCG treatment and are facing
cystectomy.
We are aware of several pharmaceutical companies that are developing drugs in the fields of urology and uro-oncology, such as AADi LLC, Aura Biosciences, Inc.,
Biocancell Ltd., Bristol Myers Squibb, CG Oncology Inc., enGene Holdings, Ferring Pharmaceuticals, FKD Therapies Oy, GSK, ImmunityBio, ImPact Biotech, Johnson &
Johnson, LIPAC Oncology, Merck Sharp & Dohme Corp, Pfizer, Prokarium, Protara Therapeutics, Roche, Samyang Biopharma, SURGE Therapeutics, Tyra Biosciences,
Viralytics Limited and Vyriad. In addition, we face competition from existing standards of treatment, surgical tumor resection procedures. If we are not able to
demonstrate that our product candidates are at least as safe and effective as such courses of treatment, medical professionals may not adopt our product candidates in
replacement of the existing standard of care.
The biotechnology industry is intensely competitive and subject to rapid and significant technological change. Our potential competitors include large and experienced
companies that enjoy significant competitive advantages over us, such as greater financial, research and development, manufacturing, personnel and marketing
resources, greater brand recognition, and more experience and expertise in obtaining marketing approvals from the FDA and foreign regulatory authorities. These
companies may develop new drugs to treat the indications that we target or seek to have existing drugs approved for use for the treatment of the indications that we
target.
These potential competitors may therefore introduce competing products without our prior knowledge and without our ability to take preemptive measures in
anticipation of their commercial launch. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability
of capital for investment in this industry. Our competitors may succeed in developing, acquiring or exclusively licensing products that are more effective, easier to
administer or less costly than our product candidates.
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Government Regulation
The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development,
manufacture and marketing of pharmaceutical products. These agencies and other federal, state and local entities regulate research and development activities and the
testing, manufacture, quality control, safety, effectiveness, labeling, storage, packaging, recordkeeping, tracking, approval, import, export, distribution, advertising and
promotion of our products.
The process required by the FDA before product candidates may be marketed in the United States generally involves the following:
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nonclinical laboratory and animal tests that must be conducted in accordance with good laboratory practices ("GLPs");
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submission of an IND, which must become effective before clinical trials may begin;
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approval by an independent institutional review board ("IRB"), for each clinical site or centrally before each trial may be initiated;
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adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed product candidate for its intended use, performed in
accordance with good clinical practices ("GCPs");
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submission to the FDA of an NDA;
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satisfactory completion of an FDA advisory committee review, if applicable;
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pre-approval inspection of manufacturing facilities and selected clinical investigators for their compliance with current good manufacturing practices ("cGMP")
and GCPs; and
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FDA approval of an NDA to permit commercial marketing for particular indications for use.
The testing and approval process requires substantial time, effort and financial resources. Nonclinical studies include laboratory evaluation of drug substance chemistry,
pharmacology, toxicity and drug product formulation, as well as animal studies to assess potential safety and efficacy. Prior to commencing the first clinical trial with a
product candidate, we must submit the results of the nonclinical tests and nonclinical literature, together with manufacturing information, analytical data and any
available clinical data or literature, among other things, to the FDA as part of an IND. Some nonclinical studies may continue even after the IND is submitted. The IND
automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the conduct
of the clinical trial by imposing a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
Submission of an IND may not result in FDA authorization to commence a clinical trial. A separate submission to the existing IND must be made for each successive
clinical trial conducted during product development, as well as amendments to previously submitted clinical trials. Further, an independent IRB for each study site
proposing to conduct the clinical trial must review and approve the plan for any clinical trial, its informed consent form and other communications to study subjects
before the clinical trial commences at that site. The IRB must continue to oversee the clinical trial while it is being conducted, including any changes to the study plans.
Regulatory authorities, an IRB or the sponsor may suspend or discontinue a clinical trial at any time on various grounds, including a finding that the subjects are being
exposed to an unacceptable health risk, the clinical trial is not being conducted in accordance with the FDA’s or the IRB’s requirements, if the drug has been associated
with unexpected serious harm to subjects, or based on evolving business objectives or competitive climate. Some studies also include a data safety monitoring board,
which receives special access to unblinded data during the clinical trial and may advise us to halt the clinical trial if it determines that there is an unacceptable safety
risk for subjects or other grounds, such as no demonstration of efficacy.
In general, for purposes of NDA approval, human clinical trials are typically conducted in three sequential phases that may overlap.
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Phase 1—Studies are initially conducted to test the product candidate for safety, dosage tolerance, structure-activity relationships, mechanism of action,
absorption, metabolism, distribution and excretion in healthy volunteers or subjects with the target disease or condition. If possible, Phase 1 trials may also be
used to gain an initial indication of product effectiveness.
•
Phase 2—Controlled studies are conducted with groups of subjects with a specified disease or condition to provide enough data to evaluate the preliminary
efficacy, optimal dosages and dosing schedule and expanded evidence of safety. Multiple Phase 2 clinical trials may be conducted to obtain information prior
to beginning larger and more expensive Phase 3 clinical trials.
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Phase 3—These clinical trials are undertaken in larger subject populations to provide statistically significant evidence of clinical efficacy and to further test for
safety in an expanded subject population at multiple clinical trial sites. Evidence is considered to be statistically significant when the probability of the result
occurring by random chance, rather than from the efficacy of the treatment, is sufficiently low. These clinical trials are intended to establish the overall
risk/benefit ratio of the product and provide an adequate basis for product labeling. These trials may be done globally to support global registrations so long as
the global sites are also representative of the U.S. population and the conduct of the study at global sites comports with FDA regulations and guidance, such as
compliance with GCPs.
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The FDA may require, or companies may pursue, additional clinical trials after a product is approved. These so-called Phase 4 studies may be made a condition to be
satisfied after approval. The results of Phase 4 studies can confirm the effectiveness of a product candidate and can provide important safety information.
Clinical trials must be conducted under the supervision of qualified investigators in accordance with GCP requirements, which includes the requirements that all
research subjects provide their informed consent in writing for their participation in any clinical trial, and the review and approval of the study by an IRB. Investigators
must also provide information to the clinical trial sponsors to allow the sponsors to make specified financial disclosures to the FDA. Clinical trials are conducted under
protocols detailing, among other things, the objectives of the trial, the trial procedures, the parameters to be used in monitoring safety and the efficacy criteria to be
evaluated and a statistical analysis plan. Information about some clinical trials, including a description of the trial and trial results, must be submitted within specific
timeframes to the National Institutes of Health, or NIH, for public dissemination on their ClinicalTrials.gov website.
The manufacture of investigational drugs for the conduct of human clinical trials is subject to cGMP requirements. Investigational drugs and active pharmaceutical
ingredients imported into the United States are also subject to regulation by the FDA relating to their labeling and distribution. Further, the export of investigational
drug products outside of the United States is subject to regulatory requirements of the receiving country as well as U.S. export requirements under the Federal Food,
Drug and Cosmetic Act ("FDCA"). Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and the IRB and more
frequently if serious adverse events ("SAEs") occur.
Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical
characteristics of the product candidate as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, must develop methods for
testing the identity, strength, quality and purity of the final product. Additionally, appropriate packaging must be selected and tested, and stability studies must be
conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.
505(b)(2) Regulatory Approval Process
Section 505(b)(2) of the FDCA ("505(b)(2)"), provides an alternate regulatory pathway to FDA approval for new or improved formulations or new uses of previously
approved drug products. Specifically, 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not
conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were
conducted. The applicant may rely upon the FDA’s prior findings of safety and efficacy for an approved product that acts as the reference listed drug for purposes of a
505(b)(2) NDA. The FDA may also require 505(b)(2) applicants to perform additional studies or measurements to support any changes from the reference listed drug.
The FDA may then approve the new product candidate for all or some of the labeled indications for which the referenced product has been approved, as well as for any
new indication sought by the 505(b)(2) applicant.
Orange Book Listing
Section 505 of the FDCA describes three types of marketing applications that may be submitted to the FDA to request marketing authorization for a new drug. A Section
505(b)(1) NDA is an application that contains full reports of investigations of safety and efficacy. A 505(b)(2) NDA is an application that contains full reports of
investigations of safety and efficacy, but where at least some of the information required for approval comes from investigations that were not conducted by or for the
applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted. This regulatory
pathway enables the applicant to rely, in part, on the FDA’s prior findings of safety and efficacy for an existing product, or published literature, in support of its
application. Section 505(j) establishes an abbreviated approval process for a generic version of approved drug products through the submission of an abbreviated new
drug application ("ANDA"). An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage form, strength, route of
administration, labeling, performance characteristics and intended use, among other things, to a previously approved product. ANDAs are termed “abbreviated”
because they are generally not required to include nonclinical and clinical data to establish safety and efficacy. Instead, generic applicants must scientifically
demonstrate that their product is bioequivalent to, or performs in the same manner as, the innovator drug through in vitro, in vivo or other testing. The generic version
must deliver the same amount of active ingredients into a subject’s bloodstream in the same amount of time as the innovator drug and under Part D, can often be
substituted by pharmacists under prescriptions written for the reference listed drug.
In seeking approval for a drug through an NDA, including a 505(b)(2) NDA, applicants are required to list patents with the FDA which claims cover the applicant’s
product. The patents chosen as part of this submission do not reflect the entire patent estate or set of product protections associated with this product, which may
provide various protections beyond the patents submitted in the NDA application. Upon approval of an NDA, each of the patents listed in the application for the drug is
then published in Approved Drug Products with Therapeutic Equivalence Evaluations, also known as the Orange Book. These products may be cited by potential
competitors in support of approval of an ANDA or 505(b)(2) NDA.
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Any applicant who submits an ANDA seeking approval of a generic equivalent version of a drug listed in the Orange Book or a 505(b)(2) NDA referencing a drug listed in
the Orange Book must certify to the FDA that (1) no patent information on the drug product that is the subject of the application has been submitted to the FDA; (2)
such patent has expired; (3) the date on which such patent expires; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug
product for which the application is submitted. This last certification is known as a Paragraph IV certification. Generally, the ANDA or 505(b)(2) NDA cannot be approved
until all listed patents have expired, except where the ANDA or 505(b)(2) NDA applicant challenges a listed patent through a Paragraph IV certification. If the applicant
does not challenge the listed patents or does not indicate that it is not seeking approval of a patented method of use, the ANDA or 505(b)(2) NDA application will not be
approved until all of the listed patents claiming the referenced product have expired.
If the competitor has provided a Paragraph IV certification to the FDA, the competitor must also send notice of the Paragraph IV certification to the holder of the NDA
for the reference listed drug and the patent owner once the application has been accepted for filing by the FDA. The NDA holder or patent owner may then initiate a
patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a
Paragraph IV certification prevents the FDA from approving the application until the earlier of 30 months from the date of the lawsuit, expiration of the patent,
settlement of the lawsuit, a decision in the infringement case that is favorable to the applicant, or such shorter or longer period as may be ordered by a court. This
prohibition is generally referred to as the 30-month stay. In instances where an ANDA or 505(b)(2) NDA applicant files a Paragraph IV certification, the NDA holder or
patent owner regularly takes action to trigger the 30-month stay, recognizing that the related patent litigation may take many months or years to resolve. Thus,
approval of an ANDA or 505(b)(2) NDA could be delayed for a significant period of time depending on the patent certification the applicant makes and the reference
drug sponsor’s decision to initiate patent litigation. The applicant may also elect to submit a statement certifying that its proposed label does not contain, or carves out,
any language regarding the patented method-of-use rather than certify to a listed method-of-use patent.
On February 25, 2024, we received a Paragraph IV Certification Notice Letter from Teva Pharmaceuticals, Inc. (“Teva”), providing notification that Teva has submitted an
ANDA to the FDA seeking approval to manufacture, use or sell a generic version of Jelmyto. In the Notice Letter, Teva alleges that two of the patents listed in the FDA
Orange Book for Jelmyto, U.S. Patent Numbers 9,040,074 and 9,950,069 each of which expires in January 2031, are invalid, unenforceable, or will not be infringed by
Teva’s manufacture, use, or sale of the generic product described in its ANDA submission. See Part I, Item 3. “Legal Proceedings” for additional discussion.
Exclusivity
The FDA provides periods of regulatory exclusivity, which provides the holder of an approved NDA limited protection from new competition in the marketplace for the
innovation represented by its approved drug for a period of three or five years following the FDA’s approval of the NDA. Five years of exclusivity are available to New
Chemical Entities ("NCEs"). An NCE is a drug that contains no active moiety that has been approved by the FDA in any other NDA. An active moiety is the molecule or
ion, excluding those appended portions of the molecule that cause the drug to be an ester, salt, including a salt with hydrogen or coordination bonds, or other
noncovalent, or not involving the sharing of electron pairs between atoms, derivatives, such as a complex (i.e., formed by the chemical interaction of two compounds),
chelate (i.e., a chemical compound), or clathrate (i.e., a polymer framework that traps molecules), of the molecule, responsible for the therapeutic activity of the drug
substance. During the exclusivity period, the FDA may not accept for review or approve an ANDA or a 505(b)(2) NDA submitted by another company that contains the
previously approved active moiety. An ANDA or 505(b)(2) application, however, may be submitted one year before NCE exclusivity expires if a Paragraph IV certification
is filed.
If a product is not eligible for the NCE exclusivity, it may be eligible for three years of exclusivity. Three-year exclusivity is available to the holder of an NDA, including a
505(b)(2) NDA, for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more
new clinical trials, other than bioavailability or bioequivalence trials, was essential to the approval of the application and was conducted or sponsored by the applicant.
This three-year exclusivity period protects against FDA approval of ANDAs and 505(b)(2) NDAs for the condition of the new drug’s approval. As a general matter, three-
year exclusivity does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for generic versions of the original, unmodified drug product. Five-year and three-
year exclusivity will not delay the submission or approval of a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain a right of
reference to all of the nonclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and efficacy.
The Orphan Drug Act
Under the Orphan Drug Act, the FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition—generally a disease or condition that
affects fewer than 200,000 individuals in the United States. Orphan Drug Designation must be requested before submitting an NDA. After the FDA grants Orphan Drug
Designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan Drug Designation does not convey any advantage in,
or shorten the duration of, the regulatory review and approval process. The first NDA applicant to receive FDA approval for a particular active ingredient to treat a
particular disease with FDA Orphan Drug Designation is entitled to a seven-year exclusive marketing period in the United States for that product, for that indication.
During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug for the same disease, except in limited
circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. Orphan drug exclusivity does not prevent the FDA from approving a
different drug for the same disease or condition, or the same drug for a different disease or condition. Among the other benefits of Orphan Drug Designation are tax
credits for certain research and a waiver of the NDA application user fee.
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Expedited Development and Review Programs
The FDA is required to facilitate the development and expedite the review of drugs that are intended for the treatment of a serious or life-threatening condition for
which there is no effective treatment, and which demonstrate the potential to address unmet medical needs for the condition. Under the Fast Track program, the
sponsor of a new product candidate may request the FDA to designate the product for a specific indication as a Fast Track product concurrent with or after the
submission of the IND for the product candidate. The FDA must determine if the product candidate qualifies for Fast Track and Breakthrough Therapy designations
within 60 days after receipt of the sponsor’s request.
For Fast Track and Breakthrough Therapy products, the sponsor may have more frequent interactions with the FDA and the FDA may initiate review of sections of a Fast
Track or Breakthrough Therapy product’s NDA before the application is complete. This rolling review is available if the applicant provides and the FDA approves a
schedule for the submission of the remaining information and the applicant pays applicable user fees. However, the FDA’s time period goal for reviewing a Fast Track or
Breakthrough Therapy application does not begin until the last section of the NDA is submitted. In addition, the Fast Track and Breakthrough Therapy designations may
be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process. A Fast Track and Breakthrough
Therapy designated product candidate would ordinarily meet the FDA’s criteria for priority review.
Drug products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing
treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the
product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on an intermediate clinical endpoint other
than survival or irreversible morbidity, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a
condition of approval, the FDA generally requires that a sponsor of a drug product receiving accelerated approval perform adequate and well-controlled post-marketing
clinical trials to verify the clinical benefit in relationship to the surrogate endpoint or ultimate outcome in relationship to the clinical benefit. In addition, the FDA
currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of
the product. The FDA may withdraw approval of a drug or indication approved under accelerated approval if, for example, the confirmatory trial fails to verify the
predicted clinical benefit of the product.
NDA Submission and Review by the FDA
Assuming successful completion of the required clinical and nonclinical testing, among other items, the results of product development, including chemistry,
manufacture and controls, nonclinical studies and clinical trials are submitted to the FDA, along with proposed labeling, as part of an NDA. The submission of an NDA
requires payment of a substantial user fee to the FDA. These user fees must be paid at the time of the first submission of the application, even if the application is being
submitted on a rolling basis. Fee waivers or reductions are available in some circumstances. One basis for a waiver of the application user fee is if the applicant employs
fewer than 500 employees, including employees of affiliates, the applicant does not have an approved marketing application for a product that has been introduced or
delivered for introduction into interstate commerce, and the applicant, including its affiliates, is submitting its first marketing application.
In addition, under the Pediatric Research Equity Act ("PREA"), an NDA or supplement to an NDA for a new active ingredient, indication, dosage form, dosage regimen or
route of administration must contain data that are adequate to assess the safety and efficacy of the drug for the claimed indications in all relevant pediatric
subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may, on its own
initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults or full or
partial waivers from the pediatric data requirements.
The FDA may refer applications for drugs that contain active ingredients that have not previously been approved by the FDA or drugs which present difficult questions
of safety, purity or potency to an advisory committee. An advisory committee is typically a panel that includes clinicians and other experts who review, evaluate and
make a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory
committee, but it considers such recommendations carefully when making decisions.
The FDA reviews applications to determine, among other things, whether a product is safe and effective for its intended use and whether the manufacturing controls
are adequate to assure and preserve the product’s identity, strength, quality and purity. Before approving an NDA, the FDA will inspect the facility or facilities where the
product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities, including contract manufacturers
and subcontracts, are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally,
before approving an NDA, the FDA will typically inspect one or more clinical trial sites to assure compliance with GCPs.
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Once the FDA receives an application, it has 60 days to review the NDA to determine if it is substantially complete to permit a substantive review, before it accepts the
application for filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. The FDA’s NDA review times may differ based on
whether the application is a standard review or priority review application. The FDA may give a priority review designation to drugs that are intended to treat serious
conditions and provide significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions. Under the goals and
policies agreed to by the FDA under the PDUFA, the FDA has set the review goal of 10 months from the 60-day filing date to complete its initial review of a standard
NDA for a New Molecular Entity ("NME") and make a decision on the application. For non-NME standard applications, the FDA has set the review goal of 10 months
from the submission date to complete its initial review and to make a decision on the application. For priority review applications, the FDA has set the review goal of
reviewing NME NDAs within six months of the 60-day filing date and non-NME applications within six months of the submission date. Such deadlines are referred to as
the PDUFA date. The PDUFA date is only a goal and the FDA does not always meet its PDUFA dates. The review process and the PDUFA date may also be extended if the
FDA requests or the NDA sponsor otherwise provides additional information or clarification regarding the submission.
Once the FDA’s review of the application is complete, the FDA will issue either a Complete Response Letter ("CRL"), or approval letter. A CRL indicates that the review
cycle of the application is complete, and the application is not ready for approval. A CRL generally contains a statement of specific conditions that must be met in order
to secure final approval of the NDA and may require additional clinical or nonclinical testing, or other information or analyses in order for the FDA to reconsider the
application. The FDA has the goal of reviewing 90% of application resubmissions in either two or six months of the resubmission date, depending on the kind of
resubmission. Even with the submission of additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for
approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA may issue an approval letter. An approval letter authorizes commercial
marketing of the drug with specific prescribing information for specific indications.
The FDA may delay or refuse approval of an NDA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-
marketing testing and surveillance to monitor safety or efficacy of a product, or impose other conditions, including distribution restrictions or other risk management
mechanisms. For example, the FDA may require a risk evaluation and mitigation strategy ("REMS"), as a condition of approval or following approval to mitigate any
identified or suspected serious risks and ensure safe use of the drug. The FDA may prevent or limit further marketing of a product, or impose additional post-marketing
requirements, based on the results of post-marketing studies or surveillance programs. After approval, some types of changes to the approved product, such as adding
new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements, FDA notification and FDA review and approval.
Further, should new safety information arise, additional testing, product labeling or FDA notification may be required.
If regulatory approval of a product is granted, such approval may entail limitations on the indicated uses for which such product may be marketed or may include
contraindications, warnings or precautions in the product labeling, which has resulted in a boxed warning. The FDA also may not approve the inclusion of labeling claims
necessary for successful marketing. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing regulatory standards is not
maintained or if problems occur after the product reaches the marketplace. In addition, the FDA may require Phase 4 post-marketing studies to monitor the effect of
approved products and may limit further marketing of the product based on the results of these post-marketing studies.
Post-approval Requirements
Any products manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including manufacturing, periodic
reporting, product sampling and distribution, advertising, promotion, drug shortage reporting, compliance with any post-approval requirements imposed as a
conditional of approval such as Phase 4 clinical trials, REMS and surveillance, recordkeeping and reporting requirements, including adverse experiences.
After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. There also
are continuing annual program user fee requirements for any approved products, as well as new application fees for supplemental applications with clinical data. Drug
manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies and to list their drug products and are
subject to periodic announced and unannounced inspections by the FDA and these state agencies for compliance with cGMPs and other requirements, which impose
procedural and documentation requirements upon us and our third-party manufacturers. We cannot be certain that we or our present or future suppliers will be able
to comply with the cGMP regulations and other FDA regulatory requirements.
Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented, or FDA notification. FDA regulations also
require investigation and correction of any deviations from cGMPs and specifications and impose reporting and documentation requirements upon the sponsor and any
third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production
and quality control to maintain cGMP compliance.
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Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or
failure to comply with regulatory requirements, may result in withdrawal of marketing approval, mandatory revisions to the approved labeling to add new safety
information or other limitations, imposition of post-market studies or clinical trials to assess new safety risks or imposition of distribution or other restrictions under a
REMS program, among other consequences.
The FDA closely regulates the marketing and promotion of drugs. A company can make only those claims relating to safety and efficacy, purity and potency that are
approved by the FDA. Physicians, in their independent professional medical judgement, may prescribe legally available products for uses that are not described in the
product’s labeling and that differ from those tested by us and approved by the FDA. We, however, are prohibited from marketing or promoting drugs for uses outside of
the approved labeling but may share truthful and not misleading information that is otherwise consistent with the product’s approved labeling.
In addition, the distribution of prescription pharmaceutical products, including samples, is subject to the Prescription Drug Marketing Act ("PDMA"), which regulates
the distribution of drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both
the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution. The
Drug Supply Chain Security Act also imposes obligations on manufacturers of pharmaceutical products related to product tracking and tracing.
Failure to comply with any of the FDA’s requirements could result in significant adverse enforcement actions. These include a variety of administrative or judicial
sanctions, such as refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, imposition of a clinical hold or termination of
clinical trials, warning letters, untitled letters, cyber letters, modification of promotional materials or labeling, product recalls, product seizures or detentions, refusal to
allow imports or exports, total or partial suspension of production or distribution, debarment, injunctions, fines, consent decrees, corporate integrity agreements,
refusals of government contracts and new orders under existing contracts, exclusion from participation in federal and state healthcare programs, restitution,
disgorgement or civil or criminal penalties, including fines and imprisonment. Any of these sanctions could result in adverse publicity, among other adverse
consequences.
Other Healthcare Regulations
Our business activities, including but not limited to, research, sales, promotion, distribution, medical education and other activities following product approval will be
subject to regulation by numerous regulatory and law enforcement authorities in the United States in addition to the FDA, including potentially the Department of
Justice, the Department of Health and Human Services ("HHS"), and its various divisions, including the CMS, and the Health Resources and Services Administration, the
Department of Veterans Affairs, the Department of Defense and state and local governments. Our business activities must comply with numerous federal, state, and
foreign healthcare laws and regulations, including those described below.
The federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting or receiving any
remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, the referral of an individual for, or purchasing, leasing,
ordering, or arranging for the purchase, lease or order of, any good, facility, item or service reimbursable, in whole or in part, by Medicare, Medicaid or other federal
healthcare programs. The term remuneration has been interpreted broadly to include anything of value, including unlawful financial inducements paid to prescribers
and beneficiaries, as well as impermissible promotional practices. There are a number of statutory exceptions and regulatory safe harbors protecting some common
activities from prosecution, but the exceptions and safe harbors are drawn narrowly. Failure to meet all of the requirements of a particular applicable statutory
exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute. Instead, the legality of the arrangement will be
evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances. Additionally, the Patient Protection and Affordable Care Act of
2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively the "ACA"), amended the intent requirement of the federal Anti-Kickback
Statute so that a person or entity no longer needs to have actual knowledge of the federal Anti-Kickback Statute, or the specific intent to violate it, to have violated the
statute. The ACA also provided that a violation of the federal Anti-Kickback Statute is grounds for the government or a whistleblower to assert that a claim for payment
of items or services resulting from such violation constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.
The federal civil and criminal false claims laws, including the federal civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting,
or causing to be presented, a false claim for payment to, or for approval by, the federal government, including the Medicare and Medicaid programs, or knowingly
making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay
money to the federal government.
The civil monetary penalties statute imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be
presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.
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As a condition of receiving Medicaid coverage for prescription drugs, the Medicaid Drug Rebate Program requires manufacturers to calculate and report to CMS their
Average Manufacturer Price ("AMP"), which is used to determine rebate payments shared between the states and the federal government and, for some multiple
source drugs, Medicaid payment rates for the drug, and for drugs paid under Medicare Part B, to also calculate and report their average sales price, which is used to
determine the Medicare Part B payment rate for the drug. In January 2016, CMS issued a final rule regarding the Medicaid Drug Rebate Program, effective April 1, 2016,
that, among other things, revises the manner in which the AMP is to be calculated by manufacturers participating in the program and implements certain amendments
to the Medicaid rebate statute created under the ACA. On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory
Medicaid drug rebate cap, currently set at 100% of a drug’s AMP for single-source and innovator multiple source drugs beginning January 1, 2024. Drugs that are
approved under a biologics license application ("BLA"), or an NDA, including a 505(b)(2) NDA, are subject to an additional requirement to calculate and report the
manufacturer’s best price for the drug and inflation penalties which can substantially increase rebate payments. For BLA and NDA drugs, the Veterans Health Care Act
requires manufacturers to calculate and report to the Department of Veterans Affairs a different price called the Non-Federal AMP, offer the drugs for sale on the
Federal Supply Schedule, and charge the government no more than a statutory price referred to as the Federal Ceiling Price, which includes an inflation penalty. A
separate law requires manufacturers to pay rebates on these drugs when paid by the Department of Defense under its TRICARE Retail Pharmacy Program. Knowingly
submitting false pricing information to the government could result in significant penalties and creates potential federal civil False Claims Act liability.
The Federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), created additional federal civil and criminal statutes that prohibit knowingly and
willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including public and private payors, or obtain, by means of false or
fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program,
regardless of whether the payor is public or private, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal
investigation of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false
statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters. The ACA amended the federal
health care fraud criminal statute implemented under HIPAA so that a person or entity no longer needs to have actual knowledge of the statute, or the specific intent to
violate it, to have violated the statute.
Additionally, the federal Open Payments program pursuant to the Physician Payments Sunshine Act, created under Section 6002 of the ACA and its implementing
regulations, require some manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s
Health Insurance Program (with specified exceptions) to report annually information related to specified payments or other transfers of value provided to
physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals (such as physician assistants and
nurse practitioners), and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, such professionals and teaching hospitals and to
report annually specified ownership and investment interests held by physicians and their immediate family members.
In addition, we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA, as
amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH"), and their implementing regulations, impose requirements relating to
the privacy, security and transmission of individually identifiable health information on HIPAA covered entities, which include certain healthcare providers, health plans
and healthcare clearinghouses, and their business associates as well as their covered subcontractors, including mandatory contractual terms and the implementation of
certain safeguards of such information. Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, independent
contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity.
HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave
state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and
costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in some circumstances, many of which
differ from each other in significant ways, may not have the same effect and may not be preempted by HIPAA, thus complicating compliance efforts.
Many states have also adopted laws similar to each of the above federal laws, which may be broader in scope and apply to items or services reimbursed by any payor,
including commercial insurers. In addition, we may be subject to certain analogous foreign healthcare laws. We may also be subject to state laws that require
pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the
federal government, and/or state laws that require drug manufacturers to report information related to marketing expenditures or payments and other transfers of
value to physicians and other healthcare providers, and drug pricing. Certain state and local laws also require the registration of pharmaceutical sales representatives.
Enforcement actions can be brought by federal or state governments or, in some cases, as “qui tam” actions brought by individual whistleblowers in the name of the
government. Depending on the circumstances, failure to comply with these laws can result in significant penalties, including criminal, civil and administrative penalties,
damages, fines, disgorgement, debarment from government contracts, imprisonment, additional reporting requirements and oversight if we become subject to a
corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, exclusion from government programs, refusal to allow us
to enter into supply contracts, including government contracts, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our
operations, any of which could adversely affect our business.
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Coverage and Reimbursement
Our ability to commercialize any products successfully, including Jelmyto, UGN-102 and our other product candidates, if approved, also will depend in part on the extent
to which coverage and adequate reimbursement for our products, once approved, and related treatments will be available from third-party payors, such as government
health administration authorities, private health insurers and managed care organizations. Third-party payors determine which medications they will cover and
separately establish reimbursement levels. Even if we obtain coverage for a given product by a third-party payor, the third-party payor’s reimbursement rates may not
be adequate to make the product affordable to patients or profitable to us, or the third-party payors may require co-payments that patients find unacceptably high.
Patients who are prescribed medications for the treatment of their conditions, and their prescribing physicians, generally rely on third-party payors to reimburse all or
part of the costs associated with their prescription drugs. Patients are unlikely to use our products unless coverage is provided, and reimbursement is adequate to cover
all or a significant portion of the cost of our products. Therefore, coverage and adequate reimbursement is critical to new product acceptance. Coverage decisions may
depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or
subsequently become available. Additionally, reimbursement by a third-party payor may depend upon a number of factors including the third-party payor’s
determination that use of a product is:
• a covered benefit under its health plan;
• safe, effective and medically necessary;
• appropriate for the specific patient;
• cost-effective; and
• neither experimental nor investigational.
Obtaining and maintaining coverage and reimbursement approval for a product from a government or other third-party payor is a time-consuming and costly process
that could require us to provide supporting scientific, clinical and cost effectiveness data for the use of our products to the payor.
Further, no uniform policy requirement for coverage and reimbursement for drug products exists among third-party payors in the United States. Therefore, coverage
and reimbursement for drug products can differ significantly from payor to payor. As a result, the coverage determination process may require us to provide scientific
and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or
obtained in the first instance.
In the United States, decisions about reimbursement for new medicines under Medicare are made by CMS, as the administrator for the Medicare program. Private
third-party payors often use CMS as a model for their coverage and reimbursement decisions, but also have their own methods and approval process apart from CMS’s
determinations. Our experience to date has demonstrated coverage with CMS and commercial payors for Jelmyto, and we have established written policies with certain
commercial providers. For example, in October 2020, a Medicare C-Code was issued for Jelmyto. CMS has established a permanent and product-specific J-code for
Jelmyto that took effect on January 1, 2021. CMS granted Jelmyto a New Technology APC, effective from October 1, 2023. A service is separately paid for under a New
Technology APC until sufficient claims data have been collected to allow CMS to assign the procedure to a clinical APC group that is appropriate in clinical and resource
terms. This generally occurs within two to three years from the time a new HCPCS code becomes effective. However, if CMS are able to collect sufficient claims data in
less than two years, CMS may consider reassigning the service to an appropriate APC, or, if CMS does not have sufficient data at the end of three years upon which to
base its reassignment to an appropriate clinical APC, CMS may keep the service in a New Technology APC until adequate data become available. Loss of our New
Technology APC may result in Medicare beneficiaries losing access to Jelmyto in the hospital outpatient setting and Jelmyto becoming packaged into a comprehensive
APC.
Additionally, coverage policies and reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for any of our
products or product candidates that receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
Government authorities and other third-party payors are developing increasingly sophisticated methods of controlling healthcare costs, such as by limiting coverage
and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined
discounts from list prices as a condition of coverage, are using restrictive formularies and preferred drug lists to leverage greater discounts in competitive classes and
are challenging the prices charged for medical products. Further, no uniform policy for determining coverage and reimbursement for drug products exists among third-
party payors in the United States. Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor. As a result, the coverage
determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each
payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.
We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, that the level of
reimbursement will be adequate. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing
approval. If coverage and reimbursement are not available, or if reimbursement is available only to limited levels, we may not successfully commercialize any product
candidate for which we obtain marketing approval.
Healthcare Reform Measures
The United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals designed to change the healthcare
system in ways that could affect our ability to sell our products profitably. Among policy makers and payors in the United States and elsewhere, there is significant
interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the United
States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
For example, in March 2010, the ACA was passed, which has changed health care financing by both governmental and private insurers and significantly affected the U.S.
pharmaceutical industry. The ACA, among other things, subjected manufacturers to new annual fees and taxes for specified branded prescription drugs, increased the
minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program, expanded health care fraud and abuse laws, revised the
methodology by which rebates owed by manufacturers to the state and federal government for covered outpatient drugs under the Medicaid Drug Rebate Program are
calculated, imposed an additional rebate similar to an inflation penalty on new formulations of drugs, extended the Medicaid Drug Rebate Program to Medicaid
managed care organizations, expanded the 340B program, which caps the price at which manufacturers can sell covered outpatient pharmaceuticals to specified
hospitals, clinics and community health centers, and provided incentives to programs that increase the federal government’s comparative effectiveness research.
There have been judicial and Congressional challenges, as well as certain aspects of the ACA. For example, on August 16, 2022, the Inflation Reduction Act of 2022
(“IRA”) was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through
plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-
of-pocket cost and creating a newly established manufacturer discount program. It is possible that the ACA will be subject to judicial or Congressional challenges in the
future. It is unclear how any such challenges and the healthcare reform measures of the current administration will impact the ACA.
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Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. These changes include aggregate reductions to Medicare
payments to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011, which began in 2013 and, due to subsequent legislative amendments to the
statute, including the Infrastructure Investment and Jobs Act, will remain in effect until 2032 unless additional Congressional action is taken.
Further, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been
several U.S. Presidential executive orders. Congressional inquiries and proposed and enacted legislation at the federal and state levels designed to, among other things,
bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and
reform government program reimbursement methodologies for drugs. At the federal level, on November 15, 2021, the Infrastructure Investment and Jobs Act was
signed into law. Effective January 1, 2023, manufacturers will be required to pay quarterly refunds to CMS for discarded amounts of certain single-dose container
and single-use package drugs payable under part B of the Medicare program. Refunds are based on the discarded volume above 10% of the total allowed amount.
However, in unique circumstances, CMS will increase the applicable threshold to 35%. At this time, CMS has determined that Jelmyto fits within this unique
circumstance classification. In addition, the IRA, among other things, (1) directs HHS to negotiate the price of certain high expenditure single-source drugs that have
been on the market for at least 7 years covered under Medicare (the “Medicare Drug Price Negotiation Program”) and (2) imposes rebates under Medicare Part B and
Medicare Part D to penalize price increases that outpace inflation. These provisions began to take effect progressively starting in fiscal year 2023. On August 15, 2024,
HHS announced the agreed-upon prices of the first ten drugs that were subject to price negotiations, although the Medicare Drug Price Negotiation program is
currently subject to legal challenges. On January 17, 2025, HHS selected fifteen additional products covered under Part D for price negotiation in 2025. Each year
thereafter more Part B and Part D products will become subject to the Medicare Drug Price Negotiation Program. Further, on December 7, 2023, the an initiative to
control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act was announced. On December 8, 2023, the National Institute of
Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time
includes the price of a product as one factor an agency can use when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is
uncertain if that will continue under the new framework. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to
control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and
marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Additional health reform measures may continue and affect our business in unknown ways, particularly given the recent change in administration. The current
administration is pursuing policies to reduce regulations and expenditures across government including at HHS, the FDA, CMS and related agencies. These actions,
presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for
our business. These actions may include, for example, directives to reduce agency workforce, rescinding a Biden administration executive order tasking the Center for
Medicare and Medicaid Innovation (“CMMI”) to consider new payment and healthcare models to limit drug spending and eliminating the Biden administration’s
executive order that directed HHS to establishing an AI task force and developing a strategic plan. Additionally, in its June 2024 decision in Loper Bright Enterprises v.
Raimondo (“Loper Bright”), the U.S. Supreme Court overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory
agencies’ reasonable interpretations of ambiguous federal statutes. The Loper Bright decision could result in additional legal challenges to current regulations and
guidance issued by federal agencies applicable to our operations, including those issued by the FDA. Congress may introduce and ultimately pass health care related
legislation that could impact the drug approval process and make changes to the Medicare Drug Price Negotiation Program created under the IRA.
The Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act ("FCPA"), prohibits any U.S. individual or business from paying, offering or authorizing payment or offering of anything of value,
directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the
individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting
provisions requiring the companies to maintain books and records that accurately and fairly reflect all transactions of the companies, including international
subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
Foreign Regulation
In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our
products to the extent we choose to develop or sell any products outside of the United States. The approval process varies from country to country and the time may
be longer or shorter than that required to obtain FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement
vary greatly from country to country.
Manufacturing, Supply and Production
We do not own or operate manufacturing facilities for the production of Jelmyto or our product candidates, nor do we have plans to develop our own manufacturing
operations in the foreseeable future. We currently rely on third-party contract manufacturers for all of our required raw materials, active ingredients and finished
products for Jelmyto and our nonclinical research and clinical trials. We have signed commercial supply agreements for Jelmyto with third-party vendors. We may
negotiate additional commercial supply agreements for our product candidates UGN-102, UGN-103, UGN-104, UGN-201 and UGN-301, or other back-up supply
agreements with other third-party manufacturers for the commercial production of any of our product candidates that receives regulatory approval.
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Development and commercial quantities of any products that we develop will need to be manufactured in facilities, and by processes, that comply with the
requirements of the FDA and the regulatory agencies of other jurisdictions in which we are seeking approval. We currently employ internal resources to manage our
manufacturing contractors. The relevant manufacturers of our drug products for our current nonclinical and clinical trials have advised us that they are compliant with
both current good laboratory practice ("cGLP"), and cGMP.
Our future product candidates, if approved, may not be producible in sufficient commercial quantities, in compliance with regulatory requirements or at an acceptable
cost. We and our contract manufacturers are, and will be, subject to extensive governmental regulation in connection with the manufacture of any pharmaceutical
products or medical devices. We and our contract manufacturers must ensure that all of the processes, methods and equipment are compliant with cGMP and cGLP for
drugs on an ongoing basis, as mandated by the FDA and foreign regulatory authorities, and conduct extensive audits of vendors, contract laboratories and suppliers.
Marketing, Sales and Distribution
Our U.S. subsidiary, UroGen Pharma, Inc., was formed to support our U.S. development and potential commercialization efforts. Our commercial management team is
comprised of experienced professionals in sales, sales operations, market access, marketing and medical affairs. In addition, we have established a customer-facing
team that includes territory business managers with deep experience in both urology and oncology. These territory business manager positions are led by eight regional
business director positions, who are in turn supported by eight regional operations manager positions. Each region is additionally supported by one to two clinical nurse
educators to provide education and training around instillation, as well as a field reimbursement manager to help ensure access and reimbursement for appropriate
patients and key account directors who engage with C-suite individuals to introduce a Jelmyto service line. In addition, our organization currently includes several
medical science liaisons who appropriately engage with physicians interested in learning more about UroGen, Jelmyto and our technology, both in person and virtually.
In total, our customer-facing team comprises approximately 100 representatives.
Our sales force is focused on promoting Jelmyto, and educating potential prescribers to identify patients, activate accounts and gain formulary access, as applicable. In
the event that we receive regulatory approvals for our products in markets outside of the United States, we intend, where appropriate, to pursue commercialization
relationships, including strategic alliances and licensing, with pharmaceutical companies and other strategic partners, which are equipped to market or sell our products
through their well-developed sales, marketing and distribution organizations in such countries.
In addition, we may out-license some or all of our worldwide patent rights to more than one party to achieve the fullest development, marketing and distribution of any
products we develop.
Employees
As of January 31, 2025, we had 235 employees worldwide, 195 in the United States and 40 in Israel, many of whom hold advanced degrees. None of our employees are
subject to a collective bargaining agreement. We have never experienced any employment-related work stoppages and consider our relationships with our
employees good.
Israeli labor laws govern the length of the workday and workweek, minimum wages for employees, procedures for hiring and dismissing employees, determination of
severance pay, annual leave, sick days, advance notice of termination, payments to the National Insurance Institute, and other conditions of employment and include
equal opportunity and anti-discrimination laws. While none of our employees is party to any collective bargaining agreements, certain provisions of the collective
bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the Coordination Bureau of Economic Organizations (including the
Industrialists’ Associations) are applicable to our employees in Israel by order of the Israeli Ministry of Economy and Industry. These provisions primarily concern
pension fund benefits for all employees, insurance for work-related accidents, recuperation pay and travel expenses. We generally provide our employees with benefits
and working conditions beyond the required minimums.
Corporate Information
Our legal and commercial name is UroGen Pharma Ltd., with registered offices at 9 Ha'Ta'asiya St., Ra'anana 4365007, Israel. We are a company organized under the
laws of State of Israel. We were formed in 2004 with an indefinite duration. We are registered with the Israeli Registrar of Companies. Our principal executive offices are
located at 400 Alexander Park Drive, 4th Floor, Princeton, NJ 08540. Our telephone number is (646)768-9780. Investors should contact us for any inquiries through the
address and telephone number of our principal executive office. We maintain a web site at www.urogen.com. The reference to our website is an inactive textual
reference only and the information contained in, or that can be accessed through, our website is not incorporated into this Annual Report.
We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other information with the SEC. Our filings with the SEC are
available free of charge on the SEC’s website at www.sec.gov and on our website under the “Investors & Media” tab as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC.
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Item 1A. Risk Factors
RISK FACTORS
An investment in our ordinary shares involves a high degree of risk. You should carefully consider all of the information set forth in this Annual Report and in our other
filings with the SEC, including the following risk factors which we face. Our business, financial condition or results of operations could be materially adversely affected by
any of these risks. This Annual Report also contains forward-looking statements that involve risks and uncertainties. Our results could materially differ from those
anticipated in these forward-looking statements, as a result of certain factors including the risks described below and elsewhere in this Annual Report. See “Special Note
Regarding Forward-Looking Statements” above.
Risks Related to Our Limited Operating History, Financial Condition and Capital Requirements
We have a limited operating history and have incurred significant losses and negative cash flows since our inception, and we anticipate that we will continue to
incur significant losses and negative cash flows for the foreseeable future, which makes it difficult to assess our future viability.
We are a biotechnology company with a limited operating history upon which you can evaluate our business and prospects. We are not profitable and have incurred net
losses in each period since we commenced operations in 2004, including net losses of $126.9 million and $102.2 million for the years ended December 31, 2024 and
2023, respectively. As of December 31, 2024, we had an accumulated deficit of $806.2 million. We expect to continue to incur significant expenses and operating losses
for the foreseeable future. Our ability to ultimately achieve recurring revenues and profitability is dependent upon our ability to successfully complete the development
of our product candidates and obtain necessary regulatory approvals for and successfully manufacture, market and commercialize our products.
We believe that we will continue to expend substantial resources in the foreseeable future for the clinical development of our current product candidates or any
additional product candidates and indications that we may choose to pursue in the future. These expenditures will include costs associated with research and
development, conducting nonclinical studies and clinical trials, and payments for third-party manufacturing and supply, as well as sales and marketing of any of our
product candidates that are approved for sale by regulatory agencies. Because the outcome of any clinical trial is highly uncertain, we cannot reasonably estimate the
actual amounts necessary to successfully complete the development and commercialization of our clinical-stage and nonclinical drug candidates and any other drug
candidates that we may develop in the future. Other unanticipated costs may also arise.
Our future capital requirements depend on many factors, including:
• the timing of, and the costs involved in, clinical development and obtaining regulatory approvals for our product candidates;
• changes in regulatory requirements during the development phase that can delay or force us to stop our activities related to any of our product candidates;
• the cost of commercialization activities for Jelmyto and any other products approved for sale, including marketing, sales and distribution costs;
• our degree of success in commercializing Jelmyto;
• the cost of third-party manufacturing of our products candidates and any approved products;
• the number and characteristics of any other product candidates we develop or acquire;
• our ability to establish and maintain strategic collaborations, licensing or other commercialization arrangements, and the terms and timing of such arrangements;
• the extent and rate of market acceptance of any approved products;
• the expenses needed to attract and retain skilled personnel;
• the costs associated with being a public company;
• the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent and other intellectual property claims, including potential litigation
costs, and the outcome of such litigation;
• the timing, receipt and amount of sales of, or royalties on, future approved products, if any;
• the repayment of outstanding debt;
• any product liability or other lawsuits related to our products or business arrangements;
• scientific breakthroughs in the field of urothelial cancer treatment and diagnosis that could significantly diminish the demand for our product candidates or make
them obsolete; and
• changes in reimbursement or other laws, regulations or policies that could have a negative impact on our future revenue stream.
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In addition, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered
by companies in new and rapidly evolving fields, particularly in the biotechnology industry. Drug development is a highly speculative undertaking and involves a
substantial degree of risk. To date, we have not obtained regulatory approval for or commercialized any product except Jelmyto.
We may require additional financing to fund our operations and achieve our goals, and a failure to obtain this capital when needed and on acceptable terms, or at
all, could force us to delay, limit, reduce or terminate our product development, commercialization efforts or other operations.
We are not profitable and have had negative cash flow from operations since our inception. Since our inception, almost all our resources have been dedicated to the
nonclinical and clinical development of our first commercial product, Jelmyto, and our lead product candidate UGN-102. As of December 31, 2024, we had cash and
cash equivalents and marketable securities of $241.7 million. To fund our operations and develop our product candidates and commercialize Jelmyto, we have relied
primarily on equity and debt financings and, following the launch of Jelmyto in June 2020, revenue generated from sales of Jelmyto.
In December 2019, we entered into a sales agreement (the “ATM Sales Agreement”) with TD Securities (USA) LLC (f/k/a Cowen and Company, LLC) (“TD Cowen”)
pursuant to which we may from time to time offer and sell our ordinary shares having an aggregate offering price of up to $100.0 million. As of December 31,
2024, $27.3 million remains available for sale under the ATM Sales Agreement.
In March 2021, we announced a transaction (the “RTW Transaction”) with RTW Investments ("RTW") totaling $75 million in funding for our company, which was
received in May 2021, to support the launch of Jelmyto and the development of UGN-102. In return for the upfront cash payment, RTW is entitled to receive tiered
future cash payments based on aggregate worldwide annual net product sales of Jelmyto and, subject to FDA approval, UGN-102, UGN-103 and UGN-104.
On March 7, 2022, UroGen Pharma Ltd., UroGen Pharma, Inc., as the borrower (the "Borrower"), and certain direct and indirect subsidiaries of the Company party
thereto from time to time, as guarantors ("Guarantors" and, collectively with UroGen Pharma Ltd. and Borrower, "Credit Parties"), entered into a loan agreement with
funds managed by Pharmakon, including BPCR Limited Partnership (as a "Lender"), BioPharma Credit Investments V (Master) LP (as a "Lender"), and BioPharma Credit
PLC, as collateral agent for the Lenders (in such capacity, "Collateral Agent"), pursuant to which the Lenders agreed to make term loans to the Borrower in an aggregate
principal amount of up to $100.0 million (the “Initial Term Loans”) to be funded in two tranches. The first tranche of $75.0 million ($72.6 million of proceeds were
received, $70.8 million net of additional transaction costs) was funded in March 2022, and the second tranche of $25.0 million was funded in December 2022.
On March 13, 2024, we entered into an amended and restated loan agreement with Pharmakon for an additional third and fourth tranche of senior secured loan. The
third tranche of $25.0 million was funded in September 2024. The fourth tranche of $75.0 million will become available at our option no later than August 29, 2025,
subject to (i) receiving FDA approval of an NDA for UGN-102 no later than June 30, 2025 and (ii) the satisfaction of customary bring down conditions and deliverables.
We may require additional capital to complete clinical trials, obtain regulatory approval for and commercialize our product candidates, and otherwise fund our
operations. Our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned,
through public or private equity financings, convertible debt or debt financings, third-party funding, marketing and distribution arrangements, as well as other
collaborations, strategic alliances and licensing arrangements, or a combination of these approaches. We may also require additional capital to pursue nonclinical and
clinical activities, and pursue regulatory approval for, and to commercialize, our pipeline product candidates.
Any additional fundraising efforts may divert the attention of our management from day-to-day activities, which may adversely affect our ability to develop and
commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on favorable terms, if at all.
Moreover, the terms of any financing may negatively impact the holdings or the rights of our shareholders, and the issuance of additional securities, whether equity or
debt, by us or the possibility of such issuance may cause the market price of our shares to decline. The incurrence of indebtedness could result in increased fixed
payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our
ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could
also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than would be desirable and we may be required to
relinquish rights to some of our technologies, intellectual property or product candidates or otherwise agree to terms unfavorable to us, any of which may harm our
business, financial condition, cash flows, operating results and prospects.
If adequate funds are not available to us on a timely basis, we may be required or choose to:
• delay, limit, reduce or terminate nonclinical studies, clinical trials or other development activities for our product candidates or any of our future product candidates;
• delay, limit, reduce or terminate our other research and development activities; or
• delay, limit, reduce or terminate our establishment or expansion of manufacturing, sales and marketing or distribution capabilities or other activities that may be
necessary to commercialize Jelmyto or any of our product candidates that obtain marketing approval.
We may also be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could harm our business, financial condition,
cash flows and results of operations.
Our indebtedness resulting from our loan agreement with Pharmakon could adversely affect our financial condition or restrict our future operations.
In March 2022, we entered into a loan agreement with Pharmakon pursuant to which the Lenders funded the Initial Term Loans to the Borrower in an aggregate
principal amount of $100.0 million in two tranches. In March of 2024, we amended and restated the loan agreement, pursuant to which the Lenders agreed to make
additional term loans to the Borrower in an aggregate principal amount of up to $100.0 million to be funded in two tranches. The third tranche of $25.0 million was
funded in September 2024. The fourth tranche of $75.0 million will become available at our option no later than August 29, 2025, subject to (i) receiving FDA approval
of an NDA for UGN-102 no later than June 30, 2025 and (ii) the satisfaction of customary bring down conditions and deliverables. There is no assurance that the
additional term loan will become available.
The obligations of the Borrower under the loan agreement with Pharmakon are guaranteed on a full and unconditional basis by UroGen Pharma Ltd. and the other
Guarantor and are secured by substantially all of the respective Credit Parties’ tangible and intangible assets and property, including intellectual property, subject to
certain exceptions.
The loan agreement contains negative covenants that, among other things and subject to certain exceptions, restrict our ability to:
• sell or dispose of assets, including certain intellectual property;
• amend, modify or waive certain agreements or organizational documents;
• consummate certain change in control transactions;
• incur certain additional indebtedness;
• incur any non-permitted lien or other encumbrance on the Credit Parties’ assets;
• pay dividends or make any distribution or payment on or redeem, retire or purchase any equity interests; and
• make payments of certain subordinated indebtedness.
In addition, we are required under the loan agreement to comply with various operating covenants and default clauses that may restrict our ability to finance our
operations, engage in business activities or expand or fully pursue our business strategies. A breach of any of these covenants or clauses could result in a default under
the loan agreement, which could cause all of the outstanding indebtedness under the facility to become immediately due and payable, including a make whole amount
and prepayment premium.
If we are unable to generate sufficient cash to repay our debt obligations when they become due and payable, we may not be able to obtain additional debt or equity
financing on favorable terms, if at all, which may negatively affect our business operations and financial condition.
Covenants under our Prepaid Forward Contract with RTW restrict our ability to borrow additional capital.
In March 2021, we entered into a Prepaid Forward Contract (the “Forward Contract”) with RTW, pursuant to which we are obligated to make tiered cash payments to
RTW, based on the worldwide annual net product sales of Jelmyto and, subject to FDA approval of UGN-102, UGN-103 and UGN-104 (together, the “Products”), subject
to an aggregate revenue cap of $300.0 million.
Until the earlier of such time that (i) our aggregate worldwide annual net product sales of the Products reach a certain threshold or (ii) our market capitalization reaches
a certain threshold, (a) we have granted RTW a security interest in the Products and the regulatory approvals, intellectual property, material agreements, proceeds and
accounts receivable related to the Products (the “Product Collateral”), (b) we are subject to a negative pledge in respect of the Product Collateral and (c) we may not
incur additional indebtedness secured by Product Collateral without such secured debt provider entering into a intercreditor agreement with RTW. Upon the
occurrence of an insolvency event, as defined in the Forward Contract, any remaining payment obligations under the Forward Contract will be automatically
accelerated.
The Forward Contract requires us to use a significant portion of our cash flow to make payments to RTW, limits our ability to borrow additional funds for working
capital, capital expenditures or other general business purposes, limits our flexibility to plan for, or react to, changes in our business and industry, places us at a
competitive disadvantage compared to our competitors not subject to similar restrictions and increases our vulnerability to the impact of adverse economic industry
conditions.
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Raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through equity, convertible debt or debt financings, as
well as selectively continuing to enter into collaborations, strategic alliances and licensing arrangements. Other than the fourth tranche that may become available
under the loan agreement with Pharmakon, we do not currently have any committed external source of funds. To the extent that we raise additional capital through the
sale of equity or convertible debt securities, including pursuant to the ATM Sales Agreement, your ownership interest in us will be diluted, and the terms of these
securities may include liquidation or other preferences that adversely affect your rights as an ordinary shareholder. Debt financing, if available, may involve agreements
that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring and
distributing dividends, and may be secured by all or a portion of our assets.
If we raise funds by selectively continuing to enter into additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to
relinquish additional valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not
be favorable to us. If we are unable to raise additional funds through equity, convertible debt or debt financings when needed, we may be required to delay, limit,
reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise
prefer to develop and market ourselves. If we are unable to raise additional funds through other collaborations, strategic alliances or licensing arrangements, we may
be required to terminate product development or future commercialization efforts or to cease operations altogether.
Risks Related to Our Business and Strategy
We are highly dependent on the successful commercialization of our only approved product, Jelmyto.
Jelmyto is our first product, which we commercially launched in the United States in June 2020. We have not commercialized any other product candidates. We have
invested significant efforts and financial resources in the research and development of Jelmyto. We are focusing a significant portion of our activities and resources on
Jelmyto, and we believe our prospects are highly dependent on, and a significant portion of the value of our company relates to, our ability to successfully
commercialize Jelmyto in the United States.
Successful commercialization of Jelmyto is subject to many risks. We initiated our commercial launch of Jelmyto in June 2020, and prior to that, we had never, as an
organization, launched or commercialized any product. There is no guarantee that our commercialization efforts will be successful, or that we will be able to
successfully launch and commercialize any other product candidates that receive regulatory approval. There are numerous examples of unsuccessful product launches
and failures to meet high expectations of market potential, including by pharmaceutical companies with more experience and resources than us. While we have
established our commercial team and have hired our U.S. sales force, we will need to maintain, further train and develop our team in order to be prepared to
successfully coordinate the ongoing commercialization of Jelmyto. Even if we are successful in maintaining and further developing our commercial team, there are many
factors that could cause the commercialization of Jelmyto to be unsuccessful, including a number of factors that are outside of our control. We must also properly
educate physicians and nurses on the skillful preparation and administration of Jelmyto, and develop a broad experiential knowledge base of aggregated clinician
feedback from which we can refine appropriate procedures for product administration, without which there could be a risk of adverse events.
Because no drug has previously been approved by the FDA for the treatment of low-grade UTUC, it is especially difficult to estimate Jelmyto’s market potential. The
commercial success of Jelmyto depends on the extent to which patients and physicians accept and adopt Jelmyto as a treatment for low-grade UTUC, and we do not
know whether our or others’ estimates in this regard will be accurate. For example, if the patient population suffering from low-grade UTUC is smaller than we estimate
or if physicians are unwilling to prescribe or patients are unwilling to be treated with Jelmyto due to label warnings, adverse events associated with product
administration or other reasons, the commercial potential of Jelmyto will be limited. Physicians may not prescribe Jelmyto and patients may be unwilling to be treated
with Jelmyto if coverage is not provided or reimbursement is inadequate to cover a significant portion of the cost. Additionally, any negative development for Jelmyto in
our post-marketing commitments, or in regulatory processes in other jurisdictions, may adversely impact the commercial results and potential of Jelmyto. Thus,
significant uncertainty remains regarding the commercial potential of Jelmyto.
In addition, our commercialization efforts for Jelmyto could be hindered by pandemics, epidemics or public health emergencies.
If Jelmyto sales do not meet expectations, our share price could decline significantly and the long-term success of the product and our company could be harmed.
Jelmyto has only been studied in a limited number of patients and in limited populations. Jelmyto is now available to a much larger number of patients and to a
broader population, and we do not know whether the results of Jelmyto use in this larger number of patients and broader populations will be consistent with the
results from our clinical studies.
Jelmyto has been administered only to a limited number of patients and in limited populations in clinical studies, including our positive pivotal Phase 3 OLYMPUS clinical
trial for the treatment of adult patients with low-grade UTUC. While the FDA granted approval of Jelmyto based on the data included in the NDA, including data from
the Phase 3 OLYMPUS clinical trial, and we have subsequently presented new long-term data from the OLYMPUS trial, we do not know whether the results when a
larger number of patients and a broader population are exposed to Jelmyto, including results related to safety and efficacy, will be consistent with the results from
earlier clinical studies of Jelmyto that served as the basis for the approval of Jelmyto. New data relating to Jelmyto, including from spontaneous adverse event reports
and post-marketing studies in the United States, other ongoing clinical studies and the ongoing uTRACT Jelmyto Registry to evaluate real world experience and
outcomes of patients with low-grade UTUC treated with Jelmyto in the United States may result in changes to the product label and may adversely affect sales, or result
in withdrawal of Jelmyto from the market. The FDA and regulatory authorities in other jurisdictions may also consider the new data in reviewing potential marketing
applications in other jurisdictions, or imposing post‑approval requirements. If any of these actions were to occur, it could result in significant expense and delay or limit
our ability to generate sales revenues.
We have limited experience as an organization in marketing and distributing products and are therefore subject to certain risks in relation to the commercialization
of Jelmyto and any of our product candidates that receive regulatory approval.
Our strategy is to build and maintain a fully integrated biotechnology company to successfully execute the commercialization of Jelmyto in the United States. Jelmyto is
our only product that has been approved for sale by any regulatory body, and it became available in the United States in June 2020. While we have established a
commercial management team and have also established a field-based organization comprised of a sales team, reimbursement support team, clinical nurse educators,
national account managers and medical science liaisons, we currently have limited experience commercializing pharmaceutical products as an organization. In order to
successfully commercialize Jelmyto, we must continue to develop our sales, marketing, managerial, compliance and related capabilities or make arrangements with
third parties to perform these services. This involves many challenges, such as recruiting and retaining talented personnel, training employees, setting the appropriate
system of incentives, managing additional headcount and integrating new business units into an existing corporate infrastructure. These efforts will continue to be
expensive and time-consuming, and we cannot be certain that we will be able to successfully further develop these capabilities. Additionally, we will need to maintain
and further develop our sales force, and we will be competing with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and
sales personnel. In the event we are unable to effectively develop and maintain our commercial team, including our sales force, our ability to effectively commercialize
Jelmyto would be limited, and we would not be able to generate product revenues successfully. If we fail to establish and maintain an effective sales and marketing
infrastructure, we will be unable to successfully commercialize our product candidates, which in turn would have an adverse effect on our business, financial condition
and results of operations.
If we are unable to effectively train and equip our sales force, our ability to successfully commercialize Jelmyto and any future product candidates will be harmed.
Our sales force has only promoted Jelmyto since its launch in June 2020. In addition, Jelmyto is the first drug approved by the FDA for the treatment of low-grade UTUC.
As a result, we are and will continue to be required to expend significant time and resources to train our sales force to be credible, persuasive, and compliant with
applicable laws in marketing Jelmyto for the treatment of low-grade UTUC to physicians and nurses. In addition, we must train our sales force to ensure that a
consistent and appropriate message about Jelmyto is being delivered to our customers. We generally manage and deploy our sales force by geographic coverage across
the United States. Open coverage due to turnover of personnel, and/or inability to identify and integrate additional personnel would have a negative impact on our
ability to engage with physicians and other stakeholders. If we are unable to effectively train, deploy and retain our sales force and equip them with effective materials,
including medical and sales literature to help them inform and educate customers about the benefits and risks of Jelmyto, any future product candidates, and
their proper administration, our efforts to successfully commercialize Jelmyto and any future product candidates could be put in jeopardy, which would negatively
impact our ability to generate product revenues.
There can be no assurance that our sales force will continue to have in-person access to physicians as a result of pandemics, epidemics or public health emergencies, or
that digital materials and virtual engagement will be effective at growing and sustaining prescription levels of Jelmyto. Disruptions in the prescription volume of Jelmyto
could also occur:
• if patients are physically quarantined or are unable or unwilling to visit healthcare providers;
• if physicians restrict access to their facilities for a material period of time;
• if healthcare providers prioritize treatment of acute or communicable illnesses over treatment of low-grade UTUC;
• if pharmacies are closed or suffering staff shortages or supply chain disruptions;
• if patients lose access to employer-sponsored health insurance due to periods of high unemployment; or
• as a result of general disruptions in the operations of payors, distributors, logistics providers and other third parties that are necessary for Jelmyto to be prescribed,
reconstituted, instilled and reimbursed.
The market opportunities for Jelmyto and our product candidates may be smaller than we anticipate or limited to those patients who are ineligible for established
therapies or for whom prior therapies have failed and may be small.
Cancer therapies are sometimes characterized as first-line, second-line or third-line. When cancer is detected early enough, first-line therapy, often chemotherapy,
hormone therapy, surgery, radiotherapy or a combination of these, is sometimes adequate to cure the cancer or prolong life. Second- and third-line therapies are
administered to patients when prior therapy is not or is no longer effective. For urothelial cancers, the current first-line standard of care is surgery designed to remove
one or more tumors. Chemotherapy is currently used in treating urothelial cancer only as an adjuvant, or supplemental therapy, after tumor resection. We are designing
our lead product candidate UGN-102 as an alternative to surgery as the standard of care for certain urothelial cancers. However, there is no guarantee that this product
candidate will be approved or that we will not have to conduct additional clinical trials. Even if approved, the market opportunity for UGN-102 may be smaller than we
anticipate or limited to those patients who are ineligible for established therapies or for whom prior therapies have failed. Our other or future product candidates,
including UGN-103, UGN-104, UGN-201 and UGN-301, may face similar risks.
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Our projections of both the number of people who have the cancers we are targeting, as well as the subset of people with these cancers who have previously failed
prior treatments, and who have the potential to benefit from treatment with our product candidates, are based on our beliefs and estimates. These estimates have
been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations or third-party market research, and may prove to be
incorrect. Further, new studies may change the estimated incidence or prevalence of these cancers and the number of patients may turn out to be lower than expected.
Additionally, the potentially addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product
candidates. For instance, our pivotal Phase 3 OLYMPUS clinical trial for Jelmyto was designed to evaluate the use of Jelmyto for the treatment of tumors in the renal
pelvis (the funnel-like dilated part of the ureter in the kidney) and was not designed to evaluate the use of Jelmyto for the treatment of tumors in the ureter (the tube
that connects the kidneys to the bladder). Even though Jelmyto is approved for the treatment of low-grade UTUC, some physicians have chosen, and physicians may
choose in the future, to only use it to treat tumors in the renal pelvis and not tumors in the ureter, which would limit the degree of physician adoption and market
acceptance of Jelmyto. Even if we obtain significant market share, because the potential target populations are small, we may never achieve profitability without
obtaining regulatory approval for additional indications, including the use of the products as first- or second-line therapy. For example, low-grade UTUC is a rare
malignant tumor of the cells lining the urinary tract and there is limited scientific literature or other research on the incidence and prevalence of low-grade UTUC. If our
estimates of the incidence and prevalence of low-grade UTUC are incorrect, Jelmyto’s commercial viability may prove to be limited, which may negatively affect our
financial results.
Jelmyto and any of our product candidates that receive regulatory approval may fail to achieve the broad degree of physician adoption and use and market
acceptance necessary for commercial success.
The commercial success of Jelmyto and any other product candidates that receive regulatory approval will depend significantly on their broad adoption and use by
physicians for approved indications, including, in the case of Jelmyto, for the treatment of low-grade UTUC, and in the case of UGN-102, for the treatment of low-grade
intermediate risk NMIBC, and for other therapeutic indications that we may seek to pursue with any of our product candidates. Physicians treating low-grade UTUC and
low-grade intermediate risk NMIBC have never had to consider treatments other than surgery. The degree and rate of physician and patient adoption of Jelmyto, UGN-
102 or any of our other product candidates, if approved, will depend on a number of factors, including:
• the clinical indications for which the product is approved;
• the safety and efficacy data from the clinical trial(s) supporting the approved clinical indications;
• the approved labeling and packaging for our products, including the degree of product preparation and administration convenience and ease of use that is afforded
to physicians by the approved labeling and product packaging;
• the prevalence and severity of adverse side effects and the level of benefit/risk observed in our clinical trials;
• sufficient patient satisfaction with the results and administration of our products and overall treatment experience, including relative convenience, ease of use and
avoidance of, or reduction in, adverse side effects;
• the extent to which physicians recommend our products to patients;
• physicians’ and patients’ willingness to adopt new therapies in lieu of other products or treatments, including willingness to adopt Jelmyto, and our lead product
candidate UGN-102 as locally-administered drug replacements to current surgical standards of care;
• the cost of treatment, safety and efficacy of our products in relation to alternative treatments, including the recurrence rate of our treatments;
• the extent to which the costs of our products are covered and reimbursed by third-party payors, including the availability of a physician reimbursement code for our
treatments, and patients’ willingness to pay for our products;
• whether treatment with our products, including the treatment of low-grade UTUC with Jelmyto and the treatment of low-grade intermediate risk NMIBC with UGN-
102, if approved, will be deemed to be an elective procedure by third- party payors; if so, the cost of treatment would be borne by the patient and would be less
likely to be broadly adopted;
• proper education of physicians or nurses for the skillful administration of our approved product, Jelmyto, and UGN-102, if approved, and development of a broad
experiential knowledge base of aggregated clinician feedback from which we can refine appropriate procedures for product administration, without which there
could be a risk of adverse events;
• the effectiveness of our sales and marketing efforts, especially the success of any targeted marketing efforts directed toward physicians and clinics and any direct-to-
consumer marketing efforts we may initiate; and
• third-party clinical practice guidelines.
If Jelmyto, UGN-102 or any of our other product candidates are approved for use but fail to achieve the broad degree of physician adoption and market acceptance
necessary for commercial success, our operating results and financial condition would be adversely affected.
Jelmyto and our product candidates, if approved, will face significant competition with competing technologies and our failure to compete effectively may prevent
us from achieving significant market penetration.
The biotechnology industry is intensely competitive and subject to rapid and significant technological change. Our potential competitors include large and experienced
companies that enjoy significant competitive advantages over us, such as greater financial, research and development, manufacturing, personnel and marketing
resources, greater brand recognition and more experience and expertise in obtaining marketing approvals from the FDA and foreign regulatory authorities. These
companies may develop new drugs to treat the indications that we target or seek to have existing drugs approved for use for the treatment of the indications that we
target.
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We are aware of several pharmaceutical companies that are developing drugs in the general fields of urology and uro-oncology, such as AADi LLC, Aura Biosciences, Inc.,
Biocancell Ltd., Bristol Myers Squibb, CG Oncology Inc., enGene Holdings, Ferring Pharmaceuticals, FKD Therapies Oy, GSK, ImmunityBio, ImPact Biotech Ltd., Johnson &
Johnson, LIPAC Oncology, Merck Sharp & Dohme Corp, Pfizer, Prokarium, Protara Therapeutics, Roche, Samyang Biopharma, SURGE Therapeutics, Tyra Biosciences,
Viralytics Limited and Vyriad. We are aware that Ferring Pharmaceuticals is marketing Adstiladrin, approved by the FDA for the treatment of high-risk BCG-unresponsive
NMIBC, and that in 2024 the FDA approved ImmunityBio's product ANKTIVA for the treatment of BCG-unresponsive NMIBC with CIS, with or without papillary tumors.
We are also aware there are companies among this list conducting clinical trials in various phases in the same indications in which we are developing products. In
addition, we received from Teva a Paragraph IV Certification Notice Letter in February 2024, providing notification that Teva has submitted an ANDA to the FDA seeking
approval to manufacture, use or sell a generic version of Jelmyto. In the Notice Letter, Teva alleges that two of the patents listed in the FDA Orange Book for Jelmyto,
U.S. Patent Numbers 9,040,074 and 9,950,069, each of which expires in January 2031, are invalid, unenforceable, or will not be infringed by Teva’s manufacture, use, or
sale of the generic product described in its ANDA submission. See Part I, Item 3. “Legal Proceedings” for additional discussion. If we are unable to maintain patent
protection for Jelmyto, Jelmyto may be subject to immediate competition from FDA approved generic entrants after orphan drug exclusivity for Jelmyto expires in April
2027.
Additionally, outside of these indications where we are developing products, we are aware of other companies doing work in both bladder and upper tract cancers, but
these are with agents or on targets in high-grade, metastatic, or muscle invasive cancers. Competition may increase further as a result of advances in the commercial
applicability of technologies and greater availability of capital for investment in this industry. Our competitors may succeed in developing, acquiring or licensing
products that are more effective, easier to administer or less costly than our product candidates.
In addition, we face competition from existing standards of treatment, surgical tumor resection procedures. If we are not able to demonstrate that our product
candidates are at least as safe and effective as such courses of treatment, medical professionals may not adopt our product candidates in replacement of the existing
standard of care. Generic mitomycin injectable drug products, while approved by FDA for gastric and pancreatic cancers, are neither approved for low-grade UTUC nor
reconstituted with hydrogel in an FDA-approved product as Jelmyto is, although they may be used off-label by physicians for the treatment of low-grade UTUC, as they
have been prior to the approval of Jelmyto.
Our ability to market Jelmyto and any of our product candidates that receive marketing approval is and will be limited to certain indications. If we want to expand
the indications for which we may market our products, we will need to obtain additional regulatory approvals, which may not be granted.
Jelmyto is indicated for adult patients with low-grade UTUC. We are currently developing UGN-102, UGN-103, UGN-104, UGN-201 and UGN-301 for the treatment of
various forms of urothelial cancer. The FDA and other applicable regulatory agencies will restrict our ability to market or advertise our products to the scope of the
approved label for the applicable product and for no other indications, which could limit physician and patient adoption. We may attempt to develop and, if approved,
promote and commercialize new treatment indications for our products in the future, but we cannot predict when or if we will receive the regulatory approvals
required to do so. Failure to receive such approvals will prevent us from promoting or commercializing new treatment indications. In addition, we would be required to
conduct additional clinical trials or studies to support approvals for additional indications, which would be time consuming and expensive, and may produce results that
do not support regulatory approvals. If we do not obtain additional regulatory approvals, our ability to expand our business will be limited.
If we are found to have improperly promoted off-label uses of Jelmyto or any of our product candidates that receive regulatory approval, or if physicians misuse our
products, we may become subject to prohibitions on the sale or marketing of our products, significant sanctions, and product liability claims, and our image and
reputation within the industry and marketplace could be harmed.
The FDA and other regulatory agencies strictly regulate the marketing and promotional claims that are made about drug products. In particular, a product may not be
promoted for uses or indications that are not approved by the FDA or such other regulatory agencies as reflected in the product’s approved labeling and may not be
promoted based on overstated efficacy or omission of important safety information. For example, we cannot promote the use of our product Jelmyto in a manner that
is inconsistent with the approved label, but we are permitted to share truthful and non-misleading information that is otherwise consistent with the product’s FDA
approved labeling. However, physicians are able, in their independent medical judgment, to use Jelmyto on their patients in an off-label manner, such as for the
treatment of other urology indications. If we are found to have promoted such off-label uses, we may receive warning letters and become subject to significant liability,
which would harm our business. The federal government has levied large administrative, civil and criminal fines against companies for alleged improper promotion and
has enjoined several companies from engaging in off-label promotion. If we become the target of such an investigation or prosecution based on our marketing and
promotional practices, we could face similar sanctions, which would harm our business. In addition, management’s attention could be diverted from our business
operations, significant legal expenses could be incurred, and our reputation could be damaged. The FDA has also requested that companies enter into consent decrees
or permanent injunctions under which specified promotional conduct is changed or curtailed. If we are deemed by the FDA to have engaged in the promotion of our
products for off-label use, we could be subject to prohibitions on the sale or marketing of our products or significant fines and penalties, and the imposition of these
sanctions could also affect our reputation with physicians, patients and caregivers, and our position within the industry.
Physicians may also misuse our products or use improper techniques, potentially leading to adverse results, side effects or injury, which may lead to product liability
claims. If our products are misused or used with improper technique, we may become subject to costly litigation. Product liability claims could divert management’s
attention from our core business, be expensive to defend, and result in sizable damage awards against us that may not be covered by insurance. We currently carry
product liability insurance covering our clinical trials with policy limits that we believe are customary for similarly situated companies and adequate to provide us with
coverage for foreseeable risks. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an
amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. In addition, while we have established
product liability insurance relating to our commercialization of Jelmyto, there can be no assurance that we will be able to maintain this insurance on commercially
reasonable terms or that this insurance will be sufficient. Furthermore, the use of our products for conditions other than those approved by the FDA may not effectively
treat such conditions, which could harm our reputation in the marketplace among physicians and patients.
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In addition to Jelmyto, we are dependent on the success of our lead product candidate, UGN-102, and our other product candidates, including obtaining regulatory
approval to market our product candidates in the United States.
The research, development, testing, manufacturing, labeling, packaging, approval, promotion, advertising, storage, recordkeeping, marketing, distribution, post-
approval monitoring and reporting, and export and import of drug products are subject to extensive regulation by the FDA and by foreign regulatory authorities. These
regulations differ from country to country. To gain approval to market our product candidates, we must provide clinical data that adequately demonstrate the safety and
efficacy of the product for the intended indication. Other than Jelmyto, all of our product candidates, including our lead product candidate, UGN-102, remain in clinical
development and have not yet received regulatory approval from the FDA or any other regulatory agency in the United States or any other country. Our business
depends upon obtaining these regulatory approvals. There are no drugs that have been approved by the FDA for the primary treatment of low-grade intermediate risk
NMIBC, and only a limited number of drugs have been approved by the FDA as adjuvant treatment for BCG unresponsive NMIBC. The FDA can delay, limit or deny
approval of our product candidates for many reasons.
While the FDA accepted our NDA for UGN-102 in October 2024, there is no guarantee that the FDA will eventually approve UGN-102 for the indication and patient
population that we request or approve the labeling that we believe is necessary or desirable for the successful commercialization of UGN-102, as the FDA has the
authority to refuse to approve NDAs for a variety of reasons. Additionally, the FDA or other comparable foreign regulatory authorities may also require a panel of
experts, referred to as an advisory committee, to deliberate on the adequacy of the safety and efficacy data to support approval of UGN-102. We currently anticipate
that the FDA will require an advisory committee for UGN-102. The opinion of the advisory committee, although not binding, may have a significant impact on our ability
to obtain approval for UGN-102 based on the completed clinical trials, as the FDA or comparable foreign regulatory authorities often adheres to the advisory
committee’s recommendations. However, even if the advisory committee provides a positive recommendation, there is no guarantee that the FDA will follow the
advisory committee’s recommendations and there are numerous examples of the FDA departing from the recommendations of its advisory committee. Accordingly, the
regulatory approval pathway for our product candidates may be uncertain, complex, expensive and lengthy, and approval may not be obtained.
The success of our product candidates is subject to significant risks and uncertainties, including risks associated with successfully completing current and future clinical
trials, such as:
• the FDA’s acceptance of our parameters for regulatory approval relating to UGN-102 and our other product candidates, including our proposed indications, primary
and secondary endpoint assessments and measurements, safety evaluations and regulatory pathways, and proposed labeling and packaging;
• our ability to successfully complete the FDA requirements related to CMC, for UGN-102 and our other product candidates, and if completed, their sufficiency to
support an NDA;
• the FDA’s timely acceptance of our INDs, for our product candidates and our inability to commence clinical trials in the United States without such IND acceptances;
• the FDA’s acceptance of the design, size, conduct and implementation of our clinical trials, our trial protocols and the interpretation of data from nonclinical studies
or clinical trials;
• the FDA’s acceptance of the population studied in our clinical trials being sufficiently large, broad and representative to assess efficacy and safety in the patient
population for which we seek approval;
• our ability to successfully complete the clinical trials of our product candidates, including timely patient enrollment and acceptable safety and efficacy data and our
ability to demonstrate the safety and efficacy of the product candidates undergoing such clinical trials;
• our ability to demonstrate meaningful clinical or other benefits which outweigh any safety or other perceived risks, through the completion of our clinical trials for
our product candidates;
• the FDA’s decision to schedule an advisory committee meeting, and to conduct such meeting, in a timely manner to evaluate and make a recommendation
regarding our NDA for UGN-102;
• the outcome of an advisory committee meeting remains uncertain and it is possible that the advisory committee will have an adverse or split recommendation with
respect to our application to market UGN-102 or our other product candidates in the United States;
• if applicable, even if FDA’s advisory committee recommends approval of our applications to market UGN-102 and our other product candidates in the United States,
without limiting the approved labeling, specifications, distribution or use of the products, or imposing other restrictions, the FDA is not bound by the advisory
committee’s recommendation and there are a number of instances where the FDA has voted against the recommendations of advisory committees;
• the FDA’s determination of safety and efficacy of our product candidates;
• the FDA’s determination that the Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act ("FDCA") regulatory pathway (“505(b)(2)”) is available for our
product candidates;
• the prevalence and severity of adverse events associated with our product candidates, including UGN-102, as there are no drugs and related drug administration
procedures approved for the primary treatment of low-grade NMIBC, that are based on RTGel technology;
• the timely and satisfactory performance by third-party contractors of their obligations in relation to our clinical trials;
• our success in educating physicians and patients about the benefits, risks, administration and use of our product candidates, if approved, particularly in light of the
fact that there are no drugs that have been approved by the FDA for the primary treatment of low-grade NMIBC, and only a limited number of drugs have been
approved by the FDA as adjuvant treatment for high-grade NMIBC;
• the availability, perceived advantages, relative cost, safety and efficacy of alternative and competing treatments for the indications addressed by our product
candidates;
• the effectiveness of our marketing, sales and distribution strategy, and operations, as well as that of any current and future licensees;
• the FDA’s acceptance of the quality of our drug substance or drug product, formulation, labeling, packaging, or the specifications of our product candidates is
sufficient for approval;
• our ability to develop, validate and maintain a commercially viable manufacturing process that is compliant with cGMP;
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• the FDA’s acceptance of the manufacturing processes or facilities of third-party manufacturers with which we contract;
• our ability to secure supplies for our product candidates to support clinical trials and commercial use;
• our ability to manufacture or secure active ingredient, RTGel hydrogel, and finished product from third-party suppliers for product candidates, including UGN-102,
UGN-103, UGN-104, UGN-201 and UGN-301, if approved;
• our ability to obtain, maintain, protect and enforce our intellectual property rights with respect to our product candidates;
• the extent to which the costs of our products, once approved, are covered and reimbursed by third-party payors, including the availability of a physician
reimbursement code for our treatments, and patients’ willingness to pay for our products; and
• our ability to properly train physicians or nurses for the skillful preparation and administration of any of our product candidates that receive approval, including
UGN-102, and our ability to develop a broad experiential knowledge base of aggregated clinician feedback from which we can refine appropriate procedures for
product administration, without which there could be a risk of adverse events.
Many of these clinical, regulatory and commercial risks are beyond our control. Further, these risks and uncertainties impact all of our clinical programs that we pursue
and may be amplified by pandemics, epidemics or public health emergencies, as described below. Accordingly, we cannot assure you that we will be able to advance
any more of our product candidates through clinical development, or to obtain additional regulatory approval of any of our product candidates. To the extent we seek
regulatory approval in foreign countries, we may face challenges similar to those described above with regulatory authorities in applicable jurisdictions. Any delay in
obtaining, or inability to obtain, applicable regulatory approval for any of our product candidates would delay or prevent commercialization of our product candidates
and would thus negatively impact our business, results of operations and prospects. Even if we receive approval of any of the product candidates in our pipeline or
future product candidates, there is no assurance that we will be able to successfully commercialize any of them.
The data from our pivotal Phase 3 ENVISION trial and supporting ATLAS and OPTIMA II trials may be insufficient to support regulatory approval of UGN-102.
On July 27, 2023, we announced that UGN-102 met its primary endpoints in the Phase 3 ATLAS and ENVISION trials. Additionally, on June 13, 2024, we announced
positive secondary endpoint DOR data from the Phase 3 ENVISION trial. The primary and secondary endpoints data from the ENVISION trial (and the other clinical trial
data contained in NDA submission) may not be sufficient to satisfy the regulatory threshold for approval, or we may receive other data that negatively impacts the
efficacy and safety profile of UGN-102.
Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and
are subject to audit and verification procedures that could result in material changes in the final data.
From time to time, we may publicly disclose preliminary, interim or topline data from our clinical trials. These interim updates are based on a preliminary analysis of
then-available data, and the results and related findings and conclusions are subject to change as patient data become available and following a more comprehensive
review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we
may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that we report may differ from future results of the
same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain
subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result,
topline data should be viewed with caution until the final data are available. In addition, we may report interim analyses of only certain endpoints rather than all
endpoints. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient
enrollment continues and more patient data become available. In particular, interim data may reflect small sample sizes, be subject to substantial variability and may
not be indicative of either future interim results or final results. Publications based on interim data may differ from FDA approved product labeling. Adverse changes
between interim data and final data could significantly harm our business and prospects. Further, additional disclosure of interim data by us or by our competitors in
the future could result in volatility in the price of our ordinary shares.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh
the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate
or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is typically selected from
a more extensive amount of available information. Furthermore, we may report interim analyses of only certain endpoints rather than all endpoints. You or others may
not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose
may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product, product candidate or
our business. If the preliminary or topline data that we report differ from late, final or actual results, or if others, including regulatory authorities, disagree with the
conclusions reached, our ability to obtain approval for, and commercialize, UGN-102 or any other investigational product candidate may be harmed, which could harm
our business, financial condition, results of operations and prospects.
We have limited experience in conducting clinical trials and obtaining approval for product candidates and may be unable to do so successfully.
As a company, we have limited experience in conducting clinical trials and have progressed only one product candidate through to regulatory approval. In part because
of this lack of experience, our clinical trials may require more time and incur greater costs than we anticipate. We cannot be certain that the planned clinical trials will
begin or conclude on time, if at all. Large-scale trials will require significant additional financial and management resources. Third-party clinical investigators do not
operate under our control. Any performance failure on the part of such third parties could delay the clinical development of our product candidates or delay or prevent
us from obtaining regulatory approval or commercializing our current or future product candidates, depriving us of potential product revenue and resulting in additional
losses.
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We have not yet completed submission of our NDA for certain product candidates in our pipeline, and we may be delayed in obtaining or fail to obtain such
regulatory approvals and to commercialize our product candidates.
The process of developing, obtaining regulatory approval for and commercializing our product candidates is long, complex, costly and uncertain, and delays or failure
can occur at any stage. The research, testing, manufacturing, labeling, marketing, sale and distribution of drugs are subject to extensive and rigorous regulation by the
FDA and foreign regulatory agencies, as applicable. These regulations are agency-specific and differ by jurisdiction. We are not permitted to market any product
candidate in the United States until we receive approval of an NDA from the FDA, or in any foreign countries until we receive the requisite approval from the respective
regulatory agencies in such countries. To gain approval of an NDA or other equivalent regulatory approval, we must provide the FDA or relevant foreign regulatory
authority with nonclinical and clinical data that demonstrates the safety and efficacy of the product for the intended indication.
Before we can submit an NDA to the FDA or comparable similar applications to foreign regulatory authorities, we must conduct Phase 3 clinical trials, or a
pivotal/registration trial equivalent, for each product candidate. After submission of an NDA, the FDA may raise additional questions on any data contained in the
application. These questions may come in the form of information requests or in the NDA 74-day letter as review issues. We must address these questions during the
review, but we do not know whether our responses will be acceptable to the FDA. We cannot assure you that the FDA will not decide to require us to perform
additional clinical trials, including potentially requiring us to perform an additional pivotal study with a control arm, before approving, or as a condition of approving,
NDAs for our product candidates.
Phase 3 clinical trials often produce unsatisfactory results even though prior clinical trials were successful. Moreover, the results of clinical trials may be unsatisfactory
to the FDA or foreign regulatory authorities even if we believe those clinical trials to be successful. The FDA or applicable foreign regulatory agencies may suspend one
or all of our clinical trials or require that we conduct additional clinical, nonclinical, manufacturing, validation or drug product quality studies and submit that data
before considering or reconsidering any NDA or comparable foreign regulatory application that we may submit. Depending on the extent of these additional studies,
approval of any applications that we submit may be significantly delayed or may cause the termination of such programs or may require us to expend more resources
than we have available.
If any of these outcomes occur, we may not receive regulatory approval for the corresponding product candidates, and our business would not be able to generate
revenue from the sale of any such product candidates.
Changes in funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new
products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal functions on which
the operation of our business may rely, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and
retain key personnel and accept payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years
as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and
development activities is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which
would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as
the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown occurs, it
could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue
our operations.
We may not be able to advance our nonclinical product candidates into clinical development and through regulatory approval and commercialization.
Certain of our product candidates are currently in nonclinical development and are therefore currently subject to the risks associated with nonclinical development,
including the risks associated with:
• generating adequate and sufficient nonclinical safety and efficacy data in a timely fashion to support the initiation of clinical trials;
• obtaining regulatory approval to commence clinical trials in any jurisdiction, including the submission and acceptance of INDs;
• contracting with the necessary parties to conduct a clinical trial;
• enrolling sufficient numbers of patients in clinical trials in timely fashion, if at all; and
• timely manufacture of sufficient quantities of the product candidate for use in clinical trials.
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These risks and uncertainties impact all of our nonclinical programs that we pursue. If we are unsuccessful in advancing our nonclinical product candidates into clinical
trials in a timely fashion, our business may be harmed. Even if we are successful in advancing our nonclinical product candidates into clinical development, their success
will be subject to all of the clinical, regulatory and commercial risks described elsewhere in this Annual Report and our other filings with the SEC. Accordingly, we cannot
assure you that we will be able to develop, obtain regulatory approval for, commercialize or generate significant revenue from our product candidates.
Clinical drug development involves a lengthy and expensive process with an uncertain outcome, results of earlier studies and trials may not be predictive of future
trial results, and our clinical trials may fail to adequately demonstrate the safety and efficacy of our product candidates.
Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. A failure of one or more of our clinical trials can occur at any
time during the clinical trial process. We do not know whether our ongoing and future clinical trials, if any, will begin on time, need to be redesigned, enroll an
adequate number of patients on time or be completed on schedule, if at all. Clinical trials can be delayed, suspended or terminated for a variety of reasons, including
failure to:
• generate sufficient nonclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials;
• obtain regulatory approval or feedback on trial design, in order to commence a trial;
• identify, recruit and train suitable clinical investigators;
• reach agreement on acceptable terms with prospective contract research organizations ("CROs") and clinical trial sites, and have such CROs and sites effect the
proper and timely conduct of our clinical trials;
• obtain and maintain institutional review board ("IRB") approval at each clinical trial site;
• identify, recruit, enroll and retain suitable patients to participate in a trial;
• have a sufficient number of patients enrolled, complete a trial or return for post-treatment follow-up;
• ensure clinical investigators and clinical trial sites observe trial protocol or continue to participate in a trial;
• address any patient safety concerns that arise during the course of a trial;
• address any conflicts with new or existing laws or regulations;
• add a sufficient number of clinical trial sites;
• manufacture sufficient quantities at the required quality of product candidate for use in clinical trials; or
• raise sufficient capital to fund a trial.
Patient enrollment is a significant factor in the timing and success of clinical trials and is affected by many factors, including the size and nature of the patient
population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and
patients’ or caregivers’ perceptions as to the potential advantages of the drug candidate being studied in relation to other available therapies, including any new drugs
or treatments that may be developed or approved for the indications we are investigating.
We may also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by the trial’s
data safety monitoring board, by the FDA or by the applicable foreign regulatory authorities. Such authorities may suspend or terminate one or more of our clinical
trials due to a number of factors, including our failure to conduct the clinical trial in accordance with relevant regulatory requirements or clinical protocols, inspection of
the clinical trial operations or trial site by the FDA or foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side
effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the
clinical trial.
If we experience delays in carrying out or completing any clinical trial of our product candidates, the commercial prospects of our product candidates may be harmed,
and our ability to generate product revenues from any of these product candidates will be delayed.
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In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our
ability to commence product sales and generate revenues. Any of these occurrences may significantly harm our business and financial condition. In addition, many of
the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our
product candidates.
Jelmyto or any of our product candidates may produce undesirable side effects that we may not have detected in our previous nonclinical studies and clinical trials
or that are not expected with mitomycin treatment or inconsistent with catheter administration procedures. This could prevent us from gaining marketing approval
or market acceptance for these product candidates, or from maintaining such approval and acceptance, and could substantially increase commercialization costs
and even force us to cease operations.
As with most pharmaceutical products, Jelmyto and our product candidates may be associated with side effects or adverse events that can vary in severity and
frequency. Side effects or adverse events associated with the use of Jelmyto or any of our product candidates, including UGN-102, may be observed at any time,
including in clinical trials or after a product is commercialized, and any such side effects or adverse events may negatively affect our ability to obtain regulatory approval
or market our product candidates. To date, in our nonclinical testing, Compassionate Use Program for Jelmyto, clinical trials and post-marketing experience, we have
observed several adverse events and SAEs, including ureteric obstruction, ureteral stenosis, inhibition of urine flow, rash, flank pain, kidney swelling, kidney infection,
renal dysfunction, hematuria, fatigue, nausea, abdominal pain, dysuria, vomiting, urinary tract infection, urgency in urination and pain during urination. In addition, we
have observed transient perturbation of laboratory measures of renal and hematopoietic function. These adverse events are known mitomycin or procedure-related
adverse events and many are indicated as potential side effects of mitomycin usage on the mitomycin label. However, we cannot assure you that we will not observe
additional drug or procedure-related adverse events or SAEs in the future or that the FDA will not determine them as such. Side effects such as toxicity or other safety
issues associated with the use of Jelmyto or our product candidates could require us to perform additional studies or halt development or sale of Jelmyto or our product
candidates or expose us to product liability lawsuits, which will harm our business.
Furthermore, as the clinical trials for UGN-102 progressed with incrementally larger study populations, and the commercial marketing of Jelmyto and, if approved, UGN-
102, will further expand the clinical exposure of the drugs to a wider and more diverse group of patients than those participating in the clinical trials, which may identify
undesirable side effects caused by these products that were not previously observed or reported.
The FDA and foreign regulatory agency regulations require that we report certain information about adverse medical events if our products may have caused or
contributed to those adverse events. The timing of our obligation to report would be triggered by the date upon which we become aware of the adverse event as well
as the nature and severity of the event. We may fail to report adverse events of which we become aware within the prescribed timeframe. We may also fail to
appreciate that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is
unexpected or removed in time from the use of our products. If we fail to comply with our reporting obligations, the FDA or a foreign regulatory agency could take
action including enforcing a hold on or cessation of clinical trials, withdrawal of approved drugs from the market, criminal prosecution, the imposition of civil monetary
penalties or seizure of our products.
Additionally, in the event we discover the existence of adverse medical events or side effects caused by one of our products or product candidates, a number of other
potentially significant negative consequences could result, including:
• our inability to submit an NDA or similar application for our product candidates because of insufficient risk-reward, or the denial of such application by the FDA or
foreign regulatory authorities;
• the FDA or foreign regulatory authorities suspending or terminating our clinical trials or suspending or withdrawing their approval of the product;
• the FDA or foreign regulatory authorities requiring the addition of labeling statements, such as boxed or other warnings or contraindications or distribution and use
restrictions;
• the FDA or foreign regulatory authorities requiring us to issue specific communications to healthcare professionals, such as letters alerting them to new safety
information about our product, changes in dosage or other important information;
• the FDA or foreign regulatory authorities issuing negative publicity regarding the affected product, including safety communications;
• our being limited with respect to the safety-related claims that we can make in our marketing or promotional materials;
• our being required to change the way the product is administered, conduct additional nonclinical studies or clinical trials or restrict or cease the distribution or use
of the product; and
• our being sued and held liable for harm caused to patients.
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Any of these events could prevent us from achieving market acceptance or approval of the affected product or product candidate and could substantially increase
development or commercialization costs, force us to withdraw from the market any approved product, or even force us to cease operations. We cannot assure you that
we will resolve any issues related to any product-related adverse events to the satisfaction of the FDA or any regulatory agency in a timely manner or ever, which could
harm our business, prospects and financial condition.
We may face future developmental and regulatory difficulties related to Jelmyto and any of our product candidates that receive marketing approval. In addition, we
are subject to government regulations and we may experience delays in obtaining required regulatory approvals to market our proposed product candidates.
We are subject to certain post-marketing commitments related to Jelmyto, including a requirement for a period of five years to provide annual updates for the duration
of response for all patients with ongoing CRs enrolled in the Phase 3 OLYMPUS trial. With respect to our current and future product candidates, even if we complete
clinical testing and receive approval of any regulatory filing for our product candidates, the FDA or applicable foreign regulatory agency may grant approval contingent
on the performance of additional costly post-approval clinical trials, risk mitigation requirements and surveillance requirements to monitor the safety or efficacy of the
product, which could negatively impact us by reducing revenues or increasing expenses, and cause the approved product candidate not to be commercially viable.
Absence of long-term safety data may further limit the approved uses of our products, if any.
The FDA or applicable foreign regulatory agency also may approve our product candidates for a more limited indication or a narrower patient population than we
originally requested or may not approve the labeling that we believe is necessary or desirable for the successful commercialization of our product candidates.
Furthermore, any such approved product will remain subject to extensive regulatory requirements, including requirements relating to manufacturing, labeling,
packaging, adverse event reporting, storage, advertising, promotion, distribution and recordkeeping.
If we fail to comply with the regulatory requirements of the FDA or other applicable foreign regulatory authorities, or previously unknown problems with any approved
commercial products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions or other
setbacks, including the following:
• suspension or imposition of restrictions on operations, including costly new manufacturing requirements;
• regulatory agency refusal to approve pending applications or supplements to applications;
• suspension of any ongoing clinical trials;
• suspension or withdrawal of marketing approval;
• an injunction or imposition of civil or criminal penalties or monetary fines;
• seizure or detention of products;
• bans or restrictions on imports and exports;
• issuance of warning letters or untitled letters;
• suspension or imposition of restrictions on operations, including costly new manufacturing requirements; or
• refusal of regulatory authorities to approve pending applications or supplements to applications.
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In addition, various aspects of our operations are subject to federal, state or local laws, rules and regulations, any of which may change from time to time. Costs arising
out of any regulatory developments could be time-consuming and expensive and could divert management resources and attention and, consequently, could adversely
affect our business, financial condition, cash flows and results of operations.
If we are not successful in developing, receiving regulatory approval for and commercializing our nonclinical and clinical product candidates, our ability to expand
our business and achieve our strategic objectives could be impaired.
We plan to devote a substantial portion of our resources to the continued clinical testing and potential approval and commercial launch of UGN-102 for the treatment
of low-grade intermediate risk NMIBC. Another key element of our strategy is to discover, develop and commercialize a portfolio of products to serve additional
therapeutic markets. We are seeking to do so through our internal research programs, but our resources are limited, and those that we have are geared towards clinical
testing and seeking regulatory approval of UGN-102 and our other existing product candidates. We may also explore strategic collaborations for the development or
acquisition of new products, but we may not be successful in entering into such relationships. Research programs to identify product candidates require substantial
technical, financial and human resources, regardless of whether any product candidates are ultimately identified. Our research programs may initially show promise in
identifying potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including:
• the research methodology used may not be successful in identifying potential product candidates;
• competitors may develop alternatives that render our product candidates obsolete or less attractive;
• a product candidate may in a subsequent trial be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise
does not meet applicable regulatory criteria;
• a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all;
• a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors, if applicable; and
• intellectual property or other proprietary rights of third parties for product candidates we develop may potentially block our entry into certain markets or make such
entry economically impracticable.
If we fail to develop and successfully commercialize other product candidates, our business and future prospects may be harmed, and our business will be more
vulnerable to any problems that we encounter in developing and commercializing our product candidates.
We have entered into collaboration and licensing agreements and in the future may enter into collaboration and licensing arrangements with other third parties for
the development or commercialization of our product candidates. If our collaboration and licensing arrangements are not successful, we may not be able to
capitalize on the market potential of these product candidates.
We may utilize a variety of types of licensing, collaboration, distribution and other marketing arrangements with third parties to develop our product candidates and
commercialize our approved product candidates, if any. We are not currently party to any such arrangement that we consider material. Our ability to generate revenues
from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements.
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Any collaborations that we enter into may pose a number of risks, including the following:
• collaborators have significant discretion in determining the amount and timing of efforts and resources that they will apply to these collaborations;
• collaborators may not perform their obligations as expected;
• product candidates developed by collaborators may not perform sufficiently in clinical trials to be determined to be safe and effective, thereby delaying or
terminating the drug approval process and reducing or eliminating milestone payments to which we would otherwise be entitled if the product candidates had
successfully met their endpoints and/or received FDA approval;
• clinical trials conducted by collaborators could give rise to new safety concerns;
• collaborators may not pursue development and commercialization of our product candidates that receive marketing approval or may elect not to continue or renew
development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such
as an acquisition, that divert resources or create competing priorities;
• collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct
new clinical trials or require a new formulation of a product candidate for clinical testing;
• collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the
collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically
attractive than ours;
• product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which
may cause collaborators to cease to devote resources to the commercialization of our product candidates;
• a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources
to the marketing and distribution of such product or products;
• disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause
delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to
product candidates, or might result in litigation or arbitration, any of which would divert management attention and resources, be time-consuming and expensive;
• collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that
could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;
• collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and
• collaborations may be terminated for the convenience of the collaborator and, if terminated, we may need to raise additional capital to pursue further development
or commercialization of the applicable product candidates.
Collaborations may not lead to development or commercialization of product candidates in the most efficient manner, or at all, and may otherwise experience
challenges. For example, in August 2020, we announced that the Phase 2 APOLLO trial of BOTOX/RTGel for the treatment of overactive bladder, which was conducted
by Allergan Pharmaceuticals Limited (“Allergan”), did not meet the primary endpoint. The data suggested that this result may have been due to BOTOX not effectively
permeating the urothelium. In November 2021, our arrangement with Allergan was terminated.
If any future material collaborations that we enter into do not result in the successful development and commercialization of products or if one of our collaborators
terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the
funding we expect under these agreements, our development of our product candidates could be delayed, and we may need additional resources to develop our
product candidates. All the risks relating to product development, regulatory approval and commercialization described in this report also apply to the activities of our
collaborators.
Additionally, subject to its contractual obligations to us, if a collaborator of ours were to be involved in a business combination, it might deemphasize or terminate the
development or commercialization of any product candidate licensed to it by us. If one of our collaborators terminates its agreement with us, we may find it more
difficult to attract new collaborators and perception of us in the business and financial communities could be harmed.
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We currently contract with third-party subcontractors and single-source suppliers for certain raw materials, compounds and components necessary to produce
Jelmyto for commercial use, and to produce UGN-102, UGN-103, UGN-104, UGN-201, and UGN-301 for nonclinical studies and clinical trials, and expect to continue
to do so to support commercial scale production of UGN-102, UGN-103, UGN-104 and UGN-201, if approved, as well as any approved product that includes UGN-
301. There are significant risks associated with the manufacture of pharmaceutical products and contracting with contract manufacturers, including single-source
suppliers. Furthermore, our existing third-party subcontractors and single-source suppliers may not be able to meet the increased need for certain raw materials,
compounds and components that may result from our commercialization efforts. This increases the risk that we will not have sufficient quantities of Jelmyto, UGN-
102, UGN-103, UGN-104, UGN-201 or UGN-301 or be able to obtain such quantities at an acceptable cost, which could delay, prevent or impair our development or
commercialization efforts.
We currently rely on third party subcontractors and suppliers for certain compounds and components necessary to produce Jelmyto for commercial use and UGN-102,
UGN-103, UGN-104, UGN-201 and UGN-301 for our nonclinical studies and clinical trials, and expect to rely on third party subcontractors and suppliers for commercial
use for any of our drug candidates that receive regulatory approval. We currently depend on Teva Pharmaceuticals Industries Ltd, as our single-source supplier of
mitomycin API for Jelmyto and UGN-102. We currently rely on Cenexi-Laboratories Thissen s.a. for the mitomycin contained in Jelmyto and UGN-102. We depend on
Isotopia Molecular Imaging Ltd. as our single contracted supplier for the hydrogel contained in Jelmyto and UGN-102. We also currently depend on a single-source
supplier for imiquimod for UGN-201 and zalifrelimab for UGN-301. We have entered into a supply agreement with medac, and pending successful completion of
development we will depend on medac as our supplier for the mitomycin contained in UGN-103 and UGN-104. Because there are a limited number of suppliers for the
raw materials that we use to manufacture our product candidates, we may need to engage alternate suppliers to prevent a possible disruption of the manufacture of
the materials necessary to produce Jelmyto for commercial sale and our product candidates for our clinical trials and their subsequent commercial sale, if approved.
Even if we are able to engage alternate suppliers on reasonable terms, we may face delays or increased costs in our supply chain that could jeopardize the
commercialization of Jelmyto and the development of UGN-102. We do not have any control over the availability of these compounds and components beyond our
existing contractual arrangements. If we or our suppliers and manufacturers are unable to manufacture our drug components or purchase required raw materials on
acceptable terms, at sufficient quality levels, or in adequate quantities, if at all, the development and commercialization of our product candidates or any future
product candidates, would be delayed or there would be a shortage in supply, which would impair our ability to meet our development objectives for our product
candidates or generate revenues from the sale of Jelmyto or any other approved products.
We expect to continue to rely on these or other subcontractors and suppliers to support our commercial requirements for Jelmyto, as well as UGN-102 or any of our
other product candidates if approved for marketing by the FDA or foreign regulatory authorities. We plan to continue to rely on third parties for the manufacture of
mitomycin API, the hydrogel contained in Jelmyto, UGN-102, UGN-103, UGN-104 and UGN-301, and for imiquimod for UGN-201, and for zalifrelimab for UGN-301, as
well as for the raw materials, compounds and components necessary to produce our product candidates and for nonclinical studies and clinical trials.
Even though we are approved as a commercial supplier of Jelmyto, we have limited experience as a company in the commercial supply of drugs and may never be
successful as a commercial supplier of drug products containing mitomycin. In addition, cost-overruns, unexpected delays, equipment failures, logistics breakdowns,
labor shortages, natural disasters, power failures, production failures or product recalls, and numerous other factors could prevent us from realizing the intended
benefits of our sales strategy and have a material adverse effect on our business. Further, although we commercially supply Jelmyto, further build-out is required and
establishing such commercial-scale supply capabilities requires additional investment, is time-consuming and may be subject to delays, including because of shortage of
labor, compliance with regulatory requirements or receipt of necessary regulatory approvals. In addition, building out our Jelmyto commercial supply capabilities may
cost more than we currently anticipate, and delays or problems may adversely impact our ability to provide sufficient quantities of Jelmyto to support our
commercialization of Jelmyto and planned future commercialization of UGN-102, if approved, as well as our financial condition.
While we currently have over 12 months of mitomycin API and/or Jelmyto finished product on hand to continue our commercial and clinical operations as planned, we
may face such delays or costs in future years. A prolonged supply interruption of certain components could adversely affect our ability to conduct commercialization
activities and planned clinical trials. If any third party in our supply or distribution chain for materials or finished product is adversely impacted by restrictions resulting
from pandemics, epidemics or public health emergencies or other disruptions caused by the outbreak of war, terrorist attacks or other acts of hostility, including staffing
shortages, production slowdowns and disruptions in delivery systems, our supply chain may be disrupted, limiting our ability to manufacture and distribute Jelmyto and
planned future commercialization of UGN-102, if approved, for commercial sales and our product candidates for our clinical trials and research and development
operations.
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In addition, before we can begin to commercially manufacture any product candidates that receive regulatory approval in the future, whether in a third-party facility or
in our own facility, once established, we must obtain regulatory approval from the FDA for our manufacturing process and facility in order to sell such products in the
United States. A manufacturing authorization would also have to be obtained from the appropriate European Union regulatory authorities in order to sell such products
in the European Union. In order to obtain approval, we will need to ensure that all of the processes, methods and equipment of such manufacturing facilities are
compliant with cGMP, and perform extensive audits of vendors, contract laboratories and suppliers. If any vendors, contract laboratories or suppliers are found to be
out of compliance with cGMP, we may experience delays or disruptions in manufacturing while we work with these third parties to remedy the violation or while we
work to identify suitable replacement vendors. The cGMP requirements govern quality control of the manufacturing process and documentation policies and
procedures. In complying with cGMP, we will be obligated to expend time, money and effort in production, record keeping and quality control to assure that the
product meets applicable specifications and other requirements. If we fail to comply with these requirements, we would be subject to possible regulatory action and
may not be permitted to sell any product candidate that we may develop.
Our continuing reliance on third party subcontractors and suppliers entails a number of risks, including reliance on the third party for regulatory compliance and quality
assurance, the possible breach of the manufacturing or supply agreement by the third party, and the possible termination or nonrenewal of the agreement by the third
party at a time that is costly or inconvenient for us. In addition, third party subcontractors and suppliers may not be able to comply with cGMP or quality system
regulation ("QSR") or similar regulatory requirements outside the United States. If any of these risks transpire, we may be unable to timely retain alternate
subcontractors or suppliers on acceptable terms and with sufficient quality standards and production capacity, which may disrupt and delay our clinical trials or the
manufacture and commercial sale of our in-line or investigational product candidates, if approved.
Our failure or the failure of our third-party subcontractors and suppliers to comply with applicable regulations could result in sanctions being imposed on us, including
fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal
prosecutions, any of which could significantly and adversely affect supplies of Jelmyto, UGN-102 or any of our other product candidates that we may develop. Any
failure or refusal to supply or any interruption in supply of the components for Jelmyto, UGN-102 or any other product candidates that we may develop could delay,
prevent or impair our clinical development or commercialization efforts.
We currently use single-source suppliers relative to production of the RTGel products, the ureteral catheter and injector which are required to be used with Jelmyto.
Both the ureteral catheter and injector are used as part of the delivery of Jelmyto. We are assessing second-source suppliers regarding certain components of Jelmyto
and are advancing these conversations as a means to ensure both a second source and potential future reductions in cost of revenues. However, there can be no
assurance that we will be able to secure any second-source suppliers for these key components on a timely basis, on favorable terms, or at all.
We rely on third party transportation to deliver materials to our facilities and ship products to our customers. Transport operators are exposed to various risks, such as
extreme weather conditions, natural disasters, outbreaks of war, terrorist attacks or other acts of hostility, work stoppages, personnel shortages, and operating hazards,
as well as interstate and international transportation requirements. In addition, transport operators were affected by the impact of COVID-19 and the related shipping
crisis and backlog, which led to increased shipping costs and supply chain disruptions, and any future pandemics, epidemics or public health emergencies may cause
similar disruptions that may impact our operations in the future.
If we experience transportation problems, or if there are other significant changes in the cost of these services, we may not be able to arrange efficient alternatives and
timely means to obtain materials or ship products to our customers. Our failure to obtain such materials, ship products or maintain sufficient buffer inventory could
materially and adversely impact our business, financial condition and results of operations.
We may need to enter into agreements with additional distributors or suppliers, and there is no guarantee that we will be able to do so on commercially reasonable
terms or at all. If we are unable to maintain and, if needed, expand, our network of specialty distributors or suppliers, this would expose us to substantial risk in our
clinical development or commercialization efforts.
Failure to obtain marketing approval in international jurisdictions would prevent our approved product, Jelmyto, and our product candidates from being marketed
abroad.
In order to market and sell our products in the European Union and other jurisdictions, we or our third-party collaborators must obtain separate marketing approvals
and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required
to obtain approval may differ substantially from that required to obtain FDA approval. Regulatory approval processes outside the United States generally include all of
the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for
reimbursement before the product can be commercialized in that country. We may not obtain approvals from regulatory authorities outside the United States on a
timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory
authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to submit
for marketing approvals and may not receive the necessary approvals to commercialize our product candidates in any particular market. Even though Jelmyto is
approved for marketing in Israel, there can be no assurance that it will achieve the broad degree of physician adoption and use, reimbursement and market acceptance
necessary for commercial success.
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We rely on third parties and consultants to assist us in conducting our clinical trials for our product candidates. If these third parties or consultants do not
successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for or commercialize UGN-102 or any of
our other product candidates.
We do not have the ability to independently conduct many of our nonclinical studies or our clinical trials. We rely on medical institutions, clinical investigators, contract
laboratories, and other third parties, such as CROs, to conduct clinical trials on our product candidates. Third parties play a significant role in the conduct of our clinical
trials and the subsequent collection and analysis of data. These third parties are not our employees, and except for remedies available to us under our agreements, we
have limited ability to control the amount or timing of resources that any such third party will devote to our clinical trials. Due to the limited drug development for non-
muscle invasive urothelial cancers over the past 15 years, neither we nor any third-party clinical investigators, CROs and/or consultants are likely to have extensive
experience conducting clinical trials for the indications we are targeting. If our CROs or any other third parties upon which we rely for administration and conduct of our
clinical trials do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of
the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements, or for other reasons, or if they otherwise
perform in a substandard manner, our clinical trials may be extended, delayed, suspended or terminated, and we may not be able to complete development of, obtain
regulatory approval for, or successfully commercialize UGN-102 or any of our other product candidates.
We and the third parties upon whom we rely are required to comply with Good Clinical Practice ("GCP") regulations, which are regulations and guidelines enforced by
regulatory authorities around the world for products in clinical development. Regulatory authorities enforce these GCP regulations through periodic inspections of
clinical trial sponsors, principal investigators and clinical trial sites. If we or our third parties fail to comply with applicable GCP regulations, the clinical data generated in
our clinical trials may be deemed unreliable and our submission of marketing applications may be delayed, or the regulatory authorities may require us to perform
additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection, a regulatory authority will determine that any of our
clinical trials comply or complied with applicable GCP regulations. In addition, our clinical trials must be conducted with material produced under current GMP
regulations, which are enforced by regulatory authorities. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the
regulatory approval process. Moreover, our business may be impacted if our CROs, clinical investigators or other third parties violate federal or state fraud and abuse or
false claims laws and regulations; healthcare privacy and security laws; and bribery and anti-corruption laws.
In order for our clinical trials to be carried out effectively and efficiently, it is imperative that our CROs and other third parties communicate and coordinate with one
another. Moreover, our CROs and other third parties may also have relationships with other commercial entities, some of which may compete with us. Our CROs and
other third parties may terminate their agreements with us upon as few as 30 days’ notice under certain circumstances. If our CROs or other third parties conducting
our clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with
us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical trial protocols or GCPs,
or for any other reason, we may need to conduct additional clinical trials or enter into new arrangements with alternative CROs, clinical investigators or other third
parties. We may be unable to enter into arrangements with alternative CROs, clinical investigators or other third parties on commercially reasonable terms, or at all.
Switching or adding CROs, clinical investigators or other third parties can involve substantial cost and require extensive management time and focus. In addition, there is
a natural transition period when a new CRO commences work. As a result, delays may occur, which can impact our ability to meet our desired clinical development
timelines. Although we carefully manage our relationship with our CROs, clinical investigators and other third parties, there can be no assurance that we will not
encounter such challenges or delays in the future or that these delays or challenges will not have a negative impact on our business, prospects, financial condition or
results of operations.
If in the future we acquire or in-license technologies or product candidates, we may incur various costs, may have integration difficulties and may experience other
risks that could harm our business and results of operations.
In the future, we may acquire or in-license additional product candidates and technologies. Any product candidate or technologies we in-license or acquire will likely
require additional development efforts prior to commercial sale, including extensive nonclinical or clinical testing, or both, and approval by the FDA and applicable
foreign regulatory authorities, if any. All product candidates are prone to risks of failure inherent in pharmaceutical product development, including the possibility that
the product candidate, or product developed based on in-licensed technology, will not be shown to be sufficiently safe and effective for approval by regulatory
authorities. If intellectual property related to product candidates or technologies we in-license is not adequate, we may not be able to commercialize the affected
products even after expending resources on their development. In addition, we may not be able to economically manufacture or successfully commercialize any
product candidate that we develop based on acquired or in-licensed technology that is granted regulatory approval, and such products may not gain wide acceptance or
be competitive in the marketplace. Moreover, integrating any newly acquired or in-licensed product candidates could be expensive and time-consuming. If we cannot
effectively manage these aspects of our business strategy, our business may be materially harmed.
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We will need to continue to increase the size of our organization. If we fail to manage our growth effectively, our business could be disrupted.
As of January 31, 2025, we had 235 employees, of whom 40 are based in Israel and 195 are based in the United States. We will need to continue to expand our
development, quality, managerial, operational, finance, marketing, sales and other resources to manage our operations and clinical trials, continue our development
activities and commercialize our product candidates, if approved. Our management, personnel, systems and facilities currently in place may not be adequate to support
this future growth. Our need to effectively execute our expansion strategy requires that we:
• manage our clinical trials effectively;
• identify, recruit, retain, incentivize and integrate additional employees;
• manage our internal development efforts effectively while carrying out our contractual obligations to third parties; and
• continue to improve our operational, financial and management controls, reporting systems and procedures.
As we continue to grow as an organization, including by expanding our development efforts and building out and developing our commercial capabilities to support our
commercialization of Jelmyto and pre-commercialization efforts for UGN-102, we will evaluate, and may implement, changes to our organization that may be
appropriate in order to properly manage and direct our growth and transformation into a commercial-stage company. Due to our limited financial resources and our
limited experience in managing a larger company, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified
personnel. The physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to
manage expansion or other significant changes to our organization could delay the execution of our development, commercialization and strategic objectives or disrupt
our operations; and if we are not successful in commercializing our approved product or any of our product candidates that may receive regulatory approval, either on
our own or through collaborations with one or more third parties, our revenues will suffer, and we would incur significant additional losses.
If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of any of our other products
we develop.
We face an inherent risk of product liability as a result of the clinical testing of our product candidates and face or will face an even greater risk with the
commercialization of Jelmyto and any investigational product candidates that receive marketing approval. For example, we may be sued if any product we develop or
market allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may
include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of
warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may
incur substantial liabilities or be required to limit commercialization of our products. Even a successful defense would require significant financial and management
resources. Regardless of the merits or eventual outcome, liability claims may result in:
• decreased demand for Jelmyto and our investigational product candidates we develop;
• injury to our reputation and significant negative media attention;
• withdrawal of clinical trial participants or cancellation of clinical trials;
• costs to defend the related litigation, which may be only partially recoverable even in the event of successful defenses;
• a diversion of management’s time and our resources;
• substantial monetary awards to trial participants or patients;
• regulatory investigations, product recalls, withdrawals or labeling, marketing or promotional restrictions;
• loss of revenues;
• exhaustion of any available insurance and our capital resources; and
• the inability to commercialize any product we develop.
Our inability to obtain and maintain sufficient product liability insurance at an acceptable cost and scope of coverage to protect against potential product liability claims
could prevent or inhibit the commercialization of products we may develop. We currently carry general clinical trial product liability insurance in an amount that we
believe is adequate to cover the scope of our ongoing clinical programs as well as coverage to include the commercialization of Jelmyto. Although we maintain such
insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our
insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions and deductibles, and we may be subject to a
product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage
limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Moreover, in the future, we may
not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses. In addition, if and when we obtain approval for
marketing UGN-102 or any other product candidate, we intend to further expand our insurance coverage to include the commercialization of UGN-102 or any other
approved product; however, we may be unable to obtain this additional liability insurance on commercially reasonable terms.
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If we fail to attract and keep senior management and key personnel, we may be unable to successfully develop our product candidates, conduct our clinical trials
and commercialize any of the products we develop.
Our success depends in part on our continued ability to attract, retain and motivate highly qualified management, clinical, scientific and other personnel. We believe
that our future success is highly dependent upon the contributions of members of our senior management, as well as our senior scientists and other members of our
management team. The loss of services of any of these individuals could delay or prevent the successful development of our product pipeline, completion of our
planned clinical trials or the commercialization of our product candidates.
Although we have not historically experienced unique difficulties in attracting and retaining qualified employees, we could experience such problems in the future. For
example, competition for qualified personnel in the pharmaceutical field is intense due to the limited number of individuals who possess the skills and experience
required by our industry. We will need to hire additional personnel as we expand our clinical development and commercial activities. We may not be able to attract and
retain quality personnel on acceptable terms, or at all. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that they have
been improperly solicited or that they have divulged proprietary or other confidential information, or that their former employers own their research output.
If our information technology systems or data, or those of third parties with whom we work, are or were compromised, this could result in adverse consequences
resulting from such compromise including, but not limited to, regulatory investigations or actions; litigation; fines and penalties; a material disruption of our drug
development program; compromise of sensitive information related to our business; harm to our reputation; triggering our breach notification
obligations; preventing us from accessing critical information; disruptions of our business operations; loss of revenue or profits; loss of customers or sales and
expose us to liability or other adverse effects to our business.
In the ordinary course of our business, we, and the third parties with whom we work, process proprietary, confidential and sensitive information, including personal
data (such as health information), intellectual property, trade secrets, and proprietary business information owned or controlled by ourselves or other parties
(collectively, "Sensitive Information").
We, our CROs and other contractors, consultants, third-party vendors, and other third parties with whom we work, depend on information technology,
telecommunication systems and data processing for significant elements of our operations, including, for example, systems handling human resources, financial
reporting and controls, regulatory compliance and other infrastructure operations. Cyber-attacks, malicious internet-based activity, online and offline fraud, and other
similar activities threaten the confidentiality, integrity, and availability of our Sensitive Information and information technology systems, and those of the third parties
with whom we work. Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional
computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-
state-supported actors.
Some actors now engage and are expected to continue to engage in cyber-attacks, including, without limitation, nation-state actors for geopolitical reasons and in
conjunction with military conflicts and defense activities. During times of war and other major conflicts, we, the third parties with whom we work, may be vulnerable to
a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell
and distribute our goods and services. We and the third parties with whom we work are subject to a variety of evolving threats, including, but not limited to, social-
engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses
and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing attacks, credential harvesting,
personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other
information technology assets, adware, telecommunications failures, earthquakes, fires, floods, attacks enhanced or facilitated by AI, and other similar threats. It may
be difficult and/or costly to detect, investigate, mitigate, contain, and remediate a security incident. Our efforts to do so may not be successful. Actions taken by us or
the third parties with whom we work to detect, investigate, mitigate, contain, and remediate a security incident could result in outages, data losses, and disruptions of
our business. Threat actors may also gain access to other networks and systems after a compromise of our networks and systems.
In particular, ransomware attacks are becoming increasingly prevalent and severe and can lead to significant interruptions, delays, or outages in our operations,
disruption of clinical trials, loss of data (including data related to clinical trials), loss of income, significant extra expenses to restore data or systems, reputational loss
and the diversion of funds. To alleviate the financial, operational and reputational impact of a ransomware attack, ransomware attack victims may prefer to make
payment demands, but if we were to be a victim of such an attack, we may be unwilling or unable to do so (including, for example, if applicable laws or regulations
prohibit such payments). Similarly, supply chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our
supply chain have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach or disruption of our systems and
networks or the systems or networks of third parties that support us. Remote work has become more common and has increased risks to our information technology
systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in
transit and in public locations. Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks
and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Furthermore, we
may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our
information technology environment and security program.
We utilize third parties to operate critical business systems to process Sensitive Information in a variety of contexts, including, without limitation, cloud-based
infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions. Our ability to
monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If our third-
party service providers experience a security incident or other interruption, we could experience adverse consequences. While we may be entitled to damages if our
third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable
to recover such award.
While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective. We take
steps to detect and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of certain third parties with whom we
work), but we may be unable to detect and remediate all vulnerabilities on a timely basis in our information technology systems because such threats and techniques
used to exploit the vulnerability change frequently and are often sophisticated in nature. Despite our efforts to identify and address vulnerabilities, if any, in our
information technology systems, our efforts may not be successful. Further, we may experience delays in developing and deploying remedial measures designed to
address any such identified vulnerabilities. Therefore, such vulnerabilities could be exploited and result in a security incident, which may not be detected until after the
incident has occurred.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental
acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our Sensitive Information or our information technology systems, or those
of the third parties upon whom we rely. A security incident or other interruption could disrupt our ability (and that of third parties with whom we work) to operate our
business. Additionally, our Sensitive Information could be leaked, disclosed, or revealed as a result of or in connection with our employees', personnel’s, or vendors' use
of generative AI technologies.
We may expend significant resources or modify our business activities (including our clinical trial activities) to try to protect against security incidents. Certain data
privacy and security obligations have required us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect
our information technology systems and Sensitive Information.
Additionally, applicable data privacy and security obligations and public company disclosure obligations may require us, or we may voluntarily choose, to notify relevant
stakeholders, including affected individuals, regulators and investors, of certain security incidents, or to take other actions, such as providing credit monitoring and
identity theft protection services. Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities, and others of security incidents
involving certain types of data. In addition, our agreements with collaborators may require us to notify them in the event of a security incident. Such disclosures and
related actions can be costly, and the disclosure or the failure to comply with such applicable requirements could lead to adverse consequences. These consequences
may include: government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or
oversight; restrictions on processing Sensitive Information (including personal data); litigation (including class claims); indemnification obligations; negative publicity;
reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and
other similar harms. For example, failures or significant downtime of our information technology or telecommunication systems or those used by our third-party service
providers could cause significant interruptions in our operations and adversely impact the confidentiality, integrity and availability of Sensitive Information, including
preventing us from conducting clinical trials, tests or research and development activities and preventing us from managing the administrative aspects of our business.
In addition, the loss of clinical trial data from completed, ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly
increase our costs to recover or reproduce the data. To the extent that any disruption or security incident results in a loss of or damage to our data or applications, or
inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our product candidates could be delayed. If
the information technology systems of our third-party vendors and other contractors become subject to disruptions or security incidents, we may have insufficient
recourse against such third parties and may have to expend significant resources to mitigate the impact of such an event, and to develop and implement protections to
prevent future events of this nature from occurring. In addition, whether a security incident is reportable to our investors may not be straightforward, may take
considerable time to determine, and may be subject to change as the investigation of the incident progresses, including changes that may significantly alter any initial
disclosure we provide. Moreover, experiencing a material security incident and any mandatory disclosures could lead to negative publicity, loss of investor, customer or
partner confidence in the effectiveness of our cybersecurity measures, diversion of management’s attention, governmental investigations, lawsuits, and the expenditure
of significant capital and other resources.
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to
protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or
sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially
reasonable terms or at all, or that such coverage will pay future claims.
Under applicable employment laws, we may not be able to enforce covenants not to compete.
We generally enter into non-competition agreements as part of our employment agreements with our employees. These agreements generally prohibit our employees,
if they cease working for us, from competing directly with us or working for our competitors or customers for a limited period. We may be unable to enforce these
agreements under the laws of the jurisdictions in which our employees work, and it may be difficult for us to restrict our competitors from benefitting from the
expertise our former employees or consultants developed while working for us.
For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive
activities of the former employee will harm one of a limited number of material interests of the employer which have been recognized by the courts as justification for
the enforcement of non-compete undertakings, such as the protection of a company’s trade secrets or other intellectual property.
Additionally, on July 9, 2021, President Biden signed an executive order encouraging the Federal Trade Commission (“FTC”) to curtail unfair use of non-compete
agreements and other agreements that may unfairly limit worker mobility. While we cannot predict how the initiatives set forth in the executive order will be
implemented or, as a result, the impact that the executive order will have on our operations, there is now increased uncertainty regarding the long-term enforceability
of our non-compete agreements. In January 2023, the FTC proposed a rule that, if enacted, would prohibit employers from entering into non-compete clauses with
workers and require employers to rescind existing non-complete clauses. Moreover, the law governing non-compete agreements and other forms of restrictive
covenants varies from state to state within the U.S. and some states are reluctant to strictly enforce non-compete agreements.
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Our employees, independent contractors, clinical investigators, CROs, consultants and vendors may engage in misconduct or other improper activities, including
noncompliance with regulatory standards and requirements and insider trading.
We are exposed to the risk that our employees, independent contractors, clinical investigators, CROs, consultants and vendors may engage in fraudulent conduct or
other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct, breach of contract or other unauthorized activities that
violate: FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA; manufacturing standards; federal, state
and foreign healthcare fraud and abuse laws; buying or selling of our ordinary shares while in possession of material non-public information; or laws that require the
reporting of financial information or data accurately.
Specifically, research, sales, marketing, education and other business arrangements in the healthcare industry are subject to extensive laws intended to prevent fraud,
misconduct, kickbacks, self-dealing and other abusive practices. These laws may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales
commission, customer incentive and other business arrangements. Activities subject to these laws also include the improper use of information obtained in the course
of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a Corporate Code of Ethics and Conduct and a
Compliance Program, but it is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and
prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or
lawsuits stemming from a failure to be in compliance with such laws. If any such actions are instituted against us, even if we are successful in defending ourselves or
asserting our rights, those actions could have a significant impact on our business. Violations of such laws could subject us to numerous penalties, including, but not
limited to, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, imprisonment, additional reporting
requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws,
possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and
future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Most states also have statutes or regulations similar to these laws, which may apply to items such as pharmaceutical products and services reimbursed by private
insurers. We and/or our future partners may be subject to administrative, civil and criminal sanctions for violations of any of these laws. Pharmaceutical and other
healthcare companies have been prosecuted under these laws for a variety of promotional and marketing activities, such as: providing free trips, free goods, improper
consulting fees and grants and other monetary benefits to prescribers; reporting to pricing services inflated average wholesale prices that were then used by federal
programs to set reimbursement rates; engaging in off-label promotion; and submitting inflated best price information to the Medicaid Rebate Program to reduce
liability for Medicaid rebates. Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and
regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future
statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations, which could have a significant impact
on the conduct of our business.
Our business involves the use of hazardous materials and we and our third-party manufacturers and suppliers must comply with environmental laws and
regulations, which can be expensive and restrict how we do business.
Our research and development activities and our third-party subcontractors’ and suppliers’ activities involve the controlled storage, use, transportation and disposal of
hazardous materials owned by us, including mitomycin, key components of our product candidates, and other hazardous compounds. We and our manufacturers and
suppliers are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. Despite our efforts, we
cannot eliminate the risk of contamination. This could cause an interruption of our commercialization efforts and business operations, environmental damage resulting
in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste
products. Although we believe that the safety procedures utilized by us and our subcontractors and suppliers for handling and disposing of these materials generally
comply with the standards prescribed by these laws and regulations, we cannot guarantee that this is the case or eliminate the risk of accidental contamination or
injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources and state or federal or other
applicable authorities may curtail our use of certain materials and interrupt our business operations.
Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such
changes and cannot be certain of our future compliance.
Exchange rate fluctuations between the U.S. Dollar and the New Israeli Shekel may negatively affect our earnings.
The U.S. dollar is our functional and reporting currency. However, a significant portion of our operating expenses are incurred in NIS, which is the lawful currency of the
State of Israel. As a result, we are exposed to the risks that the NIS may appreciate relative to the dollar, or, if the NIS instead devalues relative to the dollar, that the
inflation rate in Israel may exceed such rate of devaluation of the NIS, or that the timing of such devaluation may lag behind inflation in Israel. In any such event, the
dollar cost of our operations in Israel would increase and our dollar-denominated results of operations would be adversely affected. For example, the dollar appreciated
against the NIS during 2024 by a total of 1.2%. We cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the NIS against
the dollar. If the dollar cost of our operations in Israel increases, our dollar-measured results of operations will be adversely affected.
Our business could be adversely affected by the effects of health pandemics, epidemics or other public health emergencies.
A pandemic, epidemic or other public health emergencies pose the risk that we or our employees, contractors, suppliers, customers, and other partners may be
prevented from conducting certain business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns
that may be requested or mandated by governmental authorities. For example, COVID-19 and mitigation measures to slow its spread had an adverse impact on global
economic conditions. While it is not possible at this time to estimate the impact that any such pandemic, epidemic or other public health emergency could have on our
business, if such an event were to occur, it could have an adverse impact on global economic conditions which could have an adverse effect on our business and
financial condition, including impairing our ability to raise capital when needed. The measures that may be taken by various governments in response to a pandemic,
epidemic or other public health emergency could disrupt the supply chain of material needed for our product candidates and our approved product, Jelmyto, interrupt
healthcare services, delay coverage decisions from Medicare and third party payors, delay ongoing and planned clinical trials involving our product candidates, curtail
access to hospitals, surgery centers, clinics, healthcare providers and pharmacies by our sales force and have a material adverse effect on our business, financial
condition and results of operations.
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To the extent any future pandemics, epidemics or public health emergencies adversely affect our business and financial results, it may also have the effect of
heightening many of the other risks described in the “Risk Factors” section of this report.
Certain of our clinical trials and other significant operations (including our Israeli corporate offices and contract manufacturers) are located outside of the United
States and, therefore, our results may be adversely affected by geopolitical, economic and military instability.
Certain of our clinical trials operate outside the U.S. and certain of our research and development facilities and key vendors and suppliers are located in Israel. If any of
these current or future trials or the related facilities or our vendors' and suppliers' facilities in Israel were to be damaged, destroyed or otherwise unable to operate,
whether due to war, acts of hostility, earthquakes, fire, floods, hurricanes, storms, tornadoes, other natural disasters, employee malfeasance, terrorist acts, pandemics,
power outages or otherwise, or if performance of our clinical trials are disrupted for any other reason, such an event could cause significant development and product
delays. If we experience delays in achieving our development objectives within a timeframe that meets our prospective customers’ expectations, our business,
prospects, financial results and reputation could be harmed.
Geopolitical, economic and military conditions around the world may directly affect our business. Any hostilities involving any of the countries in which we operate,
including terrorist activities, political instability or violence in the region or the interruption or curtailment of trade or transport between such country and its trading
partners could adversely affect our operations and results of operations and adversely affect the market price of our ordinary shares.
Our business activities may be subject to the FCPA and similar anti-bribery and anti-corruption laws of other countries in which we operate, as well as U.S. and
certain foreign export controls, trade sanctions, and import laws and regulations. Compliance with these legal requirements could limit our ability to compete in
foreign markets and subject us to liability if we violate them.
We currently dedicate certain resources to comply with numerous laws and regulations in each jurisdiction in which we operate outside of the United States. Our
business activities in these foreign countries may be subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which
we operate.
The FCPA generally prohibits companies and their employees and third-party intermediaries from offering, promising, giving or authorizing the provision of anything of
value, either directly or indirectly, to a non-U.S. government official in order to influence official action or otherwise obtain or retain business. The FCPA also requires
public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate
system of internal accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials, including officials of non-
U.S. governments. Additionally, in many other countries, hospitals owned and operated by the government, and doctors and other hospital employees would be
considered foreign officials under the FCPA. Recently the SEC and U.S. Department of Justice have increased their FCPA enforcement activities with respect to
biotechnology and pharmaceutical companies. There is no certainty that all of our employees, agents or contractors, or those of our affiliates, will comply with all
applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in fines, criminal
sanctions against us, our officers or our employees, disgorgement, and other sanctions and remedial measures, and prohibitions on the conduct of our business. Any
such violations could include prohibitions on our ability to offer our product in one or more countries and could materially damage our reputation, our brand, our
international activities and our ability to attract and retain employees and our business.
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In addition, our product and activities may be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations. Governmental regulation of
the import or export of our product, or our failure to obtain any required import or export authorization for our product, when applicable, could harm our international
sales and adversely affect our revenue. Compliance with applicable regulatory requirements regarding the export of our product may create delays in the introduction
of our product in international markets or, in some cases, prevent the export of our product to some countries altogether. Furthermore, U.S. export control laws and
economic sanctions prohibit the shipment of certain products and services to countries, governments, and persons targeted by U.S. sanctions. If we fail to comply with
export and import regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges. Moreover, any new
export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries, persons, or product
targeted by such regulations, could result in decreased use of our product by, or in our decreased ability to export our product to existing or potential customers with
international operations. Any decreased use of our product or limitation on our ability to export or sell access to our product would likely significantly harm our
business, financial condition, results of operations and prospects.
Risks Related to Our Intellectual Property
If our efforts to obtain, protect or enforce our patents and other intellectual property rights related to Jelmyto, our product candidates and technologies are not
adequate, we may not be able to compete effectively, and we otherwise may be harmed.
Our commercial success depends in part upon our ability to obtain and maintain patent protection and utilize trade secret protection for our proprietary technologies,
our products and their uses, as well as our ability to operate without infringing upon the proprietary rights of others. We rely upon a combination of patents, trade
secret protection and confidentiality agreements, assignment of invention agreements and other contractual arrangements to protect the intellectual property related
to hydrogel-based pharmaceutical compositions for optimal delivery of a drug in internal cavities such as the bladder, the method for treating cancer, in
particular urothelial and bladder cancer using hydrogel-based compositions, the method for treating overactive bladder topically without the need for injections,
including an in-dwelling ureter catheter system for optimal delivery of a drug into the renal cavity.
We seek patent protection for our product candidates, and we hold a broad collection of intellectual property comprised of issued patents, in-licensed patents, pending
patent applications, trade secrets and trademarks covering our proprietary RTGel technology, the pharmaceutical compositions, methods of use and manufacturing
aspects of our product candidates. In the United States, we currently own, co-own or exclusively license 25 patents that are directed to protect our approved product,
Jelmyto and our lead product candidate, UGN-102, as well as UGN-103 and UGN-104, our proprietary RTGel technology, local compositions comprising different active
ingredients, including, inter alia, compositions comprising a Botulinum Toxin, UGN-201, the use of UGN-201 and UGN-301, and our future product candidates that are
under company research. These IP rights relate to certain aspects of cancer treatment. These issued patents are set to expire between 2025 and 2041. In total, our IP
portfolio includes 45 granted patents worldwide, and more than 45 pending patent applications filed in the U.S., Europe, Israel, Japan, Canada, China, Australia and
Korea that are directed to cover various methods, systems and compositions for treating cancer locally, by intravesical means, utilize various active ingredients and the
combinations thereof. These patent applications, if issued, are set to expire between 2031 and 2043.
Limitations on the scope of our intellectual property rights may limit our ability to prevent third parties from designing around such rights and competing against us. For
example, our patents do not claim a new compound. Rather, the active pharmaceutical ingredients of our products are known compounds, and our patents and
pending patent applications are directed inter alia to novel formulations and combination of these known compounds with our proprietary RTGel technology.
Accordingly, other parties may compete with us, for example, by independently developing or obtaining competing topical formulations that design around our patent
claims, but which may contain the same active ingredients, or by seeking to invalidate our patents. Any disclosure of or misappropriation by third parties of our
confidential proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, eroding our competitive position in the
market.
We will not necessarily seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be able to adequately enforce our
intellectual property rights even in the jurisdictions where we seek protection.
One or more of the patent applications that we filed or license may fail to result in granted patents in the United States or foreign jurisdictions, or, if granted, may fail to
prevent a potential infringer from marketing its product or be deemed invalid and unenforceable by a court. Competitors in the field of reverse thermal gel therapies
have created a substantial amount of scientific publications, patents and patent applications and other materials relating to their technologies. Our ability to obtain and
maintain valid and enforceable patents depends on various factors, including interpretation of our technology and the prior art and whether the differences between
them allow our technology to be patentable. Patent applications and granted patents are complex, lengthy and highly technical documents that are often prepared
under limited time constraints and may not be free from errors that make their interpretation uncertain. The existence of errors in a patent application may have an
adverse effect on the patent, its scope and its enforceability. Our pending patent applications may not issue, and the scope of the claims of patent applications that do
issue may be too narrow to adequately protect our competitive advantage. Also, our granted patents may be subject to challenges or narrowly construed and may not
provide adequate protection.
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We may be subject to claims that we infringe, misappropriate or otherwise violate the intellectual property rights of third parties.
Even if our patents do successfully issue, third parties may challenge the validity, enforceability or scope of such granted patents or any other granted patents we own
or license, which may result in such patents being narrowed, invalidated or held unenforceable. For example, patents granted by the European Patent Office may be
opposed by any person within nine months from the publication of their grant. Also, patents granted by the USPTO may be subject to reexamination and other
challenges.
Pharmaceutical patents and patent applications involve highly complex legal and factual questions, which, if determined adversely to us, could negatively impact our
patent position. There is significant litigation activity in the pharmaceutical industry regarding patent and other intellectual property rights. Such litigation could result
in substantial costs and be a distraction to management and other employees.
The patent positions of biotechnology and pharmaceutical companies can be highly uncertain and involve complex legal and factual questions. The interpretation and
breadth of claims allowed in some patents covering pharmaceutical compositions may be uncertain and difficult to determine and are often affected materially by the
facts and circumstances that pertain to the patented compositions and the related patent claims. Furthermore, even if they are not challenged, our patents and patent
applications may not adequately protect our intellectual property or prevent others from designing around our claims. To meet such challenges, which are part of the
risks and uncertainties of developing and marketing product candidates, we may need to evaluate third party intellectual property rights and, if appropriate, to seek
licenses for such third party intellectual property or to challenge such third party intellectual property, which may be costly and may or may not be successful, which
could also have an adverse effect on the commercial potential for Jelmyto, UGN-102 and any of our other product candidates.
We may receive only limited protection, or no protection, from our issued patents and patent applications.
There can be no assurance that any pending patent application will be granted. The term of individual patents depends upon the legal term of the patents in the
countries in which they are obtained.
The patent application process, also known as patent prosecution, is expensive and time consuming, and we or any future licensors and licensees may not be able to
prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we or any future licensors or
licensees will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent
protection on them. Therefore, these and any of our patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our
business. It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, for example with
respect to proper priority claims, inventorship, etc., although we are unaware of any such defects that we believe are of material import. If we or any future licensors or
licensees fail to establish, maintain or protect such patents and other intellectual property rights, such rights may be reduced or eliminated. If any future licensors or
licensees are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be
compromised. If there are material defects in the form or preparation of our patents or patent applications, such patents or applications may be invalid and
unenforceable. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.
The strength of patents in the pharmaceutical field involves complex legal and scientific questions and can be uncertain. This uncertainty includes changes to patent
laws through either legislative action to change statutory patent law or court action that may reinterpret existing laws in ways affecting the scope or validity of issued
patents. The patent applications that we own or in-license may fail to result in issued patents in the United States or foreign countries. Even if patents do successfully
issue from the patent applications that we own or in-license, third parties may challenge the validity, enforceability or scope of such patents, which may result in such
patents being narrowed, invalidated or held unenforceable. For example, patents granted by the European Patent Office may be challenged, also known as opposed, by
any person within nine months from the publication of their grant. Any successful challenge to our patents could deprive us of exclusive rights necessary for the
successful commercialization of our product candidates. Furthermore, even if they are unchallenged, our patents may not adequately protect our product candidates,
provide exclusivity for our product candidates, or prevent others from designing around our claims. If the breadth or strength of protection provided by the patents we
hold or pursue with respect to our product candidates is challenged, it could dissuade companies from collaborating with us to develop or threaten our ability to
commercialize our product candidates.
Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available;
however, the life of a patent, and the protection it affords, is limited. Without patent protection for Jelmyto or our product candidates, we may be open to competition
from generic versions thereof. We received a Paragraph IV Certification Notice Letter from Teva in February 2024, providing notification that Teva has submitted an
ANDA to the FDA seeking approval to manufacture, use or sell a generic version of Jelmyto. In the Notice Letter, Teva alleges that two of the patents listed in the FDA
Orange Book for Jelmyto, U.S. Patent Numbers 9,040,074 and 9,950,069, each of which expires in January 2031, are invalid, unenforceable, or will not be infringed by
Teva’s manufacture, use, or sale of the generic product described in its ANDA submission. See Part I, Item 3. “Legal Proceedings” for additional discussion. If we are
unable to maintain patent protection for Jelmyto, Jelmyto will be subject to immediate competition from generic entrants after regulatory exclusivity expires in April
2027. Further, if we encounter delays in our development efforts, including our clinical trials, the period of time during which we could market our product candidates
under patent protection would be reduced.
A considerable number of our patents and patent applications are entitled to effective filing dates prior to March 16, 2013. For U.S. patent applications in which patent
claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third party, for example a competitor, or instituted by the
USPTO to determine who was the first to invent any of the subject matter covered by those patent claims. An unfavorable outcome could require us to cease using the
related technology or to attempt to license rights from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on
commercially reasonable terms. Our participation in an interference proceeding may fail and, even if successful, may result in substantial costs and distract our
management.
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Our trade secrets may not have sufficient intellectual property protection.
In addition to the protection afforded by patents, we also rely on trade secret protection to protect proprietary know-how that may not be patentable or that we elect
not to patent, processes for which patents may be difficult to obtain or enforce, and any other elements of our product candidates, and our product development
processes (such as manufacturing and formulation technologies) that involve proprietary know-how, information or technology that is not covered by patents. However,
trade secrets can be difficult to protect. If the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties
for misappropriating any trade secrets. Misappropriation or unauthorized disclosure of our trade secrets could significantly affect our competitive position and may
have an adverse effect on our business. Furthermore, trade secret protection does not prevent competitors from independently developing substantially equivalent
information and techniques and we cannot guarantee that our competitors will not independently develop substantially equivalent information and techniques. The
FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information
that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA’s disclosure policies may change in the
future, if at all.
In an effort to protect our trade secrets and other confidential information, we require our employees, consultants, advisors, and any other third parties that have
access to our proprietary know-how, information or technology, for example, third parties involved in the formulation and manufacture of our product candidates, and
third parties involved in our clinical trials to execute confidentiality agreements upon the commencement of their relationships with us. These agreements require that
all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us is kept
confidential and not disclosed to third parties. However, we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed
despite having such confidentiality agreements. Adequate remedies may not exist in the event of unauthorized use or disclosure of our trade secrets. In addition, in
some situations, these confidentiality agreements may conflict with, or be subject to, the rights of third parties with whom our employees, consultants, or advisors have
previous employment or consulting relationships. To the extent that our employees, consultants or contractors use any intellectual property owned by third parties in
their work for us, disputes may arise as to the rights in any related or resulting know-how and inventions. If we are unable to prevent unauthorized material disclosure
of our trade secrets to third parties, we may not be able to establish or maintain a competitive advantage in our market, which could harm our business, operating
results and financial condition.
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly on obtaining and enforcing patents.
Obtaining and enforcing patents in the pharmaceutical industry involves both technological and legal complexity, and therefore, is costly, time-consuming and
inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Further, recent U.S.
Supreme Court rulings have either narrowed the scope of patent protection available in certain circumstances or weakened the rights of patent owners in certain
situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with
respect to the value of patents, once obtained.
For our U.S. patent applications containing a claim not entitled to priority before March 16, 2013, there is a greater level of uncertainty in the patent law. In September
2011, the Leahy-Smith America Invents Act, or the America Invents Act ("AIA"), was signed into law. The AIA includes a number of significant changes to U.S. patent law,
including provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. The USPTO is currently developing regulations and
procedures to govern administration of the AIA, and many of the substantive changes to patent law associated with the AIA. It is not clear what other, if any, impact the
AIA will have on the operation of our business. Moreover, the AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our
patent applications and the enforcement or defense of our issued patents, all of which could harm our business and financial condition.
An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be
granted a patent when two or more patent applications are filed by different parties claiming the same invention. A third party that files a patent application in the
USPTO after that date but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by the
third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application. Furthermore, our ability to obtain and maintain
valid and enforceable patents depends on whether the differences between our technology and the prior art allow our technology to be patentable over the prior art.
Since patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we were the first to
either (i) file any patent application related to our product candidates or (ii) invent any of the inventions claimed in our patents or patent applications.
Among some of the other changes introduced by the AIA are changes that limit where a patentee may file a patent infringement suit and provide opportunities for third
parties to challenge any issued patent in the USPTO. This applies to all of our U.S. patents, even those issued before March 16, 2013. Because of a lower evidentiary
standard in USPTO proceedings compared to the evidentiary standard in a United States federal court necessary to invalidate a patent claim, a third party could
potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate
the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not
have been invalidated if first challenged by the third party as a defendant in a district court action.
Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that
would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
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Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirements imposed by
governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions
during the patent prosecution process.
Periodic maintenance fees and various other governmental fees on any issued patent and/or pending patent applications are due to be paid to the USPTO and foreign
patent agencies in several stages over the lifetime of a patent or patent application. We have systems in place to remind us to pay these fees, and we employ an outside
firm and rely on our outside counsel to pay these fees. While an inadvertent lapse may sometimes be cured by payment of a late fee or by other means in accordance
with the applicable rules, there are many situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial
or complete loss of patent rights in the relevant jurisdiction. If we fail to maintain the patents and patent applications directed to our product candidates, our
competitors might be able to enter the market earlier than should otherwise have been the case, which could harm our business.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting and defending patents on our approved product or product candidates in all countries throughout the world would be prohibitively expensive. The
requirements for patentability may differ in certain countries, particularly developing countries. For example, unlike other countries, China has a heightened
requirement for patentability, and specifically requires a detailed description of medical uses of a claimed drug. In addition, the laws of some foreign countries do not
protect intellectual property rights to the same extent as laws in the United States. Consequently, we may not be able to prevent third parties from practicing our
inventions in all countries outside the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop
their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement on infringing activities is
inadequate. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them
from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain
countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to
pharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights
generally.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business,
could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert
claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. In
addition, certain countries in Europe and certain developing countries, including India and China, have compulsory licensing laws under which a patent owner may be
compelled to grant licenses to third parties. In those countries, we may have limited remedies if our patents are infringed or if we are compelled to grant a license to
our patents to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to
enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or
license. Finally, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws.
If we are unable to protect our trademarks from infringement, our business prospects may be harmed.
We filed applications for trademarks (Jelmyto®, RTGel®, and UroGen®) that identify our branding elements, such as Jelmyto and our unique technology in the United
States, Europe, Japan and China. Although we take steps to monitor the possible infringement or misuse of our trademarks, it is possible that third parties may infringe,
dilute or otherwise violate our trademark rights. Any unauthorized use of our trademarks could harm our reputation or commercial interests. In addition, our
enforcement against third-party infringers or violators may be unduly expensive and time-consuming, and the outcome may be an inadequate remedy.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property rights or the patents of our licensors, which could be expensive
and time consuming.
Third parties may infringe or misappropriate our intellectual property, including our existing patents, patents that may issue to us in the future, or the patents of our
licensors to which we have a license. As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use. Further, we may
not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those
rights as fully as in the United States.
Drug manufacturers may develop, seek approval for, and launch generic versions of our products. For example, we received a Paragraph IV Certification Notice Letter
from Teva in February 2024, providing notification to us that Teva has submitted an ANDA to the FDA seeking approval to manufacture, use, or sell a generic version of
Jelmyto. See Part I, Item 3. “Legal Proceedings” for additional discussion.
If we do not file a patent infringement lawsuit against a generic manufacturer within 45 days of receiving notice of its Paragraph IV certification, the ANDA applicant
may not be subject to a 30‑month stay. If we file an infringement action against a generic drug manufacturer, that company may challenge the scope, validity or
enforceability of our or our licensors’ patents, requiring us and/or our licensors to engage in complex, lengthy and costly litigation or other proceedings.
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In addition, if we or one of our licensors initiate legal proceedings against a third party to enforce a patent covering our product candidates, the defendant could
counterclaim that the patent covering our product candidates is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging
invalidity and/or unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent.
Furthermore, within and outside of the United States, there has been a substantial amount of litigation and administrative proceedings, including interference and
reexamination proceedings before the USPTO or oppositions and other comparable proceedings in various foreign jurisdictions, regarding patent and other intellectual
property rights in the pharmaceutical industry. The AIA's procedures include inter partes review and post grant review. These procedures bring uncertainty to the
possibility of challenges to our patents in the future, including challenges by competitors who perceive our patents as blocking entry into the market for their products,
and the outcome of such challenges.
Such litigation and administrative proceedings could result in revocation of our patents or amendment of our patents such that they do not cover our product or
product candidates. They may also put our pending patent applications at risk of not issuing or issuing with limited and potentially inadequate scope to cover our
product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we
cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. Additionally, it is also possible that
prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim, may, nonetheless, ultimately be found by a court of law or
an administrative panel to affect the validity or enforceability of a claim. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we
would lose at least part, and perhaps all, of the patent protection on our product or product candidates. Such a loss of patent protection could have a negative impact
on our business.
Enforcing our or our licensors’ intellectual property rights through litigation is very expensive, particularly for a company of our size, and time-consuming. Some of our
competitors may be able to sustain the costs of litigation more effectively than we can because of greater financial resources. Patent litigation and other proceedings
may also absorb significant management time.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace. The
occurrence of any of the foregoing could harm our business, financial condition or results of operations.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk
that some of our confidential information could be compromised by disclosure. In addition, during the course of litigation or administrative proceedings, there could be
public announcements of the results of hearings, motions or other interim proceedings or developments or public access to related documents. If investors perceive
these results to be negative, the market price for our ordinary shares could be significantly harmed.
We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely
affect our business.
A significant portion of our intellectual property has been developed by our employees during their employment. Our employees execute agreements that assign to
us any ownership interest in a patent or patent application created in the scope of the employee’s employment. Under the Israeli Patents Law, 5727-1967 (the “Patent
Law”), inventions conceived by an employee during the scope of his or her employment with a company are regarded as “service inventions,” which belong to the
employer, absent an agreement between the employee and employer giving the employee service invention rights. The Patents Law also provides that if there is no
agreement between an employer and an employee determining whether the employee is entitled to receive remuneration for service inventions and on what terms,
the Israeli Compensation and Royalties Committee (the “Committee”), a body constituted under the Patents Law, has the authority to determine whether the employee
is entitled to remuneration for his or her inventions and the scope of such remuneration. Case law clarifies that the right to receive consideration for “service
inventions” can be waived by the employee. The Committee will examine, on a case-by-case basis, the general contractual framework between the parties, using
interpretation rules of general Israeli contract law. Further, the Committee has not yet determined one specific formula for calculating this remuneration, but rather
uses the criteria specified in the Patents Law. Although we enter into agreements with our Israeli employees pursuant to which such individuals assign to us all rights to
any inventions created during and as a result of their employment with us and waive their right to remuneration for service inventions, we may nonetheless face claims
by employees demanding remuneration beyond their regular salary and benefits. As a consequence of such claims, we could be required to pay additional
remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could negatively affect our business.
Third-party claims alleging intellectual property infringement may adversely affect our business.
Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties, for example, the intellectual property rights
of competitors. Our commercialization activities may be subject to claims that we infringe or otherwise violate patents owned or controlled by third parties. Numerous
U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our product
candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our activities related to our product
candidates may give rise to claims of infringement of the patent rights of others. We cannot assure you that our product candidates will not infringe existing or future
patents. We may unknowingly infringe existing patents by commercialization of our product candidates. It is also possible that patents of which we are aware, but
which we do not believe are relevant to our product candidates, could nevertheless be found to be infringed by our product candidates. Nevertheless, we are not aware
of any issued patents that we believe would prevent us from marketing our product candidates, if approved. There may also be patent applications that have been filed
but not published that, when issued as patents, could be asserted against us.
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Third parties making claims against us for infringement or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief,
which could effectively block our ability to further develop and commercialize our product candidates. Further, if a patent infringement suit were brought against us, we
could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit. Defense of these
claims, regardless of their merit, would cause us to incur substantial expenses, and would be a substantial diversion of management time and employee resources from
our business. In the event of a successful claim of infringement against us by a third party, we may have to (i) pay substantial damages, including treble damages and
attorneys’ fees if we are found to have willfully infringed the third party’s patents; (ii) obtain one or more licenses from the third party; (iii) pay royalties to the third
party; and/or (iv) redesign any infringing products. Redesigning any infringing products may be impossible or require substantial time and monetary expenditures.
Further, we cannot predict whether any required license would be available at all or whether it would be available on commercially reasonable terms. In the event that
we could not obtain a license, we may be unable to further develop and commercialize our product candidates, which could harm our business significantly. Even if we
are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could
result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease
some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.
Defending ourselves or our licensors in litigation is very expensive, particularly for a company of our size, and time-consuming. Some of our competitors may be able to
sustain the costs of litigation or administrative proceedings more effectively than we can because of greater financial resources. Patent litigation and other proceedings
may also absorb significant management time. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our
ability to compete in the marketplace. The occurrence of any of the foregoing could harm our business, financial condition or results of operations.
We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.
We employ individuals who were previously employed at other biotechnology or pharmaceutical companies. We may be subject to claims that we or our employees,
consultants or independent contractors have inadvertently or otherwise improperly used or disclosed confidential information of these third parties or our employees’
former employers. Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are
involved in developing our product candidates. We may also be subject to claims that former employees, consultants, independent contractors, collaborators or other
third parties have an ownership interest in our patents or other intellectual property. Litigation may be necessary to defend against these and other claims challenging
our right to and use of confidential and proprietary information. If we fail in defending any such claims, in addition to paying monetary damages, we may lose our rights
therein. Such an outcome could have a negative impact on our business. Even if we are successful in defending against these claims, litigation could result in substantial
cost and be a distraction to our management and employees.
Risks Related to Government Regulation
If the FDA does not conclude that UGN-102 satisfies the requirements under 505(b)(2), or if the requirements for our product candidates are not as we expect, the
approval pathway for these product candidates will likely take significantly longer, cost significantly more and entail significantly greater complications and risks
than anticipated, and in either case may not be successful.
The Drug Price Competition and Patent Term Restoration Act of 1984 (the "Hatch-Waxman Act"), added 505(b)(2) to the FDCA. 505(b)(2) permits the filing of an NDA
where at least some of the information required for approval comes from studies that were not conducted by or for the applicant, and for which the applicant has not
received a right of reference, which could expedite the development program for UGN-102 and our other product candidates by potentially decreasing the amount of
nonclinical and clinical data that we would need to generate in order to obtain FDA approval. However, while we believe that our product candidates are reformulations
of existing drugs and, therefore, will not be treated as NCEs, the submission of an NDA under the 505(b)(2) pathway does not preclude the FDA from determining that
the product candidate that is the subject of such submission is an NCE and therefore not eligible for review under such regulatory pathway.
If the FDA does not allow us to pursue the 505(b)(2) pathway as anticipated, we may need to conduct additional nonclinical experiments and clinical trials, provide
additional data and information, and meet additional standards for regulatory approval. If this were to occur, the time and financial resources required to obtain FDA
approval for these product candidates, and complications and risks associated with these product candidates, would likely increase significantly. Moreover, inability to
pursue the 505(b)(2) pathway could result in new competitive products reaching the market more quickly than our product candidates, which would likely harm our
competitive position and prospects. Even if we are allowed to pursue the 505(b)(2) pathway, our product candidates may not receive the requisite approvals for
commercialization.
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In addition, notwithstanding the approval of a number of products by the FDA under 505(b)(2) certain competitors and others have objected to the FDA’s interpretation
of 505(b)(2). If the FDA’s interpretation of 505(b)(2) is successfully challenged, the FDA may be required to change its 505(b)(2) policies and practices, which could delay
or even prevent the FDA from approving any NDA that we submit under 505(b)(2). In addition, the pharmaceutical industry is highly competitive, and 505(b)(2) NDAs
are subject to special requirements designed to protect the patent rights of sponsors of previously approved drugs that are referenced in a 505(b)(2) NDA. These
requirements may give rise to patent litigation and mandatory delays in approval of our potential future NDAs for up to 30 months depending on the outcome of any
litigation. It is not uncommon for a manufacturer of an approved product to file a citizen petition with the FDA seeking to delay approval of, or impose additional
approval requirements for, pending competing products. If successful, such petitions can significantly delay, or even prevent, the approval of the new product. However,
even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it considers and responds to the petition. In addition, even if we are
able to utilize the 505(b)(2) regulatory pathway for our product candidates, there is no guarantee this would ultimately lead to faster product development or earlier
approval.
Moreover, even if these product candidates are approved under the 505(b)(2) pathway, as the case may be, the approval may be subject to limitations on the indicated
uses for which the products may be marketed or to other conditions of approval or may contain requirements for costly post-marketing testing and surveillance to
monitor the safety or efficacy of the products.
In addition, there have been a number of recent regulatory and legislative initiatives designed to encourage generic competition for pharmaceutical products, including
expedited review procedures for generic manufacturers and incentives designed to spur generic competition of branded drugs. In particular, the FDA and the FTC have
been focused on brand companies’ denial of drug supply to potential generic competitors for testing. In December 2019, the CREATES Act was enacted, which provides
a legislatively defined private right of action under which generic companies can bring suit against companies who refuse access to product for the bioequivalence
testing needed to support approval of a generic product.
We cannot currently predict the specific outcome or impact on our business of such regulatory and legislative initiatives, litigation or investigation. However, it is our
policy, which is in compliance with the CREATES Act, to evaluate requests for samples of our approved product, and to provide samples in response to bona fide
requests from qualified third parties, including generic manufacturers, subject to specified conditions. We have provided samples of Jelmyto to certain generic
manufacturers.
We expect current and future legislation affecting the healthcare industry, including healthcare reform, to impact our business generally and to increase limitations
on reimbursement, rebates and other payments, which could adversely affect third-party coverage of our products, our operations, and/or how much or under what
circumstances healthcare providers will prescribe or administer our products, if approved.
The United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in
ways that could affect our ability to sell our products profitably. Among policy makers and payors in the United States and elsewhere, there is significant interest in
promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access. In the United States, the
pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the
“ACA”) was signed into law. The ACA intended, among other things, to broaden access to health insurance, improve quality of care, and reduce or constrain the growth
of healthcare spending.
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There have been judicial, Congressional and executive branch challenges and amendments to certain aspects of the For example, on August 16, 2022, the Inflation
Reduction Act of 2022 (“IRA”) was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA
marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the
beneficiary maximum out-of-pocket cost and through a newly established manufacturer discount program. It is possible that the ACA will be subject to judicial or
Congressional challenges in the future. It is unclear any such challenges, other litigation and the healthcare reform measures of the current administration will impact
the ACA and our business.
In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes include aggregate reductions to Medicare payments
to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011, which began in 2013 and, due to subsequent legislative amendments to the statute,
including the Infrastructure Investment and Jobs Act, will remain in effect until 2032 unless additional Congressional action is taken. Further, on March 11, 2021, the
American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s AMP, for single
source and innovator multiple source drugs, effective January 1, 2024.
Additionally, there have been several recent U.S. presidential executive orders, Congressional inquiries and proposed and enacted legislation at the federal and state
levels designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce
the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs. At the federal level, on November 15, 2021, the
Infrastructure Investment and Jobs Act was signed into law. On January 1, 2023, manufacturers began to be required to pay quarterly refunds to the Centers for
Medicare & Medicaid Services ("CMS")for discarded amounts of certain single-dose container and single-use package drugs payable under part B of the Medicare
program. Refunds are generally based on the discarded volume above 10% of the total allowed amount. However, in unique circumstances, CMS will increase the
applicable threshold to 35%. At this time, CMS has determined that Jelmyto fits within this unique circumstance classification. In addition, the IRA, among other things,
(1) directs the U.S. Department of Health and Human Services (“HHS”) to negotiate the price of certain high expenditure, single-source drugs that have been on the
market for at least 7 years covered under Medicare (the “Medicare Drug Price Negotiation Program”) and (2) imposes rebates under Medicare Part B and Medicare Part
D to penalize price increases that outpace inflation. These provisions began to take effect progressively starting in fiscal year 2023. On August 15, 2024, HHS announced
the agreed-upon reimbursement prices of the first ten drugs that were subject to price negotiations, although the Medicare Drug Price Negotiation Program is currently
subject to legal challenges. On January 17, 2025, HHS selected fifteen additional products covered under Part D for price negotiation in 2025. Each year thereafter more
Part B and Part D products will become subject to the Medicare Drug Price Negotiation Program. Further, on December 7, 2023, an initiative to control the price of
prescription drugs through the use of march-in rights under the Bayh-Dole Act was announced. On December 8, 2023, the National Institute of Standards and
Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price
of a product as one factor an agency can use when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is uncertain if that
will continue under the new framework.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing,
including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and,
in some cases, designed to encourage importation from other countries and bulk purchasing. If healthcare policies or reforms intended to curb healthcare costs are
adopted, or if we experience negative publicity with respect to the pricing of our products or the pricing of pharmaceutical drugs generally, the prices that we charge
for any approved products may be limited, our commercial opportunity may be limited and/or our revenues from sales of our products may be negatively impacted.
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These laws may result in additional reductions in healthcare funding, which could have an adverse effect on our customers and accordingly, our financial operations.
Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products.
We cannot be sure whether additional legislative changes will be enacted, or whether regulations, guidance or interpretations will be changed, or what the impact of
such changes on our operations, including the marketing approvals of UGN-102 or our other product candidates may be.
Although we cannot predict the full effect on our business of the implementation of existing legislation or the enactment of additional legislation pursuant to
healthcare and other legislative reform, we believe that legislation or regulations that would reduce reimbursement for, or restrict coverage of, our products could
adversely affect how much or under what circumstances healthcare providers will prescribe or administer our products. Further, the current administration is pursuing
policies to reduce regulations and expenditures across government including at HHS, the FDA, CMS and related agencies. These actions, presently directed by executive
orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business. These actions may
include, for example, directives to reduce agency workforce, rescinding a Biden administration executive order tasking the CMMI to consider new payment and
healthcare models to limit drug spending and eliminating the Biden administration’s executive order that directed HHS to establishing an AI task force and developing a
strategic plan. Additionally, in its June 2024 decision in Loper Bright Enterprises v. Raimondo (“Loper Bright”), the U.S. Supreme Court overturned the longstanding
Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper
Bright decision could result in additional legal challenges to current regulations and guidance issued by federal agencies applicable to our operations, including those
issued by the FDA. Congress may introduce and ultimately pass health care related legislation that could impact the drug approval process and make changes to the
Medicare Drug Price Negotiation Program created under the IRA. We cannot predict which additional measures may be adopted or the impact of current and additional
measures on the marketing, pricing and demand for Jelmyto or our future product candidates, if approved, which could have a material adverse effect on our business,
financial condition and results of operations.
We may be unable to obtain Orphan Drug Designation or exclusivity for future product candidates we may develop. If our competitors are able to obtain orphan
drug exclusivity for their products that are for the same indication as our product candidates, we may not be able to have competing products approved by the
applicable regulatory authority for a significant period of time.
Under the Orphan Drug Act of 1983 (the "Orphan Drug Act"), the FDA may designate a product as an orphan drug if it is intended to treat an orphan disease or
condition, defined as a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States where there is
no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States.
In the United States, Orphan Drug Designation entitles a party to financial incentives, such as opportunities for grant funding towards clinical trial costs, tax advantages
and user-fee waivers. In addition, if a product receives the first FDA approval for the indication for which it has Orphan Drug Designation, the product is entitled to
orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same indication for a period of seven years,
except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer is unable to assure
sufficient product quantity. Although the FDA has granted orphan drug exclusivity to Jelmyto for the treatment of UTUC, we may not receive orphan drug exclusivity for
any of our other product candidates that have received orphan designation.
Although the FDA has granted Orphan Drug Designation to Jelmyto and UGN-201 for treatment of UTUC and CIS, respectively, we may not receive Orphan Drug
Designation for any of our other product candidates. If our competitors are able to obtain orphan drug exclusivity for their products that are the same or similar to our
product candidates before our drug candidates are approved, we may not be able to have competing product candidates approved by the FDA for a significant period of
time. Any delay in our ability to bring our product candidates to market would negatively impact our business, revenue, cash flows and operations.
Orphan Drug Designation may not ensure that we will enjoy market exclusivity in a particular market, and if we fail to obtain or maintain orphan drug exclusivity for
our product candidates, we may be subject to earlier competition and our potential revenue will be reduced.
Orphan Drug Designation entitles a party to financial incentives, such as opportunities for grant funding towards clinical trial costs, tax advantages, user-fee waivers and
market exclusivity for certain periods of time.
Jelmyto and UGN-201 have been granted Orphan Drug Designation for the treatment of UTUC and CIS, respectively, in the United States. Even if we obtain Orphan Drug
Designation for our other product candidates, we may not be the first to obtain regulatory approval for any particular orphan indication due to the uncertainties
associated with developing biotechnology products. Further, even if we obtain Orphan Drug Designation for a product candidate, that exclusivity may not effectively
protect the product from competition because different drugs with different active moieties can be approved for the same condition. In addition, if a competitor
obtains approval and marketing exclusivity for a drug product with an active moiety that is the same as that in a product candidate we are pursuing for the same
indication, approval of our product candidate would be blocked during the period of marketing exclusivity unless we could demonstrate that our product candidate is
clinically superior to the approved product. Conversely, even if we are granted orphan exclusivity, a competitor that demonstrates clinical superiority with the same
active moiety may obtain approval prior to expiration of our exclusivity. In addition, if a competitor obtains approval and marketing exclusivity for a drug product with
an active moiety that is the same as that in a product candidate we are pursuing for a different orphan indication, this may negatively impact the market opportunity for
our product candidate. There have been legal challenges to aspects of the FDA’s regulations and policies concerning the exclusivity provisions of the Orphan Drug Act,
and future challenges could lead to changes that affect the protections afforded to our product candidates in ways that are difficult to predict.
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Jelmyto and any of our product candidates that receive regulatory approval will be subject to ongoing regulatory obligations and continued regulatory review,
which may result in significant additional expenses, limit or withdraw regulatory approval and subject us to penalties if we fail to comply with applicable regulatory
requirements.
Jelmyto and any of our product candidates that receive regulatory approval will be subject to continual regulatory review by the FDA and/or foreign regulatory
authorities. Additionally, Jelmyto and any of our product candidates that receive regulatory approval will be subject to extensive and ongoing regulatory requirements,
including labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience
unanticipated problems with our products.
The FDA approval of Jelmyto is, and any regulatory approvals that we receive for our product candidates may be, subject to limitations on the approved indications for
which the product may be marketed or to the conditions of approval. In addition, any regulatory approvals that we receive for our current or future product candidates
may contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the
product. In addition, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for
Jelmyto is, and any of our product candidates that receive regulatory approval will be, subject to extensive and ongoing regulatory requirements. These requirements
include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP and GCP for any clinical trials
that we conduct post-approval.
Later discovery of previously unknown problems with our products or product candidates, including adverse events of unanticipated severity or frequency, or problems
with our third-party manufacturers’ processes, or failure to comply with regulatory requirements, may result in, among other things:
•
restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;
•
fines, warning letters or holds on clinical trials;
•
refusal by the FDA to approve pending applications or supplements to approved applications submitted by us, or suspension or revocation of product license
approvals; and
•
product seizure or detention, or refusal to permit the import or export of products; and injunctions or the imposition of civil or criminal penalties.
Our ongoing regulatory requirements may also change from time to time, potentially harming or making costlier our commercialization efforts. We cannot predict the
likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or other countries. If we
are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory
compliance, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability, which would adversely affect our
business.
Our relationships with healthcare professionals, independent contractors, clinical investigators, CROs, consultants and vendors in connection with our current and
future business activities may be subject to federal and state healthcare fraud and abuse laws, false claims laws, transparency laws, government price reporting,
and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face significant penalties.
We are subject to various U.S. federal, state and foreign health care laws, including those intended to prevent health care fraud and abuse. These laws may impact,
among other things, our clinical research, sales and marketing activities, and constrain the business or financial arrangements with healthcare providers, physicians, and
other parties that have the ability to directly or indirectly influence the prescribing, ordering, marketing, or distribution of products for which we obtain marketing
approval.
The federal Anti-Kickback Statute prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any
remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the
referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part,
by a federal healthcare program such as Medicare and Medicaid. Remuneration has been broadly defined to include anything of value, including, but not limited to,
cash, improper discounts, and free or reduced-price items and services.
Federal false claims laws, including the federal civil False Claims Act (the "FCA"), and civil monetary penalties law impose penalties against individuals or entities for,
among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false or fraudulent or making
a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government. The FCA has been used to, among other things,
prosecute persons and entities submitting claims for payment that are inaccurate or fraudulent, that are for services not provided as claimed, or for services that are
not medically necessary. The FCA includes a whistleblower provision that allows individuals to bring actions on behalf of the federal government and share a portion of
the recovery of successful claims.
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Many states have similar fraud and abuse statutes and regulations that may be broader in scope and may apply regardless of payor, in addition to items and services
reimbursed under Medicaid and other state programs. State and federal authorities have aggressively targeted pharmaceutical companies for, among other things,
alleged violations of these anti-fraud statutes, based on among other things, unlawful financial inducements paid to prescribers and beneficiaries, as well as
impermissible promotional practices, including certain marketing arrangements that rely on volume-based pricing and off-label promotion of FDA-approved products.
The federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), among other things, imposes civil and criminal liability for knowingly and willfully
executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including public and private payors, or knowingly and willfully falsifying,
concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or
services.
Additionally, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their implementing regulations,
impose, among other things, specified requirements on covered entities, including certain healthcare providers, health plans, and healthcare clearinghouses, and their
business associates as well as their covered subcontractors relating to the privacy, security and transmission of individually identifiable health information, including
mandatory contractual terms and required implementation of certain safeguards of such information. Among other things, HITECH makes HIPAA’s security standards
directly applicable to business associates, independent contractors or agents of covered entities that receive or obtain protected health information in connection with
providing a service on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties
directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce
HIPAA and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in
some circumstances, many of which differ from each other in significant ways, may not have the same effect and may not be preempted by HIPAA, thus complicating
compliance efforts.
Our operations are also subject to the federal Open Payments program pursuant to the Physician Payments Sunshine Act, created under Section 6002 of the ACA and its
implementing regulations, which requires certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare,
Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information related to payments and other transfers of value
provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals (such as physician
assistants and nurse practitioners) and teaching hospitals and certain ownership and investment interests held by physicians and their immediate family members to
CMS. We may also be subject to state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and
other healthcare providers or marketing expenditures, drug pricing, and/or state laws that require pharmaceutical companies to comply with the pharmaceutical
industry’s voluntary compliance guidelines and the relevant compliance guidelines promulgated by the federal government.
Many states have also adopted laws similar to each of the above federal laws, which may be broader in scope and apply to items or services reimbursed by any payor,
including commercial insurers. In addition, we may be subject to certain foreign healthcare laws that are analogous to the U.S. healthcare laws described above. If any
of our business activities, including but not limited to our relationships with healthcare providers, are found to violate any of the aforementioned laws, we may be
subject to significant administrative, civil and criminal penalties, damages, monetary fines, disgorgement, imprisonment, possible exclusion from participation in
Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, additional reporting requirements and oversight if we become
subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, diminished profits and future earnings and
curtailment or restructuring of our operations.
Also, the FCPA and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for
the purpose of obtaining or retaining business. We cannot assure you that our internal control policies and procedures will protect us from reckless or negligent acts
committed by our employees, future distributors, partners, collaborators or agents. Violations of these laws, or allegations of such violations, could result in fines,
penalties or prosecution and have a negative impact on our business, results of operations and reputation.
Legislative or regulatory healthcare reforms in the United States or abroad may make it more difficult and costly for us to obtain regulatory clearance or approval of
our product candidates or any future product candidates and to produce, market, and distribute our products after clearance or approval is obtained.
From time to time, legislation is drafted and introduced in Congress in the United States or by governments in foreign jurisdictions that could significantly change the
statutory provisions governing the regulatory clearance or approval, manufacture, and marketing of regulated products or the reimbursement thereof. In addition, FDA
or foreign regulatory agency regulations and guidance are often revised or reinterpreted by the FDA or the applicable foreign regulatory agency in ways that may
significantly affect our business and our products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen
review times of our product candidates or any future product candidates. We cannot determine what effect changes in regulations, statutes, legal interpretation or
policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require:
•
changes to manufacturing methods;
•
recall, replacement, or discontinuance of one or more of our products; and
•
additional recordkeeping.
Each of these would likely entail substantial time and cost and could harm our business and our financial results. In addition, delays in receipt of or failure to receive
regulatory clearances or approvals for any future products would harm our business, financial condition, and results of operations.
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We and the third parties with whom we work are subject to stringent and changing U.S. and foreign laws, regulations, and rules, contractual obligations, industry
standards, self-regulatory schemes, government regulation, policies, standards, and other obligations related to data privacy and security. The actual or perceived
failure by us, our customers, partners or vendors to comply with such obligations could lead to regulatory investigations or actions; litigation (including class claims)
and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or
sales; or otherwise adversely affect our business.
In the ordinary course of our business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and
share (collectively, "process") Sensitive Information. Our data processing activities are subject to numerous data privacy and security obligations, such as domestic and
foreign laws and regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating
to privacy, data protection, and data security.
In the United States, federal, state, and local governments have enacted numerous privacy, data protection, and data security laws, including data breach notification
laws, personal data privacy laws, and consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
For example, as further described above, HIPAA imposes specific requirements relating to the privacy, security, and transmission of individually identifiable health
information. In the past few years, numerous U.S. states—including California, Virginia, Colorado, Connecticut, and Utah—have enacted comprehensive privacy laws
that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning
their personal data. As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing
activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business and ability to provide our
products and services. Certain states also impose stricter requirements for processing certain personal data, including Sensitive Information, such as conducting data
privacy impact assessments. These state laws allow for statutory fines for noncompliance. For example, the California Consumer Privacy Act of 2018 as amended by the
California Privacy Rights Act of 2020 (collectively “CCPA”) applies to personal data of consumers, business representatives, and employees who are California residents,
and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights. The CCPA provides
for fines and allows private litigants affected by certain data breaches to recover significant statutory damages. The CCPA and other comprehensive U.S. state privacy
laws exempt some data processed in the context of clinical trials, but these developments may further complicate compliance efforts, and increase legal risk and
compliance costs for us and the third parties with whom we work. Similar laws are being considered at the federal, state, and local levels and we expect more states to
pass similar laws in the future. Furthermore, we are subject to new laws governing the privacy of consumer health data. For example, Washington’s My Health My Data
Act (“MHMD”) broadly defines consumer health data, places restrictions on processing consumer health data (including imposing stringent requirements for consents),
provides consumers certain rights with respect to their health data, and creates a private right of action to allow individuals to sue for violations of the law. Other states
are considering and may adopt similar laws. These laws demonstrate our vulnerability to the evolving regulatory environment related to personal data. As we expand
our operations, these and similar laws may increase our compliance costs and potential liability.
Outside the United States, an increasing number of laws, regulations, and industry standards apply to privacy, data protection, and data security. For example, the
European Union’s General Data Protection Regulation (“EU GDPR”) and the United Kingdom’s GDPR (“UK GDPR”) impose strict requirements for processing personal
data. Our upcoming clinical trial will include sites in the EU, which will increase our exposure to potential liability under the EU GDPR. For example, under the GDPR,
companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros under the EU GDPR, 17.5 million
pounds sterling under the UK GDPR or, in each case, 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data
brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests. We anticipate that over time we may expand
our business to include additional operations outside of the United States and Israel. With such expansion, we would be subject to increased governmental regulation
in other countries in which we might operate, including the EU GDPR. Assisting our customers, partners, and vendors in complying with the EU GDPR or other foreign
laws, or complying with such laws ourselves, may cause us to incur substantial operational costs or require us to change our business practices. Additionally, under
various privacy laws and other obligations, we may be required to obtain certain consents to process personal data. Our inability or failure to do so could result in
adverse consequences, including class action litigation and mass arbitration demands.
Moreover, in the ordinary course of business, we transfer personal data from Europe and other jurisdictions to the United States or other countries. Europe and other
jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. In particular, the European Economic Area
("EEA") and the United Kingdom ("UK") have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it
generally believes are inadequate. Other jurisdictions may adopt or have already adopted similarly stringent data localization and cross-border data transfer laws.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as
the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S. Data Privacy Framework and the UK extension
thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to
legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States. If there is no lawful
manner for us to transfer personal data from other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could
face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing
activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer
data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our
business. Inability to import personal data from Europe to the United States may limit our ability to conduct clinical trial activities in Europe, limit our ability to
collaborate with CROs, service providers, contractors and other entities subject to European data protection laws, adversely impact our operations, product
development and ability to provide our products, and require us to increase our data processing capabilities in Europe at significant expense. Additionally, companies
that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual
litigants, and activist groups. Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly
violating the GDPR’s cross-border data transfer limitations. Regulators in the United States, such as the Department of Justice, are also increasingly scrutinizing certain
personal data transfers and have proposed and may enact certain data localization requirements, for example, the Biden Administration’s executive order Preventing
Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern.
Our employees and personnel may use generative artificial intelligence (“AI”) technologies to perform their work, and the disclosure and use of personal data in
generative AI technologies is subject to various privacy laws and other privacy obligations. Governments have passed and are likely to pass additional laws regulating
generative AI. Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits. If we are unable to use
generative AI, it could make our business less efficient and result in competitive disadvantages. We may also use AI or machine learning ("ML") to assist us in making
certain decisions, which is regulated by certain privacy laws. Due to inaccuracies or flaws in the inputs, outputs, or logic of the AI/ML, the model could be biased and
could lead us to make decisions that could bias certain individuals (or classes of individuals), and adversely impact their rights, employment, and ability to obtain certain
pricing, products, services, or benefits.
We are also bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful. For example,
certain privacy laws, such as the GDPR and the CCPA, require our customers to impose specific contractual restrictions on their service providers. We publish privacy
policies, marketing materials, whitepapers, and other statements such as statements related to security or compliance with certain certifications or self-regulatory
principles, regarding concerning data privacy and security. Regulators in the United States are increasingly scrutinizing these statements, and if these policies, materials
or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigation,
enforcement actions by regulators or other adverse consequences.
Obligations related to data privacy and security (and individuals’ data privacy expectations) are quickly changing, becoming increasingly stringent, and creating
uncertainty. Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions.
Preparing for and complying with these obligations require us to devote significant resources, which may necessitate changes to our services, information technologies,
systems, and practices and to those of any third parties that process personal data on our behalf. In addition, these obligations may require us to change our business
model. Our business model materially depends on our ability to process personal data, so we are particularly exposed to the risks associated with the rapidly changing
legal landscape. For example, we may be at heightened risk of regulatory scrutiny, and any changes in the regulatory framework could require us to fundamentally
change our business model. We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover,
despite our efforts, our personnel or third parties with whom we work may fail to comply with such obligations, which could negatively impact our business operations.
If we or the third parties with whom we work fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could
face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar);
litigation (including class-action claims) and mass arbitration demands; additional reporting requirements and/or oversight; bans or restrictions on processing personal
data; orders to destroy or not use personal data; and imprisonment of company officials. In particular, plaintiffs have become increasingly more active in bringing
privacy-related claims against companies, including class claims and mass arbitration demands. Some of these claims allow for the recovery of statutory damages on a
per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations. Any of these
events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or
stoppages in our business operations (including clinical trials); inability to process personal data or to operate in certain jurisdictions; limited ability to develop or
commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; and substantial changes to our business model or
operations.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could negatively
impact our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage,
treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological
materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot
eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be
held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and
penalties.
We maintain workers compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous
materials or other work-related injuries with policy limits that we believe are customary for similarly situated companies and adequate to provide us with coverage for
foreseeable risks. Although we maintain such insurance, this insurance may not provide adequate coverage against potential liabilities. In addition, we may incur
substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may
impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other
sanctions.
It may be difficult for us to profitably sell our product and any product candidates that receive regulatory approval if coverage and reimbursement for these
products is limited by government authorities and/or third-party payor policies.
In addition to any healthcare reform measures which may affect reimbursement, market acceptance and sales of Jelmyto, UGN-102 and our other product candidates, if
approved, will depend on the coverage and reimbursement policies of third-party payors, like government authorities, private health insurers, and managed care
organizations. Third-party payors decide which medications they will cover and separately establish reimbursement levels. In October 2020, a Medicare C-Code was
issued for Jelmyto and we have obtained pass-through status for two years, no more than three. CMS has established a permanent and product-specific J-code for
Jelmyto that took effect on January 1, 2021. Our existing pass-through status was set to expire in the fourth quarter of 2023. However, CMS granted Jelmyto a New
Technology APC, effective from October 1, 2023. A service is separately for paid under a New Technology APC until sufficient claims data have been collected to allow
CMS to assign the procedure to a clinical APC group that is appropriate in clinical and resource terms. This generally occurs within two to three years from the time a
new HCPCS code becomes effective. However, if CMS are able to collect sufficient claims data in less than two years, CMS may consider reassigning the service to an
appropriate APC, or, if CMS does not have sufficient data at the end of three years upon which to base its reassignment to an appropriate clinical APC, CMS may keep
the service in a New Technology APC until adequate data become available. Loss of our New Technology APC may result in Medicare beneficiaries losing access to
Jelmyto in the hospital outpatient setting and Jelmyto becoming packaged into a comprehensive APC.
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government and other third-party payors are increasingly challenging the prices
charged for health care products, examining the cost effectiveness of drugs in addition to their safety and efficacy, and limiting or attempting to limit both coverage and
the level of reimbursement for prescription drugs. Although our experience to date has demonstrated coverage for Jelmyto, we cannot be sure that adequate coverage
will be available for UGN-102 or our other product candidates, if approved, or, if coverage is available, the level of reimbursement will be adequate to make our
products affordable for patients or profitable for us. In addition, if inflation or other factors were to significantly increase our business costs, it may not be feasible to
pass price increases on to our customers due to the process by which healthcare providers are reimbursed for our product candidates.
There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, decisions about reimbursement
for new medicines under Medicare are made by CMS, as the administrator for the Medicare program. Private third-party payors often use CMS as a model for their
coverage and reimbursement decisions, but also have their own methods and approval process apart from CMS’s determinations. Our experience to date has
demonstrated coverage with CMS and commercial payors for Jelmyto, and we have established written policies with certain commercial providers. However, it is
difficult to predict what CMS as well as other third-party payors will decide with respect to reimbursement for fundamentally novel products such as ours, as there is no
body of established practices and precedents for these new products.
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Reimbursement may impact the demand for, and/or the price of, any product for which we obtain marketing approval. Assuming we obtain coverage for a given product
by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high. Patients who
are prescribed medications for the treatment of their conditions, and their prescribing physicians, generally rely on third-party payors to reimburse all or part of the
costs associated with their prescription drugs. Patients are unlikely to use our products unless coverage is provided, and reimbursement is adequate to cover all or a
significant portion of the cost of our products. Moreover, for products administered under the supervision of a physician, obtaining and maintaining coverage and
adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement for the
product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization. Therefore, coverage and
adequate reimbursement is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products
when more established or lower cost therapeutic alternatives are already available or subsequently become available. There may be significant delays in obtaining
coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or applicable
foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that a drug will be paid for in all cases or at a rate that covers our
costs, including research, development, manufacture, sale and distribution.
Reimbursement by a third-party payor may depend upon a number of factors including the third-party payor’s determination that use of a product is:
•
a covered benefit under its health plan;
•
safe, effective and medically necessary;
•
appropriate for the specific patient;
•
cost-effective; and
•
neither experimental nor investigational.
Obtaining and maintaining coverage and reimbursement approval for a product from a government or other third-party payor is a time-consuming and costly process
that could require us to provide supporting scientific, clinical and cost effectiveness data for the use of our products to the payor. Further, no uniform policy
requirement for coverage and reimbursement for drug products exists among third-party payors in the United States. Therefore, coverage and reimbursement for drug
products can differ significantly from payor to payor. As a result, the coverage determination process may require us to provide scientific and clinical support for the use
of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.
We may not be able to provide data sufficient to gain acceptance with respect to coverage and/or sufficient reimbursement levels.
Although we have obtained written policy coverage in commercial plans as well as coverage for government plans for Jelmyto to date, we cannot be sure that adequate
coverage or reimbursement will continue to be available for Jelmyto, or be available for UGN-102 or any of our other product candidates, if approved. Also, we cannot
be sure that reimbursement amounts will not reduce the demand for, or the price of, our future products. If reimbursement is not available, or is available only to
limited levels, we may not be able to successfully commercialize Jelmyto, UGN-102 or our other product candidates, or achieve profitably at all, even if approved.
Additionally, coverage policies and reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for any of our
products or product candidates that receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. For
example, beginning on January 1, 2023, manufacturers began to be required to pay quarterly refunds to CMS for discarded amounts of single-dose container and single-
use package drugs covered under Medicare Part B. Rebates will generally be based on the discarded volume above 10% of the total allowed amount. CMS has been
receptive to evaluating the feasibility of the 10% threshold, and where appropriate, has modified the discarded volume threshold accordingly. In unique circumstances,
CMS will increase the applicable threshold to 35%. At this time, CMS has determined that Jelmyto fits within this unique circumstance. If we are unable to obtain and
maintain sufficient third‑party coverage and adequate reimbursement for our products, the commercial success of our products may be greatly hindered and our
financial condition and results of operations may be materially and adversely affected.
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Risks Related to Ownership of Our Ordinary Shares
The market price of our ordinary shares has been and may continue to be subject to fluctuation and you could lose all or part of your investment.
The stock market in general, and the market price of our ordinary shares in particular, has been and may continue to be, subject to fluctuation, whether due to, or
irrespective of, our operating results and financial condition. The market price of our ordinary shares on the Nasdaq Global Market may fluctuate as a result of a
number of factors, some of which are beyond our control, including, but not limited to:
•
the success of our ongoing commercialization of Jelmyto;
•
actual or anticipated variations in our and our competitors’ results of operations and financial condition;
•
physician and market acceptance of Jelmyto or any other approved product;
•
the mix of products that we sell;
•
any voluntary or mandatory recall of Jelmyto or any other approved product, or the imposition of any additional labeling, marketing or promotional
restrictions;
•
our success or failure to obtain approval for and commercialize our product candidates;
•
changes in the structure of healthcare payment systems;
•
changes in earnings estimates or recommendations by securities analysts, if our ordinary shares are covered by analysts;
•
development of technological innovations or new competitive products by others;
•
announcements of technological innovations or new products by us;
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publication of the results of nonclinical or clinical trials for Jelmyto, UGN-102 or our other product candidates;
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failure by us to achieve a publicly announced milestone;
•
delays between our expenditures to develop and market new or enhanced product candidates and the generation of sales from those products;
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developments concerning intellectual property rights;
•
the announcement of, or developments in, any litigation matters, including any product liability claims related to Jelmyto or any of our product candidates;
•
regulatory developments and the decisions of regulatory authorities as to the approval or rejection of new or modified products;
•
changes in the amounts that we spend to develop, acquire or license new products, technologies or businesses;
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changes in our expenditures to promote our products;
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the sale or proposed sale, by us or our significant shareholders, of our ordinary shares or other securities in the future;
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changes in key personnel;
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success or failure of our research and development projects or those of our competitors;
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the trading volume of our ordinary shares; and
•
general economic and market conditions and other factors, including factors unrelated to our operating performance.
These factors and any corresponding price fluctuations may negatively impact the market price of our ordinary shares and result in substantial losses being incurred by
our investors. In the past, following periods of market volatility, public company shareholders have often instituted securities class action litigation. If we were to
become involved in securities litigation, it could impose a substantial cost upon us and divert the resources and attention of our management from our business.
Future sales of our ordinary shares could reduce the market price of our ordinary shares.
If our existing shareholders, particularly our directors, their affiliates, or our executive officers, sell a substantial number of our ordinary shares in the public market, the
market price of our ordinary shares could decrease significantly. The perception in the public market that our shareholders might sell our ordinary shares could also
depress the market price of our ordinary shares and could impair our future ability to obtain capital, especially through an offering of equity securities.
In addition, our sale of additional ordinary shares or other securities in order to raise capital might have a similar negative impact on the share price of our ordinary
shares. A decline in the price of our ordinary shares might impede our ability to raise capital through the issuance of additional ordinary shares or other equity
securities and may cause you to lose part or all of your investment in our ordinary shares.
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Future equity offerings could result in future dilution and could cause the price of our ordinary shares to decline.
In order to raise additional capital, we may in the future offer additional ordinary shares or other securities convertible into or exchangeable for our ordinary shares at
prices that we determine from time to time, and investors purchasing shares or other securities in the future could have rights superior to existing shareholders. We
may choose to raise additional capital due to market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future
operating plans. On December 20, 2019, we entered into the ATM Sales Agreement pursuant to which we may from time to time offer and sell our ordinary shares,
having an aggregate offering price of up to $100.0 million, to or through TD Cowen, acting as sales agent or principal, in any manner deemed to be an “at-the market
offering.” As of December 31, 2024, $27.3 million remains available for sale under the ATM Sales Agreement. The shares will be offered and sold, if any, pursuant to our
shelf registration statement on Form S-3 filed with the SEC on November 15, 2022, which was declared effective on November 29, 2022, or a subsequent shelf
registration statement.
We have never paid cash dividends on our share capital, and we do not anticipate paying any cash dividends in the foreseeable future.
We have never declared or paid cash dividends on our share capital, nor do we anticipate paying any cash dividends on our share capital in the foreseeable future. We
currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of our
ordinary shares will be investors’ sole source of gain for the foreseeable future. In addition, Israeli law limits our ability to declare and pay dividends and may subject
our dividends to Israeli withholding taxes. The Loan Agreement also restricts our ability to pay dividends.
If we are classified as a passive foreign investment company ("PFIC"), our U.S. shareholders may suffer adverse tax consequences.
Generally, for any taxable year, if at least 75% of our gross income is passive income, or at least 50% of the value of our assets is attributable to assets that produce
passive income or are held for the production of passive income, including cash, we would be characterized as a PFIC for U.S. federal income tax purposes.
The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis and the applicable law is subject to varying interpretation. In
particular, the characterization of our assets as active or passive may depend in part on our current and intended future business plans, which are subject to change. In
addition, the total value of our assets for PFIC testing purposes may be determined in part by reference to the market price of our ordinary shares from time to time,
which may fluctuate considerably. Under the income test, our status as a PFIC depends on the composition of our income which will depend on the transactions we
enter into in the future and our corporate structure. The composition of our income and assets is also affected by how, and how quickly, we spend the cash we raise in
any offering.
Based on our analysis of our income, assets, activities and market capitalization, we do not believe that we were a PFIC for the taxable year ended December 31, 2024.
However, because the determination of whether or not we are a PFIC is a fact-intensive determination made on an annual basis, and because the applicable law is
subject to varying interpretation, we cannot provide any assurances regarding our PFIC status for any past, current or future taxable years. Our U.S. tax counsel has not
provided any opinion regarding our PFIC status in any taxable year.
If we are characterized as a PFIC, our U.S. shareholders may suffer adverse tax consequences, including having gains realized on the sale of our ordinary shares treated
as ordinary income, rather than capital gain, the loss of the preferential rate applicable to dividends received on our ordinary shares by individuals who are U.S.
shareholders who are individuals, having interest charges apply to distributions by us and gains from the sales of our shares, and additional reporting requirements
under U.S. federal income tax laws and regulations. A U.S. Holder that (i) owns our ordinary shares at any point during a year in which we are characterized as a PFIC
and (ii) does not timely make a QEF election (as described below) will treat such ordinary shares as stock in a PFIC for all subsequent tax years, even if we no longer
qualify as a PFIC under the relevant tests in such subsequent tax years. A U.S. shareholder of a PFIC generally may mitigate these adverse U.S. federal income tax
consequences by making a qualified electing fund (“QEF”) election, or, in some circumstances, a “mark to market” election. However, there is no assurance that we will
provide the information required by the IRS in order to enable U.S. shareholders to make a timely QEF election. Moreover, there is no assurance that we will have timely
knowledge of our status as a PFIC in the future. Accordingly, U.S. shareholders may be unable to make a timely QEF election with respect to our ordinary shares.
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Changes to tax laws could have a material adverse effect on us and reduce net returns to our shareholders.
Our tax treatment is subject to changes in tax laws, regulations and treaties, or the interpretation thereof, as well as tax policy initiatives and reforms under
consideration and the practices of tax authorities in jurisdictions in which we operate, including those related to the Organisation for Economic Co-Operation and
Development’s ("OECD") Base Erosion and Profit Shifting ("BEPS") Project (including "BEPS 2.0"), and the European Commission’s state aid investigations and other
initiatives.
Such changes may include (but are not limited to) the taxation of operating income, investment income, dividends received or, in the specific context of withholding tax,
dividends paid. The OECD has published a package of measures for reform as a product of BEPS, which include the reallocation of global profits above a fixed profit
margin of large multinational companies to market jurisdictions based, broadly, on customer location (referred to as the Pillar One rules) as well as the introduction of a
global minimum tax (referred to as the Pillar Two rules). Many countries have enacted, or are in the process of enacting, core elements of the Pillar Two rules. Based on
our current understanding of the minimum revenue thresholds, we currently expect to be outside the scope of both the Pillar One and Pillar Two rules, but could fall
within their scope in the future, which could increase our tax obligations and compliance costs.
We are unable to predict what tax reform may be proposed or enacted in the future or what effect such changes would have on our business, but such changes, to the
extent they are brought into tax legislation, regulations, policies or practices, could affect our financial position and overall or effective tax rates in the future in
countries where we have operations, reduce post-tax returns to our shareholders, and increase the complexity, burden and cost of tax compliance.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could affect the tax treatment of our domestic
and foreign earnings. Any new taxes could adversely affect our domestic and international business operations, and our business and financial performance. Further,
existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. Changes in corporate tax rates, the
realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses could have a material impact on the
value of our deferred tax assets, could result in significant one-time charges, and could increase our future tax expenses.
Tax authorities may disagree with our positions and conclusions regarding certain tax positions, resulting in unanticipated costs, taxes or non-realization of expected
benefits.
A tax authority may disagree with tax positions that we have taken, which could result in increased tax liabilities. For example, the U.S. Internal Revenue Service or
another tax authority could challenge our allocation of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany
arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property development. Similarly, a tax authority could assert that we
are subject to tax in a jurisdiction where we believe we have not established a taxable nexus, often referred to as a “permanent establishment” under international tax
treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions. A tax authority may take the position that material
income tax liabilities, interest and penalties are payable by us, in which case, may decide to contest such assessment. Contesting such an assessment may be lengthy
and costly and if we were unsuccessful in disputing the assessment, the implications could increase our anticipated effective tax rate, where applicable.
If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.
If a “United States person” (as defined by the Internal Revenue Code of 1986, as amended (the “Code”)) is treated as owning (directly, indirectly or constructively) at
least 10% of the total combined voting power of all classes of our stock entitled to vote or 10% or more of the total value of all classes of our stock, such United States
person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” ("CFC") in our group (if any). Each United States
shareholder of a CFC may be required to annually report and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed
income” and investments in U.S. property by the CFC, regardless of whether the CFC makes any distributions. In addition, a United States shareholder that realizes gain
from the sale or exchange of shares in a CFC may be required to classify a portion of such gain as dividend income rather than capital gain. An individual who is a United
States shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States
shareholder that is a U.S. corporation. A non-U.S. corporation generally will be classified as a CFC for U.S. federal income tax purposes if United States shareholders
own, directly or indirectly, more than 50% of either the total combined voting power of all classes of stock of such corporation entitled to vote or of the total value of
the stock of such corporation. The determination of CFC status is complex and includes attribution rules, the application of which is not entirely certain. Because our
group includes at least one U.S. subsidiary (UroGen Pharma, Inc.), if we were to form or acquire any non-U.S. subsidiaries in the future, attribution rules could cause
them to be treated as CFCs with respect to any United States person owning (directly, indirectly or constructively) at least 10% of the value or voting power of our
ordinary shares.
We cannot provide any assurances that we will assist investors in determining whether we or any non-U.S. subsidiaries that we may form or acquire in the future would
be treated as a CFC or whether such investor would be treated as a United States shareholder with respect to any such CFC. Further, we cannot provide any assurances
that we will furnish to any United States shareholder information that may be necessary to comply with the reporting and tax paying obligations discussed above.
Failure to comply with these reporting obligations may subject you to significant monetary penalties and may prevent the statute of limitations with respect to your U.S.
federal income tax return for the year for which reporting was due from starting. U.S. shareholders should consult their tax advisors regarding the potential application
of these rules to their investment in our ordinary shares.
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Our ability to use our U.S. net operating loss carryforwards and certain other tax attributes to offset future taxable income and taxes may be limited.
Under U.S. federal income tax law, federal net operating losses ("NOLs") incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely,
but the deductibility of such federal NOLs is limited to 80% of taxable income. In addition, under Sections 382 and 383 of the Code, and corresponding provisions of
state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-
year period, the corporation’s ability to utilize its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be
limited. We have not performed a detailed analysis to determine whether an ownership change under Section 382 of the Code has occurred for UroGen Pharma, Inc. If
we undergo or have undergone an ownership change, our ability to utilize NOLs and other tax attributes could be limited by Sections 382 and 383 of the Code. Future
changes in our share ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. As a result, even if we
attain profitability, we may be unable to use a material portion of our NOLs and other tax attributes, which could negatively impact our future cash flows. In addition, at
the state level, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or
permanently increase state taxes owed.
Risks Related to our Operations in Israel
Our research and development and other significant operations are located in Israel and, therefore, our results may be adversely affected by political, economic and
military instability in Israel.
Our research and development facility is located in Ra’anana, Israel, and certain of our key vendors and suppliers, including Isotopia Molecular Imaging Ltd., our single
contracted supplier for the hydrogel contained in Jelmyto and UGN-102, are located within Israel. If these or any future facilities in Israel were to be damaged,
destroyed or otherwise unable to operate, whether due to war, acts of hostility, earthquakes, fire, floods, hurricanes, storms, tornadoes, other natural disasters,
employee malfeasance, terrorist acts, pandemic, power outages or otherwise, or if performance of our research and development is disrupted for any other reason,
such an event could delay our clinical trials or, if our product candidates are approved and we choose to manufacture all or any part of them internally, jeopardize our
ability to manufacture our products as promptly as our prospective customers will likely expect, or possibly at all. If we experience delays in achieving our development
objectives, or if we are unable to manufacture an approved product within a timeframe that meets our prospective customers’ expectations, our business, prospects,
financial results and reputation could be harmed.
In addition, several countries, principally in the Middle East, restrict doing business with Israel, and additional countries may impose restrictions on doing business with
Israel and Israeli companies whether as a result of hostilities in the region or otherwise. Any hostilities involving Israel, terrorist activities, political instability or violence
in the region or the interruption or curtailment of trade or transport between Israel and its trading partners could adversely affect our operations and results of
operations and adversely affect the market price of our ordinary shares.
In October 2023, Hamas initiated an attack against Israel. In response, Israel’s security cabinet declared war against Hamas. Since the commencement of these events,
there have been continued hostilities along Israel’s northern border with Lebanon (with Hezbollah) and on other fronts from various extremist groups in region, such as
the Houthis in Yemen and various rebel militia groups in Syria and Iraq. In addition, Iran launched direct attacks on Israel. Although a ceasefire was agreed to between
Israel and Hezbollah in Lebanon in November 2024, and a ceasefire was agreed to between Israel and Hamas in January 2025, it is possible that the conflict between
Israel and Hezbollah in Lebanon, the conflict between Israel and Hamas in Gaza, the Houthi attacks, and other ongoing conflicts will escalate into a greater regional
conflict, and that other countries and non-state organizations will join or escalate their involvement in such hostilities.
The scope, intensity and duration of Israel-Hamas war are difficult to predict, as are the economic implications on our business and operations and on Israel’s economy
in general. For example, these events may be intertwined with wider macroeconomic factors relating to a deterioration of Israel’s economic standing that may involve,
for instance, a downgrade in Israel’s credit rating and outlook by rating agencies. Any of these implications on Israel’s security, business, economic or financial
conditions may have an adverse effect on our ability to effectively conduct our business, our results of operations and our ability to raise additional funds.
Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although the Israeli
government is currently committed to covering the reinstatement value of certain damages that are caused by terrorist attacks or acts of war, there can be no assurance
that this government coverage will be maintained, or if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us
could have a material adverse effect on our business, financial condition and results of operations.
Further, our operations could be disrupted by the obligations of our employees to perform military service. As of January 31, 2025, we had 40 employees based in
Israel. Of these employees, some may be military reservists, and may be called upon to perform military reserve duty for periods ranging from several days to several
weeks per year (and in some cases more) until they reach the age of 40 (and in some cases, older) and, in the event of a military conflict, may be called to active duty
for extended periods of time. For example, following October 7, 2023, the Israeli Defense Forces called up more than 350,000 of its reserve forces to serve. It is possible
that there will be further military reserve duty call-ups in the future, which may affect our business due to a shortage of skilled labor and loss of institutional
knowledge, and necessary mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, for example,
may have unintended negative effects and adversely impact our results of operations, liquidity or cash flows.
Provisions of Israeli law and our articles of association may delay, prevent or otherwise impede a merger with, or an acquisition of, us, even when the terms of such
a transaction are favorable to us and our shareholders.
Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving
directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions.
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Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty
with Israel granting tax relief to such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S.
tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of a number of
conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating
companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires,
the tax becomes payable even if no disposition of the shares has occurred.
These provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be considered to
be beneficial by some of our shareholders and may limit the price that investors may be willing to pay in the future for our ordinary shares.
It may be difficult to enforce a judgment of a U.S. court against us and our officers and directors in Israel or the United States, to assert U.S. securities laws claims in
Israel or to serve process on our officers and directors.
We are incorporated in Israel. One of our directors resides outside of the United States, and most of the assets of this director are located outside of the United States.
Therefore, a judgment obtained against us, or this director, including a judgment based on the civil liability provisions of U.S. federal securities laws, may not be
collectible in the United States. Moreover, Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments
rendered against us or this director. Additionally, it may also be difficult to effect service of process on this director in the United States or to assert U.S. securities law
claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the
most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is
applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses, which can be a time
consuming and costly process. Certain matters of procedure will also be governed by Israeli law.
There is little binding case law in Israel that addresses the matters described above.
Your rights and responsibilities as a shareholder will be governed by Israeli law, which differs in some material respects from the rights and responsibilities of
shareholders of U.S. companies.
The rights and responsibilities of the holders of our ordinary shares are governed by our articles of association and by Israeli law. These rights and responsibilities differ
in some material respects from the rights and responsibilities of shareholders in U.S. companies. In particular, a shareholder of an Israeli company has a duty to act in
good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders, and to refrain from abusing
its power in the company, including, among other things, in voting at a general meeting of shareholders on matters such as amendments to a company’s articles of
association, increases in a company’s authorized share capital, mergers and related party transactions requiring shareholder approval, as well as a general duty to
refrain from discriminating against other shareholders. In addition, a shareholder who is aware that it possesses the power to determine the outcome of a vote at a
meeting of the shareholders or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company.
There is limited case law available to assist us in understanding the nature of these duties or the implications of these provisions. These provisions may be interpreted
to impose additional obligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. companies.
Risks Related to Our Management and Employees
We depend on our executive officers and key clinical, technical and commercial personnel to operate our business effectively, and we must attract and retain highly
skilled employees in order to succeed.
Our success depends upon the continued service and performance of our executive officers who are essential to our growth and development. The loss of one or more
of our executive officers could delay or prevent the continued successful implementation of our growth strategy, could affect our ability to manage our company
effectively and to carry out our business plan, or could otherwise be detrimental to us. As of January 31, 2025, we had 235 employees. Therefore, knowledge of our
product candidates and clinical trials is concentrated among a small number of individuals. Members of our executive team as well as key clinical, scientific, technical
and commercial personnel may resign at any time and there can be no assurance that we will be able to continue to retain such personnel. If we cannot recruit suitable
replacements in a timely manner, our business will be adversely impacted.
Our growth and continued success will also depend on our ability to attract and retain additional highly qualified and skilled research and development, operational,
managerial and finance personnel. However, we face significant competition for experienced personnel in the pharmaceutical field. Many of the other pharmaceutical
companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than
we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to quality
candidates than what we have to offer. If we cannot retain our existing skilled scientific and operational personnel and attract and retain sufficiently skilled additional
scientific and operational personnel, as required, for our research and development and manufacturing operations on acceptable terms, we may not be able to
continue to develop and commercialize our existing product candidates or new products. Further, any failure to effectively integrate new personnel could prevent us
from successfully growing our company.
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General Risk Factors
If equity research analysts do not publish research or reports about us or our business or if they issue unfavorable commentary or downgrade our ordinary shares,
the price of our ordinary shares could decline.
The trading market for our ordinary shares relies in part on the research and reports that equity research analysts publish about us and our business, if at all. We do not
have control over these analysts, and we do not have commitments from them to write research reports about us. The price of our ordinary shares could decline if no
research reports are published about us or our business, or if one or more equity research analysts downgrade our ordinary shares or if those analysts issue other
unfavorable commentary or cease publishing reports about us or our business.
Our business could be negatively affected as a result of actions of activist shareholders, and such activism could impact the trading value of our securities.
Shareholders may, from time to time, engage in proxy solicitations or advance shareholder proposals, or otherwise attempt to effect changes and assert influence on
our board of directors and management. Activist campaigns that contest or conflict with our strategic direction or seek changes in the composition of our board of
directors could have an adverse effect on our operating results and financial condition. A proxy contest would require us to incur significant legal and advisory fees,
proxy solicitation expenses and administrative and associated costs and require significant time and attention by our board of directors and management, diverting
their attention from the pursuit of our business strategy. Any perceived uncertainties as to our future direction and control, our ability to execute on our strategy, or
changes to the composition of our board of directors or senior management team arising from a proxy contest could lead to the perception of a change in the direction
of our business or instability which may result in the loss of potential business opportunities, make it more difficult to pursue our strategic initiatives, or limit our ability
to attract and retain qualified personnel and business partners, any of which could adversely affect our business and operating results. If individuals are ultimately
elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create additional value for
our shareholders. We may choose to initiate, or may become subject to, litigation as a result of a proxy contest or matters arising from a proxy contest, which would
serve as a further distraction to our board of directors and management and would require us to incur significant additional costs. In addition, actions such as those
described above could cause significant fluctuations in our share price based upon temporary or speculative market perceptions or other factors that do not necessarily
reflect the underlying fundamentals and prospects of our business.
Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and
results of operations.
Adverse developments that affect financial institutions, such as events involving liquidity that are rumored or actual, have in the past and may in the future lead to bank
failures and market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial
Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate
Capital Corp. were each swept into receivership. In addition, on May 1, 2023, the FDIC seized First Republic Bank and sold its assets to JPMorgan Chase & Co. It is
uncertain whether the U.S. Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of
other banks or financial institutions, or that they would do so in a timely fashion.
Although we assess our banking relationships as we believe necessary or appropriate, our access to cash in amounts adequate to finance or capitalize our current and
projected future business operations could be significantly impaired by factors that affect the financial institutions with which we have banking relationships. These
factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity
agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects
for companies in the financial services industry. These factors could also include factors involving financial markets or the financial services industry generally. The
results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business
operations and our financial condition and results of operations. These could include, but may not be limited to, delayed access to deposits or other financial assets or
the uninsured loss of deposits or other financial assets; or termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to
cash management arrangements.
In addition, widespread investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including
higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more
difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks,
adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or contractual
obligations or result in violations of federal or state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors described above or other
related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial
condition and results of operations.
Unstable market, economic and geo-political conditions may have serious adverse consequences on our business, financial condition and share price.
The global credit and financial markets have experienced extreme volatility and disruptions in the past. These disruptions can result in severely diminished liquidity and
credit availability, increase in inflation, declines in consumer confidence, declines in economic growth, increases in unemployment rates, further bank failures and
uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will
not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment, higher inflation, bank failures or
continued unpredictable and unstable market conditions. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more
difficult, more costly and more dilutive. Our portfolio of corporate and government bonds could also be adversely impacted. Failure to secure any necessary financing in
a timely manner and on favorable terms could have a material adverse effect on our operations, growth strategy, financial performance and share price and could
require us to delay or abandon clinical development plans. In addition, there is a risk that one or more of our current service providers, manufacturers and other
partners may not survive an economic downturn or rising inflation, which could directly affect our ability to attain our operating goals on schedule and on budget.
Other international and geo-political events could also have a serious adverse impact on our business. For instance, in February 2022, Russia initiated military action
against Ukraine. In response, the United States and certain other countries imposed significant sanctions and trade actions against Russia and could impose further
sanctions, trade restrictions, and other retaliatory actions. In October 2023, Hamas initiated an attack against Israel, provoking a war, other hostilities and the risk of a
larger conflict. While we cannot predict the broader consequences, these conflicts and retaliatory and counter-retaliatory actions could materially adversely affect
global trade, currency exchange rates, inflation, regional economies, and the global economy, which in turn may increase our costs, disrupt our supply chain, impair our
ability to raise or access additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of
operations.
Our business could be negatively impacted by environmental, social and corporate governance matters or our reporting of such matters.
There is an increasing focus from certain investors, employees, partners, and other stakeholders concerning environmental, social and corporate governance matters.
We may be, or be perceived to be, not acting responsibly in connection with these matters, which could negatively impact us. For instance, the SEC recently finalized
rules designed to enhance and standardize climate-related disclosures. These climate disclosure rules have been challenged in court and the SEC has issued an order
staying their implementation pending the outcome of judicial review. These new climate-related disclosures, if required, may significantly increase our compliance and
reporting costs and may also result in disclosures that certain investors or other stakeholders deem to impact our reputation negatively and/or that harm our share
price.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk management and strategy
We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our
critical computer networks, third-party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, clinical
trial data, customer data, manufacturing data, and confidential information that is proprietary, strategic or competitive in nature (“Information Systems and Data”).
Our Vice President of Information Technology supervises our Information Technology Department (the “IT Department”) which coordinates with third-party service
providers that perform security management roles, including those of a Chief Information Security Officer, to identify, assess and manage our cybersecurity threats and
risks. Our IT Department and security management team, including third-party service providers, identify and assess risks from cybersecurity threats by monitoring and
evaluating our threat environment using various methods including, for example: manual and automated tools, subscribing to reports and services that identify
cybersecurity threats, analyzing reports of threats and actors, conducting scans of the threat environment, internal audits relating to cybersecurity, conducting threat
assessments for internal and external threats, third-party threat assessments, conducting vulnerability assessments to identify vulnerabilities, use of external
intelligence feeds, evaluating our and our industry’s risk profile, and evaluating threats reported to us.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to
manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: a cybersecurity incident response policy;
asset management, tracking and disposal; incident detection and response; systems monitoring; vulnerability management policy; risk assessments; encryption of
certain of our data; third-party cybersecurity staff; network security controls; segregation of certain of our data; access controls; physical security; employee training;
penetration testing; and cybersecurity insurance.
Our assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes. For example, our IT
Department works with management to prioritize our risk management processes and mitigate cybersecurity threats that are expected to be more likely to lead to a
material impact to our business. In addition, our management evaluates material risks from cybersecurity threats against our overall business objectives and reports to
the audit committee of our board of directors, which, together with our board of directors, evaluates our overall enterprise risk.
We use third-party service providers to assist us to identify, assess, and manage material risks from cybersecurity threats, including, for example: a third-party IT and
cybersecurity consultant; professional services firms, including legal counsel; threat intelligence service providers; cybersecurity software providers; managed
cybersecurity service providers; penetration testing firms; dark web monitoring services; and forensic investigators.
We use third-party service providers to perform a variety of functions throughout our business, such as: conducting nonclinical and clinical trials; supplying certain raw
materials, compounds and components; delivering materials to our facilities; and shipping products to our customers. Additionally, we rely on third-party service
providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, including, without limitation, cloud-based
infrastructure, data center facilities, encryption and authentication technology, employee email, and content delivery. Third-party service providers we rely on include:
application providers, distributors, hosting companies, supply chain resources, contract research organizations, and contract manufacturing organizations. Our vendor
assessment process is generally limited to reputational due diligence of the vendor and, in some cases, examination of the vendor’s security reports and certifications.
For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, see our risk factors under
Part I, Item 1A. Risk Factors in this Annual Report on Form 10-K, including “Risk Factors – If our information technology systems or
data, or those of third parties upon whom we rely, are or were compromised, this could result in adverse consequences resulting from
such compromise including but not limited to regulatory investigations or actions; litigation; fines and penalties; a material disruption of
our drug development program; compromise sensitive information related to our business; harm our reputation; triggering our breach
notification obligations; prevent us from accessing critical information; disruptions of our business operations; loss of revenue or profits;
loss of customers or sales and expose us to liability or other adverse effects to our business.”
Governance
Our board of directors addresses our cybersecurity risk management as part of its general oversight function. The audit committee of our board of directors is
responsible for overseeing our cybersecurity risk management processes, including oversight of risks from cybersecurity threats.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain members of our management,
including, among others, our Executive Vice President of Talent, Advocacy & Communications, Vice President of IT, and Associate
Director of IT Operations. Our Vice President of IT is an IT security professional and members of our IT Department have certain
credentialling in cybersecurity. We also rely on third-party security analysts who have certain certifications related to cybersecurity.
Our Executive Vice President of Talent, Advocacy & Communications and Vice President of IT, are responsible for hiring appropriate personnel, helping to integrate
cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel. Additionally, they are responsible
for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related
reports.
Our cybersecurity incident response policy is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances,
including our Chief Financial Officer and General Counsel and Chief Compliance Officer. Our management works with our incident response team to help us mitigate
and remediate cybersecurity incidents of which they are notified. In addition, our cybersecurity incident response policy includes reporting to the audit committee of
our board of directors for certain cybersecurity incidents.
The audit committee periodically reviews and discusses with the appropriate members of our management material risks relating to cybersecurity threats and our
processes for assessing, identifying, and managing material risks from cybersecurity threats, as well as our internal controls and disclosure controls and procedures
relating to cybersecurity incidents. Our board of directors and audit committee are also provided with reports, summaries or presentations related to cybersecurity
threats, risk and mitigation.
Item 2. Properties
We lease approximately 20,913 square feet of space in Princeton, NJ, which serves as our principal executive offices and is used for commercial and marketing as well as
general and administrative purposes. We lease an approximately 11,495 square foot facility in Israel, which is used primarily as research and development laboratories
as well as for administrative purposes. We believe that our existing facilities are adequate to meet our current needs, and that suitable additional or alternative spaces
will be available in the future on commercially reasonable terms.
Item 3. Legal Proceedings
On April 2, 2024, UroGen Pharma Ltd. filed a lawsuit in the U.S. District Court for the District of Delaware against Teva Pharmaceuticals, Inc., Teva Pharmaceuticals USA,
Inc., and Teva Pharmaceutical Industries, Ltd., alleging infringement of U.S. Patent Numbers 9,040,074 and 9,950,069 and seeking a permanent injunction preventing
market entry of a generic product from Teva prior to the expiry of such patents. The Company stipulated to the dismissal of Teva Pharmaceutical Industries, Ltd. without
prejudice and the action continues against the other two Teva entities. Both patents are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence
Evaluations (commonly known as the Orange Book) for Jelmyto. The lawsuit follows an Abbreviated New Drug Application filed by Teva Pharmaceuticals, Inc., which
seeks authorization from the FDA to manufacture, use or sell a generic version of mitomycin for pyelocalyceal solution, 40 mg/vial in the United States before the expiry
of the two patents referenced above. By order dated February 27, 2025, the court approved the parties’ joint stipulation to remove the Markman hearing and any
related claim-construction proceedings from the court’s calendar. This matter is scheduled for a bench trial in October 2026.
From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. Other than as set forth above, we are not
currently a party to any material legal proceedings. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs,
diversion of management resources and other factors.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
Market Information
Our ordinary shares have been traded on the Nasdaq Global Market since May 4, 2017, under the symbol URGN. Prior to such time, there was no public market for our
ordinary shares.
Holders
As of March 3, 2025, there were 10 registered holders of record of our ordinary shares.
Dividend Policy
We have not paid any dividends on our ordinary shares since our inception and do not expect to pay dividends on our ordinary shares in the foreseeable future. The
Loan Agreement with Pharmakon restricts our ability to pay dividends. In addition, Israeli law limits our ability to declare and pay dividends and may subject our
dividends to Israeli withholding taxes. We currently intend to retain all available funds as well as future earnings, if any, to fund the development and expansion of our
operations.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with the
historical consolidated financial statements and the notes thereto included in “Financial Statements and Supplementary Data.” This discussion contains forward-looking
statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Risk Factors”
section of this Annual Report. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note
Regarding Forward-Looking Statements” and “Risk Factors.”
Overview
We are a biotechnology company dedicated to developing and commercializing innovative solutions that treat urothelial and specialty cancers. We have
developed RTGel® reverse-thermal hydrogel, a proprietary sustained release, hydrogel-based technology that has the potential to improve therapeutic profiles of
existing drugs. Our technology is designed to enable longer exposure of the urinary tract tissue to medications, making local therapy a potentially more effective
treatment option. Our approved product Jelmyto® (mitomycin) for pyelocalyceal solution, and our investigational candidates, UGN-102 (mitomycin) for intravesical
solution, UGN-103 (mitomycin) for intravesical solution and UGN-104 (mitomycin) for pyelocalyceal solution, are designed to ablate tumors by non-surgical means and
to treat several forms of non-muscle invasive urothelial cancer, including low-grade upper tract urothelial cancer (“low-grade UTUC”) in the case of Jelmyto and UGN-
104 and low-grade intermediate risk non-muscle invasive bladder cancer (“low-grade intermediate risk NMIBC”)in the case of UGN-102 and UGN-103. In addition, our
immuno-uro-oncology pipeline includes UGN-301 (zalifrelimab), an anti-CTLA-4 antibody, which we are currently studying as both monotherapy and combination
therapy.
If approved, UGN-102 would become the first U.S. Food and Drug Administration ("FDA") approved medicine for low-grade intermediate risk NMIBC. We estimate
that the annual treatable population of low-grade intermediate risk NMIBC in the United States is approximately 82,000, of which approximately 23,000 are estimated
to be newly diagnosed and 59,000 are estimated to be recurrent patients. We estimate that the total addressable market opportunity for UGN-102 in low-
grade intermediate risk NMIBC is potentially over $5.0 billion, assuming an expected pricing range of $16,000 to $19,000 per dose.
UGN-102, if approved, may be an alternative to the current standard of care for low-grade intermediate risk NMIBC, trans-urethral resection of bladder tumor
(“TURBT”). We estimate that approximately 68% of low-grade intermediate risk NMIBC patients have two or more recurrences, with approximately 23% of recurrent
patients having five or more recurrences. Repeated TURBT procedures to treat these recurrences can impact patients’ physical health and quality of life. We estimate
that around 35% of patients will experience an adverse event within 90 days of undergoing a TURBT, and patients who have had two to four procedures have an
estimated 14% greater risk of death than patients who have only had one procedure.
RTGel is a novel proprietary polymeric biocompatible, reverse thermal gelation hydrogel technology, which, unlike the general characteristics of most forms of matter, is
liquid at lower temperatures and converts into gel form when warmed to body temperature. We believe that these characteristics promote ease of delivery into and
retention of drugs in body cavities, including the bladder and the upper urinary tract, forming a transient reservoir of drug that dissolves over time while preventing
rapid excretion, providing for increased dwell time. RTGel leverages the physiologic flow of urine to provide a natural exit from the body.
We believe that RTGel, when formulated with an active drug, may allow for the improved efficacy of treatment of various types of urothelial and specialty cancers and
urologic diseases without compromising the safety of the patient or interfering with the natural flow of fluids in the urinary tract. RTGel achieves this by:
•
increasing the exposure of active drugs in the bladder and upper urinary tract by significantly extending the dwell time of the active drug while conforming
to the anatomy of the bladder and the upper urinary tract, which allows for enhanced drug tissue coverage. For example, the average dwell time of the
standard aqueous mitomycin formulation, currently used as adjuvant treatment, in the upper urinary tract is approximately five minutes, compared to
approximately six hours when mitomycin is formulated with RTGel;
•
administering higher doses of an active drug than would otherwise be possible using standard water-based formulations. For instance, it is only possible to
dissolve 0.5 mg of mitomycin in 1 mL of water while it is possible to formulate up to 8 mg of mitomycin with 1 mL of RTGel; and
•
maintaining the active drug’s molecular structure and mode of action.
These characteristics of RTGel enable sustained release of mitomycin in the urinary tract for Jelmyto, UGN-102, UGN-103 and UGN-104. Further, RTGel may be
particularly effective in the bladder and upper urinary tract where tumor visibility and access are challenging, and where there exists a significant amount of urine flow
and voiding. We believe that these characteristics of RTGel may prove useful for the local delivery of active drugs to other bodily cavities in addition to the bladder and
upper urinary tract.
Jelmyto
On April 15, 2020, the FDA approved our new drug application (“NDA”) for Jelmyto (mitomycin) for pyelocalyceal solution, formerly known as UGN-101, for the
treatment of adult patients with low-grade UTUC. Jelmyto consists of mitomycin, an established chemotherapy, and sterile hydrogel, using our proprietary sustained
release RTGel technology. It has been designed to prolong exposure of urinary tract tissue to mitomycin, thereby enabling the treatment of tumors by non-surgical
means. New product exclusivity for Jelmyto expired on April 15, 2023, however, Orphan Drug exclusivity extends until April 15, 2027. Additionally, the main patents that
protect Jelmyto in the United States are set to expire in January 2031. These patents were listed in the FDA's Orange Book (Approved Drug Products with Therapeutic
Equivalence Evaluations).
Low-grade UTUC is a rare cancer that develops in the lining of the upper urinary tract, ureters and kidneys. In the United States, there are approximately 6,000 to 7,000
new or recurrent low-grade UTUC patients annually. It is a challenging condition to treat due to the complex anatomy of the urinary tract system. Prior to Jelmyto,
the current standard of care included endoscopic resection(s) and radical nephroureterectomy (“RNU”), the latter which involves the removal of the renal pelvis, kidney,
ureter and bladder cuff. Treatment is further complicated by the fact that low-grade UTUC is most commonly diagnosed in patients over 70 years of age, who may
already have compromised kidney function and may suffer further complications as a result of a major surgery. We are focused on changing the way urothelial cancers
are treated, an area in which there has been no significant advancements in recent years. Jelmyto is the first drug therapy of its kind, providing an alternative
to endoscopic resection(s) and/or RNU.
The FDA approval was based on results from our Phase 3 OLYMPUS trial showing Jelmyto achieved clinically significant disease eradication in adults with low-grade
UTUC. Findings from the final study results include:
•
Complete response (“CR”) rate (primary endpoint) of 58% (41/71) in the intent-to-treat population and in the sub-population of patients who were
deemed not capable of surgical removal at diagnosis.
•
At the 12-month time point for assessment of durability, 23 patients remained in CR of a total of 41 patients, eight had experienced recurrence of disease
and ten patients were unable to be evaluated.
•
Durability of response was estimated to be 81.8% at 12 months by Kaplan-Meier analysis. The median duration of response was not reached.
•
The most commonly reported adverse events (≥ 20%) were ureteric obstruction, flank pain, urinary tract infection, hematuria, abdominal pain, fatigue,
renal dysfunction, nausea, dysuria and vomiting. Most adverse events were mild to moderate and manageable. No treatment-related deaths occurred.
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In December 2022, we presented new data from a follow-up study to the OLYMPUS trial designed to obtain long‐term data on Jelmyto. Based on data available for 16 of
the 23 patients who had remained in CR at the end of the OLYMPUS study, the median duration of response in that subset of patients was 28.9 months. Thirteen
patients remained in CR, two patients had recurrence of low grade‐UTUC on the same side as treated in OLYMPUS, and one patient underwent RNU due to ureteral
stricture without evidence of UTUC at the time of surgery. No patient had progressed to high‐grade disease. In November 2024, we published results from a long-term
follow-up study with Jelmyto evaluating 20 of the 41 patients from the OLYMPUS trial who achieved a CR after primary chemoablation with Jelmyto. The median
duration of response in this subset of patients was 47.8 months. The study results are published online in the Journal of Urology.
In June 2020, we initiated our commercial launch of Jelmyto in the United States. We have staffed, trained and prepared a customer-facing team that includes territory
business managers with deep experience in both urology and oncology. These territory business manager positions are led by eight regional business director positions,
who are in turn supported by eight regional operations manager positions. Each region is additionally supported by one to two clinical nurse educators to provide
education and training around instillation, as well as a field reimbursement manager to help ensure access and reimbursement for appropriate patients and a key
account director who engages with C-suite individuals to introduce a Jelmyto service line. In addition, our organization currently includes several medical science
liaisons who appropriately engage with physicians interested in learning more about UroGen, Jelmyto and our technology, both in person and virtually. In total, our
customer-facing team comprises approximately 100 representatives.
We are committed to helping patients access Jelmyto. Our market access teams have laid the foundation for coverage and reimbursement, meeting multiple times with
payors. Medicare patients with supplemental coverage are covered and the vast majority of commercial plans have policies in place, in whole covering over 150 million
lives. In addition to reimbursement and access, we have also been focused on ensuring seamless integration into physician practices. We have implemented processes
to help make Jelmyto preparation and administration seamless for practitioners and patients, including entering into agreements with various national, regional and
local specialty pharmacies under which the pharmacy, following receipt of a patient prescription, prepares and dispenses the Jelmyto admixture on our behalf. In
September 2022, the FDA authorized an extension of the in-use period for the Jelmyto admixture from eight hours to 96 hours (four days) following reconstitution of
the product, adding convenience and flexibility in managing patient care.
In October 2020, a Medicare C-Code was issued for Jelmyto. The Centers for Medicare & Medicaid Services established a permanent and product-specific J-code for
Jelmyto that took effect on January 1, 2021 and replaced the C-Code. The Centers for Medicare & Medicaid Services has granted Jelmyto a New Technology Ambulatory
Payment Classification, effective from October 1, 2023. We have also launched a registry to capture data and evaluate real world outcomes in patients with low-grade
UTUC who have been or will be treated with Jelmyto. The purpose of the registry is to study the use of Jelmyto in clinical practice in the United States and address
specific clinical questions.
In each of the first three fiscal years beginning after the initiation of our commercial launch of Jelmyto in June 2020, we experienced a moderate decline in revenue
during the third quarter from the preceding quarter. We believe this result was primarily attributable to the nature of low-grade disease, which does not require
immediate treatment and therefore we believe there could be an impact in the summer months. However, we did not observe this trend in 2024 and therefore cannot
say with confidence whether this seasonality trend will continue in future periods. Moreover, our future Jelmyto revenue will be impacted by various factors and we
expect our Jelmyto revenue to fluctuate quarter-to-quarter for the foreseeable future.
UGN-102 (mitomycin) for intravesical solution
UGN-102 is our sustained-release formulation of mitomycin that we are developing for the treatment of low-grade intermediate risk NMIBC.
UGN-102 is administered locally using the standard practice of intravesical instillation directly into the bladder via a catheter. The instillation into the bladder is
expected to take place in a physician’s office as a non-operative outpatient treatment, in comparison with TURBT or similar surgical procedures, which are operations
often conducted under general anesthesia and may require an overnight stay. Complete surgical tumor removal often has limited success due to the inability to properly
identify, reach and resect all tumors. We believe that an effective chemoablation agent can potentially provide better eradication of tumors irrespective of the
detectability and location of the tumors. In addition, by reducing the need for surgery, patients may avoid potential complications associated with surgery and
anesthesia.
In October 2021, we reported final data from the Phase 2b OPTIMA II trial. The single-arm, open label trial completed enrollment of 63 patients at clinical sites across
the United States and Israel in September 2019. Patients were treated with six weekly instillations of UGN-102 and underwent assessment of CR (the primary endpoint)
four to six weeks following the last instillation; 65%, or 41 out of 63 patients, treated with UGN-102 achieved a CR three months after the start of therapy. In this subset
of patients, 39 (95%), 30 (73%), and 25 (61%) remained disease-free at six, nine, and 12 months after treatment initiation, respectively. The probability of durable
response nine months after CR (12 months after treatment initiation) was estimated to be 72.5% by Kaplan-Meier analysis. Thirteen patients had documented
recurrences. Fifty-seven of 63 (90%) patients completed all six instillations of UGN-102 according to the study protocol. Median duration of response was not reached.
The most common adverse events, greater than 10%, were most often reported as mild to moderate in severity and include dysuria, hematuria, urinary frequency,
fatigue, urgency and urinary tract infection. The final data was published online in The Journal of Urology in October 2021 and was included in the January 2022 print
edition.
In December 2022, we presented new data from a follow-up study to the OPTIMA II study designed to obtain long-term data on UGN-102 that shows median duration
of response of 24.4 months based on available data for 15 out of 25 patients who achieved a CR in OPTIMA II. Seven patients remained in CR, six patients had
recurrence of low-grade disease, one patient had progression to high-grade disease and one patient withdrew consent but remained in CR at the last evaluation prior to
discontinuation. All patients were alive at the last contact, and five patients were known to have had post-study treatment with TURBT or fulguration.
We initiated our Phase 3 ATLAS trial in December 2020 and until November 2021, were enrolling patients in this trial comparing UGN-102 with or without TURBT to
standard of care, TURBT. In parallel, we continued to engage in discussions with the FDA and based on this dialogue, we designed a trial in order to demonstrate the
efficacy and safety of UGN-102. This Phase 3 ENVISION trial is a single-arm, multinational, multicenter study evaluating the efficacy and safety of UGN-102 as primary
chemoablative therapy in patients with low-grade intermediate risk NMIBC. The design of the Phase 3 ENVISION trial is similar to our Phase 2 OPTIMA II trial in that the
patient population has similar clinical characteristics, receives the same investigational treatment regimen and undergoes similar efficacy and safety assessments and
qualitative follow-up. Study participants receive six once-weekly intravesical instillations of UGN-102. The primary endpoint is CR rate at three months after the first
instillation, and the key secondary endpoint is durability of response in patients who achieve CR at the three-month assessment.
In February 2022, we announced the initiation of the Phase 3 ENVISION trial, targeting enrollment of 220 patients across 90 sites. In December 2022, we completed our
target enrollment of the Phase 3 ENVISION trial. As a result of the FDA's acceptance of a single arm approach, we stopped enrollment of the Phase 3 ATLAS trial without
knowledge of the data. However, at the time enrollment was stopped, patients who had signed an informed consent were able to complete screening, and if eligible
were randomized into the trial. ATLAS continued until the last ongoing patient completed the month 15 visit. On July 27, 2023, we announced topline data from our
Phase 3 trials, ATLAS and ENVISION. In the ATLAS trial, UGN-102 with or without TURBT met its primary endpoint of disease-free survival, reducing risk of recurrence,
progression, or death by 55% compared to TURBT alone. Results of the ATLAS trial also showed a 64.8% CR rate at three months for patients who only received UGN-
102, compared to a 63.6% CR rate at three months for patients who only received a TURBT. The ENVISION trial met its primary endpoint by demonstrating that patients
treated with UGN-102 had a 79.6% rate of CR at three-months following the initial instillation. In both trials, the safety profile of UGN-102 was acceptable, and
comparable to that observed in previous clinical trials of UGN-102.
In June 2024, we announced positive secondary endpoint duration of response (“DOR”) data from the Phase 3 ENVISION trial investigating UGN-102 for intravesical
solution in patients with low-grade intermediate risk NMIBC. In the ENVISION trial, the 12-month DOR data by Kaplan-Meier estimate for patients who achieved a CR at
three months after the first instillation of UGN-102 was 82.3% (95% CI, 75.9%, 87.1%). The ENVISION trial met its primary endpoint with patients having a 79.6% (73.9%,
84.5%) CR rate at three months after the first instillation of UGN-102. Among the patients in the ENVISION trial who achieved a CR at three months, 76.4% (69.8%,
82.3%) maintained a CR at 12 months. Among all 240 patients enrolled in the ENVISION trial, 60.8% (54.3%, 67.0%) were in CR at 12 months. In the ENVISION trial, DOR
Kaplan-Meier estimates at 15 (n=43) and 18 (n=9) months were both 80.9% (95% CI, 73.9%, 86.2%) with a median follow-up time of 13.8 months after the 3-month
CR. The ENVISION trial demonstrated a similar safety profile to that observed in the OPTIMA II and ATLAS trials, with treatment-emergent adverse events typically mild-
to-moderate in severity. The ENVISION trial data was published online in The Journal of Urology in October 2024 and was included in the February 2025 print edition.
In March 2025, we announced updated 18-month DOR data from the Phase 3 ENVISION trial. The 18-month DOR by Kaplan-Meier estimate for patients who achieved a
CR at three months after the first instillation of UGN-102 remained consistent with the 12-month DOR data: 80.6% (95% CI, 74.0%, 85.7%) at 18-months (n=101)
compared to 82.5% (76.1%, 87.3%) at 12-months (n=146). Median follow-up time was 18.7 months after the 3-month CR.
We also completed a Phase 3b study with the objective of demonstrating whether UGN-102 can be administered at home by a qualified home health professional,
avoiding the need for repeated visits to a healthcare setting for instillation. As per the study design, patients in this study received six once-weekly intravesical
instillations of UGN-102 with the initial treatment visit occurring at the investigative site and instillation performed by a qualified physician. Treatment visits two to six
took place at the patient's home and instillations were performed by a properly trained and qualified home health professional. The primary endpoints of the study
include safety and tolerability, discontinuations from at home study treatment and feedback from patients, home health professionals and investigators via
standardized questionnaires. The study completed enrollment with a total of eight patients across four centers and all study visits for these enrolled patients have been
completed. Preliminary results were reported through a press release in February 2023, finding that UGN-102 was suitable to administer at home by a visiting nurse
under the supervision of a treating physician and resulted in 75% of patients achieving a CR, defined as no detectable disease three months after starting treatment.
Patients, nurses and investigators also completed home instillation feasibility questionnaires. These standardized feasibility questionnaires highlighted that all
eight patients preferred at-home to in-office treatment, and five of six patients recommended UGN-102 home instillation instead of TURBT. Home instillation was
reported as feasible for visiting nurses, and three of four investigators considered at-home treatment “not different” than in-office treatment.
In October 2023, we announced our agreement with the FDA on plans for submission of an NDA for UGN-102 (mitomycin) for intravesical solution. The FDA indicated
that the current clinical development plan for UGN-102, which includes evaluation of duration of CR at 12 months from the pivotal ENVISION trial, will support
submission of an NDA for the treatment of low-grade intermediate risk NMIBC. The FDA also agreed that the UGN-102 NDA can utilize a rolling review, allowing for early
submission of the CMC sections of the NDA, which we submitted in January 2024. In August 2024, we completed the submission of the rolling NDA for UGN-102. In
October 2024, the FDA accepted our NDA for UGN-102 (mitomycin) for intravesical solution and assigned a Prescription Drug User Fee Act ("PDUFA") goal date of June
13, 2025. We anticipate, and are preparing for, an FDA advisory committee meeting. If approved, UGN-102 would become the first FDA-approved medicine for the
treatment of low-grade intermediate-risk NMIBC.
UGN-103 (mitomycin) for intravesical solution and UGN-104 (mitomycin) for pyelocalyceal solution
In January 2024, we entered into a licensing and supply agreement with medac Gesellschaft für klinische Spezialpräparate m.b.H. (“medac”) to develop UGN-103 and
UGN-104, which are intended to be next-generation formulations of UGN-102 and Jelmyto, respectively, that combine medac’s proprietary 80 mg mitomycin
formulation with our RTGel technology, which we believe will provide advantages related to production, cost, supply and product convenience. In April 2024, we
announced that the FDA accepted our Investigational New Drug Application (“IND”) for UGN-103 and we initiated our Phase 3 UTOPIA trial, a single-arm, multicenter
study that will evaluate the efficacy and safety of UGN-103 in low-grade intermediate risk NMIBC. We plan to enroll 87 patients in the UTOPIA trial, with
patients receiving 75 mg of mitomycin via intravesical instillation once a week for six weeks. Efficacy will be assessed by the CR rate at the three-month visit. Patients
who have a CR at the three-month visit, defined as having no detectable disease in the bladder, will enter the follow-up period of the study. Patients will remain on
study until disease recurrence, disease progression, death, or the last patient completes 12 months of follow-up (i.e., 15 months after the first instillation), whichever
occurs first. In October 2024, we announced the first patient dosed in the UTOPIA trial. An NDA submission is projected for 2026, followed by a standard review period
and potential approval and, if approved, the commercial launch in 2027. In February 2025, the FDA accepted our IND for UGN-104. We plan to initiate a Phase 3 trial of
UGN-104 in low-grade UTUC in the first half of 2025.
UGN-301 (zalifrelimab) intravesical solution
Our immuno-uro-oncology pipeline includes UGN-301, an anti-CTLA-4 monoclonal antibody, which we intend to study as a standalone agent and as a combination
therapy. UGN-301 is delivered using our proprietary RTGel technology, which has been designed to significantly improve the effectiveness of certain intravesical
therapies.
High-grade NMIBC is a highly aggressive form of bladder cancer. TURBT followed by adjuvant intravesical immunotherapy with BCG is the current standard of care
therapy for high-grade NMIBC. However, the high rates of recurrence and significant risk of progression to muscle-invasive tumors are particularly dangerous. Radical
cystectomy, or surgical removal of the bladder, is strongly advocated in patients with BCG-unresponsive NMIBC (i.e., patients with BCG-refractory and BCG-relapsing
tumors in whom further BCG therapy is not recommended) or for patients who cannot tolerate BCG.
The first combination we are investigating clinically involves the sequential use of UGN-201 (imiquimod), a toll like receptor 7 (“TLR 7”) agonist, and UGN-301 in high-
grade NMIBC. UGN-201 is a liquid formulation of imiquimod for intravesical administration that has been optimized for delivery in the urinary tract. The second
combination we are investigating clinically involves the sequential administration of gemcitabine and UGN-301 to the bladder in high-grade NMIBC. Gemcitabine is a
chemotherapy that is used intravesically to treat high grade NMIBC where it is administered as a liquid formulation. We believe these two combinations could elicit
both an innate and adaptive immune response, which may translate into a long-lasting acquired immune response, and potentially represent a valid post-TURBT
adjuvant treatment of high-grade NMIBC. We are investigating these combinations to determine if they may make local therapy a potentially more effective treatment
option while minimizing systemic exposure and potential side effects.
In March 2022, we announced FDA clearance of our IND to begin a novel Phase 1 clinical study of UGN-301 in patients with recurrent NMIBC. The novel study design
utilizes a Master Protocol that we believe is a more efficient and streamlined approach to development. It will provide more flexibility to add study arms as the trial
progresses and is expected to increase efficiency and potentially reduce costs. We expect the Master Protocol will allow us to more quickly evaluate safety, tolerability
and dosing of UGN-301 in combination with additional immunomodulators and chemotherapies, with the goal of developing optimized treatment regimens for
patients. The multi-arm Phase 1 study, which is expected to support the development of UGN-301 in high-grade NMIBC, was initiated in April 2022 and enrollment in
the current arms of the study are complete. Safety and dosing data from the first arm evaluating UGN-301 as monotherapy was presented in late 2024.
Research and Development and License Agreements
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Agenus Agreement
In November 2019, we entered into a license agreement with Agenus Inc. (“Agenus”), pursuant to which Agenus granted us an exclusive, worldwide (not including
Argentina, Brazil, Chile, Colombia, Peru, Venezuela and their respective territories and possessions), royalty-bearing, sublicensable license under Agenus’s intellectual
property rights to develop, make, use, sell, import, and otherwise commercialize products incorporating a proprietary monoclonal antibody of Agenus known as
AGEN1884 (zalifrelimab), an anti-CTLA-4 antagonist, for the treatment of cancers of the urinary tract via intravesical delivery. UGN-301 is a formulation of zalifrelimab
administered using RTGel technology that is in Phase 1 clinical development for high-grade NMIBC.
For additional information regarding our research and development and license agreements, see Note 13 to our consolidated financial statements appearing elsewhere
in this Annual Report.
Components of Operating Results
Revenue
During the year ended December 31, 2024 and December 31, 2023, we recognized $90.4 million and $82.7 million of revenue, respectively, from sales of our product,
Jelmyto.
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Cost of Revenue
Cost of revenue consists primarily of inventory and related costs associated with the manufacturing, distribution, warehousing and preparation of Jelmyto, including
inventory write-downs. In periods prior to receiving FDA approval for Jelmyto, we recognized inventory and related costs associated with the manufacture of Jelmyto as
research and development expenses.
Research and Development Expenses
Research and development expenses, net consists primarily of:
•
salaries and related costs, including share-based compensation expense, for our personnel in research and development functions;
•
facility and equipment costs, including depreciation expense, maintenance and allocated direct and indirect overhead costs;
•
expense incurred under agreements with third parties, including contract research organizations, subcontractors, suppliers and consultants, nonclinical studies
and clinical trials;
•
expense incurred to acquire, develop and manufacture nonclinical study and clinical trial materials; and
•
expense incurred to purchase API in support of R&D activities and other related manufacturing costs.
We manage and prioritize our research and development expenses based on scientific data, probability of successful technical development and regulatory approval,
market potential and unmet medical need, available human and capital resources and other considerations. We regularly review our research and development
activities and, as necessary, reallocate resources among our programs, product candidates and external opportunities that we believe will best support the long-term
growth of our business. We do not track total research and development expenses by program, product candidates, or development phase.
The following table provides a breakout of expenses by major cost type:
(in thousands)
2024
2023
Personnel, facility and equipment, and other overhead costs
$
16,054 $
16,245
Clinical and other development costs
41,091
29,369
Total
$
57,145 $
45,614
See Note 20 to our consolidated financial statements appearing elsewhere in this Annual Report for additional disaggregation of significant research and development
expenses. We expense all research and development costs as incurred. We estimate nonclinical study and clinical trial expense based on the services performed
pursuant to contracts with research institutions and contract research organizations that conduct and manage nonclinical studies and clinical trials on our behalf based
on actual time and expense incurred by them.
We recognize costs incurred as the services are being provided by monitoring the status of the trial or project and the invoices received from our external service
providers. We adjust our accrual as actual costs become known. Where at risk contingent milestone payments are due to third parties under research and development
and collaboration agreements, the milestone payment obligations are expensed when such development milestone results are achieved.
License fees and development milestone payments related to in-licensed products and technology are expensed as incurred, or achieved in the case of milestones, if it
is determined at that point that they have no established alternative future use.
We are currently focused on advancing our product candidates, and our future research and development expenses will depend on their clinical success. Research and
development expenses will continue to be significant.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development
costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We do not believe that it is
possible at this time to accurately project total expenses required for us to reach commercialization of our product candidates. Due to the inherently unpredictable
nature of nonclinical and clinical development, we are unable to estimate with certainty the costs we will incur and the timelines that will be required in the continued
development and approval of our product candidates. Clinical and nonclinical development timelines, the probability of success and development costs can differ
materially from expectations. In addition, we cannot forecast which product candidates may be subject to future collaborations, if and when such arrangements will be
entered into, if at all, and to what degree such arrangements would affect our development plans and capital requirements. We expect our research and development
expenses to increase over the next several years as our clinical programs progress and as we seek to initiate clinical trials of additional product candidates. We also
expect to incur increased research and development expenses as we selectively identify and develop additional product candidates.
The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors that include, but are not limited to, the
following:
•
per patient trial costs;
•
the number of patients that participate in the trials;
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•
the number of sites included in the trials;
•
the countries in which the trials are conducted;
•
the length of time required to enroll eligible patients;
•
the number of doses that patients receive;
•
the drop-out or discontinuation rates of patients;
•
potential additional safety monitoring or other studies requested by regulatory agencies;
•
the duration of patient follow-up; and
•
the efficacy and safety profile of the product candidates.
In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial
viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate,
as well as an assessment of each product candidate’s commercial potential.
Other than Jelmyto, which was approved by the FDA in April 2020, we have not received approval of any of our product candidates. UGN-102, UGN-103, UGN-104 and
UGN-301 are still in clinical development. As such, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization
of our product candidates or whether, or when, we may achieve profitability. Until such time, if ever, as we can generate substantial product revenue, we expect to
finance our cash needs through revenues from commercial sales of Jelmyto and a combination of equity or debt financings and collaboration arrangements.
License fees and development milestone payments related to in-licensed products and technology are expensed as incurred, or achieved in the case of milestones, if it
is determined at that point that they have no established alternative future use.
Selling and Marketing Expenses
To date, selling and marketing expenses consist primarily of commercial personnel costs (including share-based compensation) along with commercialization activities
related to Jelmyto and pre-commercialization activities related to UGN-102.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel costs (including share-based compensation related to directors, executives, finance, medical affairs,
business development, investor relations, and human resource functions). Other significant costs include medical affairs services, external professional service costs,
facility costs, accounting and audit services, legal services, and other consulting fees.
Financing on Prepaid Forward Obligation
Financing on prepaid forward obligation is comprised of financing expense related to the transaction with RTW Investments (the “RTW Transaction”) (see Note 9 to our
consolidated financial statements appearing elsewhere in this Annual Report).
Interest Expense
Interest expense is primarily comprised of interest related to our long-term debt with Pharmakon Advisors, L.P. (“Pharmakon”) (see Note 10 to our consolidated
financial statements appearing elsewhere in this Annual Report).
Interest and Other Income, Net
Interest and other income, net, consisted primarily of interest income, net losses on foreign exchange and bank commissions.
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Income Taxes
We have yet to generate taxable income in Israel. We have historically incurred operating losses resulting in carry forward tax losses totaling approximately $533.9
million as of December 31, 2024. We anticipate that we will continue to generate tax losses for the foreseeable future and that we will be able to carry forward these
tax losses indefinitely to future taxable years. Accordingly, we do not expect to pay taxes in Israel until we have taxable income after the full utilization of our carry
forward tax losses. We have provided a full valuation allowance with respect to the deferred tax assets related to these carry forward losses. Income tax expense also
consists of our estimate of uncertain tax positions, and related interest and penalties. See Note 17 to our consolidated financial statements appearing elsewhere in this
Annual Report for further information.
Results of Operations
Comparison of the Years Ended December 31, 2024 and 2023
The following table sets forth our results of operations for the years ended December 31, 2024 and 2023.
Year Ended December 31,
2024
2023
Change
(in thousands)
Revenue
$
90,398 $
82,713 $
7,685
Cost of revenue
8,881
9,361
(480)
Gross profit
81,517
73,352
8,165
Operating expenses:
Research and development
57,145
45,614
11,531
Selling and marketing
75,232
54,703
20,529
General and administrative
45,922
38,571
7,351
Total operating expenses
178,299
138,888
39,411
Operating loss
(96,782)
(65,536)
(31,246)
Financing on prepaid forward obligation
(23,411)
(21,552)
(1,859)
Interest expense on long-term debt
(12,521)
(14,715)
2,194
Interest and other income, net
8,672
3,479
5,193
Loss before income taxes
(124,042)
(98,324)
(25,718)
Income tax expense
(2,832)
(3,920)
1,088
Net loss
$
(126,874) $
(102,244) $
(24,630)
Revenue
Revenues were $90.4 million and $82.7 million for the years ended December 31, 2024 and 2023, respectively. The increase of $7.7 million was primarily driven by
increased underlying demand sales of Jelmyto, partially offset by a decrease in CREATES Act sales, which totaled $3.0 million in 2024, compared to $4.4 million of
CREATES Act sales in 2023.
Cost of Revenue
Cost of revenue was $8.9 million and $9.4 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $0.5 million is primarily attributable
to certain nonrecurring payments made in connection with our supply arrangement in the prior year, lower shipping and warehousing costs and a decrease in
the Jelmyto unit cost.
Research and Development Expenses
Research and development expenses were $57.1 million and $45.6 million for the years ended December 31, 2024 and 2023, respectively. The increase in research and
development expenses of $11.5 million is primarily attributable to higher manufacturing costs, which are recognized as research and development expenses prior to
our product candidates receiving FDA approval, regulatory expenses in connection with UGN-102, and costs associated with the Phase 3 UTOPIA trial for UGN-103,
partially offset by lower UGN-102 clinical trial costs and costs related to the research into ingredient scale-up and production efficiency for Jelmyto.
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Selling and Marketing Expenses
Selling and marketing expenses were $75.2 million and $54.7 million for the years ended December 31, 2024 and 2023, respectively. The increase in selling and
marketing expenses of $20.5 million is primarily attributable to UGN-102 commercial preparation activities as well as an increase in overall commercial operation costs
including compensation, advisory, meetings, conferences, trainings and software costs.
General and Administrative Expenses
General and administrative expenses were $45.9 million and $38.6 million for the years ended December 31, 2024 and 2023, respectively. The increase in general and
administrative expenses of $7.3 million is primarily attributable to higher compensation expenses, costs for announcements and communications related to UGN-102,
third-party advisory services, and ongoing managed services.
Financing on Prepaid Forward Obligation
Financing on prepaid forward obligation was $23.4 million and $21.6 million for the years ended December 31, 2024 and 2023, respectively. The measurement of
financing on prepaid forward obligation is an accounting estimate under the "imputed interest method" of accounting (see Note 9 to our consolidated financial
statements appearing elsewhere in this Annual Report) which is affected by estimated future payments to RTW, which are based on a percentage of revenues. The
increase in financing on prepaid forward obligation of $1.8 million was driven primarily by changes in underlying assumptions for remeasuring the effective rate.
Interest Expense on Long-term Debt
Interest expense was $12.5 million and $14.7 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $2.2 million 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.
Interest and Other Income, Net
Interest and other income, net was $8.7 million and $3.5 million for the years ended December 31, 2024 and 2023, respectively. The increase of $5.2 million in interest
and other income, net was primarily due to higher cash and investment balances.
Liquidity and Capital Resources
As of December 31, 2024, we had $241.7 million in cash and cash equivalents and marketable securities. Cash in excess of immediate requirements is invested in
accordance with our investment policy, primarily with a view to liquidity and capital preservation, and is held primarily in U.S. dollars.
Through December 31, 2024, we funded our operations primarily through public equity offerings, private placements of equity securities and our funding arrangements
with RTW and Pharmakon.
ATM Sales Agreement
In December 2019, we entered into the ATM Sales Agreement with TD Securities (USA) LLC (f/k/a Cowen and Company, LLC) (“TD Cowen”) pursuant to which we may
from time to time offer and sell our ordinary shares having an aggregate offering price of up to $100.0 million.
In the first quarter of 2024, we sold 3,400,468 ordinary shares under the ATM Sales Agreement, for gross proceeds of approximately $56.1 million. The net proceeds to
us after deducting sales commissions to TD Cowen were approximately $54.7 million. The remaining capacity under the ATM Sales Agreement was approximately $27.3
million as of December 31, 2024. The shares will be offered and sold, if any, pursuant to our shelf registration statement on Form S-3 filed with the SEC on November
15, 2022, which was declared effective on November 29, 2022, or a subsequent shelf registration statement.
Prepaid Forward Agreement
In March 2021, we entered into a prepaid forward agreement with RTW, pursuant to which RTW agreed to provide us with an upfront cash payment of $75.0 million to
support the launch of Jelmyto and the development of UGN-102, and we agreed to provide RTW with tiered future payments based on global annual net product sales
of Jelmyto and UGN-102, if approved. In May 2021, following the receipt of necessary regulatory approvals, we received the $75.0 million prepaid forward payment
($72.4 million net of transaction costs) from RTW.
Pharmakon Loan Agreement
On March 7, 2022, we entered into a loan agreement with Pharmakon (the “Loan Agreement”) for a senior secured term loan of up to $100.0 million in two tranches.
The first tranche of $75.0 million ($72.6 million of proceeds were received, $70.8 million net of additional transaction costs) was funded in March 2022, and the second
tranche of $25.0 million was funded in December 2022.
On June 29, 2023, the Loan Agreement with Pharmakon was amended to replace the benchmark governing the interest rate with a rate based on the secured overnight
financing rate (“SOFR”) published by the Federal Reserve Bank of New York. Effective July 2023, the loan accrued interest using a benchmark rate of 3-month SOFR plus
8.25% plus an additional adjustment of 0.26161%.
On March 13, 2024, we entered into an amended and restated loan agreement with Pharmakon for an additional third and fourth tranche of senior secured loan. The
third tranche of $25.0 million was funded in September 2024. The fourth tranche of $75.0 million will become available at our option no later than August 29, 2025,
subject to (i) receiving FDA approval of an NDA for UGN-102 no later than June 30, 2025 and (ii) the satisfaction of customary bring down conditions and deliverables.
Securities Purchase Agreement
On July 26, 2023, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional and other accredited investors (the
“Purchasers”), pursuant to which we agreed to sell and issue to the Purchasers 12,579,156 ordinary shares of the Company (“Shares”) (or in lieu of Shares, pre-
funded warrants to purchase ordinary shares of the Company) at a purchase price of $9.54 per Share (or $9.539 for each ordinary share underlying a pre-
funded warrant), in a private placement transaction that closed on July 28, 2023 and August 9, 2023 (the “Private Placement”) for aggregate gross proceeds of $120.0
million, before deducting fees to placement agents and financial advisors and before other expenses. Each pre-funded warrant has an exercise price of $0.001 per
ordinary share, subject to customary adjustments, and became exercisable upon original issuance and will not expire until exercised in full. The pre-funded warrants
may not be exercised if the aggregate number of ordinary shares beneficially owned by the holder thereof immediately following such exercise would exceed a
specified beneficial ownership limitation. The aggregate fee paid by us to placement agents and financial advisors was $3.6 million, plus the reimbursement of certain
expenses.
Underwritten Public Offering
On June 17, 2024, we entered into an underwriting agreement (the “Underwriting Agreement”) with TD Securities (USA) LLC and Guggenheim Securities, LLC, as
representatives of the several underwriters named therein (collectively, the “Underwriters”), relating to the issuance and sale in a public offering of 5,000,000 ordinary
shares of the Company for $17.50 per share and pre-funded warrants to purchase 1,142,857 ordinary shares of the Company for $17.499 per pre-funded warrant. The
offering closed on June 20, 2024. The gross proceeds from this closing of the offering were $107.5 million, before deducting underwriting discounts and commissions
and offering expenses of $7.3 million. Each pre-funded warrant has an exercise price of $0.001 per ordinary share, subject to customary adjustments, is exercisable at
any time and will not expire until exercised in full. The pre-funded warrants may not be exercised if the aggregate number of ordinary shares beneficially owned by the
holder thereof immediately following such exercise would exceed a specified beneficial ownership limitation. In addition, the Underwriters were granted an option
exercisable for 30 days, to purchase up to 921,428 additional shares at the public offering price, less the underwriting discounts and commissions. On July 18, 2024, we
completed the closing of the sale of 921,428 additional shares in the offering following the exercise in full of the Underwriters’ option to purchase additional shares,
which resulted in additional gross proceeds of $16.1 million before deducting underwriting discounts and commissions and offering expenses of $1.0 million.
We have incurred losses since our inception and negative cash flows from our operations, and as of December 31, 2024 we had an accumulated deficit of $806.2
million. We anticipate that we will continue to incur losses for the reasonably foreseeable future. Our primary uses of capital are, and we expect will continue to be,
commercialization activities, research and development expenses, including third-party clinical research and development services, laboratory and related supplies,
clinical costs, including manufacturing costs, legal and other regulatory expense and general and administrative costs, partially offset by proceeds from sales of Jelmyto.
We routinely evaluate our liquidity needs, including assessment of our current financial condition, sources of liquidity including current cash and cash equivalents and
marketable securities and management’s cash flow projections. Our ability to continue as a going concern is expected to be impacted by the advancement of UGN-102
through regulatory approval, our ability to raise additional capital to fund our operations, and produce cash inflows from Jelmyto product sales. Based on our cash, cash
equivalents and marketable securities as of December 31, 2024, together with management’s cash flow projections, we believe we have sufficient cash and cash
equivalents to fund our operations beyond one year from the issuance of our consolidated financial statements appearing elsewhere in this Annual Report. If we are
unable to obtain approval for UGN-102 and generate sufficient cash inflows from the sale and distribution of UGN-102, we may need to raise additional capital in the
future or reduce operating expenditures. There can be no assurances that we will be able to secure such additional financing on terms that are satisfactory to us, in an
amount sufficient to meet our needs, or at all. In the event we are not successful in obtaining sufficient funding, this could force us to delay, limit, reduce or terminate
our product development, commercialization efforts or other operations.
We cannot estimate the actual amounts necessary to successfully commercialize any approved products, or whether, or when, we may achieve profitability. Until such
time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings and collaboration
arrangements.
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Cash Flows
The following table sets forth the significant sources and uses of cash for the periods set forth below:
Year Ended December 31,
2024
2023
(in thousands)
Net cash (used in) provided by:
Operating activities
$
(96,766) $
(76,376)
Investing activities
(20,613)
(953)
Financing activities
194,619
116,931
Net change in cash and cash equivalents
$
77,240 $
39,602
Operating Activities
Net cash used in operating activities was $96.8 million during the year ended December 31, 2024, compared to $76.4 million used in operating activities during the year
ended December 31, 2023. The $20.4 million increase was attributable primarily to higher net loss driven by increased operating expenses such as regulatory and
commercial preparation costs related to UGN-102, as well as timing of certain payments and accruals.
Investing Activities
Net cash used in investing activities was $20.6 million during the year ended December 31, 2024, compared to net cash used in investing activities of $1.0 million during
the year ended December 31, 2023. The increase of $19.6 million is attributable primarily to additional investment in marketable securities in 2024 as compared to
2023.
Financing Activities
Net cash provided by financing activities was $194.6 million during the year ended December 31, 2024, compared to net cash provided by financing activities of $116.9
million during the year ended December 31, 2023. The increase of $77.7 million is attributable primarily to proceeds from the issuance of ordinary shares under the
ATM Sales Agreement, the underwritten public offering and the issuance of debt related to the third tranche of the Pharmakon loan as compared to proceeds from the
Private Placement in the prior year.
Funding and Material Cash Requirements
Our present and future funding and material cash requirements will depend on many factors, including, among other things:
•
the progress, timing and completion of clinical trials for UGN-301, UGN-103 and UGN-104;
•
nonclinical studies and clinical trials for any of our other product candidates;
•
the costs related to obtaining regulatory approval UGN-102, UGN-301, UGN-103, UGN-104 and any of our other product candidates, and any delays we may
encounter as a result of regulatory requirements or adverse clinical trial results with respect to any of these product candidates;
•
selling, marketing and patent-related activities undertaken in connection with the commercialization of Jelmyto and, if approved, UGN-102 and any of our
other product candidates, and costs involved in the continued development of an effective sales and marketing organization;
•
the costs involved in filing and prosecuting patent applications and obtaining, maintaining and enforcing patents or defending against claims or infringements
raised by third parties, and license royalties or other amounts we may be required to pay to obtain rights to third party intellectual property rights;
•
potential new product candidates we identify and attempt to develop;
•
revenues we may derive either directly or in the form of royalty payments from future sales of Jelmyto, UGN-102, UGN-103, UGN-104, UGN-301, RTGel reverse
thermal hydrogel technology and any other product candidates; and
•
the repayment of outstanding debt.
Accordingly, we may need to obtain additional funding in connection with our continuing operations. There can be no assurance that we will be able to secure such
additional financing on terms that are satisfactory to us, in an amount sufficient to meet our needs, or at all. In the event we are not successful in obtaining sufficient
funding, we may be forced to delay, limit, reduce or terminate our research and development programs or future commercialization efforts.
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We may finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent
that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest in us will be diluted, and the terms of any additional
securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing, if available, may involve agreements that
include covenants that further limit or restrict our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
In addition, the terms of the Forward Contract with RTW and the Loan Agreement limit our ability to take certain actions, including incurring additional indebtedness.
If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our
technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise
additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future
commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
For more information as to the risks associated with our future funding needs, see “Item 1.A – Risk Factors.”We will require additional financing to achieve our goals,
and a failure to obtain this capital when needed and on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development,
commercialization efforts or other operations.
Contractual Obligations and Commitments
In April 2016, we signed an addendum to our November 2014 lease agreement for our executive offices located in Israel, in order to increase the office space rented
and to extend the rent period until 2019. In March 2019, we utilized the agreement extension option and extended the rent period for an additional three years until
August 2022. In July 2022, we signed a lease extension agreement extending the term of the lease through September 2025.
In November 2019, we entered into a new lease agreement, dated effective October 31, 2019, for an office in Princeton, NJ. The lease commencement date was
November 29, 2019 and the lease term is 38 months. In June 2022, we signed an amendment to our November 2019 lease agreement to extend the term for an
additional three years through January 31, 2026.
In July 2024, we entered into a new master lease agreement for vehicles, primarily for use by employees in sales, field services, and roles that require regular travel.
Under the terms of the master lease agreement, we will lease various vehicles from time to time with an initial lease term of 48 months commencing on the delivery
date of the vehicle with an option to continue month-to-month for an unlimited period of time.
The total obligation for future minimum lease payments under our operating and finance leases are $0.8 million and $3.0 million, respectively, as of December 31,
2024. See Note 11 to the consolidated financial statements appearing elsewhere in this Annual Report for further information.
On March 7, 2022, we entered into the Loan Agreement with Pharmakon for a senior secured term loan of up to $100.0 million in two tranches. The first tranche of
$75.0 million ($72.6 million of proceeds were received, $70.8 million net of additional transaction costs) was funded in March 2022, and the second tranche of $25.0
million was funded in December 2022.
On March 13, 2024, we entered into an amended and restated loan agreement with Pharmakon for an additional third and fourth tranche of senior secured loan. The
third tranche of $25.0 million was funded in September 2024. The fourth tranche of $75.0 million will become available at our option no later than August 29, 2025,
subject to (i) receiving FDA approval of an NDA for UGN-102 no later than June 30, 2025 and (ii) the satisfaction of customary bring down conditions and deliverables.
All outstanding loans with Pharmakon accrue interest using a benchmark rate of 3-month SOFR plus 7.25% plus an additional adjustment of 0.26161%. All outstanding
principal will be required to be repaid in four equal quarterly installments commencing in the second quarter of 2026, with a one-year extension possible upon FDA
approval of an NDA for UGN-102 by June 30, 2025. All outstanding loans with Pharmakon can be prepaid in whole at our discretion, at any time, subject to prepayment
premiums and make-whole amounts.
The obligations of UroGen Pharma, Inc., as the borrower under the loan agreement (the "Borrower") are guaranteed on a full and unconditional basis by UroGen
Pharma Ltd. and the other guarantor parties thereto and are secured by substantially all of the respective Credit Parties’ tangible and intangible assets and property,
including intellectual property, subject to certain exceptions.
On June 26, 2024, we entered into a separation agreement with Jeff Bova, our former Chief Commercial Officer, which sets forth the terms of Mr. Bova's termination of
employment, effective as of September 30, 2024. The arrangement includes cash severance, a pro rata portion of the target annual bonus for calendar year 2024, and
partial acceleration of share-based compensation. We recognized $1.1 million of expenses during the year ended December 31, 2024 in relation to this arrangement.
On October 7, 2024, we entered into a separation and consulting agreement with Don Kim, pursuant to which Mr. Kim resigned from his positions as our Chief Financial
Officer, principal financial officer and principal accounting officer, effective October 8, 2024. The arrangement includes cash severance, target annual bonus for calendar
year 2024, a post-separation consulting arrangement, and partial acceleration of share-based compensation. We recognized $0.8 million of expenses during the year
ended December 31, 2024 in relation to this arrangement.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in
accordance with GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of revenue and expenses during the
reporting periods. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the
circumstances at the time such estimates are made. Actual results may differ materially from our estimates and judgments under different assumptions or conditions.
We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, are reflected in our
financial statements prospectively from the date of the change in estimate.
We define our critical accounting policies as those accounting principles generally accepted in the United States that require us to make subjective estimates and
judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner
in which we apply those principles. While our significant accounting policies are more fully described in Note 3 to our consolidated financial statements appearing
elsewhere in this Annual Report, we believe the following are the critical accounting policies used in the preparation of our financial statements.
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Revenue
Net revenue from product sales is recognized at the transaction price when the specialty distributors obtain control of our products, which occurs at a point in time,
typically upon delivery of the product to the treating physician. All product sales of Jelmyto are recognized through our arrangements with two customers as defined by
ASC 606, both of which are third-party national specialty distributors. Payment terms with these customers are 60 days and 90 days. Net revenue recognized includes
gross revenue and management’s estimate of returns, consideration paid to the customer, chargebacks relating to differences between the wholesale acquisition cost
and the contracted price offered to the end consumer, chargebacks relating to 340B drug pricing programs and other government sponsored programs, Medicaid drug
rebate programs, our co-pay assistance program, and Medicare refunds for discarded drug, which are estimated based on our historical experience.
Share-Based Compensation
We account for employees’ and directors’ share-based payment awards classified as equity awards using the grant-date fair value method. The fair value of share-based
payment transactions is recognized as an expense over the requisite service period, which is equal to the vesting period. For performance stock units (“PSUs”), cost is
measured at the grant date based on the fair value of the award and is recognized over any relevant service period as expense when the achievement of the
performance condition is probable. The fair value of options is determined using the Black-Scholes option-pricing model. The fair value of a restricted stock unit (“RSU”)
or a PSU equals the closing price of our ordinary shares on the grant date. We account for forfeitures as they occur in accordance with ASC Topic 718, “Compensation—
Stock Compensation.”
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We elected to recognize compensation costs for awards conditioned only on continued service that have a graded vesting schedule using the straight-line method and
to value the awards based on the single-option award approach. Performance based awards are expensed over the requisite service period when the achievement of
performance criteria is probable.
Prepaid Forward Obligation
Under the RTW Transaction, we received funds to support the launch of Jelmyto and the development of UGN-102 in return for tiered, future cash payments based on
net sales of Jelmyto and, subject to FDA approval, UGN-102, UGN-103 and UGN-104. The net proceeds received under the RTW Transaction were recognized as a long-
term liability. We recognize the current cash payable amounts under the arrangement within other current liabilities on the consolidated balance sheets. The
subsequent measurement for the liability follows the accounting principles defined in ASC Topic 835-30, “Imputation of Interest.” Each period we make a payment to
RTW, an expense is recognized related to financing on the prepaid forward obligation based on an imputed rate derived from the expected future payments.
Management reassesses the effective rate each period based on the current carrying value of the obligation and the revised estimated future payments. Changes in
future payments from previous estimates are included in future financing expense.
Income Taxes
We provide for income taxes based on pretax income, if any, and applicable tax rates available in the various jurisdictions in which we operate, including Israel and the
U.S. Deferred taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A
valuation allowance is recognized to the extent that it is more likely than not that the deferred taxes will not be realized in the foreseeable future.
We follow a two-step approach in recognizing and measuring uncertain tax positions. After concluding that a particular filing position can be recognized (i.e., has a
more-likely-than-not chance of being sustained), ASC 740-10-30-7 requires that the amount of benefit recognized be measured using a methodology based on the
concept of cumulative probability. Under this methodology, the amount of benefit recorded represents the largest amount of tax benefit that is greater than 50% likely
to be realized upon settlement with a taxing authority that has full knowledge of all relevant information.
Item 7A. Quantitative and Qualitative Disclosures about Market Risks
Interest Rate Fluctuation Risk
Some of the securities in which we invest have market risk in that a change in prevailing interest rates may cause the principal amount of the marketable securities to
fluctuate. Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents. As of December 31,
2024, we had approximately $241.7 million in cash, cash equivalents and marketable securities. We invest our cash primarily in money market accounts, certificates of
deposit, commercial paper and debt instruments of U.S. government-sponsored agencies, the U.S. Treasury, financial institutions, and corporations. The primary
objectives of our investment activities are to ensure liquidity and to preserve principal while at the same time maximizing the income we receive from our marketable
securities without significantly increasing risk. We have established guidelines regarding approved investments and maturities of investments, which are designed to
maintain safety and liquidity. If a 10% change in interest rates were to have occurred on December 31, 2024, this change would not have had a material effect on the
fair value of our cash and cash equivalents as of that date.
Inflation Risk
Inflation generally may affect us by increasing our cost of labor and clinical trial costs. Inflation did not have a material effect on our business, financial condition or
results of operations during the year ended December 31, 2024.
Foreign Currency Exchange Risk
The U.S. dollar is our functional and reporting currency. However, a significant portion of our operating expenses are incurred in NIS. As a result, we are exposed to the
risk that the NIS may appreciate relative to the dollar, or, if the NIS instead devalues relative to the dollar, that the inflation rate in Israel may exceed such rate of
devaluation of the NIS, or that the timing of such devaluation may lag behind inflation in Israel. In any such event, the dollar cost of our operations in Israel would
increase and our dollar-denominated results of operations would be adversely affected. We cannot predict any future trends in the rate of inflation in Israel or the rate
of devaluation, if any, of the NIS against the dollar. For example, the dollar appreciated against the NIS during 2024 by a total of 1.2%. If the dollar cost of our operations
in Israel increases, our dollar-measured results of operations will be adversely affected. Our operations also could be adversely affected if we are unable to effectively
hedge against currency fluctuations in the future.
We do not currently engage in currency hedging activities in order to reduce this currency exposure, but we may begin to do so in the future. Instruments that may be
used to hedge future risks may include foreign currency forward and swap contracts. These instruments may be used to selectively manage risks, but there can be no
assurance that we will be fully protected against material foreign currency fluctuations.
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Item 8. Financial Statements and Supplementary Data
UroGen Pharma Ltd.
Index to financial statements
Pages
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
75
Consolidated Balance Sheets
76
Consolidated Statements of Operations and Comprehensive Loss
77
Consolidated Statements of Shareholders’ Deficit
78
Consolidated Statements of Cash Flows
79
Notes to Consolidated Financial Statements
80
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of UroGen Pharma Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of UroGen Pharma Ltd. and its subsidiary (the "Company") as of December 31, 2024 and 2023, and
the related consolidated statements of operations and comprehensive loss, of shareholders' deficit and of cash flows for the years then ended, including the related
notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are
required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Emphasis of Matter
As discussed in Note 2 to the consolidated financial statements, if the Company is unable to obtain approval for UGN-102 and generate sufficient cash inflows from
the sale and distribution of UGN-102, the Company may need to raise additional capital in the future or reduce operating expenditures. Management’s evaluation of
the events and conditions and management’s plans to mitigate these matters are also described in Note 2.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or
required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii)
involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical
audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition - Gross Revenue from Product Sales
As described in Notes 1, 3 and 12 to the consolidated financial statements, product sales from the Company’s commercial product, Jelmyto, are recognized as
revenue at the transaction price when the specialty distributors obtain control of the Company’s products, which occurs at a point in time, typically upon delivery of
the product to the treating physician. All product sales of Jelmyto are recognized through the Company's arrangements with two customers as defined by ASC 606,
both of which are third-party national specialty distributors. Net revenue recognized includes gross revenue and management’s estimate of returns, consideration
paid to the customers, chargebacks relating to differences between the wholesale acquisition cost and the contracted price offered to the end consumer, chargebacks
relating to 340B drug pricing programs and other government sponsored programs, Medicaid drug rebate programs, the Company’s copay assistance program, and
Medicare refunds for discarded drug. The Company’s consolidated net revenue was $90.4 million for the year ended December 31, 2024, of which gross revenue from
product sales represented a majority.
The principal consideration for our determination that performing procedures relating to revenue recognition for gross revenue from product sales is a critical audit
matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial
statements. These procedures included, among others (i) testing the Company’s reconciliation of gross revenue recognized from product sales to third-party
information, (ii) evaluating reconciling items, as applicable, (iii) confirming sales terms with the Company’s customers, (iv) confirming a sample of outstanding
customer invoice balances as of December 31, 2024, and (v) evaluating a sample of gross revenue transactions by obtaining and inspecting source documents,
including the customer contract, purchase orders, invoices, proof of delivery, cash remittances, and bank statements, as applicable.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
March 10, 2025
We have served as the Company’s auditor since 2020.
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UROGEN PHARMA LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts and par value)
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
171,987 $
95,002
Marketable securities
64,698
41,966
Restricted cash
1,076
821
Accounts receivable, net
20,302
15,443
Inventories
9,227
5,673
Prepaid expenses and other current assets
8,845
10,281
Total current assets
276,135
169,186
Non-current assets:
Property and equipment, net
655
689
Restricted deposit
176
225
Right-of-use assets
3,134
1,671
Marketable securities
5,022
4,502
Other non-current assets
589
2,038
Total Assets
$
285,711 $
178,311
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable and accrued expenses
$
27,431 $
16,538
Employee related accrued expenses
10,570
10,814
Other current liabilities
7,948
3,860
Total current liabilities:
45,949
31,212
Non-current liabilities:
Prepaid forward obligation
121,387
109,722
Long-term debt
121,734
98,551
Long-term lease liabilities
1,653
844
Uncertain tax positions liability
3,791
3,194
Total Liabilities
294,514
243,523
Commitments and Contingencies (Note 19)
Shareholders' Deficit:
Ordinary shares, NIS 0.01 par value; 100,000,000 shares authorized at December 31, 2024 and 2023; 42,231,746
and 32,490,119 shares issued and outstanding as of December 31, 2024 and 2023, respectively
115
89
Additional paid-in capital
797,248
614,035
Accumulated deficit
(806,222)
(679,348)
Accumulated other comprehensive income
56
12
Total Shareholders' Deficit
(8,803)
(65,212)
Total Liabilities and Shareholders' Deficit
$
285,711 $
178,311
The accompanying notes are an integral part of these consolidated financial statements.
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UROGEN PHARMA LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
Year Ended December 31,
2024
2023
Revenue
$
90,398 $
82,713
Cost of revenue
8,881
9,361
Gross profit
81,517
73,352
Operating expenses:
Research and development expenses
57,145
45,614
Selling, general and administrative expenses
121,154
93,274
Operating loss
(96,782)
(65,536)
Financing on prepaid forward obligation
(23,411)
(21,552)
Interest expense on long-term debt
(12,521)
(14,715)
Interest and other income, net
8,672
3,479
Loss before income taxes
(124,042)
(98,324)
Income tax expense
(2,832)
(3,920)
Net Loss
$
(126,874) $
(102,244)
Statements of Comprehensive Loss
Net loss
$
(126,874) $
(102,244)
Other comprehensive income (loss)
Unrealized gain on investments
44
119
Comprehensive Loss
$
(126,830) $
(102,125)
Net loss per ordinary share - basic and diluted
$
(2.96) $
(3.55)
Weighted average number of shares outstanding used in computation of basic and diluted loss per ordinary share
42,876,737
28,834,303
The accompanying notes are an integral part of these consolidated financial statements.
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UROGEN PHARMA LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(in thousands, except share amounts)
Ordinary Shares
Additional Paid-
in Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Number of
Shares
Amount
Amounts
Balance as of December 31, 2022
23,129,953 $
63 $
487,787 $
(577,104) $
(107) $
(89,361)
Changes during 2023
Exercise of options into ordinary shares
460,053
1
872
873
Share-based compensation
9,343
9,343
Issuance of pre-funded warrants, net of
issuance costs
48,700
48,700
Conversion of pre-funded warrants into
ordinary shares
1,599,733
5
(5)
—
Issuance of ordinary shares, net of issuance
costs
7,300,380
20
67,338
67,358
Other comprehensive income
119
119
Net loss
(102,244)
(102,244)
Balance as of December 31, 2023
32,490,119 $
89 $
614,035 $
(679,348) $
12 $
(65,212)
Changes during 2024
Exercise of options into ordinary shares
419,731
1
320
321
Share-based compensation
13,108
13,108
Issuance of pre-funded warrants, net of
issuance costs
18,641
18,641
Issuance of ordinary shares, net of issuance
costs
9,321,896
25
151,144
151,169
Other comprehensive income
44
44
Net loss
(126,874)
(126,874)
Balance as of December 31, 2024
42,231,746 $
115 $
797,248 $
(806,222) $
56 $
(8,803)
The accompanying notes are an integral part of these consolidated financial statements.
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UROGEN PHARMA LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2024
2023
Cash Flows From Operating Activities
Net loss
$
(126,874) $
(102,244)
Adjustment to reconcile net loss to net cash from operating activities:
Depreciation and amortization
329
802
Accrued financing on prepaid forward obligation
15,077
11,504
Accretion on marketable securities
(2,891)
(1,034)
Share-based compensation
13,108
9,343
Amortization (accretion) of discount on long-term debt
(1,305)
1,014
Amortization of right-of-use assets
857
903
Changes in operating assets and liabilities:
Inventory
(3,554)
(1,348)
Accounts receivable, net
(4,859)
(2,739)
Prepaid expenses and other current assets
1,436
820
Other non-current assets
1,449
702
Accounts payable and accrued expenses
10,893
4,155
Employee related accrued expenses
(244)
2,557
Other current liabilities
200
—
Lease liabilities
(1,034)
(987)
Restricted deposit
49
—
Uncertain tax positions
597
176
Net cash used in operating activities
(96,766)
(76,376)
Cash Flows From Investing Activities
Purchases of marketable securities
(128,023)
(49,832)
Maturities of marketable securities
107,705
49,073
Purchases of property and equipment
(295)
(194)
Net cash used in investing activities
(20,613)
(953)
Cash Flows From Financing Activities
Proceeds from exercise of options into ordinary shares
321
873
Proceeds from issuance of long-term debt, net of issuance costs
24,488
—
Proceeds from pre-funded warrant issuance, net of issuance costs
18,641
48,700
Proceeds from ordinary shares issuance, net of issuance costs
151,169
67,358
Net cash provided by financing activities
194,619
116,931
Increase in Cash and Cash Equivalents
77,240
39,602
Cash, Cash Equivalents and Restricted Cash at Beginning of Year
95,823
56,221
Cash, Cash Equivalents and Restricted Cash at End of Year
$
173,063 $
95,823
Supplemental Disclosures of Non-Cash Activities
Right-of-use assets obtained in exchange for new operating lease liabilities
$
2,321 $
122
The accompanying notes are an integral part of these consolidated financial statements.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – BUSINESS AND NATURE OF OPERATIONS
Nature of Operations
UroGen Pharma Ltd. is an Israeli company incorporated in April 2004 (“UPL”).
UroGen Pharma, Inc., a wholly owned subsidiary of UPL, was incorporated in Delaware in October 2015 and began operating in February 2016 (“UPI”).
UPL and UPI (together the “Company”) is a biotechnology company dedicated to developing and commercializing innovative solutions that treat urothelial and specialty
cancers. Since commencing operations, the Company has devoted substantially all of its efforts to securing intellectual property rights, performing research and
development activities, including conducting clinical trials and manufacturing activities, hiring personnel, launching the Company’s first commercial product, Jelmyto
(mitomycin) for pyelocalyceal solution, formerly known as UGN-101, advancing UGN-102 through regulatory approval, and raising capital to support and expand these
activities.
On April 15, 2020, the U.S. Food and Drug Administration (“FDA”) granted expedited approval for Jelmyto, a first-in-class treatment indicated for adults with low-grade
upper tract urothelial cancer. Jelmyto consists of mitomycin, an established chemotherapy, and sterile hydrogel, using the Company's proprietary sustained release
RTGel technology. It has been designed to prolong exposure of urinary tract tissue to mitomycin, thereby enabling the treatment of tumors by non-surgical means.
In August 2024, the Company completed the submission of the rolling NDA for UGN-102. In October 2024, the FDA accepted the Company's NDA for UGN-102
(mitomycin) for intravesical solution and assigned a Prescription Drug User Fee Act (“PDUFA”) goal date of June 13, 2025.
NOTE 2 – BASIS OF PRESENTATION
The Company has experienced net losses since its inception and has an accumulated deficit of $806.2 million and $679.3 million as of December 31, 2024 and 2023,
respectively. The Company expects to incur losses and have negative net cash flows from operating activities as it executes on its strategy including engaging in further
research and development activities, particularly conducting non-clinical studies and clinical trials. The success of the Company depends on the ability to successfully
commercialize its technologies to support its operations and strategic plan.
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The consolidated
financial statements include the accounts of UPL and its wholly owned subsidiary UPI. All material intercompany balances and transactions have been eliminated during
consolidation.
In accordance with the accounting guidance related to the presentation of financial statements, management evaluates whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the date the financial
statements are issued. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, and do
not include any adjustments relating to the carrying amounts and classification of assets and liabilities that may be necessary should the Company be unable to
continue as a going concern. The Company’s ability to continue as a going concern is expected to be impacted by the advancement of UGN-102 through regulatory
approval, its ability to raise additional capital to fund its operations, and produce cash inflows from Jelmyto product sales.
Based on the Company's cash, cash equivalents and marketable securities as of December 31, 2024, together with management’s cash flow projections, the Company
believes that it has sufficient cash and cash equivalents to fund its operations beyond one year from the issuance of these consolidated financial statements. If the
Company is unable to obtain approval for UGN-102 and generate sufficient cash inflows from the sale and distribution of UGN-102, the Company may need to raise
additional capital in the future or reduce operating expenditures. There can be no assurances that the Company will be able to secure such additional financing on
terms that are satisfactory to the Company, in an amount sufficient to meet the Company's needs, or at all. In the event the Company is not successful in obtaining
sufficient funding, this could force the Company to delay, limit, reduce or terminate the Company's product development, commercialization efforts or other
operations.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Company’s consolidated financial statements include the accounts of UPL and its subsidiary, UPI. Intercompany balances and transactions have been eliminated
during consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results may differ from those estimates. As applicable to the consolidated financial statements,
the critical accounting estimates relate to the fair value of share-based compensation, measurement of revenue, estimate of uncertain tax positions, and measurement
of liabilities accounted for under the interest method.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Functional Currency
The U.S. dollar (“Dollar”) is the currency of the primary economic environment in which the operations of the Company are conducted. Therefore, the functional
currency of the Company is the Dollar.
Accordingly, transactions in currencies other than the Dollar are measured and recorded in the functional currency using the exchange rate in effect at the date of the
transaction. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the Dollar are measured using the official
exchange rate at the balance sheet date. The effects of foreign currency re-measurements are recorded in the consolidated statements of operations as “Interest and
other income, net.”
Cash and Cash Equivalents; Marketable Securities
The Company presents all highly liquid investments with an original maturity of three months or less when purchased as cash equivalents. Cash and cash equivalents
generally consist of money market funds and bank money market accounts and are stated at cost, which approximates fair value.
Cash and cash equivalents and marketable securities totaled $241.7 million as of December 31, 2024. The Company accounts for its investments, which include cash
equivalents and marketable securities, as available-for-sale in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 320, “Investments — Debt and Equity Securities.” Available-for-sale debt securities are carried at fair value with unrealized gains and losses reported in
other comprehensive income/loss within shareholders’ equity. Realized gains and losses are recorded as a component of interest and other income, net. The cost of
securities sold is based on the specific-identification method.
Certain short-term investments are valued using models or other valuation methodologies that use Level 2 inputs. These models are primarily industry-standard models
that consider various assumptions, including time value, yield curve, volatility factors, default rates, current market and contractual prices for the underlying financial
instruments, as well as other relevant economic measures. The majority of these assumptions are observable in the marketplace, can be derived from observable data
or are supported by observable levels at which transactions are executed in the marketplace.
For individual debt securities classified as available-for-sale securities where there has been a decline in fair value below amortized cost, the Company determines
whether the decline resulted from a credit loss or other factors. The Company records impairment relating to credit losses through an allowance for credit losses,
limited by the amount that the fair value is less than the amortized cost basis. Impairment that has not been recorded through an allowance for credit losses is recorded
through other comprehensive income, net of applicable taxes.
Restricted cash is related primarily to cash held to secure corporate credit cards; restricted deposits are related to cash held to secure leases.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and cash equivalents and marketable
securities. The primary objectives for the Company’s investment portfolio are the preservation of capital and the maintenance of liquidity. The Company does not enter
into any investment transaction for trading or speculative purposes.
The Company’s investment policy limits investments to certain types of instruments such as certificates of deposit, money market instruments, obligations issued by the
U.S. government and U.S. government agencies as well as corporate debt securities, and places restrictions on maturities and concentration by type and issuer. The
Company maintains cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation and concentrated within a limited number of financial
institutions. The accounts are monitored by management to mitigate the risk.
The Company’s accounts receivables are composed of net sales of Jelmyto arising from the Company's arrangements with two third-party national specialty
distributors. The Company assesses the need for an allowance for doubtful accounts primarily based on creditworthiness, historical payment experience and general
economic conditions. The Company has not experienced any credit losses related to arrangements with customers and has not currently recognized any allowance for
doubtful accounts.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes
The Company provides for income taxes based on pretax income, if any, and applicable tax rates available in the various jurisdictions in which it operates, including
Israel and the United States. Deferred taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted
tax rates and laws. A valuation allowance is recognized to the extent that it is more likely than not that the deferred taxes will not be realized in the foreseeable future.
The Company follows a two-step approach in recognizing and measuring uncertain tax positions. After concluding that a particular filing position can be recognized (i.e.,
has a more-likely-than-not chance of being sustained), ASC 740-10-30-7 requires that the amount of benefit recognized be measured using a methodology based on the
concept of cumulative probability. Under this methodology, the amount of benefit recorded represents the largest amount of tax benefit that is greater than 50% likely
to be realized upon settlement with a taxing authority that has full knowledge of all relevant information. See Note 17 for further discussion related to income taxes.
Inventory
The Company capitalizes inventory costs related to products to be sold in the ordinary course of business. The Company makes a determination of capitalizing inventory
costs for a product based on, among other factors, status of regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales
and recoverability of costs. For Jelmyto, the Company commenced capitalization of inventory at the receipt of FDA approval. Costs related to inventories that are not
expected to be manufactured and sold within the next 12 months are classified as long-term assets and presented within Other non-current assets on the consolidated
balance sheets.
The Company values its inventory at the lower of cost or net realizable value. The Company measures inventory approximating actual cost under a first-in, first-out
basis. The Company assesses recoverability of inventory each reporting period to determine any write down to net realizable value resulting from excess or obsolete
inventories.
Property and Equipment
Property and equipment are recorded at historical cost, net of accumulated depreciation, amortization and, if applicable, impairment charges. The Company reviews its
property and equipment assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Property and equipment are depreciated over the following useful lives (in years):
Useful Lives
Computers and software
3
Laboratory equipment
3 - 6.5
Furniture
5 - 16.5
Manufacturing equipment
2 - 10
Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or lease terms. See Note 8 for further discussion
regarding property and equipment.
Prepaid Forward Obligation
The Company is party to a transaction with RTW Investments (the “RTW Transaction”) in which the Company received funds to support the launch of Jelmyto and the
development of UGN-102 in return for tiered, future cash payments based on net sales of Jelmyto and, subject to FDA approval, UGN-102, UGN-103 and UGN-104. The
net proceeds received under the RTW Transaction were recognized as a long-term liability. The Company recognizes the current cash payable amounts under the
arrangement within other current liabilities on the consolidated balance sheets. The subsequent measurement for the liability follows the accounting principles defined
in ASC Topic 835-30, “Imputation of Interest.” See Note 9 for further discussion related to the prepaid forward obligation.
Long-Term Debt
The Company is party to a loan agreement with funds managed by Pharmakon Advisors, L.P. (“Pharmakon”). The Company recognizes interest expense in current
earnings, and accrued interest within other current liabilities on the consolidated balance sheets. The Company recognizes capitalized financing expenses as a direct
offset to the long-term debt on the Company's consolidated balance sheets, and amortizes them over the term of the debt using the effective interest method. See
Note 10 for further discussion related to long-term debt.
Leases
The Company is a lessee in several noncancelable operating and finance leases, primarily for office space, office equipment and vehicles.
The Company accounts for leases in accordance with ASC Topic 842, “Leases.” The Company determines if an arrangement is a lease at inception. The Company
additionally evaluates leases at their inception to determine if they are to be accounted for as an operating lease or a finance lease. Right-of-use (“ROU”) assets and
lease liabilities are recognized based on the present value of lease payments over the lease term as of the commencement date. Certain adjustments to the ROU asset
may be required for items such as initial direct costs paid or incentives received. Operating and finance lease ROU assets are presented as right-of-use assets on the
consolidated balance sheets. The current portion of lease liabilities is included in other current liabilities and the long-term portion is presented separately as long-term
lease liabilities on the consolidated balance sheets.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Lease expense for operating leases is recognized on a straight-line basis over the lease term. For finance leases, the expense consists of interest on the lease liability and
amortization of the right-of-use asset. Variable lease payments associated with the Company’s leases are recognized when the event, activity, or circumstance in the
lease agreement on which those payments are assessed occurs. Variable lease payments are presented as selling, general and administrative expenses in the
consolidated statements of operations. The Company has elected the practical expedient to not separate between lease and non-lease components.
The Company’s lease terms may include options to extend the lease. The lease extensions are included in the measurement of the right-of-use asset and lease liability
when it is reasonably certain that it will exercise that option.
Because most of the Company’s leases do not provide an implicit rate of return, an incremental borrowing rate is used based on the information available at the
commencement date in determining the present value of lease payments on an individual lease basis. The Company’s incremental borrowing rate for a lease is the rate
of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.
ROU assets are periodically reviewed for impairment losses under ASC 360-10, “Property, Plant, and Equipment,” to determine whether an ROU asset is impaired, and if
so, the amount of the impairment loss to recognize.
Revenue
Net revenue from product sales is recognized at the transaction price when the specialty distributors obtain control of the Company’s products, which occurs at a point
in time, typically upon delivery of the product to the treating physician. All product sales of Jelmyto are recognized through the Company's arrangements with two
customers as defined by ASC 606, both of which are third-party national specialty distributors. Net revenue recognized includes gross revenue and management’s
estimate of returns, consideration paid to the customers, chargebacks relating to differences between the wholesale acquisition cost and the contracted price offered to
the end consumer, chargebacks relating to 340B drug pricing programs and other government sponsored programs, Medicaid drug rebate programs, the Company’s
copay assistance program, and Medicare refunds for discarded drug, which are estimated based on the Company’s historical experience.
Research and Development Expenses
Research and development costs are expensed as incurred and consist primarily of the cost of salaries, share-based compensation expenses, payroll taxes and other
employee benefits, subcontractors and materials used for research and development activities, including nonclinical studies, clinical trials, manufacturing costs and
professional services. The costs of services performed by others in connection with the research and development activities of the Company, including research and
development conducted by others on behalf of the Company, shall be included in research and development costs and expensed as the contracted work is performed.
The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial or project and the invoices received from its external
service providers. The Company adjusts its accrual as actual costs become known. Where contingent milestone payments are due to third parties under research and
development arrangements or license agreements, the milestone payment obligations are expensed when such development milestone results are achieved.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of personnel costs (including share-based compensation related to directors, employees and consultants).
Other significant costs include commercial, medical affairs, external professional service costs, facility costs, accounting and audit services, legal services and other
consulting fees. Selling, general and administrative costs are expensed as incurred, and the Company accrues for services provided by third parties related to the above
expenses by monitoring the status of services provided and receiving estimates from its service providers and adjusting its accruals as actual costs become known.
Share-Based Compensation
Share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the required service period, which
is equal to the vesting period. For performance stock units (“PSUs”), cost is measured at the grant date based on the fair value of the award and is recognized over any
relevant service period as expense when the achievement of the performance condition is probable. The fair value of options is determined using the Black-Scholes
option-pricing model. The fair value of a restricted stock unit ("RSU") or a PSU equals the closing price of the Company’s ordinary shares on the grant date. The
Company accounts for forfeitures as they occur in accordance with ASC Topic 718, “Compensation—Stock Compensation.”
The Company elected to recognize compensation costs for awards conditioned only on continued service that have a graded vesting schedule using the straight-line
method and to value the awards based on the single-option award approach.
Pre-funded Warrants
The Company's outstanding pre-funded warrants are accounted for as a freestanding equity-linked financial instrument that meets the criteria for equity classification
under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815, “Derivatives and Hedging.” Accordingly, the Company classifies the pre-funded warrants as a
component of permanent shareholders’ equity within additional paid-in capital and records them at the applicable issuance date using a relative fair value allocation
method. The Company valued the pre-funded warrants at the applicable issuance date, concluding that their sales price approximated their fair value, and allocated the
net sales proceeds from the applicable equity transaction proportionately to the ordinary shares and pre-funded warrants.
Net Loss per Ordinary Share
Basic net loss per share is computed by dividing the net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding.
Diluted net loss per share is computed similarly to basic net loss per share except that the denominator is increased to include the number of additional ordinary shares
that would have been outstanding if the potential ordinary shares had been issued and if the additional ordinary shares were dilutive.
For all periods presented, potentially dilutive securities are excluded from the computation of fully diluted loss per share as their effect is anti-dilutive.
The Company’s pre-funded warrants require the holder to pay nominal consideration to receive the Company’s ordinary shares and are therefore considered
outstanding shares in determining basic and diluted earnings per share in accordance with ASC Topic 260, “Earnings per Share.”
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the calculation of basic and diluted loss per ordinary share for the periods presented (in thousands, except share and per share
amounts):
Year Ended December 31,
2024
2023
Basic and diluted:
Loss attributable to equity holders of the Company
$
(126,874) $
(102,244)
Weighted-average number of ordinary shares
42,876,737
28,834,303
Loss per ordinary share
$
(2.96) $
(3.55)
Recently Adopted or Issued Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
("ASU 2023-07"), which provides guidance to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional,
more detailed information about a reportable segment’s expenses. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2023, and
interim periods within fiscal years beginning after December 15, 2024. The amendments in this ASU must be applied on a retrospective basis to all prior periods
presented in the financial statements and early adoption is permitted. The Company has adopted the new guidance, which applies to all public entities, including those
with a single reportable segment. The amendments primarily enhance segment expense disclosures.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”),
which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items
that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with
further disaggregation required for significant individual jurisdictions. The Company will adopt ASU 2023-09 for the 2025 year-end and is currently evaluating the
potential impact of the adoption on the Company’s financial disclosures. ASU 2023-09 allows for adoption using either a prospective or retrospective transition
method.
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation
Disclosures (Subtopic 220-40) ("ASU 2024-03"), which provides guidance to improve the disclosures about a public business entity’s expenses. Public entities must
adopt the new guidance for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is
currently evaluating the potential impact of the adoption of ASU 2024-03 on the Company’s financial disclosures.
The Company has reviewed other Accounting Standards Updates recently issued by the FASB, and determined that none of these pronouncements will have a
significant impact on the Company's consolidated financial statements and related disclosures.
NOTE 4 – OTHER FINANCIAL INFORMATION
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following as of December 31, 2024 and 2023 (in thousands):
December 31, 2024
December 31, 2023
Accounts payable
$
10,931 $
6,514
Accrued sales reserves
5,151
4,391
Accrued clinical expenses
2,027
1,246
Accrued research and development expenses
2,173
1,049
Accrued selling, general and administrative expenses
6,000
2,752
Accrued other expenses
1,149
586
Total accounts payable and accrued expenses
$
27,431 $
16,538
Interest and Other Income, Net
Interest and other income, net consisted of the following for the year ended December 31, 2024 and 2023 (in thousands):
Year Ended December 31,
2024
2023
Interest income
$
8,901 $
2,641
Other income (loss), net
(229)
838
Total interest and other income, net
$
8,672 $
3,479
NOTE 5 – INVENTORIES
Inventories consisted of the following as of December 31, 2024 and December 31, 2023 (in thousands):
December 31, 2024
December 31, 2023
Raw materials (1)
$
4,924 $
4,464
Finished goods
4,522
2,877
Total inventories
$
9,446 $
7,341
(1) $0.2 million and $1.7 million of raw materials are included within other non-current assets on the consolidated balance sheets at December 31, 2024 and
December 31, 2023, respectively. These raw materials are not expected to be manufactured and sold within the next 12 months. Changes in non-current
inventories are reflected on the consolidated statements of cash flows within the caption of other non-current assets.
NOTE 6 – FAIR VALUE MEASUREMENTS
The Company follows authoritative accounting guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value and
expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing
the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-
based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
The carrying amounts of the Company’s cash, restricted cash, other current assets, accounts payable and accrued liabilities are generally considered to be
representative of their fair value because of the short-term nature of these assets and liabilities.
The carrying value of the prepaid forward obligation (See Note 9 - Prepaid Forward Obligation) approximates its fair value. The Company estimated the fair value of the
prepaid forward obligation using Level 3 inputs, including internally developed financial forecasts and management's estimate of probability of success related to
product candidates, and determined that the effective interest rate in the obligation approximates market rates for loans with similar terms and risk characteristics.
The Company estimated the fair value of long-term debt (see Note 10 - Long-Term Debt) using the income approach with Level 3 inputs. The Company estimated future
floating rate interest payments using a forward curve of a three-month benchmark rate, and estimated fair value based on publicly available data reported in the
financial statements of publicly traded venture lending companies. Based on a reasonable range of yields for debt instruments of similar tenor in a similar industry, the
Company determined that the carrying value of the long-term debt on the Company's balance sheet approximates its fair value.
No transfers between levels have occurred during the periods presented.
Assets measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of December 31, 2024 are as follows (in thousands):
Fair Value Measurements Using
Quoted Prices
Significant
in Active
Other
Balance as of
Markets for
Observable
December 31,
Identical Assets
Inputs
2024
(Level 1)
(Level 2)
Assets:
Cash equivalents
Money market funds
$
41,008 $
41,008 $
—
Marketable securities
U.S. government
$
26,053 $
26,053 $
—
Corporate bonds
14,980
—
14,980
Commercial paper
26,622
—
26,622
Certificates of deposit
2,065
—
2,065
Total marketable securities
$
69,720 $
26,053 $
43,667
Total assets at fair value
$
110,728 $
67,061 $
43,667
Assets measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of December 31, 2023 are as follows (in thousands):
Fair Value Measurements Using
Quoted Prices
Significant
in Active
Other
Balance as of
Markets for
Observable
December 31,
Identical Assets
Inputs
2023
(Level 1)
(Level 2)
Assets:
Cash equivalents
Money market funds
$
9,704 $
9,704 $
—
Marketable securities
U.S. government
$
28,634 $
28,634 $
—
Corporate bonds
6,738
—
6,738
Commercial paper
7,101
—
7,101
Certificates of deposit
3,995
—
3,995
Total marketable securities
$
46,468 $
28,634 $
17,834
Total assets at fair value
$
56,172 $
38,338 $
17,834
The Company’s investments in U.S. government bonds and money market funds are measured based on publicly available quoted market prices for identical securities
as of December 31, 2024 and 2023. The Company's investments in corporate bonds, commercial paper and certificates of deposits are measured based on quotes from
market makers for similar items in active markets.
NOTE 7 – INVESTMENTS
The following table summarizes the Company’s investments as of December 31, 2024 (in thousands):
Amortized Cost
Basis
Unrealized Gains
Unrealized
Losses
Fair Value
Assets:
Cash equivalents
Money market funds
$
41,008 $
— $
— $
41,008
Marketable securities
U.S. government
$
26,019 $
34 $
— $
26,053
Corporate bonds
14,966
15
(1)
14,980
Commercial paper
26,608
15
(1)
26,622
Certificates of deposit
2,071
—
(6)
2,065
Total marketable securities
$
69,664 $
64 $
(8) $
69,720
Total assets at fair value
$
110,672 $
64 $
(8) $
110,728
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the Company’s investments as of December 31, 2023 (in thousands):
Amortized Cost Basis
Unrealized Gains
Unrealized Losses
Fair Value
Assets:
Cash equivalents
Money market funds
$
9,704 $
— $
— $
9,704
Marketable securities
U.S. government
$
28,618 $
36 $
(20) $
28,634
Corporate bonds
6,756
2
(20)
6,738
Commercial paper
7,094
8
(1)
7,101
Certificates of deposit
3,988
7
—
3,995
Total marketable securities
$
46,456 $
53 $
(41) $
46,468
Total assets at fair value
$
56,160 $
53 $
(41) $
56,172
The Company classifies its investments as available-for-sale, and they consist entirely of debt securities. As of December 31, 2024, the amortized cost of investments
included an immaterial amount of accrued interest. As of December 31, 2024, marketable securities were in a net unrealized gain position. Unrealized gains and losses
on available-for-sale debt securities are included as a component of comprehensive loss.
As of December 31, 2024, the aggregate fair value of investments held by the Company in an unrealized loss position was $14.4 million which consisted of
12 securities. The unrealized loss was primarily driven by fluctuations in interest rates. The Company does not expect to settle the debentures at a price less than the
amortized cost basis of the investment; the Company expects to recover the entire amortized cost basis of the security. In accordance with the Company’s general
investment strategy, the Company does not intend to sell the investments before maturity. As of December 31, 2024, the Company believes the cost basis for its
marketable securities were recoverable in all material aspects and no allowance for credit losses were recognized in the period.
The Company’s investments as of December 31, 2024 mature at various dates through November 2026. The fair values of investments by contractual maturity consist of
the following (in thousands):
December 31, 2024
December 31, 2023
Maturities within one year
$
105,706 $
51,670
Maturities after one year through three years
5,022
4,502
Total investments
$
110,728 $
56,172
NOTE 8 – PROPERTY AND EQUIPMENT
Property and equipment, consists of the following as of December 31, 2024 and 2023 (in thousands):
December 31,
2024
2023
Laboratory equipment
$
473 $
464
Computer equipment and software
2,542
2,293
Furniture
612
612
Leasehold improvements
626
617
Manufacturing equipment
683
655
4,936
4,641
Less: accumulated depreciation and amortization
(4,281)
(3,952)
Property and equipment, net
$
655 $
689
Depreciation and amortization expense was $0.3 million and $0.8 million for the years ended December 31, 2024 and 2023, respectively.
NOTE 9 – PREPAID FORWARD OBLIGATION
In March 2021, the Company entered into a prepaid forward agreement with RTW. Under the terms of the RTW Transaction, the Company received $75.0 million
($72.4 million net of transaction costs) to support the launch of Jelmyto and the development of UGN-102. In return for the transferred funds, RTW is entitled to receive
tiered, future cash payments based on aggregate worldwide annual net product sales of Jelmyto and, subject to FDA approval, UGN-102, UGN-103 and UGN-104, in an
amount equal to: (i) 9.5% of annual net sales up to $200 million, (ii) 3.0% of annual net sales for annual net sales between $200 million and $300 million, and (iii) 1.0%
of annual net sales for annual net sales above $300 million. Pursuant to the agreement, the initial cash payment rate of 9.5% on Jelmyto aggregate worldwide annual
net sales of up to $200 million was increased to 13.0% and remained at that rate during the year ended December 31, 2024 because certain revenue thresholds
were not met.
In addition, subject to FDA approval of UGN-102 and UGN-103, RTW is entitled to receive tiered, future cash payments based on aggregate worldwide annual net
product sales of UGN-102 and UGN-103 in an amount equal to: (i) 2.5% of annual net sales up to $200 million, (ii) 1.0% of annual net sales for annual net sales between
$200 million and $300 million, and (iii) 0.5% of annual net sales for annual net sales above $300 million. If the Company does not receive FDA approval for UGN-102 by
June 30, 2025, the future cash payments to RTW with respect to aggregate worldwide annual net sales of Jelmyto across all Jelmyto annual net sales tiers will increase
by 1.5%.
In accordance with the prepaid forward agreement, the Company will be required to make payments of amounts owed to RTW each calendar quarter, through and until
the quarter in which the aggregate cash payments received by RTW are equal to or greater than $300 million. As of December 31, 2024, the cumulative amounts paid
and payable by the Company were $34.8 million. As security for the payment and fulfilment of these amounts throughout the arrangement, the Company has granted
RTW a first priority security interest in Jelmyto, UGN-102, UGN-103 and UGN-104, including the regulatory approvals, intellectual property, material agreements,
proceeds and accounts receivable related to these products.
In May 2021, following the receipt of necessary regulatory approvals, the Company received the $75.0 million prepaid forward payment ($72.4 million net of
transaction costs) from RTW and recognized an associated prepaid forward obligation liability. Each period the Company makes a payment to RTW, an expense is
recognized related to financing on the prepaid forward obligation based on an imputed rate derived from the expected future payments. Management reassesses the
effective rate each period based on the current carrying value of the obligation and the revised estimated future payments. Changes in future payments from previous
estimates are included in future financing expense. The Company does not expect to make any principal payments in the next 12 months.
The following table shows the activity with respect to the carrying value of the prepaid forward liability for the year ended December 31, 2024 and 2023 (in thousands):
Carrying value of prepaid forward obligation as of December 31, 2022
$
98,923
Financing on prepaid forward obligation
21,552
Amounts paid and payable (1)
(10,753)
Carrying value of prepaid forward obligation as of December 31, 2023
109,722
Financing on prepaid forward obligation
23,411
Amounts paid and payable (1)
(11,746)
Carrying value of prepaid forward obligation as of December 31, 2024
$
121,387
(1) $6.5 million and $3.0 million of the Amounts paid and payable are included as current portion of the prepaid forward obligation within other current liabilities on the
consolidated balance sheets as of December 31, 2024 and December 31, 2023, respectively.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 – LONG-TERM DEBT
On March 7, 2022, the Company entered into a loan agreement with Pharmakon for a senior secured term loan of up to $100 million in two tranches. The first tranche
of $75 million was funded in March 2022. The second tranche of $25 million was funded in December 2022.
On June 29, 2023, the loan agreement with Pharmakon was amended to replace the benchmark governing the interest rate with a rate based on the secured overnight
financing rate ("SOFR") published by the Federal Reserve Bank of New York. Effective July 2023, the loan accrued interest using a benchmark rate of 3-month SOFR plus
8.25% plus an additional adjustment of 0.26161%.
On March 13, 2024, the Company entered into an amended and restated loan agreement with Pharmakon for an additional third and fourth tranche of senior secured
loan. The third tranche of $25.0 million was funded in September 2024. The fourth tranche of $75.0 million will become available at the Company's option no later than
August 29, 2025, subject to (i) receiving FDA approval of a new drug application (“NDA”) for UGN-102 no later than June 30, 2025 and (ii) the satisfaction of customary
bring down conditions and deliverables. Under the amended and restated loan agreement, all outstanding loans with Pharmakon accrue interest using a benchmark
rate of 3-month SOFR plus 7.25% plus an additional adjustment of 0.26161%. All outstanding principal will be required to be repaid in four equal quarterly installments
commencing in the second quarter of 2026, with a one-year extension possible upon FDA approval of an NDA for UGN-102 by June 30, 2025. All outstanding loans with
Pharmakon can be prepaid in whole at the Company's discretion, at any time, subject to prepayment premiums and make-whole amounts. The Company is not required
to maintain any financial covenants.
The Company incurred financing expenses of $4.2 million related to the first and second tranches funded in 2022, and $0.5 million related to the third tranche funded in
2024, which are recognized as a direct offset to the long-term debt on the Company's consolidated balance sheets. These debt issuance costs are amortized over the
term of the debt using the effective interest method, and are recorded in the consolidated statements of operations as "Interest expense."
The following table shows the activity with respect to the carrying value of the long-term debt, in thousands:
Carrying value of Pharmakon loan as of December 31, 2022
$
97,537
Interest expense
14,715
Amounts paid
(13,701)
Carrying value of Pharmakon loan as of December 31, 2023
98,551
Third tranche of Pharmakon loan
25,000
Capitalized costs and discounts
(512)
Interest expense
12,521
Amounts paid
(13,826)
Carrying value of Pharmakon loan as of December 31, 2024
$
121,734
NOTE 11 – LEASES
Operating Leases
The Company had the following office and laboratory facility leases during the period covered by this report:
•
In April 2016, UPL signed an addendum to its November 2014 lease agreement for the Company’s offices located in Israel, in order to increase the office space
rented and to extend the rent period for an additional three years until August 2022. In July 2022, the Company signed a lease extension agreement for the
Company’s offices located in Israel, extending the term of the lease through September 2025. The Company's remaining contractual obligation under this
lease is approximately $0.2 million as of December 31, 2024.
•
In April 2018, UPI entered into a new lease agreement for an office in Los Angeles, California. The lease commencement date was July 10, 2018 and
terminated in March 2024. The landlord provided a tenant allowance for leasehold improvements of $0.2 million that was accounted for as a lease incentive.
In November 2019, UPI entered into a sublease for this office space, with a lease commencement date of January 1, 2020, which continued until the end of
the lease term in March 2024. The subtenants exercised their early access clause and moved into the premises at the end of November 2019. The Company
accounted for the sublease as an operating lease in accordance with ASC 842.
•
In November 2019, UPI entered into a new lease agreement for an office in Princeton, New Jersey, which the Company now uses as its headquarters. The lease
commencement date was November 29, 2019 with an original lease term of 38 months, expiring January 31, 2023. In June 2022, the Company signed a lease
extension for the Princeton office, extending the term of the lease through January 31, 2026. The Company’s remaining contractual obligation under this lease
is approximately $0.6 million as of December 31, 2024.
Finance Leases
•
In July 2024, UPI entered into a new master lease agreement for vehicles, primarily for use by employees in sales, field services, and roles that require regular
travel. Under the terms of the master lease agreement, the Company will lease various vehicles from time to time with an initial lease term of 48 months
commencing on the delivery date of the vehicle with an option to continue month-to-month for an unlimited period of time. Lease payments are fixed, with
payments due monthly in advance, and include charges for depreciation, maintenance, and other related services. At the end of each lease term, the Company
is required to make a terminal rental adjustment based on the difference between the vehicle’s contractual book value and its estimated wholesale value,
which may result in additional payments or refunds. The Company may also be required to pay additional rent if the vehicle exceeds certain mileage limits or
shows abnormal wear and tear during the lease term. The Company’s remaining contractual obligation under this lease is approximately $3.0 million as of
December 31, 2024.
In addition, the Company has other operating office equipment and vehicle leases. The Company’s operating leases may require minimum rent payments, contingent
rent payments adjusted periodically for inflation, or rent payments equal to the greater of a minimum rent or contingent rent. The Company’s leases do not contain any
residual value guarantees or material restrictive covenants. The Company’s active leases expire at various dates from 2025 through 2028, with varying renewal and
termination options.
The components of lease cost for the year ended December 31, 2024 and 2023 were as follows (in thousands):
Year Ended December
31, 2024
Year Ended December
31, 2023
Finance lease cost:
Amortization of right-of-use assets
$
36 $
—
Interest on lease liabilities
20
—
Operating lease cost
900
934
Sublease income
(42)
(224)
Variable lease cost
70
73
$
984 $
783
The amounts recognized as of December 31, 2024 and 2023 were as follows (in thousands):
Year Ended
December 31,
2024
Year Ended
December 31,
2023
Finance lease right-of-use assets
$
2,285 $
1,671
Operating lease right-of-use assets
849
—
Finance long-term lease liabilities
1,595
844
Operating long-term lease liabilities
58
—
Other current liabilities related to finance leases
745
—
Other current liabilities related to operating leases
785
819
As of December 31, 2024, no impairment losses have been recognized.
Supplemental information related to leases for the periods reported is as follows (in thousands, except for lease terms and discount rate amounts):
Year Ended December
31, 2024
Year Ended December
31, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
933 $
1,169
Right-of-use assets obtained in exchange for new finance lease liabilities
$
2,321 $
—
Right-of-use assets obtained in exchange for new operating lease liabilities
$
— $
122
Weighted-average remaining lease term of finance leases (in years)
3.94
—
Weighted-average remaining lease term of operating leases (in years)
1.02
1.92
Weighted-average discount rate of finance leases
13.82%
—
Weighted-average discount rate of operating leases
10.24%
10.21%
87
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2024, maturities of lease liabilities were as follows (in thousands):
Finance Leases
Years ending December 31,
2025
$
998
2026
657
2027
657
2028
642
Total future minimum lease payments
$
2,954
Less: Interest
(614)
Present value of lease liabilities
$
2,340
Operating Leases
Years ending December 31,
2025
$
824
2026
58
Total future minimum lease payments
$
882
Less: Interest
(39)
Present value of lease liabilities
$
843
NOTE 12 – REVENUE FROM PRODUCT SALES
Net product sales consist of the following for the year ended December 31, 2024 and 2023 (in thousands):
Year Ended December
31, 2024
Year Ended December
31, 2023
Jelmyto
$
90,398 $
82,713
All product sales of Jelmyto are recognized through the Company's arrangements with two customers as defined by ASC 606, both of which are third-party national
specialty distributors. The Company's largest customer comprises over 90% of product sales throughout the full year 2024, and approximately 80% of accounts
receivables at December 31, 2024. Net revenue recognized includes gross revenue and management’s estimate of returns, consideration paid to the customers,
chargebacks relating to differences between the wholesale acquisition cost and the contracted price offered to the end consumer, chargebacks relating to 340B drug
pricing programs and other government sponsored programs, Medicaid drug rebate programs, the Company’s copay assistance program, and Medicare refunds for
discarded drug. The Company estimates these elements of variable consideration based on the contractual or statutory terms governing the arrangements and the
Company’s historical experience, and constrains the net revenue recognized for product sales to the value that is not probable to be reversed when the uncertainty
associated with the variable consideration is subsequently resolved. Reserves for chargebacks and returns are net settled and recognized as contra accounts
receivable while the remaining reserves are recognized within other current liabilities on the consolidated balance sheets. The following table shows the activity with
respect to sales reserves for the year ended December 31, 2024 and 2023, in thousands:
Reserves related
to government
sponsored
programs
Medicare refunds
for discarded drug
reserve
Other reserves
Total accrued
sales reserves
Balance as of December 31, 2022
$
590 $
— $
847 $
1,437
Changes during 2023
Accruals
11,110
3,451
8,807
23,368
Utilizations
(10,638)
—
(8,196)
(18,834)
Balance as of December 31, 2023
$
1,062 $
3,451 $
1,458 $
5,971
Changes during 2024
Accruals
13,870
3,920
11,273
29,063
Utilizations
(13,822)
—
(10,785)
(24,607)
Changes to prior period estimates
(223)
358
—
135
Balance as of December 31, 2024
$
887 $
7,729 $
1,946 $
10,562
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 – LICENSE AND COLLABORATION AGREEMENTS
Agenus Agreement
In November 2019, the Company entered into a license agreement with Agenus Inc. ("Agenus"), pursuant to which Agenus granted to the Company an exclusive,
worldwide (not including Argentina, Brazil, Chile, Colombia, Peru, Venezuela and their respective territories and possessions), royalty-bearing, sublicensable license
under Agenus’s intellectual property rights to develop, make, use, sell, import, and otherwise commercialize products incorporating a proprietary monoclonal antibody
of Agenus known as AGEN1884 (zalifrelimab), an anti-CTLA-4 antagonist, for the treatment of cancers of the urinary tract via intravesical delivery. UGN-301 is a
formulation of zalifrelimab administered using RTGel technology that is in Phase 1 clinical development for high-grade non-muscle invasive bladder cancer.
NOTE 14 – EMPLOYEE RIGHTS UPON RETIREMENT
In Israel, the Company is required by law to make severance payments upon dismissal of an employee or upon termination of employment in certain other
circumstances.
The Company operates a number of post-employment defined contribution plans. A defined contribution plan is a program that benefits an employee after termination
of employment, under which the Company regularly makes fixed payments to a separate and independent entity so that the Company has no legal or constructive
obligation to pay additional contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and
prior periods. The fund assets are not included in the Company’s financial position.
The Company operates pension and severance compensation plans subject to Section 14 of the Israeli Severance Pay Law, 5723-1963. The plans are funded through
payments to insurance companies or pension funds administered by trustees. In accordance with its terms, the plans meet the definition of a defined contribution plan,
as defined above.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 – SHAREHOLDERS’ EQUITY
The Company had 100.0 million ordinary shares authorized for issuance as of December 31, 2024 and 2023. The Company had 42.2 million and 32.5 million ordinary
shares issued and outstanding as of December 31, 2024 and 2023, respectively. Each ordinary share is entitled to one vote. The holders of ordinary shares are also
entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors (the "Board"). Since the Company's inception, the
Board has not declared any dividends.
ATM Sales Agreement
In December 2019, the Company entered into a sales agreement (the “ATM Sales Agreement”) with TD Securities (USA) LLC (f/k/a Cowen and Company, LLC) (“TD
Cowen”)
pursuant to which the Company may from time to time offer and sell the Company's ordinary shares having an aggregate offering price of up to $100.0 million.
During the first quarter of 2024, the Company sold 3,400,468 ordinary shares under the ATM Sales Agreement, for gross proceeds of approximately $56.1 million. The
net proceeds to the Company after deducting sales commissions to TD Cowen were approximately $54.7 million. The remaining capacity under the ATM Sales
Agreement was approximately $27.3 million as of December 31, 2024. The shares will be offered and sold, if any, pursuant to the Company's shelf registration
statement on Form S-3 filed with the SEC on November 15, 2022, which was declared effective on November 29, 2022, or a subsequent shelf registration statement.
Securities Purchase Agreement
On July 26, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional and other accredited investors (the
“Purchasers”), pursuant to which the Company agreed to sell and issue to the Purchasers 7,300,380 ordinary shares of the Company (“Shares”) and 5,278,776 of pre-
funded warrants to purchase ordinary shares of the Company at a purchase price of $9.54 per Share or $9.539 for each ordinary share underlying a pre-funded warrant,
in a private placement transaction that closed on July 28, 2023 and August 9, 2023 (the “Private Placement”) for aggregate gross proceeds of $120.0 million, before
deducting fees to placement agents and financial advisors and before other expenses paid by the Company. Each pre-funded warrant has an exercise price of $0.001 per
ordinary share, subject to customary adjustments, became exercisable upon original issuance and will not expire until exercised in full. The pre-funded warrants may
not be exercised to the extent that the aggregate number of ordinary shares beneficially owned by the holder thereof immediately following such exercise would
exceed a specified beneficial ownership limitation. The aggregate fee paid by the Company to placement agents and financial advisors was $3.6 million, plus the
reimbursement of certain expenses.
Resales of the Shares and the ordinary shares issuable upon exercise of the pre-funded warrants were registered pursuant to the Company’s registration statement on
Form S-3 (File No. 333-274423) filed with the SEC on September 8, 2023, which was declared effective on September 15, 2023.
On December 20, 2023, the Company issued 1,599,733 ordinary shares through a cashless conversion of 1,599,840 pre-funded warrants for the purchase of ordinary
shares of the Company. On January 24, 2025, the Company issued 3,206,271 ordinary shares through a conversion of 3,206,271 pre-funded warrants for the purchase
of ordinary shares of the Company.
Monograph Capital Partners I, L.P. (“Monograph”), a life sciences venture firm that is affiliated with Fred Cohen, M.D., a director of the Company at the time, purchased
1,572,327 of the Shares in the Private Placement, for an aggregate purchase price of $15.0 million. Dr. Cohen was the Chair and Chief Investment Officer of Monograph
at the time of purchase.
Underwritten Public Offering
On June 17, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with TD Securities (USA) LLC and Guggenheim Securities, LLC,
as representatives of the several underwriters named therein (collectively, the “Underwriters”), relating to the issuance and sale in a public offering of 5,000,000
ordinary shares of the Company for $17.50 per share and pre-funded warrants to purchase 1,142,857 ordinary shares of the Company for $17.499 per pre-
funded warrant. The offering closed on June 20, 2024. The gross proceeds to the Company from the closing of the offering were $107.5 million, before deducting
underwriting discounts and commissions and offering expenses of $7.3 million. Each pre-funded warrant has an exercise price of $0.001 per ordinary share, subject to
customary adjustments, is exercisable at any time and will not expire until exercised in full. The pre-funded warrants may not be exercised if the aggregate number of
ordinary shares beneficially owned by the holder thereof immediately following such exercise would exceed a specified beneficial ownership limitation. In addition, the
Underwriters were granted an option exercisable for 30 days, to purchase up to 921,428 additional shares at the public offering price, less the underwriting discounts
and commissions. On July 18, 2024, the Company completed the closing of the sale of 921,428 additional shares in the offering following the exercise in full of the
Underwriters’ option to purchase additional shares, which resulted in additional gross proceeds to the Company of $16.1 million before deducting underwriting
discounts and commissions and offering expenses paid by the Company of $1.0 million.
NOTE 16 – SHARE-BASED COMPENSATION
In October 2010, the Board approved a share option plan (the “2010 Plan”) for grants to Company employees, consultants, directors, and other service
providers. Subsequently, in March 2017, the Board adopted the 2017 Equity Incentive Plan (the "2017 Plan" and, together with the 2010 Plan, the "Plans"), which was
approved by the shareholders in April 2017. The 2017 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards,
performance share awards, performance cash awards, and other forms of share awards to the Company's employees, directors and consultants.
The grant of options to Israeli employees under the Plans is subject to the terms stipulated by Section 102 of the Israeli Income Tax Ordinance (“Section 102”). The
option grants are subject to the track chosen by the Company, either the “regular income” track or the “capital gains” track, as set out in Section 102. The Company
registered the Plans under the capital gains track, which offers more favorable tax rates to the employees. As a result, and pursuant to the terms of Section 102, the
Company is not allowed to claim as an expense for tax purposes the amounts credited to the employees in respect of options granted to them under the Plans,
including amounts recorded as salary benefits in the Company’s accounts, with the exception of the work-income benefit component, if any, determined on grant date.
For non-employees and for non-Israeli employees, the Plans is subject to Section 3(i) of the Israeli Income Tax Ordinance.
Employees are typically granted stock options and/or RSUs, upon commencement of employment. Also, eligible employees may receive an annual grant of
options, RSUs and/or PSUs. Non-employee members of the Board typically receive a grant of stock options upon initial appointment to the Board, and/or stock options
annually. The term of any option granted under the Plans cannot exceed 10 years. Options shall not have an exercise price less than 100% of the fair market value of the
Company’s ordinary shares on the grant date, and generally vest over a period of three years. If the individual possesses more than 10% of the combined voting power
of all classes of equity of the Company, the exercise price shall not be less than 110% of the fair market value of an ordinary share on the date of grant.
The Company’s RSU and option grants provide for accelerated or continued vesting in certain circumstances as defined in the Plans and related grant agreements,
including a termination in connection with a change in control. RSUs generally vest in a 33% increment upon the first anniversary of grant, and in either equal quarterly
or annual amounts for the two years following the one-year anniversary of the grant date. Options generally vest in a 33% increment upon the first anniversary of the
grant date, and in either equal quarterly or annual amounts for the two years following the one-year anniversary of the grant date. The Company also grants PSUs to
certain employees. The PSU’s currently outstanding vest based on either the earlier of obtaining regulatory approval for the Company’s lead product candidate UGN-
102 or the occurrence of a change in control, or for certain other awards, the achievement of the first commercial sale of UGN-102 in the United States following UGN-
102's receipt of regulatory approval. In June 2024, the Company amended certain RSU and PSU awards granted to the chief executive officer to defer vesting until the
end of 2025. The Company accounted for the modification as a Type I probable-to-probable modification under ASC 718. As the modification did not result in any
incremental fair value at the modification date, the Company continues to recognize the original grant-date fair value ratably over the original service period or
expected performance period.
The maximum number of ordinary shares that was initially authorized for issuance under the 2017 Plan was 1,400,000. On January 1, 2018, the share reserve increased
by 250,167 shares to 1,650,167 shares. On October 12, 2018, the Company increased the number of ordinary shares authorized for issuance under the 2017 Plan by
1,900,000 shares to 3,550,167 shares. On June 8, 2020, the Company’s shareholders approved an increase to the number of ordinary shares authorized for issuance
under the 2017 Plan by 400,000 shares to a total share reserve of 3,950,167 shares. On June 7, 2021, the Company’s shareholders approved an increase to the
number of ordinary shares authorized for issuance under the 2017 Plan by 400,000 shares to a total share reserve of 4,350,167 shares. On June 8, 2022, the Company's
shareholders approved an increase to the number of ordinary shares authorized for issuance under the 2017 Plan by 400,000 shares to a total share reserve of
4,750,167 shares. On September 7, 2023, the Company's shareholders approved an increase to the number of ordinary shares authorized for issuance under the
2017 Plan by 450,000 shares to a total share reserve of 5,200,167 shares. On August 6, 2024, the Company's shareholders approved an increase to the number of
ordinary shares authorized for issuance under the 2017 Plan by 800,000 shares to a total of 6,000,167 shares.
In May 2019, the Company adopted the UroGen Pharma Ltd. 2019 Inducement Plan (the “Inducement Plan”). Under the Inducement Plan, the Company is authorized
to issue up to 900,000 ordinary shares pursuant to inducement awards. The only persons eligible to receive grants under the Inducement Plan are individuals who
satisfy the standards for inducement grants under Nasdaq Marketplace Rule 5635(c)(4) and the related guidance under Nasdaq IM 5635-1, including individuals who
were not previously an employee or director of the Company or are following a bona fide period of non-employment, in each case as an inducement material to such
individual’s agreement to enter into employment with the Company. In December 2021, the Board approved an increase to the number of shares authorized for
issuance under the Inducement Plan of 300,000 shares. In June 2024, the Board approved an increase to the number of shares authorized for issuance under the
Inducement Plan of 600,000 shares to a total of 1,800,000 shares.
As of December 31, 2024, 4,119,671 ordinary shares are subject to outstanding awards under the Company's share-based compensation plans and 1,654,692 ordinary
shares remain available for future awards.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Options granted:
Set forth below are grants made by the Company as of December 31, 2024. The majority of options vest over three years and expire on the tenth anniversary of the
date of grant. During 2024, the Company granted 238,614 options with exercise prices ranging from $13.11 to $15.16 per share.
The weighted average fair value of options granted during 2024 and 2023 was $2.5 million and $4.3 million, respectively.
The total unrecognized compensation cost of options as of December 31, 2024 was $3.1 million, which is expected to be recognized over a weighted average period of
1.75 years.
The fair value of options granted was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are as follows:
2024
2023
Value of ordinary shares
13.11-15.16
8.84-17.94
Dividend yield
0%
0%
Expected volatility
81.00%-89.12%
67.21%-81.00%
Risk-free interest rate
3.61%-4.42%
3.47%-4.42%
Expected term (in years)
6.0-10 years
6.0-10 years
The expected volatility is based on a mix of the Company's historical volatility and the historical volatility of comparable companies with similar attributes to the
Company, including industry, stage of life cycle, size and financial leverage. The risk-free interest rate assumption is based on observed interest rates appropriate for the
expected term of the options granted. The expected term is the length of time until the expected dates of exercising the options and is estimated for employees using
the simplified method due to insufficient specific historical information of employees’ exercise behavior, and for non-employees, and directors using the contractual
term.
The following table summarizes the number of employee and non-employee options outstanding under the Plans for the years ended December 31, 2024 and 2023,
and related information:
Number of
options
Weighted
average exercise
price
per share
Weighted
average
remaining
contractual life
Aggregate
intrinsic
value
Outstanding as of December 31, 2023
2,685,796 $
25.35
7.37 $
5,131
Granted
238,614
13.80
Forfeited
(277,901)
24.05
Exercised
(34,666)
9.25
Outstanding as of December 31, 2024
2,611,843 $
24.65
5.80 $
1,092
Vested and expected to vest, December 31, 2024
2,611,843 $
24.65
5.80 $
1,092
Exercisable, December 31, 2024
2,051,867 $
28.24
5.04 $
743
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The intrinsic value of stock options exercised was $0.2 million and $0.7 million for the years ended December 31, 2024 and 2023, respectively.
The following table summarizes information about RSU activity as of December 31, 2024:
Outstanding
Restricted Stock
Units
Outstanding as of December 31, 2023
1,098,684
Granted
964,369
Vested and released
(385,065)
Forfeited
(170,160)
Outstanding as of December 31, 2024
1,507,828
The fair value of RSUs granted during 2024 and 2023 was $14.5 million and $10.4 million, respectively. The total unrecognized compensation cost of RSUs as of
December 31, 2024 is $12.1 million with a weighted average recognition period of 2.00 years.
The following table illustrates the effect of share-based compensation on the Statements of Operations:
Year ended December 31,
2024
2023
Research and development expenses
$
2,235 $
1,905
Selling, general and administrative expenses
10,873
7,439
Total share-based compensation expense
$
13,108 $
9,344
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 – INCOME TAXES
The Company is taxed under Israeli tax laws:
Corporate tax rate
The applicable Israeli tax rate relevant to the Company for 2023 and thereafter is 23%.
For financial reporting purposes, the expense for current income taxes consists of the following (in thousands):
2024
2023
Current taxes:
U.S. Federal
$
2,206 $
2,937
U.S. State
626
983
Total current taxes
$
2,832 $
3,920
Deferred income taxes:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Significant components of the Company and its subsidiary deferred tax assets are as follows (in thousands):
December 31,
2024
2023
In respect of:
Net operating loss carryforward
$
122,944 $
103,566
Research and development expenses
26,231
22,451
Stock-based compensation
12,441
11,953
Accrued expenses
2,371
2,310
Interest expense
2,630
1,345
In-process research and development
815
1,102
Lease Liabilities
683
283
Issuance costs
221
—
Other
988
877
Total deferred tax assets
169,324
143,887
Less—valuation allowance
(168,555)
(143,566)
Deferred tax assets, net of valuation allowance
769
321
Right-of-use asset
(725)
(276)
Depreciation of fixed assets
(44)
(45)
Total deferred tax liabilities
(769)
(321)
Net deferred tax assets
$
— $
—
The change in valuation allowance for the years ended December 31, 2024 and 2023 were as follows (in thousands):
2024
2023
Balance at the beginning of the year
$
(143,566) $
(129,601)
Changes during the year
(24,989)
(13,965)
Balance at the end of the year
$
(168,555) $
(143,566)
The main reconciling items between the statutory tax rates of the Company and the effective rate are nondeductible expenses related to financing on the prepaid
forward obligation and share-based compensation, the provision for a full valuation allowance in respect of tax benefits from carryforward tax losses due to the
uncertainty of the realization of such tax benefits, utilization of tax credits and expense related to uncertain tax positions. A reconciliation of the Company’s statutory
tax rate to effective tax is as follows (in thousands, except statutory rate):
December 31,
2024
2023
Pretax loss
$
(124,042) $
(98,324)
Statutory rate
23%
23%
Income tax expense/(benefit) at statutory rate
(28,530)
(22,615)
Additional tax (tax saving) in respect of:
Non-deductible expenses
6,929
5,704
R&D and orphan drug credits
(510)
(1,197)
Different tax rate of foreign subsidiaries
(669)
(689)
Uncertain tax positions
597
176
Change in valuation allowance(1)
24,989
22,898
Other
26
(358)
Income tax expense
$
2,832 $
3,920
(1) In the course of preparing the 2022 tax returns, adjustments were made for certain nondeductible amounts, reducing net operating loss carryforward and reflected
as a change in valuation allowance of approximately $8.9 million in 2023.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pretax loss for December 31, 2024 and 2023 includes pretax loss from foreign (United States) jurisdictions of $11.0 million and $17.9 million, respectively.
The Internal Revenue Code of 1986, as amended (the “Code”), contains provisions that may limit our use of federal net operating loss carryforwards if significant
changes occur in the constructive stock ownership of UroGen Pharma, Inc. In the event it has had an “ownership change” within the meaning of Section 382 of the
Code, utilization of its net operating loss carryforwards could be restricted under Section 382 of the Code and similar state provisions. Such limitations could result in
the expiration of the net operating carryforwards incurred before 2018 before their utilization.
Losses for tax purposes carried forward to future years
As of December 31, 2024 and 2023, the Company had approximately $533.9 million and $452.0 million of carryforward tax losses, prior to tax effecting, respectively,
available to reduce future taxable income without limitation of use. The Company's carryforward tax losses relate to losses generated in Israel and can be carried
forward indefinitely.
Uncertain tax positions
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
2024
2023
Unrecognized tax benefits at the beginning of the year
$
1,974 $
1,974
Gross increases — tax positions in current period
—
—
Gross increases — tax positions in prior period
—
—
Unrecognized tax benefits at the end of the year
$
1,974 $
1,974
The liability for uncertain tax positions of $3.8 million as of December 31, 2024 is related to transfer pricing between affiliated entities. The uncertain tax positions
liability on the consolidated balance sheets includes $1.8 million and $1.2 million of accrued interest and penalties related to unrecognized tax benefits at December
31, 2024 and December 31, 2023, respectively. The Company recognizes interest accrued and penalties related to uncertain tax positions as a component of income tax
expense. If recognized, balances of uncertain tax positions as of December 31, 2024 would result in incremental net operating loss carryforwards, which would be
expected to require a full valuation allowance based on present circumstances, therefore, the uncertain tax positions will not impact the effective tax rate.
The Company operates on a global basis and is subject to tax laws and regulations in the United States and Israel. The estimate of the Company’s tax liabilities relating
to uncertain tax positions requires management to assess uncertainties and to make judgments about the application of complex tax laws and regulations, expectations
regarding the outcome of tax authority examinations, as well as the ultimate measurement of potential liabilities.
The uncertain tax positions are reviewed quarterly and adjusted as events occur that could affect potential liabilities for additional taxes, including lapsing of applicable
statutes of limitations, correspondence with tax authorities, proposed assessments by tax authorities, identification of new issues, and issuance of new legislation or
regulations. The Company recognizes its gross uncertain tax positions as a long-term liabilities. The Company believes that adequate amounts of tax have been provided
in income tax expense for any adjustments that may result from its uncertain tax positions. Approximately $1.4 million of the liability for uncertain tax positions relate
to tax years for which the statute of limitations will expire within the next 12 months. Based upon the information currently available, the Company does not
reasonably expect any other changes in its existing uncertain tax positions in the next 12 months.
The Company has received final tax assessments up to and including its 2017 tax year in Israel and 2020 in the US.
NOTE 18 – RELATED PARTIES
There were no related party transactions for the year ended December 31, 2024. See Note 15 for discussion regarding an affiliated investor in the private placement
transaction for the year ended December 31, 2023. See Note 21 for discussion related to a subsequent event in February 2025 which involved a related party.
NOTE 19 – COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service
providers. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum
exposure under these arrangements is unknown as of December 31, 2024 and 2023. The Company does not anticipate recognizing any significant losses relating to
these arrangements.
On February 25, 2024, the Company received from Teva, a Paragraph IV Certification Notice Letter dated February 20, 2024, providing notification that Teva submitted
an ANDA to the FDA seeking approval to manufacture, use or sell a generic version of Jelmyto. In the Notice Letter, Teva alleges that two of the patents listed in the FDA
Orange Book for Jelmyto, U.S. Patent Numbers 9,040,074 and 9,950,069, each of which expires in January 2031, are invalid, unenforceable, or will not be infringed by
Teva’s manufacture, use, or sale of the generic product described in its ANDA submission. On April 2, 2024, the Company filed a lawsuit in the U.S. District Court for the
District of Delaware against Teva Pharmaceuticals, Inc., Teva Pharmaceuticals USA, Inc., and Teva Pharmaceutical Industries, Ltd., alleging infringement of U.S. Patent
Numbers 9,040,074 and 9,950,069 and seeking a permanent injunction preventing U.S. market entry of Teva’s generic product prior to the expiry of such patents. The
Company stipulated to the dismissal of Teva Pharmaceutical Industries, Ltd. without prejudice and the action continues against the other two Teva entities. If the
Company is unsuccessful in securing the requested court relief, Jelmyto may be subject to immediate competition from an FDA approved generic product after
regulatory exclusivity for Jelmyto expires in April 2027.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Separation Agreements
On June 26, 2024, the Company entered into a separation agreement with Jeff Bova, the Company’s former Chief Commercial Officer, which sets forth the terms of Mr.
Bova's termination of employment with the Company, effective as of September 30, 2024. The arrangement includes cash severance, a pro rata portion of the target
annual bonus for calendar year 2024, and partial acceleration of share-based compensation. The Company recognized $1.1 million within selling, general and
administrative expenses during the year ended December 31, 2024 in relation to this arrangement.
On October 7, 2024, the Company entered into a separation and consulting agreement with Don Kim, pursuant to which Mr. Kim resigned from his positions as the
Company’s Chief Financial Officer, principal financial officer and principal accounting officer, effective October 8, 2024. The arrangement includes cash severance, target
annual bonus for calendar year 2024, a post-separation consulting arrangement, and partial acceleration of share-based compensation. The Company recognized $0.8
million within selling, general and administrative expenses during the year ended December 31, 2024 in relation to this arrangement.
Leases
See Note 11 for further discussion regarding lease commitments.
NOTE 20 – SEGMENT REPORTING
The Company is engaged in the development and commercialization of innovative solutions for the treatment of urothelial and specialty cancers. The Company has a
single operating segment and reportable segment focused on these business activities, and its operations are managed on a consolidated basis. The primary revenue
source for the segment comes from sales of the Company’s approved product, Jelmyto, primarily conducted in the United States.
The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer (“CEO”). The CODM assesses performance and allocates resources based on
net income or loss, which is the primary measure of performance, as reported in the Consolidated Statements of Operations and Comprehensive Loss. Additionally, net
income or loss is used to monitor performance relative to budgeted targets and to evaluate financial performance in relation to the Company’s strategic goals. For
additional information, refer to the Consolidated Statements of Operations and Comprehensive Loss for detailed measures of segment revenues, expenses, and profit
or loss.
Information about significant segment expenses regularly provided to the CODM is as follows (in thousands):
Year Ended December 31,
2024
2023
Research and development expenses
R&D project materials & services
$
38,556 $
26,928
Employee compensation
14,882
14,796
Rent, office, utilities & technology
2,972
3,569
Other expenses
735
321
Total research and development expenses
$
57,145 $
45,614
Selling, general and administrative expenses
Employee compensation
$
59,709 $
52,605
Commercial & medical affairs services
27,205
14,210
Professional services
14,031
11,650
Travel, meetings & conferences
12,962
8,796
Rent, office, utilities & technology
3,283
2,790
Other expenses (1)
3,964
3,223
Total selling, general and administrative expenses
$
121,154 $
93,274
(1) Other expenses primarily consist of insurance, sponsorship, grants, other fees and taxes.
NOTE 21 – SUBSEQUENT EVENTS
On January 24, 2025, the Company issued 3,206,271 ordinary shares through a conversion of 3,206,271 pre-funded warrants for the purchase of ordinary shares of the
Company. See Note 15 for further discussion related to shareholders' equity.
On February 14, 2025 (the “Closing Date”), the Company entered into an Asset Purchase Agreement (the “Agreement”) with IconOVir Bio, Inc. (“IconOVir”), pursuant
to which the Company purchased and acquired certain assets of IconOVir (the “Transferred Assets”), including the product candidate ICVB-1042 and certain contracts,
intellectual property rights, regulatory applications, submissions and registrations, and data and other rights related thereto, and assumed certain liabilities and
obligations of IconOVir arising under certain contracts of IconOVir acquired by the Company.
As consideration for the Transferred Assets and subject to the terms and conditions of the Agreement, on the Closing Date the Company (i) issued 374,843 ordinary
shares of the Company (the “Company Shares”) to IconOVir, which represents a purchase price of $4.0 million divided by the volume-weighted average closing price of
the Company Shares on The Nasdaq Stock Market over the 30 consecutive trading days ending on (and including) the trading day immediately prior to the Closing Date,
(ii) agreed to pay IconOVir a one-time payment of $15.0 million in cash upon the achievement of a cumulative aggregate worldwide net sales milestone for all products,
including combination products, that incorporate or comprise ICVB-1042 (“ICVB Products”), (iii) agreed to pay IconOVir a low, single-digit percentage royalty, on an
ICVB Product-by-ICVB Product basis, on the annual, worldwide net sales of such ICVB Product during the royalty term, subject to certain reductions as set forth in the
Agreement, and (iv) agreed to assume certain immaterial liabilities arising under certain acquired contracts ((i), (ii), (iii), and (iv) collectively, the “Purchase Price”).
The Company also granted IconOVir certain piggyback registration rights with respect to the Company Shares issued to IconOVir, subject to customary exceptions and
cutback rights.
Entities affiliated with Arie Belldegrun, M.D., the Chair of the Board of Directors of the Company, hold certain promissory notes of IconOVir that may entitle such
entities to receive, in the aggregate, approximately 28.3% of the Purchase Price paid to IconOVir pursuant to the Agreement.
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22 - SELECTED UNAUDITED QUARTERLY FINANCIAL DATA
Certain unaudited selected quarterly financial results for the quarters within 2024 and 2023 are presented as follows:
2024
For the Three
Months
Ended March
31
For the Three
Months
Ended June
30
For the Six
Months
Ended June
30
For the Three
Months
Ended
September 30
For the Nine
Months
Ended
September 30
For the Three
Months
December 31
For the Year
Ended
December 31
Revenue
$
18,781 $
21,848 $
40,629 $
25,204 $
65,833 $
24,565 $
90,398
Gross profit
$
17,053 $
19,619 $
36,672 $
22,751 $
59,423 $
22,094 $
81,517
Net loss
$
(32,286) $
(33,403) $
(65,689) $
(23,673) $
(89,362) $
(37,512) $
(126,874)
Weighted-average
number of ordinary
shares (1)
37,059,186
40,501,315
38,785,924
46,779,637
41,476,892
47,030,820
42,876,737
Basic and diluted loss
per ordinary share (1)
$
(0.87) $
(0.82) $
(1.69) $
(0.51) $
(2.15) $
(0.80) $
(2.96)
(1) The loss per share, both basic and diluted, for the first, second, and third quarters of 2024 was revised to record an immaterial correction to the
amounts originally reported in the March 31, 2024 Form 10-Q filed on May 13, 2024, June 30, 2024 Form 10-Q filed on August 13, 2024, and
September 30, 2024 Form 10-Q filed on November 6, 2024, by incorporating the 3,679,400 shares of pre-funded warrants outstanding as of each
respective reporting period, which were not included in the previous calculations and are now reflected in the weighted average shares outstanding.
2023
For the Three
Months
Ended March
31
For the Three
Months
Ended June
30
For the Six
Months
Ended June
30
For the Three
Months
Ended
September 30
For the Nine
Months
Ended
September 30
For the Three
Months
December 31
For the Year
Ended
December 31
Revenue
$
17,192 $
21,139 $
38,331 $
20,852 $
59,183 $
23,530 $
82,713
Gross profit
$
14,927 $
18,696 $
33,623 $
18,485 $
52,108 $
21,244 $
73,352
Net loss
$
(30,213) $
(24,136) $
(54,349) $
(21,879) $
(76,228) $
(26,016) $
(102,244)
Weighted-average
number of ordinary
shares
23,279,951
23,462,016
23,371,878
32,298,182
26,358,719
36,153,634
28,834,303
Basic and diluted loss
per ordinary share
$
(1.30) $
(1.03) $
(2.33) $
(0.68) $
(2.89) $
(0.72) $
(3.55)
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UROGEN PHARMA LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer,
respectively), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as of December 31, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under
the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the
reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in
the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and
principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their
objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of
our disclosure controls and procedures as of December 31, 2024, our principal executive officer and principal financial officer concluded that, as of such date, our
disclosure controls and procedures were effective at a reasonable assurance level.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the
Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management has assessed the effectiveness of our internal control over financial reporting based on the framework set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on our evaluation, management has concluded
that our internal control over financial reporting was effective as of December 31, 2024.
Changes in Internal Control over Financial Reporting
An evaluation was also performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, of any changes in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting. That evaluation did not identify any change in our internal control over financial reporting that
occurred during our latest fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item will be set forth in our definitive proxy statement for our 2025 annual meeting of shareholders, or an amendment to this Annual
Report on Form 10-K, to be filed with the SEC by April 30, 2025 (the "Proxy Statement/Form 10-K Amendment").
We have adopted a code of ethics for directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and
employees, known as the “Corporate Code of Ethics and Conduct.” The Corporate Code of Ethics and Conduct is available on our website at www.urogen.com under the
Governance section of our Investors page. To the extent requirement by applicable SEC rules, we intend to promptly disclose on our website (i) the nature of any
amendment to the policy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar
functions and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of these specified individuals, the name of
such person who is granted the waiver and the date of the waiver. Shareholders may request a free copy of the Corporate Code of Ethics and Conduct from c/o UroGen
Pharma Ltd., 400 Alexander Park Dr., Princeton, NJ 08540.
Item 11. Executive Compensation
The information required by this item will be set forth in the Proxy Statement/Form 10-K Amendment.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be set forth in the Proxy Statement/Form 10-K Amendment.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be set forth in the Proxy Statement/Form 10-K Amendment.
Item 14. Principal Accountant Fees and Services
The information required by this item will be set forth in the Proxy Statement/Form 10-K Amendment.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(1) Financial Statements.
The response to this portion of Item 15 is set forth under Part II, Item 8 above.
(a)(2) Financial Statement Schedules.
All schedules have been omitted because they are not required or because the required information is given in the Financial Statements or Notes thereto set forth
under Item 8 above.
(a)(3) Exhibits.
Exhibit
Number
Exhibit Description
3.1
Articles of Association of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Report on Form 6-K, filed with the SEC on May 18,
2017).
4.1
Reference is made to Exhibit 3.1.
4.2
Description of the Registrant’s Ordinary Shares.
4.3
Form of July 2023 Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on
July 27, 2023).
4.4
Form of June 2024 Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on
June 18, 2024).
10.1*
Form of Officer Indemnity and Exculpation Agreement (incorporated by reference to Exhibit 99.2 to the Registrant’s Report Form 6-K, filed with the SEC
on July 13, 2018).
10.2*
Amended and Restated 2010 Israeli Share Option Plan (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 20-F, filed
with the SEC on March 15, 2018).
10.3*
2017 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on
August 8, 2024).
10.4*
2017 Israeli Equity Incentive Sub Plan to the 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration
Statement on Form F-1, filed with the SEC on April 7, 2017).
10.5
Form of Performance Stock Award Grant Notice and Performance Stock Award Agreement under the UroGen Pharma Ltd. Israeli Sub-Plan to 2017
Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 13,
2024).
10.6
Form of Stock Option Grant Notice and Stock Option Agreement under the UroGen Pharma Ltd. 2017 Equity Incentive Plan (incorporated by reference
to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on November 14, 2023).
10.7
Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the UroGen Pharma Ltd. 2017 Equity Incentive
Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on November 14, 2023).
10.8
Amendment to Form of Restricted Stock Unit Grant Notice under the UroGen Pharma Ltd. 2017 Equity Incentive Plan (incorporated by reference to
Exhibit 10.7 to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 14, 2024)
10.9
Form of Performance-Based Restricted Stock Unit Grant Notice and Performance-Based Restricted Stock Unit Award Agreement under the UroGen
Pharma Ltd. 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC
on November 14, 2023).
10.10
Amendment to Form of Performance-Based Restricted Stock Unit Grant Notice under the UroGen Pharma Ltd. 2017 Equity Incentive Plan
(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 13, 2024).
10.11*
UroGen Pharma Ltd. 2019 Inducement Plan, as amended (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q,
filed with the SEC on August 13, 2024).
10.12
Form of Stock Option Grant Notice and Stock Option Agreement under the UroGen Pharma Ltd. 2019 Inducement Plan (incorporated by reference to
Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 28, 2019).
10.13
Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the UroGen Pharma Ltd. 2019 Inducement Plan (incorporated
by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 28, 2019).
10.14
Amendment to Form of Restricted Stock Unit Grant Notice under the UroGen Pharma Ltd. 2019 Inducement Plan (incorporated by reference to Exhibit
10.12 to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 14, 2024).
10.15*
UroGen Pharma Ltd. 2024 Non-Employee Director and Officer Compensation Policy (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K, filed with the SEC on August 8, 2024).
10.16*
Employment Agreement by and between the Registrant and Elizabeth Barrett, dated as of January 3, 2019 (incorporated by reference to Exhibit 10.9 to
the Registrant’s Annual Report on Form 10-K, filed with the SEC on February 28, 2019).
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Table of Contents
10.17*
Amendment 1 to Employment Agreement by and between the Registrant and Elizabeth Barrett, dated as of January 26, 2021 (incorporated by
reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 13, 2021).
10.18*
Omnibus Amendment to Equity Awards by and between the Registrant and Elizabeth Barrett, dated as of January 19, 2021 (incorporated by reference
to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 13, 2021).
10.19*
Performance-Based Restricted Stock Unit Grant Notice by and between the Registrant and Elizabeth Barrett, dated as of November 13, 2023
(incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on November 14, 2023).
10.20*
Amended Restricted Stock Unit Grant Notice by and between the Registrant and Elizabeth Barrett, dated as of December 20, 2023 (incorporated by
reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 14, 2024).
10.21*
Employment Agreement by and between the Registrant and Mark Schoenberg, dated as of December 5, 2017 (incorporated by reference to Exhibit
10.12 to the Registrant’s Annual Report on Form 10-K, filed with the SEC on February 28, 2019).
10.22*
Amendment 1 to Employment Agreement by and between the Registrant and Mark Schoenberg, dated as of January 26, 2021 (incorporated by
reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 13, 2021).
10.23*
Amendment 2 to Employment Agreement by and between the Registrant and Mark Schoenberg, dated as of March 15, 2021 (incorporated by
reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 13, 2021).
10.24*
Employment Agreement between the Registrant and Jason Smith, dated August 12, 2020 (incorporated by reference to Exhibit 10.3 to the Registrant’s
Quarterly Report on Form 10-Q, filed with the SEC on November 9, 2020).
10.25*
Amendment 1 to Employment Agreement between the Registrant and Jason Smith, dated January 26, 2021 (incorporated by reference to Exhibit 10.4
to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 13, 2021).
10.26*
Employment Agreement between the Company and Chris Degnan, dated October 7, 2024 (incorporated by reference to Exhibit 10.2 to the Registrant’s
Current Report on Form 8-K, filed with the SEC on October 9, 2024).
10.27*
Separation Agreement between the Company and Don Kim, dated October 7, 2024 (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K, filed with the SEC on October 9, 2024).
10.28†
License Agreement, dated November 8, 2019, by and between the Registrant and Agenus Inc. (incorporated by reference to Exhibit 10.14 to the
Registrant’s Annual Report on Form 10-K, filed with the SEC on March 2, 2020).
10.29
Lease Agreement, dated November 4, 2019, by and between the Registrant and Witman Properties, L.L.C. and Alexander Road at Davanne, L.L.C.
(incorporated by reference to Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 2, 2020).
10.30
Amendment to Lease Agreement, dated June 8, 2022, by and between the Registrant and Witman Properties, L.L.C. and Alexander Road at Davanne,
L.L.C. (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2022).
10.31†**
Manufacturing and Supply Agreement, dated May 26, 2020, by and between the Registrant and Isotopia Molecular Imaging Ltd. (the “Isotopia
Agreement”) and the extension to the Isotopia Agreement, dated August 25, 2022, by and between the Registrant and Isotopia Molecular Imaging Ltd.
(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on November 10, 2022).
10.32†**
Manufacturing and Supply Agreement - Amendment No. 2, dated May 19, 2023, by and between the Registrant and Isotopia Molecular Imaging Ltd.
(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on August 10, 2023).
10.33†**
Manufacturing & Supply Agreement, dated as of April 24, 2020 and amended as of March 2, 2022, by and between UroGen Pharma Ltd. and Cenexi-
Laboratoires Thissen s.a. (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 10,
2022).
10.34†**
Amendment 2 to Manufacturing & Supply Agreement, dated as of December 28, 2023 by and between UroGen Pharma Ltd. and Cenexi-Laboratoires
Thissen s.a. (incorporated by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 14, 2024).
10.35†**
License and Supply Agreement, dated as of January 16, 2024, by and between UroGen Pharma Ltd. and Medac Gesellschaft für klinische
Spezialpräparate m.b.H. (incorporated by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 14,
2024).
10.36
Amended and Restated Loan Agreement, dated as of March 13, 2024, by and among UroGen Pharma, Inc., as the borrower, and a credit party, UroGen
Pharma Ltd. as Parent, and a Credit Party, the other guarantors signatory hereto or otherwise party hereto from time to time as additional Credit
Parties, BioPharma Credit PLC as collateral agent, BPCR Limited Partnership as a lender and BioPharma Credit Investments V (Master) LP as a lender
(incorporated by reference to Exhibit 10.35 to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 14, 2024).
10.37†**
Pre-Paid Forward Contract by and among the Registrant and RTW Investments ICAV for and on behalf of RTW Fund 2, dated as of March 18, 2021, as
amended April 30, 2021 and August 14, 2024 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with
the SEC on November 6, 2024).
19.1
UroGen Pharma Ltd. Insider Trading Policy.
21.1
Subsidiary of the Registrant (incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 24,
2023).
23.1
Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm.
24.1
Power of Attorney (see signature page hereto).
31.1
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Principal Executive and Financial Officers Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
97
UroGen Pharma Ltd. Incentive Compensation Recoupment Policy (incorporated by reference to Exhibit 97 to the Registrant’s Annual Report on Form
10-K, filed with the SEC on March 14, 2024).
101
The following financial information from the Annual Report on Form 10-K of UroGen Pharma Ltd. for the year ended December 31, 2024, formatted in
Inline XBRL (extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated
Statements of Changes in Shareholders Equity, (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements.
104
The cover page to this Annual Report on Form 10-K has been formatted in Inline XBRL
*
Management contract or compensatory plan.
†
Certain information in this exhibit has been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both not material and is the type of information
that the registrant treats as private or confidential.
**
Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
Item 16. Form 10-K Summary
None.
100
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UROGEN PHARMA LTD.
March 10, 2025
By:
/s/ Elizabeth Barrett
Elizabeth Barrett
President and Chief Executive Officer
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned directors and officers of UroGen Pharma Ltd., hereby severally constitute and appoint Elizabeth Barrett and Chris Degnan, and each of them singly,
our true and lawful attorneys, with full power to them, and to each of them singly, to sign for us and in our names in the capacities indicated below, any and all
amendments to this Annual Report on Form 10-K, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of us might or could do in person, and hereby ratifying and
confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Name
Title
Date
/s/ Elizabeth Barrett
President, Chief Executive Officer and Director
March 10, 2025
Elizabeth Barrett
(Principal Executive Officer)
/s/ Chris Degnan
Chief Financial Officer
March 10, 2025
Chris Degnan
(Principal Financial and Accounting Officer)
/s/ Arie Belldegrun
Chair
March 10, 2025
Arie Belldegrun, M.D.
/s/ Cynthia Butitta
Director
March 10, 2025
Cynthia Butitta
/s/ Leana S. Wen
Director
March 10, 2025
Leana S. Wen, M.D., M.Sc.
/s/ Stuart Holden
Director
March 10, 2025
Stuart Holden, M.D.
/s/ James Robinson Jr.
Director
March 10, 2025
James Robinson Jr.
/s/ Dan Wildman
Director
March 10, 2025
Dan Wildman
101
Exhibit 4.2
DESCRIPTION OF ORDINARY SHARES
The following descriptions of our ordinary shares and provisions of our amended and restated articles of association are summaries and do not purport to be
complete. For a complete description of the matters set forth below, you should refer to our amended and restated articles of association, a copy of which is included
as an exhibit to our Annual Report on Form 10-K, and to the applicable provisions of Israeli law. References herein to “we,” “us,” “our” and the “Company” refer to
UroGen Pharma Ltd. and not to any of its subsidiaries.
General
Our authorized share capital consists of 100,000,000 ordinary shares, par value NIS 0.01 per share. Our ordinary shares are not redeemable and do not have any
preemptive rights. All of our ordinary shares have identical voting and other rights in all respects.
Registration Number and Purpose of the Company
Our registration number with the Israeli Registrar of Companies is 513537621. Our affairs are governed by our amended and restated articles of association and we
are subject to the Israeli Companies Law, 5759-1999 (the “Israeli Companies Law”) and other applicable Israeli law. Our purpose as set forth in our amended and
restated articles of association is to engage in any lawful activity.
Transfer of Shares
Our fully paid ordinary shares are issued in registered form and may be freely transferred under our amended and restated articles of association, unless the transfer is
restricted or prohibited by another instrument, applicable law or the rules of a stock exchange on which the shares are listed for trade. The ownership or voting of our
ordinary shares by non-residents of the State of Israel is not restricted in any way by our amended and restated articles of association or the laws of the State of Israel,
except for ownership by nationals of some countries that are, or have been, in a state of war with the State of Israel.
The Powers of the Board of Directors
Our board of directors shall direct our policy and shall supervise the performance of our chief executive officer and his or her actions. The board of directors may
exercise all powers that are not required under the Israeli Companies Law or under our amended and restated articles of association to be exercised or taken by our
shareholders.
Election of Directors
Our ordinary shares do not have cumulative voting rights for the election of directors. As a result, the holders of a majority of the voting power represented and
voting at a meeting of shareholders have the power to elect all of our directors.
Under our amended and restated articles of association, our board of directors must consist of at least five and not more than nine directors and the number of
directors may be fixed from time to time by a two-thirds majority of the then incumbent directors. Our board of directors currently consists of seven directors.
Pursuant to our amended and restated articles of association, each of our directors is appointed by a simple majority vote of holders of our ordinary shares,
participating and voting at an annual general meeting of our shareholders. Each director serves until the next annual general meeting following his or her election or
until his or her earlier death, resignation or removal by a vote of the majority of the aggregate voting power of the Company at a general meeting of our shareholders
or until his or her office expires by operation of law. Our amended and restated articles of association also provide that if no director nominees are proposed or
elected at an annual general meeting, then the directors then in office shall continue to hold office until the convening of a general meeting of shareholders at which
director nominees shall be proposed and elected. In addition, our amended and restated articles of association allow our board of directors to appoint directors to fill
vacancies on the board of directors, including filling empty board seats up to the maximum number of directors permitted under our amended and restated articles of
association, to serve until the next annual general meeting of shareholders. Our amended and restated articles of association do not have a retirement age requirement
for our directors.
Dividend and Liquidation Rights and Share Buy-Backs
We may declare a dividend to be paid to the holders of our ordinary shares in proportion to their respective shareholdings. We may also conduct repurchases, or buy-
backs, of our shares. Under the Israeli Companies Law, share buy-backs are considered to be a distribution. Under the Israeli Companies Law, dividend distributions
or share buy-backs are determined by the board of directors and do not require the approval of the shareholders of a company unless the company’s articles of
association provide otherwise. Our amended and restated articles of association do not require shareholder approval of a dividend distribution or share buy-back.
Pursuant to the Israeli Companies Law, the distribution amount is limited to the greater of retained earnings or earnings generated over the previous two years,
according to our then last reviewed or audited financial statements (less the amount of previously distributed dividends, if not already reduced from the earnings),
provided that the end of the period to which the financial statements relate is not more than six months prior to the date of the distribution (the “Profits Test”). If we
do not meet such criteria, then we may distribute dividends only with court approval. In each case, we are only permitted to distribute a dividend if our board of
directors and, if applicable, the court, determines that there is no reasonable concern that payment of the dividend will prevent us from satisfying our existing and
foreseeable obligations as they become due (the “Solvency Test”).
Pursuant to regulations promulgated under the Israeli Companies Law, we may make a distribution by means of share buy-back even if such distribution does not
meet the Profits Test and without court approval, provided, that we meet the following conditions: (i) the distribution qualifies under the Solvency Test; (ii) we notify
our material creditors and secured creditors of our intention to make a distribution that does not meet the Profits Test; (iii) we make such notice public; and (iv) no
creditor timely files an objection. If a creditor timely files an objection, court approval would be required for such distribution in accordance with the requirements of
the Israeli Companies Law.
In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our ordinary shares in proportion to their
shareholdings. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distribution rights to the holders of a class
of shares with preferential rights that may be authorized in the future.
Exchange Controls
There are currently no Israeli currency control restrictions on remittances of dividends on our ordinary shares, proceeds from the sale of the shares or interest or other
payments to non-residents of the State of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of war with the State of Israel.
Shareholder Meetings
Under Israeli law, we are required to hold an annual general meeting of our shareholders once every calendar year that must be held no later than 15 months after the
date of the previous annual general meeting. All meetings other than the annual general meeting of shareholders are referred to in our amended and restated articles
of association as extraordinary meetings. Our board of directors may call extraordinary meetings whenever it sees fit, at such time and place, within or outside of the
State of Israel, as it may determine. In addition, as a company whose shares are listed for trading on an exchange outside of Israel, the Israeli Companies Law
provides that our board of directors shall convene an extraordinary meeting upon the written request of (i) any two or more of our directors, (ii) one-quarter or more
of the members of our board of directors, or (iii) one or more shareholders holding, in the aggregate, either (a) 10% or more of our outstanding issued shares and 1%
or more of our outstanding voting power, or (b) 10% or more of our outstanding voting power.
Under Israeli law, one or more shareholders holding at least 1% of the voting rights in a company may request that the board of directors include a matter in the
agenda of a general meeting of shareholders to be convened in the future (or, with respect to a company whose shares are listed for trade on an exchange outside of
Israel, 5% if the matter is the appointment or removal of a director), provided that it is appropriate to discuss such a matter at the general meeting. Our amended and
restated articles of association currently provide that any shareholder holding at least 1% of the outstanding voting rights may make such a request. Our amended and
restated articles of association contain provisions concerning procedures and disclosure items with respect to the submission of shareholder proposals for general
meetings.
Subject to the provisions of the Israeli Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings
are the shareholders of record on a date to be decided by the board of directors, which may be between four and 60 days prior to the date of the meeting.
Furthermore, the Israeli Companies Law requires that resolutions regarding the following matters must be passed at a general meeting of our shareholders:
•
amendments to our articles of association;
•
appointment or termination of our auditors;
•
appointment of external directors (if applicable);
•
approval of certain related-party transactions;
•
increases or reductions of our authorized share capital;
•
a merger; and
•
the exercise of our board of director’s powers by a general meeting, if our board of directors is unable to exercise its powers and the exercise of any of its
powers is required for our proper management.
The Israeli Companies Law requires that a notice of any annual general meeting or extraordinary meeting be provided to shareholders at least 21 days prior to the
meeting and if the agenda of the meeting includes the appointment or removal of directors, the approval of related-party transactions that require shareholder
approval, or an approval of a merger, notice must be provided at least 35 days prior to the meeting.
Pursuant to our amended and restated articles of association, holders of our ordinary shares have one vote for each ordinary share held on all matters submitted to a
vote before the shareholders at a general meeting. Under the Israeli Companies Law, shareholders of a public company are not permitted to take action by way of
written consent in lieu of a meeting.
Quorum Requirements
Pursuant to our amended and restated articles of association, the quorum required for our general meetings of shareholders consists of at least two shareholders
present in person, by proxy or by other voting instrument in accordance with the Israeli Companies Law who hold or represent between them at least 33 1/3% of the
total outstanding voting rights. A meeting adjourned for lack of a quorum is generally adjourned to the same day in the following week at the same time and place or
to a later time or date if so specified in the notice of the meeting. At the reconvened meeting, any two or more shareholders present in person or by proxy shall
constitute a lawful quorum.
Voting Requirements
Our amended and restated articles of association provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required by the
Israeli Companies Law or by our amended and restated articles of association.
Under our amended and restated articles of association, (i) the removal of a director from office requires the adoption of a resolution at a general meeting of
shareholders by a majority of the aggregate voting rights of the Company, and (ii) the alteration of the rights, privileges, preferences or obligations of any class of our
shares requires a simple majority of the class so affected (or such other percentage of the relevant class that may be set forth in the governing documents relevant to
such class), in addition to the ordinary majority vote of all classes of shares voting together as a single class at a shareholder meeting.
Compensation Policy
In general, under the Israeli Companies Law, a public company must have a compensation policy that applies to its office holders (as such term is defined in the
Israeli Companies Law) approved by its board of directors after receiving and considering the recommendations of the compensation committee. We have adopted an
amended and restated compensation policy regarding the terms of engagement of office holders, which our shareholders approved on August 6, 2024. The
compensation policy is valid for a period of three years. Renewal or amendment of the compensation policy is subject to shareholder approval. However, if our
shareholders do not approve the compensation policy, the board of directors may approve the compensation policy despite the objection of the shareholders on the
condition that the compensation committee and then the board of directors decide, on the basis of detailed grounds and after discussing again the compensation
policy, that approval of the compensation policy, despite the objection of shareholders, is for the benefit of the Company.
Renewing or amending the compensation policy requires the recommendation to our board of directors by the compensation committee. Thereafter our board of
directors, after considering the recommendations of the compensation committee, need to approve the compensation policy, and will further need to be approved by
our shareholders, which we refer to as a Special Majority Approval for Compensation. A Special Majority Approval for Compensation requires shareholder approval
by a majority vote of the shares present and voting at a meeting of shareholders called for such purpose, provided that either: (i) such majority includes at least a
majority of the shares held by all shareholders who voted who are not controlling shareholders (as such term is defined in the Israeli Companies Law) and do not
have a personal interest in such compensation policy that are voted, excluding abstentions; or (ii) the total number of shares of non-controlling shareholders and
shareholders who do not have a personal interest in the compensation policy that are voted against the policy does not exceed 2% of the Company’s aggregate voting
rights.
Related-Party Transactions
The Israeli Companies Law generally requires that an office holder promptly disclose to the board of directors any personal interest that he or she may have and all
related material information or documents concerning any existing or proposed transaction of the company. An interested office holder’s disclosure must be made
promptly and in any event no later than the first meeting of the board of directors at which the transaction is considered.
A personal interest includes an interest of any person in an action or transaction of a company, including a personal interest of such person’s relative or of a corporate
body in which such person or a relative of such person is a 5% or greater shareholder, director or chief executive officer or in which he or she has the right to appoint
at least one director or the chief executive officer, but excluding a personal interest stemming from one’s ownership of shares in the company. A personal interest also
includes the personal interest of a proxy holder voting shares even if the proxy giver does not have a personal interest in the matter and the personal interest of the
proxy giver, whether or not the person voting the shares has discretion.
An extraordinary transaction is defined as:
•
a transaction that is not in the ordinary course of business;
•
a transaction that is not on market terms; or
•
a transaction that may have a material impact on a company’s profitability, assets or liabilities.
If it is determined that an office holder has a personal interest in a transaction, which is not an extraordinary transaction, approval by the board of directors is required
for the transaction, unless the company’s articles of association provide for a different method of approval. Further, so long as an office holder has disclosed his or
her personal interest in a transaction, the board of directors may approve an action by the office holder that would otherwise be deemed a breach of his or her duty of
loyalty. However, a company may not approve a transaction or action that is not in the company’s interest or that is not performed by the office holder in good faith.
An extraordinary transaction in which an office holder has a personal interest requires approval first by the company’s audit committee and subsequently by the
board of directors.
The compensation of, or an undertaking to indemnify or insure, an office holder who is not a director generally requires approval first by the company’s
compensation committee, then by the company’s board of directors. If such compensation arrangement or an undertaking to indemnify or insure is inconsistent with
the company’s stated compensation policy, or if the office holder is the chief executive officer (apart from a number of specific exceptions), then such arrangement is
further subject to a Special Majority Approval for Compensation. If the shareholders of a company do not approve the compensation terms of office holders (other
than directors) at a meeting of the shareholders, the compensation committee and board of directors may override the shareholders’ decision, subject to certain
conditions. Arrangements regarding the compensation, indemnification or insurance of a director require the approval of the compensation committee, board of
directors and shareholders by simple majority, in that order, and if the arrangement is inconsistent with the company’s stated compensation policy, a Special Majority
Approval for Compensation.
Generally, a person who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee may not be present at
such a meeting or vote on that matter unless the chairperson of the audit committee or board of directors (as applicable) determines that he or she should be present in
order to present the transaction that is subject to approval. If a majority of the members of the audit committee or the board of directors (as applicable) has a personal
interest in the approval of a transaction, then all directors may participate in discussions of the audit committee or the board of directors (as applicable) on such
transaction and the voting on approval thereof, but shareholder approval is also required for such transaction.
Under the Israeli Companies Law, the approval of the audit committee, the board of directors and the shareholders of the company, in that order, is required for (i) an
extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest; (ii) transactions for the provision of services
whether directly or indirectly by a controlling shareholder or his or her relative, or a company controlled by a controlling shareholder; and (iii) the terms of
engagement and compensation of a controlling shareholder or such controlling shareholder’s relative. In addition, the shareholder approval requires one of the
following, which we refer to as a Special Majority:
•
at least a majority of the shares held by all shareholders who do not have a personal interest in the transaction and who are present and vote on the matter are
voted in favor of the transaction, excluding abstentions; or
•
the shares voted against the transaction by shareholders who have no personal interest in the transaction and who are present and voting on the matter do not
exceed 2% of the aggregate voting rights in the company.
To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years and under certain conditions, five years from a
company’s initial public offering, approval is required at the end of such period unless, with respect to certain transactions, the audit committee determines that the
duration of the transaction is reasonable given the circumstances related thereto.
Arrangements regarding the compensation, indemnification or insurance of a controlling shareholder in his or her capacity as an office holder require the approval of
the compensation committee, board of directors and shareholders by a Special Majority.
Pursuant to regulations promulgated under the Israeli Companies Law, certain transactions, including with respect to compensation, indemnification or insurance,
with a controlling shareholder or his or her relative, or with directors or other office holders, that would otherwise require approval of a company’s shareholders may
be exempt from shareholder approval under certain conditions.
Further exceptions to the simple majority vote requirement are a resolution for the voluntary winding up, or an approval of a scheme of arrangement or
reorganization, of the Company pursuant to Section 350 of the Israeli Companies Law, that governs the settlement of debts and reorganization of a company, which
requires the approval of holders of 75% of the voting rights represented at the meeting and voting on the resolution.
Access to Corporate Records
Under the Israeli Companies Law, shareholders generally have the right to review: minutes of our general meetings, our shareholders register and principal
shareholders register, articles of association and annual audited financial statements, any document that we are required by law to file publicly with the Israeli
Registrar of Companies or the Israel Securities Authority. In addition, shareholders may request to review any document related to an action or transaction requiring
shareholder approval under the related party transaction provisions of the Israeli Companies Law. We may deny this request if we believe it has not been made in
good faith or that the document contains a trade secret or a patent or that the document’s disclosure may otherwise impair our interests.
Modification of Class Rights
Under the Israeli Companies Law and our amended and restated articles of association, the rights attached to any class of shares, such as voting, liquidation and
dividend rights, may be amended by adoption of a resolution by the holders of a majority of the shares of that class present at a separate class meeting, or otherwise
in accordance with the rights attached to such class of shares, as set forth in our amended and restated articles of association.
Acquisitions under Israeli Law
Full Tender Offer
A person wishing to acquire shares of an Israeli public company and who would as a result hold over 90% of the target company’s voting rights or issued and
outstanding share capital (or of a certain class of shares thereof) is required by the Israeli Companies Law to make a tender offer to all of the company’s shareholders
for the purchase of all of the issued and outstanding shares of the company (or the applicable class. In general, if the shareholders who do not accept the offer hold
less than 5% of the issued and outstanding share capital of the company or of the applicable class, and more than half of the shareholders who do not have a personal
interest in the offer accept the offer, all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. However, a tender
offer will also be accepted if the shareholders who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of the
applicable class of shares.
Upon a successful completion of such a full tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder accepted the tender offer
or not, may, within six months from the date of acceptance of the tender offer, petition an Israeli court to determine whether the tender offer was for less than fair
value and that the fair value should be paid as determined by the court. However, under certain conditions, the offeror may include in the terms of the tender offer
that an offeree who accepted the offer will not be entitled to petition the Israeli court.
If a full tender offer is not accepted, the acquirer may not acquire shares from shareholders who accepted the tender offer that will increase its holdings to more than
90% of the company’s issued and outstanding share capital or of the applicable class.
Shares acquired in contradiction of the full tender offer rules under the Israeli Companies Law will have no rights and will become dormant shares.
Special Tender Offer
The Israeli Companies Law provides that, subject to certain exceptions, an acquisition of shares of an Israeli public company must be made by means of a special
tender offer if as a result of the acquisition the purchaser would become a holder of 25% or more of the voting rights in the company. This requirement does not
apply if there is already another holder of at least 25% of the voting rights in the company. Similarly, the Israeli Companies Law provides that, subject to certain
exceptions, an acquisition of shares in a public company must be made by means of a special tender offer if as a result of the acquisition the purchaser would become
a holder of more than 45% of the voting rights in the company, if there is no other shareholder of the company who holds more than 45% of the voting rights in the
company. These requirements do not apply if, in general, the acquisition (i) was made in a private placement that received shareholders’ approval as a private
placement whose purpose is to give the purchaser 25% or more of the voting rights in the company, if there is no person who holds 25% or more of the voting rights
in the company, or as a private placement whose purpose is to give the purchaser 45% of the voting rights in the company, if there is no person who holds 45% of the
voting rights in the company, (ii) was from a shareholder holding 25% or more of the voting rights in the company which resulted in the purchaser becoming a holder
of 25% or more of the voting rights in the company, or (iii) was from a holder of more than 45% of the voting rights in the company which resulted in the acquirer
becoming a holder of more than 45% of the voting rights in the company.
A special tender offer must be extended to all shareholders of a company. In general, a special tender offer may be consummated only if (i) the offeror acquired
shares representing at least 5% of the voting power in the company and (ii) the number of shares tendered by shareholders who accept the offer exceeds the number
of shares held by shareholders who object to the offer (excluding the offeror, controlling shareholders, holders of 25% or more of the voting rights in the company or
any person having a personal interest in the acceptance of the tender offer, or anyone on their behalf, including any of their relatives or any entity controlled by
them). If a special tender offer is accepted, then the purchaser or any person or entity controlling it or under common control with the purchaser or such controlling
person or entity may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger with the target company for
a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an offer or merger in the initial special tender
offer.
Shares purchased in contradiction of the special tender offer rules under the Israeli Companies Law will have no rights and will become dormant shares.
Merger
The Israeli Companies Law permits merger transactions if approved by each party’s board of directors and, unless certain requirements described under the Israeli
Companies Law are met, by a majority vote of each party’s shareholders. In the case of the target company, approval of the merger further requires a majority vote of
each class of its shares.
Pursuant to the Israeli Companies Law, the board of directors of a merging company is required to discuss and determine whether in its opinion there exists a
reasonable concern that as a result of a proposed merger, the surviving company will not be able to satisfy its obligations towards its creditors, such determination
taking into account the financial condition of the merging companies. If the board of directors determines that such a concern exists, it may not approve a proposed
merger. Following the approval of the board of directors of each of the merging companies, the boards of directors must jointly prepare a merger proposal for
submission to the Israeli Registrar of Companies.
For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the votes of shares represented at the
meeting of shareholders that are held by parties other than the other party to the merger, or by any person (or group of persons acting in concert) who holds (or hold,
as the case may be) 25% or more of the voting rights or the right to appoint 25% or more of the directors of the other party, vote against the merger. If the transaction
would have been approved by the shareholders of a merging company but for the separate approval of each class or the exclusion of the votes of certain shareholders
as provided above, a court may still approve the merger upon the petition of holders of at least 25% of the voting rights of a company. For such petition to be granted,
the court must find that the merger is fair and reasonable, taking into account the respective values assigned to each of the parties to the merger and the consideration
offered to the shareholders of the target company. If, however, the merger involves a merger with a company’s own controlling shareholder or if the controlling
shareholder has a personal interest in the merger, then the merger is subject to the same Special Majority approval that governs all extraordinary transactions with
controlling shareholders.
Under the Companies Law, each merging company must deliver the merger proposal to its secured creditors and inform its unsecured creditors of the merger
proposal. Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable
concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations of the merging entities, and may further give instructions to
secure the rights of creditors.
In addition, a merger may not be consummated unless at least (i) 50 days have passed from the date on which a proposal for approval of the merger is filed with the
Israeli Registrar of Companies and (ii) at least 30 days have passed from the date on which the merger was approved by the shareholders of each merging company.
Anti-Takeover Measures under Israeli Law
The Israeli Companies Law allows us to create and issue shares having rights different from those attached to our ordinary shares, including shares providing certain
preferred rights with respect to voting, distributions or other matters and shares having preemptive rights. No preferred shares are currently authorized under our
amended and restated articles of association. In the future, if we do authorize, create and issue a specific class of preferred shares, such class of shares, depending on
the specific rights that may be attached to it, may have the ability to frustrate or prevent a takeover or otherwise prevent our shareholders from realizing a potential
premium over the market value of their ordinary shares. The authorization and designation of a class of preferred shares will require an amendment to our amended
and restated articles of association, which requires the prior approval of the holders of a majority of the voting power attaching to our issued and outstanding shares
and voting at a general meeting. The convening of the meeting, the shareholders entitled to participate, and the majority vote required to be obtained at such a
meeting will be subject to the requirements set forth in the Israeli Companies Law as described above.
Borrowing Powers
Pursuant to the Israeli Companies Law and our amended and restated articles of association, our board of directors may exercise all powers and take all actions that
are not required under law or under our amended and restated articles of association to be exercised or taken by our shareholders, including the power to borrow
money for company purposes.
Changes in Capital
Our amended and restated articles of association enable us to increase or reduce our share capital. Any such changes are subject to the provisions of the Israeli
Companies Law and must be approved by a resolution duly passed by our shareholders at a general meeting. In addition, transactions that have the effect of reducing
capital, such as the declaration and payment of dividends in the absence of sufficient retained earnings or profits, require the approval of both our board of directors
and an Israeli court.
Transfer Agent and Registrar
The transfer agent and registrar for our ordinary shares is Computershare Trust Company, N.A. Its address is 150 Royall Street, Canton, MA 02021. Its telephone
number is +1 (201) 680-4503.
Listing
Our ordinary shares are listed on the Nasdaq Global Market under the symbol “URGN.”
Exhibit 19.1
Corporate Policy 3020 Insider Trading
I.
Introduction
This policy determines acceptable transactions in the securities of UroGen Pharma Ltd. (the “Company”) by our employees, directors and consultants.
During the course of your employment, directorship or consultancy with the Company, you may receive important information that is not yet publicly available
(“inside information”), about the Company or about other publicly-traded companies with which the Company has business dealings. Because of your access to
this inside information, you may be in a position to profit financially by buying or selling, or in some other way dealing, in the Company’s stock, or stock of
another publicly-traded company, or to disclose such information to a third party who does so profit (a “tippee”).
II. Insider Trading Policy
A.
Securities Transactions
Use of inside information by someone for personal gain, or to pass on, or “tip,” the inside information to someone who uses it for personal gain, is illegal,
regardless of the quantity of shares, and is therefore prohibited. You can be held liable both for your own transactions and for transactions effected by a tippee, or
even a tippee of a tippee. Furthermore, it is important that the appearance of insider trading in securities be avoided. The only exception is that transactions directly
with the Company, e.g., option exercises for cash or purchases under an employee stock purchase plan, are permitted. However, the subsequent sale (including the
sale of shares in a cashless exercise program) or other disposition of such stock is fully subject to these restrictions.
B.
Inside Information
As a practical matter, it is sometimes difficult to determine whether you possess inside information. The key to determining whether nonpublic
information you possess about a public company is inside information is whether dissemination of the information would likely affect the market price of the
company’s stock or would likely be considered important, or “material,” by investors who are considering trading in that company’s stock. Certainly, if the
information makes you want to trade, it would probably have the same effect on others. Remember, both positive and negative information can be material. If you
possess inside information, you may not trade in a company’s stock, advise anyone else to do so or communicate the information to anyone else until you know
that the information has been publicly disseminated. This means that in some circumstances, you may have to forego a proposed transaction in a company’s
securities even if you planned to execute the transaction prior to learning of the inside information and even though you believe you may suffer an economic loss
or sacrifice an anticipated profit by waiting. “Trading” includes engaging in short sales, transactions in put or call options, hedging transactions and other
inherently speculative transactions.
Although by no means an all-inclusive list, information about the following items may be considered to be inside information until it is publicly
disseminated:
(a) financial results or forecasts;
(b) confirming or updating previous disclosures or analysts’ reports;
(c) major product or technological developments;
(d) results of pre-clinical studies and clinical trials of the Company’s product candidates;
(e) major contract awards or cancellations;
(f)
M&A activity, including acquisitions or dispositions of assets or divisions;
(g) pending public or private sales of debt or equity securities;
(h) declaration of stock splits, dividends or changes in dividend policy;
(i)
top management or control changes;
(j)
possible tender offers or proxy fights;
(k) significant write-offs;
(l)
significant litigation or settlements;
(m) impending bankruptcy;
(n) gain or loss of a significant license agreement or other contracts with customers or suppliers;
(o) pricing changes or discount policies;
(p) corporate partner relationships or joint venture developments; and
(q) governmental actions or regulations.
For information to be considered publicly disseminated, it must be widely disclosed through a press release or SEC filing, and a sufficient amount of time
must have passed to allow the information to be fully disclosed. Generally speaking, information will be considered publicly disseminated after two full trading
days have elapsed since the date of public disclosure of the information. For example, if an announcement of inside information of which you were aware was
made prior to trading on Wednesday, then you may execute a transaction in the Company’s securities on Friday.
III. Stock Trading by Directors, Officers and Other Designated Employees
We require directors, officers and other employees of the Company designated pursuant to paragraph A of this policy to do more than refrain from insider
trading. We require that they limit their transactions in the Company’s stock to defined time periods following public dissemination of quarterly, interim and annual
financial results and notify, and receive approval from, the Chief Financial Officer prior to engaging in transactions in the Company’s stock and observe other
restrictions designed to minimize the risk of apparent or actual insider trading.
A.
Covered Insiders
The provisions outlined in this stock trading policy apply to all directors and officers of the Company, and to such other employees of the Company as the
Chief Executive Officer, the Chief Financial Officer, the Chief Compliance Officer or General Counsel may designate from time to time because of their access to
sensitive information. Generally, any entities or family members of those individuals whose trading activities are controlled or influenced by any of such persons
should be considered to be subject to the same restrictions.
B.
Window Period
Generally, except as set forth in this paragraph B and in paragraphs C, D and G of this policy, directors, officers and other employees of the Company
designated pursuant to paragraph A of this policy may buy or sell securities of the Company only during a “window period” that opens after two full trading days
have elapsed after the public dissemination of the Company’s annual, interim or quarterly financial results and closes two full trading days before the end of the
quarter. This window period may be closed early or may not open if, in the judgment of the Company’s Chief Financial Officer, there exists undisclosed
information that would make trades by members of the Company’s directors, officers or designated employees inappropriate. It is important to note that the fact
that the window period has closed early or has not opened should be considered inside information. A director, officer or other designated employee who believes
that special circumstances require him or her to trade outside the window period should consult with the Company’s Chief Financial Officer. Permission to trade
outside the window period will be granted only where the circumstances are extenuating and there appears to be no significant risk that the trade may
subsequently be questioned.
C.
Exceptions to Window Period
1. Option/Warrant Exercises. Directors, officers and other employees may exercise options/warrants for cash granted under the Company’s
equity incentive plans without restriction to any particular period in light of information then available to the public. However, the subsequent sale of the stock
(including sales of stock in a cashless exercise) acquired upon the exercise of options/warrants is subject to all provisions of this policy.
2. 10b5-1 Automatic Trading Programs. In addition, purchases or sales of the Company’s securities made pursuant to, and in compliance
with, a written plan established by a director, officer or other employee that meets the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (a “Trading Plan”) may be made without restriction to any particular period provided that (i) the Trading Plan was established in
good faith, in compliance with the requirements of Rule 10b5-1, at the time when such individual was not in possession of material nonpublic information about
the Company and the Company had not imposed any trading blackout period, (ii) the Trading Plan was reviewed by the Company prior to establishment, solely to
confirm compliance with this policy and the securities laws and (iii) the Trading Plan allows for the cancellation of a transaction and/or suspension of such Trading
Plan upon notice and request by the Company to the individual if any proposed trade (a) fails to comply with applicable laws (e.g., exceeding the number of shares
that may be sold under Rule 144 under the Securities Act of 1933, as amended (“Rule 144”)) or (b) would create material adverse consequences for the Company.
The Company must be notified of the establishment of any such Trading Plan, any amendments to such Trading Plan and the termination of such Trading Plan. In
addition, sales of the Company’s securities made pursuant to, and in compliance with, a Sell to Cover Election in place relating to the Company’s Restricted Stock
Units may be made without restriction to any particular period.
D.
Pre-Clearance and Advance Notice of Transactions
In addition to the requirements of paragraph B above, directors and officers (and such other employees of the Company as the Chief Executive Officer,
the Chief Financial Officer, the Chief Compliance Officer or General Counsel may designate from time to time because of their access to sensitive information)
may not engage in any transaction in the Company’s securities, including any purchase or sale in the open market, loan or other transfer of beneficial ownership
without first obtaining pre-clearance of the transaction from the Company’s Chief Financial Officer (the “Clearing Officer”), at least two business days in advance
of the proposed transaction. Any transaction under a Trading Plan that has been pre-cleared will be deemed to be a pre-cleared transaction so long as the
transaction is conducted and completed in accordance with the Trading Plan. The Clearing Officer will then determine whether the transaction may proceed. Pre-
cleared transactions not completed within five business days shall require new pre-clearance under the provisions of this paragraph. The Company may, at its
discretion, shorten such period of time.
Advance notice of gifts or an intent to exercise an outstanding stock option shall be given to the Clearing Officer. To the extent possible, advance notice of
upcoming transactions to be effected pursuant to an established Trading Plan under Section III.C.2 above shall also be given to the Clearing Officer. Upon the
completion of any transaction, officers and directors of the Company must immediately notify the Company’s Chief Financial Officer so that the Company may
assist the individual in complying with his or her reporting obligations under Section 16 of the Exchange Act, if applicable.
E.
Prohibition of Speculative or Short-term Trading
No director, officer or other employee may engage in short sales, transactions in put or call options, hedging transactions, margin accounts or other
inherently speculative transactions with respect to the Company’s stock at any time.
F.
Short-Swing Trading/Control Stock/Section 16 Reports
Directors and officers subject to the reporting obligations under Section 16 of the Exchange Act should take care not to violate the prohibition on short-
swing trading (Section 16(b) of the Exchange Act) and the restrictions on sales by control persons (Rule 144), and should file with the Securities and Exchange
Commission all appropriate Section 16(a) reports (Forms 3, 4 and 5) and any notices of sale required by Rule 144.
G.
Prohibition of Trading During Pension Fund Blackouts
In accordance with Regulation BTR under the Exchange Act, no director or executive officer of the Company shall, directly or indirectly, purchase, sell or
otherwise acquire or transfer any equity security of the Company (other than an exempt security) during any “blackout period’’ (as defined in Regulation BTR)
with respect to such equity security, if such director or executive officer acquires or previously acquired such equity security in connection with his or her service
or employment as a director or executive officer. This prohibition shall not apply to any transactions that are specifically exempted from Section 306(a)(1) of the
Sarbanes-Oxley Act of 2002 (as set forth in Regulation BTR), including but not limited to, purchases or sales of the Company’s securities made pursuant to, and in
compliance with, a Trading Plan; compensatory grants or awards of equity securities pursuant to a plan that, by its terms, permits executive officers and directors to
receive automatic grants or awards and specifies the terms of the grants and awards; and acquisitions or dispositions of equity securities involving a bona fide gift
or by will or the laws of descent or pursuant to a domestic relations order. The Company shall timely notify each director and executive officer of any blackout
periods in accordance with the provisions of Regulation BTR.
IV. Duration of Policy’s Applicability
This policy continues to apply to your transactions in the Company’s shares or the securities of other publicly traded companies engaged in business
transactions with the Company even after your employment, directorship or consultancy with the Company has terminated. If you are in possession of inside
information when your relationship with the Company concludes, you may not trade in the Company’s shares or the securities of any such other company until the
information has been publicly disseminated or is no longer material.
V.
Penalties
Anyone who effects transactions in the Company’s stock or the stock of other public companies engaged in business transactions with the Company (or
provides information to enable others to do so) on the basis of inside information is subject to both civil liability and criminal penalties, as well as disciplinary
action by the Company. An employee, director or consultant who has questions about this policy should contact his or her own attorney or our Chief Financial
Officer.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-274423 and 333-268398) and Form S-8 (Nos. 333-281520,
333-275547, 333-266761, 333-263729, 333-258496, 333-243750, 333-232034, 333-227812, 333-222955, 333-221212 and 333-218992) of UroGen Pharma Ltd. of our
report dated March 10, 2025 relating to the financial statements, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
March 10, 2025
Exhibit 31.1
CERTIFICATIONS
I, Elizabeth Barrett, certify that:
1.
I have reviewed this Annual Report on Form 10-K of UroGen Pharma Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in exchange act rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: March 10, 2025
/s/ Elizabeth Barrett
Elizabeth Barrett
Chief Executive Officer
Exhibit 31.2
CERTIFICATIONS
I, Chris Degnan, certify that:
1.
I have reviewed this Annual Report on Form 10-K of UroGen Pharma Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in exchange act rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: March 10, 2025
/s/ Chris Degnan
Chris Degnan
Chief Financial Officer
Exhibit 32.1
CERTIFICATION
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of
Title 18 of the United States Code (18 U.S.C. §1350), Elizabeth Barrett, Chief Executive Officer of UroGen Pharma Ltd. (the “Company”), and Chris Degnan, Chief
Financial Officer of the Company, each hereby certifies that, to the best of his or her knowledge:
1.
The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, to which this Certification is attached as Exhibit 32.1 (the “Annual
Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and
2.
The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: March 10, 2025
In Witness Whereof, the undersigned have set their hands hereto as of the 10th day of March, 2025.
/s/ Elizabeth Barrett
/s/ Chris Degnan
Elizabeth Barrett
Chris Degnan
Chief Executive Officer
Chief Financial Officer
“This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by
reference into any filing of UroGen Pharma Ltd. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made
before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.”